DeFi (Decentralized Finance) took the crypto world by storm. I clearly didn't expect such a mania.
It literally reminded me of the 2017/2018 ICOs craze were buying anything could give an instant X3/X5 (assuming one knows when to exit properly)
Based on the Ethereum blockchain and started with a few famous blockchains/tokens in 2018 such as $COMP, $YFI, $AMPL. I didn't notice those before July 2020 and I have to admit the concept behind those tokens is truly revolutionary.
$YFI (Yefi) for instance is a form of passive investment. The system is automatic and selects the investments to be madde behind the curtains to maximize your return on investment.
Let's cover now my TOP 7 reasons why DeFi could bring you a lot of profit
Reason #1: Farming
Back in the days, we were "mining", buying expensive hardware to mine cryptocurrencies - and those mining hardware generally being located in foreign countries where the electricity cost is cheaper
Let me introduce you a new paradigm called "Farming" - here no hardware needed.
Farming means you'll buy the native tokens and add them to a liquidity pool. As you provide liquidity for everyone, the DeFi rewards you hourly/daily with a reward denominated in a native token.
What's really beyond awesome and pretty new in the investment world, is that we're talking about APR/APY (Annual Percentage Rate/Annual Percentage Yield) in the 3 or sometimes 4 figures....
Imagine making 1-2% a day on your investment from Day #1
This is unheard of before DeFi.
Obviously, all of this is very speculative and risky. It's great to get a reward in a native token assuming the native token appreciate in fiat currency value also and we can withdraw our profit (which is not guaranteed)
Let's not lie to ourselves, we're not here for the tech. We're here for making more fiat currency and improve our lifestyle. Once done, the tech could die, we shouldn't care less
Reason #2: Meet Fascinating People
Since Summer 2020, DeFi is moving at one speed - light speed.
The amount of daily new innovations, blogs, websites, tokens is... astonishing.
A lot of crypto folks are working hard to enable the future of finance. If you think your bank doesn't reward you enough to borrow your money (= the money you deposit), then you're halfway on your path to success.
Crypto innovators are super busy but always willing to teach, interact with their audience. Most of them are pure scammers and only some experience teaches how to differenyiate a scammer from a legit entrepreneur.
Reason #3: Bullish for Bitcoin
DeFi has nothing to do with Bitcoin. That's being said, most of the people (nicely called "normies" by the crypto community) see cryptocurrencies as a single entity.
More eyeballs are directed towards crypto assets, and as such, this is bullish for Bitcoin overall.
Reason #4: Here for the tech
I literally spend hours every day analyzing the new projects. Figuring out if they're scam, simple copy paste of existing projects, analyzing the existing and upcoming pre-sales, analyzing the ETH, TRX smart contract codes, ...
Basically, I want to answer this simple question in less than 2 minutes after reading a whitepaper: "will this DeFi project make me super rich quickly?".
Disclaimer: DeFi can make you richer if you know how to exit. If you don't, very likely it won't end well..
Knowing the Ethererum transaction fees (also called GAS fees) are quite high, it's crucial to make sure we don't invest in "scams".
And in case we know you want to invest in scams because it could pump quickly, then I recommend making sure you have enough capital to whistand the ETH GAS fees + eventual drawdown.
As a tech guy, I really enjoy learning more about the space and blockchain in general. As I said before, those tokens and blockchain could die, I couldn't care less.
I see all of them as ponzi schemes but... with an uncommon potential to make multiple digits percent of profit every day.
Reason #5: Tokens Swap
We were used to trade tokens against another via our favorite crypto brokers before.
Now we can use our decentralized wallet (Ledger, Metamask) to swap token A against token B via a website.
A broker represents a counter-party risk. Meaning, if the broker loses your coins, got hacked, he may not be entitled to refund you...
DeFi and uniswap technology remove this risk for us.
DeFi is like winning the lottery every day. For every winner, I bet you there is 100 losers who aren't happy.
That's being said, investing in DeFi contains risks that are proportional to the potential rewards. I'll talk more about it in the tomorrow blog post.
Our recent Crypto trades shared on Discord and Twitter
A quick note
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