{"id":466048,"date":"2021-05-10T11:09:03","date_gmt":"2021-05-10T15:09:03","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=466048"},"modified":"2021-05-04T22:21:19","modified_gmt":"2021-05-05T02:21:19","slug":"how-to-invest-in-defi","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/how-to-invest-in-defi","title":{"rendered":"How To Invest In DeFi"},"content":{"rendered":"<p><span style=\"color: #000000; background-color: transparent;\"><em>How To Invest In DeFi:<\/em> Decentralized Finance (DeFi) is the most-talked-about disruptor in the financial services industry. <strong>It\u2019s based on blockchain, the technology behind cryptocurrency like bitcoin and Ethereum\u2019s Ether, and it permits users to access financial services without going through traditional channels.<\/strong><\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">Gone are the days when brokerage firms and commercial banks controlled every avenue to borrow and lend funds or speculate on certain assets. <strong>DeFi takes the intermediaries out of the equation, relying instead on blockchain smart contracts.&nbsp;<\/strong><\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">DeFi carries certain benefits that are unavailable to consumers in the mainstream financial services world &#8211; transactions are faster and less expensive, there is no minimum transaction amount, and there is absolutely no paperwork involved&nbsp;in the process.&nbsp;<\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">However,<strong> no paperwork doesn\u2019t mean no accountability<\/strong>. Blockchain technology makes transactions fully transparent. More importantly, there is a secure audit trail that keeps transactions and accounts accurate and organized.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">What Are The Risks Of DeFi?&nbsp;<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">Of course, DeFi and the underlying blockchain are not without flaws. <\/span><span style=\"color: #000000; background-color: transparent;\"><strong>One of the biggest disadvantages is that transactions cannot be reversed.<\/strong> <\/span><span style=\"color: #000000; background-color: transparent;\">That\u2019s bad news for anyone prone to typos and transposed figures. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">The second issue that gives prospective DeFi users pause is the possibility of a hack. <strong>There have been instances in which consumers realized significant losses as a result of sophisticated cybercriminals.&nbsp;<\/strong><\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">How Fast Is DeFi Growing?&nbsp;<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">The DeFi industry has been around since 2013, but it really took off in 2020. That year marked an uptick in both centralized and decentralized financial protocols based in the Ethereum blockchain. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">In December of 2019, the DeFi industry was home to a total of&nbsp;$700 million. By December 31, 2020, that figure went up to $13 billion, and <a href=\"https:\/\/www.coindesk.com\/defi-100-billion-dolla\" target=\"_blank\" rel=\"noopener\">some reports indicate it has already surpassed $40 billion<\/a> in 2021.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">How To Invest In DeFi?&nbsp;<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">Clearly, DeFi has a place in the future of finance, and many investors are curious about getting involved. That brings up an important question: <em>how to invest in decentralized finance?&nbsp;<\/em><\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">Step 1: Set Up A Coinbase Account<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\"><strong>Before you can invest in DeFi, you must own cryptocurrency<\/strong>. In this case, <a href=\"https:\/\/www.coinbase.com\/price\/ethereum\" target=\"_blank\" rel=\"noopener\">Ethereum\u2019s Ether<\/a> is the best option. Begin by setting up a Coinbase account &#8211; and don\u2019t worry. There are no startup or maintenance fees to worry about.&nbsp;<\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">You can access Coinbase through the mobile app or online at Coinbase.com. Choose \u201cGet Started.\u201d You will be asked to provide the following personal information:&nbsp;<\/span><\/p>\n<ul>\n<li><strong><span style=\"background-color: transparent;\">Full Name (as listed on your government-issued identification documents)<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Email Address&nbsp;<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Password<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">State (as listed on your government-issued identification documents)&nbsp;<\/span><\/strong><\/li>\n<\/ul>\n<p><span style=\"color: #000000; background-color: transparent;\">Once you have verified your email address, you will add and verify your phone number. Then you will be asked some additional questions. These include:&nbsp;<\/span><\/p>\n<ul>\n<li><strong><span style=\"background-color: transparent;\">How will you use Coinbase?&nbsp;<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Where are your funds sourced from?&nbsp;<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">What is your current occupation?&nbsp;<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Who is your current employer?&nbsp;<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">What are the last four digits of your social security number?&nbsp;<\/span><\/strong><\/li>\n<\/ul>\n<p><span style=\"color: #000000; background-color: transparent;\">You will receive instructions on how to verify your identity, and then you can link a payment method. Once that is done, the setup is complete. You are ready to transfer funds into your Coinbase account, so you can purchase cryptocurrency.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">Step 2: Buy Ethereum<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">Coinbase makes the process of&nbsp;buying cryptocurrency simple. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">For the purpose of investing in DeFi, choose the Buy\/Sell option, and then select Ethereum. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">Choose the amount you wish to purchase, review your order, and click \u201cBuy Ethereum.\u201d That\u2019s it &#8211; you now own cryptocurrency, and you are ready to invest in DeFi.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">Step 3: Set Up TokenSets Account<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">Setting up a new TokenSets account is easier than creating your digital wallet with Coinbase. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">The two platforms have a partnership that makes it possible to log in directly from Coinbase Wallet (and Wallet Link). <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">Alternatively, you can create your account by entering basic information and verifying your email address.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">Step 4: Transfer Ethereum To TokenSets<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">Moving Ethereum from Coinbase to TokenSets requires a link between the two. This is referred to as a Web3 account. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">Your account has a public web address that begins with the characters 0x &#8211; for example: 0x89205A3A3b2A69De6Dbf7f01ED13B2108B2c43e7.&nbsp;<\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">Copy your web address and paste it into the appropriate&nbsp;field on the transfer screen. <strong>Typing the address manually is not recommended, as sending your cryptocurrency to the wrong address is often irreversible. <\/strong><\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">The transaction may take a few minutes to complete. You will know everything has gone through properly when you see the cryptocurrency in your Web3 account.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">Step 5: Buy DeFi Pulse Index at TokenSets Using Ethereum<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">Once your Ethereum is accessible from your Web3 account, you can trade. A popular option is the DeFi Pulse Index, which is composed of a <a href=\"https:\/\/www.tokensets.com\/portfolio\/dpi\" target=\"_blank\" rel=\"noopener\">select group of DeFi tokens<\/a>. As of early May 2021, the DeFi Pulse Index includes&nbsp;the following:&nbsp;<\/span><\/p>\n<ul>\n<li><strong><span style=\"background-color: transparent;\">Uniswap<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Aave<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Maker<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Compound<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Synthetix<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Sushi<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Yearn<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">REN<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Balancer<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Loopring<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Kyber<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Cream<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">Harvest<\/span><\/strong><\/li>\n<li><strong><span style=\"background-color: transparent;\">mStable Governance<\/span><\/strong><\/li>\n<\/ul>\n<p><span style=\"color: #000000; background-color: transparent;\">Each of these meets stringent criteria for inclusion, and the DeFi Pulse Index is weighted by their capitalization. <strong>DeFi Pulse Index has a market cap of approximately $176.67 million.<\/strong> Since its October 2020 launch, it has gone from $78 to more than $600.&nbsp;<\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">To invest in the DeFi Pulse Index, navigate to the Index\u2019s page on TokenSets. You will see the option to buy, and then you can choose the amount and payment method. <\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">Once you have approved the transaction, no further action is required. You can leave your shares alone to (hopefully) grow, or you can sell at any time by following the same steps.&nbsp;<\/span><\/p>\n<h2><strong style=\"color: #000000; background-color: transparent;\">Invest in DeFi: The Bottom Line<\/strong><\/h2>\n<p><span style=\"color: #000000; background-color: transparent;\">DeFi is growing, and those who invested over the past six months have seen significant returns. <strong>Proponents of this new direction in the financial world believe DeFi is the m<\/strong>arket\u2019s future, and growth will continue to trend upwards at a rapid rate.&nbsp;<\/span><\/p>\n<p><span style=\"color: #000000; background-color: transparent;\">However, no investment is risk-free, and for the time being,<strong> DeFi is considered particularly&nbsp;high-risk<\/strong>. Its rapid rise brings back images of other big bubbles that eventually burst, resulting in big losses. As you invest in DeFi, keep the risks in mind. High-risk can mean high rewards but be prepared for the possibility of losing some principal.&nbsp;<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>How To Invest In DeFi: Decentralized Finance (DeFi) is the most-talked-about disruptor in the financial services industry. It\u2019s based on blockchain, the technology behind cryptocurrency like bitcoin and Ethereum\u2019s Ether, and it permits users to access financial services without going through traditional channels. Gone are the days when brokerage firms and commercial banks controlled every [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":466053,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[22],"tags":[],"class_list":["post-466048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/financhill.com\/blog\/wp-content\/uploads\/2021\/05\/how-to-invest-in-defi.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9czeV-1XeU","_links":{"self":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/466048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/comments?post=466048"}],"version-history":[{"count":5,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/466048\/revisions"}],"predecessor-version":[{"id":466057,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/466048\/revisions\/466057"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media\/466053"}],"wp:attachment":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media?parent=466048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/categories?post=466048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/tags?post=466048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}