Hey everyone,
Following on last month’s post, I’ll be sharing some DeFi strategies I’ve been looking into.
A quick look at any crypto chart would show us that prices have declined from all-time highs - most about 50% down, some more.
Though not every crypto coin will make it, it is times like this that separates the good ones from the trash.
Personally for me, here’s a list of crypto coins I’m narrowing down towards. My conviction comes from looking at these aspects:
The founding team - how they are as people & their motivations
The amount of applications being built on the network
User adoption & number of transactions/value exchanged
Use cases of the network (somewhat related to point 2 → more use cases = more apps)
The bottom line is that if the number of users & value exchanged on a network increases, the network becomes more valuable.
Raoul writes about it beautifully here
Oh, and it’s quite amazing how much you can learn off Twitter. Many of the people who’re much smarter in finance and crypto are on there sharing their knowledge daily. I revived my account late last year, if you have time, consider doing it :)
Ok, so here’s my list with some good resource on Twitter.
LUNA
ThorChain (RUNE)
Fantom (FTM)
What I like about Fantom (FTM) is that its compatible with Ethereum’s network which means it easier to bring applications between either network
DeFiChain (DFI)
Built based on the Bitcoin network. Aims to leverage Bitcoin’s properties & build a truly decentralized network
Love the team behind this network → Dr. Julian
Ethereum (ETH)
ETH is actually being burned for every transaction as ETH upgrades to ETH2.0
see @ultrasoundmoney & @DocumentEther on Twitter
Bitcoin (BTC)
In crypto, there’re 2 main ways of ‘making money’.
Firstly, through capital gains as the value of the crypto network increases resulting in price of the network’s token/coin to go up. The strategy here is simple → simply buy and hold
Secondly, through obtaining yield (known as yield farming). Yields are mainly obtained through staking, providing liquidity and lending. This is where we’re able to still make returns when the market trades sideways or goes down in the short term due to macro economic factors.
Some very simple ways to get your feet wet in DeFi is with the help of centralized platforms. Here’s what I’m doing:
It’s a crypto custody platform based in Singapore where you’re able to earn interest on your crypto assets by simply parking them on their platform. Check out their interest rates here.
Besides depositing Bitcoin and Ethereum to earn up to 6% interest annually, I’d also deposit money in the form of stablecoins (USDT and USDC) and earn the 12% interest in the form of Bitcoin and Ethereum
Here’s how I do it:
Goal: Accumulate BTC passively
1. Use Gemini/Crypto.com buy USDC
2. Transfer USDC to Hodlnaut (up to $25k)
3. earn 12.73% APY on USDC -> select payouts in BTC
4. BTC earns 6.5% APY
Goal: Accumulate ETH passively
1. Use Gemini/Crypto.com buy USDT
2. Transfer USDT to Hodlnaut (up to $25k)
3. earn 12.73% APY on USDT -> select payouts in ETH
4. ETH earns 5.5% APY
Risks: Centralized platform → if they fail as a business, our assets are at risk. Insurance can be bought to insure our assets on the platform. View FAQ here
It’s a protocol built on the Terra Network which provides close to 20% interest on your UST stablecoin savings on the platform
Here’s how I do it:
Go to ‘Earn’ tab on Anchor
Click ‘Buy UST’ & choose means of buying UST
Deposit UST under ‘Earn’ tab and start earning 19.46% annually as of writing
To accumulate LUNA using some leverage:
Buy LUNA on Kucoin exchange (I use Kucoin as LUNA bought on there is on its native network so I don’t have to convert LUNA to use Anchor)
Swap LUNA to bLUNA on TerraSwap
Deposit bLUNA into Anchor as collateral under ‘Borrow’ tab → Collateral list
Borrow up to 35% Loan-to-Value (LTV) worth of UST stablecoin (borrowing up to 35% only to protect against drawdowns in LUNA’s price which can liquidate your positions)
Swap UST for more LUNA on TerraSwap
Swap LUNA to bLUNA on TerraSwap
Deposit bLUNA into Anchor as collateral under ‘Borrow’ tab → Collateral list
Your LTV should decrease as you’ve deposited more bLUNA as collateral
Borrow more UST to buy more LUNA or deposit UST under ‘Earn’ tab to earn 19% interest annually.
Pros is that Anchor is decentralized meaning it’s not dependent on a centralized authority to function. However, there’s still smart contract risk where the protocol is hacked and our funds stolen. However, insurance is available for our assets on protocol → find it under ‘Earn’ tab, ‘Protect Your Deposit’
CakeDefi’s a centralized platform based in Singapore offering DeFi services for DeFiChain.
Here’s what I’m doing:
Buy DFI on Kucoin exchange
Deposit DFI into CakeDefi
Go to ‘Freezer’ tab and freeze DFI for 120 months to earn 83% interest annually. (Basically freezing is simply locking up your DFI & staking it for the next 120 months/10 years)
Alternatively, to simply stake without lock up, go to staking under all products tab → search for DFI staking pool and click stake.
Same as Hodlnaut, this has centralized platform risk where if the business fails, our assets are at risk. I can’t seem to find any FAQs on insurance on their platform, so I’ve reached out to the customer support team for details on it.
Alright, that’s all I have for you this time. Thank you for reading!
Justin