Wait, WTF is DeFi? 🤔
Decentralized Finance is the application of cryptographic tools for financial applications. By trusting in code we can compose new ways to interact with tokens, which means money LEGOS. In the House of DeFi, we give you a small taste of some different DeFi platforms as well as recap some of the key platforms while covering their purpose.
- But why do we need DeFi? Don't we get financial services from banks?
TL;DR: Want to ape a $5k investment into something at 3 AM (don't FOMO 😬), donate $10k to a small charity project in Costa Rica via Giveth, borrow $1k to fix your car, send $100 to a friend on the other side of the world, or simply earn some interest on the assets you have in your wallet? With DeFi you can, and you don't have to go to a local bank branch, call anyone, or answer any probing questions before you do it. You can just do it. You become your own bank and it feels damn good.
It's true, we do get financial services from banks like Wells Fargo, HSBC, Lloyds, etc. But the banks aren't very nice and only serve to benefit their shareholders. Banks offer high interest accounts earning a whopping 0.1% APY and charge us to use their fine services. 🥳 For this amazing yield, we deposit funds into banks, and our funds are used to provide the liquidity for them to offer their services, make exorbitant profits from those services, and invest in arms and other nefarious ventures. Not content with taking all the profit for themselves and making the world a poorer place, they also charge you to have these accounts and hammer you hard if you fall out of favor. Yay the banks. 💔
Decentralized Finance or "DeFi" is a bit different. 🙌 You get most of the same services you get in traditional, centralized finance, or "TradFi", but instead of the banks holding all the money and profiting from everything, the functions they traditionally perform are rolled into code (Smart Contracts) by very clever developers - often open-sourced - and run in a permissionless state on a global, public network of nodes (blockchain), using decentralized storage and no intermediaries involved. Anyone can deposit their assets, play an active role in the protocol, and get a share in the profits. 😁
Users are incentivized to use a protocol and often earn yield in the protocol's own token, which then can give them the ability to partake in the governance and evolution of the protocol, while being invested in the growth of DeFi itself.
Using, depositing, lending, borrowing & staking all can produce different yields that often vary, with the typical being 1-10% and in some (usually risky) cases, even 100%+. Often it will be much much more for the early users of these platforms. This is not without risk and you must always research anything you're considering throwing your precious assets at, but educate yourself, use risk management, and it is possible to begin to free yourself of the very broken financial system and make some sweet gains and passive income along the way.
DeFi covers a wide range of tools from traditional borrowing and lending, to flash loans, automatic market makers (AMM), staking, and yield farms. WTF is yield farming and, how can you avoid getting rekt? Get educated...
A fairly comprehensive guide from The Defiant can be found here: The Defiant's Definitive Guide to DeFi, but we keep our own index below as well.
⚠️Danger can be anywhere. Do Your Own Research (DYOR) and equip yourself with the knowledge of how to use some of these tools; what they can do, and their powers and dangers.⚠️
- Bankless One of the best resources for learning about DeFi, becoming 'un-banked' and going west, like raiding regen Vikings into the new frontier of finance to defile banks and slay Moloch. Perhaps begin here if you're just starting out. They often have educational quests around DeFi strategies in their newsletter. The podcast is fantastic!
- Gitcoin Quests We ❤️ Gitcoin (who doesn't) and the alpha release of their new Quests system is live and is an amazing resource for leveling up your crypto game. You get ranked and can claim an NFT for each completed quest.
- ETH Build For the more curious or tech hungry - learn about cryptography, smart contracts, and how all this stuff works behind the scenes. All in an interactive drag & drop interface! All hail @austingriffith
- scaffold-eth If you want to get your hands dirty with the nuts and bolts of DeFi and maybe try your hand at building the next Uniswap or Aave, this is one of the best places to start.
- Finematics - Provides educational content in both written and visual (illustrated videos) form, helping people understand and learn about the close connection between finance and technology revolving around DeFi. Great place for beginners to start learning about Decentralized Finance as well.
- Decrypt - Decrypt provides great explanatory articles, revolving around Blockchain technology and Cryptocurrencies. On the site, you can find the latest news from the Blockchain/Cryptocurrency world, to learning materials which are covering everything from technology, projects, coins, and the future of the blockchain industry.
- Ethereum.org - The official Ethereum website has a great lengthy explanation of DeFi and it's surroundings which is great for beginners.
👨🌾 Yield Farming
One of the 'magic' money sides to DeFi is Yield Farming. Earn interest and passive income through depositing your assets into a wide variety of protocols to provide liquidity for exchanges and lending platforms. You can also borrow against your assets and earn yield in platform tokens & stablecoins.
Borrowing against your assets is a form of CDP (Collateralized Debt Position) and you can read more about it here 👀
On to the yield farming...
- Reflexer Borrow against Ether for $RAI.
- mStable Earn interest by staking mUSD or mint mUSD for farming in other pools.
- Yearn Yield farming on autopilot. Deposit assets and Yearn will automatically farm for you.
- Curve Deposit stablecoins to earn trading fees and $CRV.
- Balancer Earn $BAL by staking your tokens in Balancer pools.
- Aave Borrow against or lend many different crypto assets (Ethereum & Polygon).
- Compound Borrow against crypto assets, lend crypto assets, and farm $COMP.
- MakerDAO Borrow against crypto assets and lend crypto assets for $DAI.
- Ampleforth Farm $AMPL by providing liquidity and staking.
- Cream Lend and borrow a variety of assets while earning $CREAM.
- SushiSwap Farms A rapidly evolving, multichain (10!) DeFi platform.
- Agave Finance the DeFi lending protocol on xDai. Sweet, sweet DeFi from 1Hive
- CoinGecko Top 100 DeFi by Market Capitalization
- Nexus Mutual Get coverage on your assets against a smart contract hack.
- Bridge Mutual Coverage for your crypto assets plus earn yield & shares in profit in exchange for coverage liquidity.
- Zerion A dashboard and mobile app for tracking your DeFi transactions and assets.
- Zapper A dashboard for managing your DeFi assets and liabilities.
- DeBank A DeFi dashboard that includes ecosystem info.
- Alphaday A dashboard for viewing and managing DeFi assets as well as tracking other crypto data.
- InstaDapp Manage your DeFi assets while leveraging powerful tools.
- DeFi Saver MakerDAO and Compound management, including the ability to automatically save a CDP (Collateralized Debt Position) from being liquidated.
- DEXTools Packed full of useful info and charts on pretty much every token with free and paid subscriptions.
- FURUCOMBO DeFi legos. Allows you to combine multiple actions into one transaction.
- DeFi Safety Analysis of each platform.
- Rotki A privacy-preserving and open-source portfolio tracker, analytics, accounting, and tax reporting tool.
- TokenSets Use Set asset management tools to manage crypto portfolios.
- Token Tax TokenTax automatically calculates your crypto taxes, and supports generating taxes for DeFi protocols.
- Chainlist Chainlist is a list of EVM networks. It makes it very easy to add new EVM networks (Polygon, xDai, Fantom, Optimism, etc) to a Web3 wallet like MetaMask.
- Earni.fi Not DeFi per se BUT lets you watch your wallets for airdrops. 1 is free, up to 10 is $20p/m but pays for itself if you're active in DeFi, Governance & DAOs.
- Umbra (BETA) - Send stealth payments so only the sender and recipient know who received funds.
- Nanoly Lets you see hundreds of different yield farming options across various platforms.
- ChainHop ChainHop facilitates cross-chain transfers by finding you the best and cheapest route.
📈 Decentralized Trading
- Uniswap Exchange Trade between Ethereum based assets.
- 1inch Exchange Finds the most optimal route to trade between tokens.
- Honeyswap 🍯A Decentralized Exchange on xDai. Created by the best buzzin' bees in the buzziness, 1Hive 🐝
- Matcha Seamless, user-friendly trading.
- Curve Swap between stablecoins with very low slippage.
- SushiSwap A PolyDEX(?!) & DeFi platform supporting 10 networks and uses ArcherDAO MEV Shield to prevent being front-run. Supported networks include: Ethereum, Polygon, Fantom, xDai, Avalanche, to name a few. Also offers lending and borrowing.
- QuickSwap A decent DEX on Polygon but I have found 1Inch and quite possibly Sushi to be a fair bit cheaper on fees.
- Slingshot A DEX Aggregator similar to 1inch, but returns slippage to users, resulting in positive slippage and better prices for trades.
- Balancer - Trade between Ethereum based assets.
- sudoswap - A little different than most DEXs, sudoswap lets you trade NFTs.
💳 Crypto debit cards
- Monolith - A European DeFi account - non-custodial Ethereum wallet and a debit card in one.
- Plutus - Bank on crypto; receive a UK sort code and account number or European IBAN within minutes. Swap ETH to FIAT and move it to your Plutus card. Earn 3% rewards in PLU.
- Binance - With the Binance Card, you can spend your favorite cryptocurrencies at more than 60 million merchants worldwide. Just transfer crypto from your spot wallet to your funding wallet, and you're ready to go.
- Wirex - Wirex allows you to spend dozens of crypto currency of your choice after topped up, and is even supported in the US.
- Trezor - A great wallet. Can also be used to sign encrypted messages, as 2FA with U2F, a password manager, etc.
- Ledger - Enjoy security, ownership, and ease of use for your crypto with Ledger.
- GridPlus Lattice - A more pricey, but much more fun with plenty of benefits to other options, while still providing exceptional security.
- Argent - Phone wallet with built-in dapps, trading, advanced security, and recovery features.
- Metamask - A browser-based wallet that lets you interact with decentralized apps from your favorite browser. Supports Ledger and Trezor. Mobile wallets are also available, although not recommended. Argent wallet is a much safer option for mobile devices.
- TrustWallet - Trust Wallet is a multi-coin wallet acquired by Binance in 2018. It will allow you to store, send, receive and exchange different cryptocurrencies with a single account.
- Frame - Frame is a native desktop wallet that runs on Windows, macOS, and Linux that still allows for seamless use in DeFi and everything else EVM compatible in your browser and elsewhere.
It is recommended to use a Ledger or Trezor with MetaMask in the browser. If you don't have one, buy one (direct from the manufacturer), use it via MetaMask, and just use MetaMask itself as a burner wallet. You won't regret it.
🎯 Now What?
Get going and get learning, doing, and freeing yourself from the shackles of the steaming pile of broken institutions we call banks. An amazing place to start is either Bankless & Gitcoin Quests (see 👩🏫 Education above) to make sure you've got your wits about you when venturing out into the frontier.
Remember: Always always Do Your Own Research. Not Your Keys, Not Your Coins. Always keep your seed phrase safe, private, never share it, and never store it digitally.
- If there are links & resources you would like to add to the page above (while being rewarded for doing so), you are free to submit them here.
- If you have any questions or need any help, you are welcome to join our Discord. :)