Learn how to invest in DeFi coins and tokens

Learn how to invest in DeFi coins and tokens
Learn how to invest in DeFi coins and tokens

Simply explained, DeFi is an umbrella word for a variety of cryptocurrency applications with the common goal of decentralizing finance through the use of blockchain technology.

DeFi coins were created to be used like money. Similar to how traditional fiat money can be used to buy products and services, cryptocurrencies like Bitcoin, Litecoin, and Ether have always been intended to be used to buy commodities.

Tokens are assets that can be paid for with coins, but the coins are supposed to be used for direct forms of trading. Tokens are often held as a way to earn interest or be sold, rather than used for transactional purposes.

Tether is the most popular cryptocurrency, followed by USD Coin and Shiba Inu. Also, some tokens exist only to have value, but others can only be traded. These assets are often based on the blockchain of a cryptocurrency such as Ether or Bitcoin.

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What you need to know about investing in DeFi coins and tokens

  • DeFi is expanding rapidly

By now, you have probably heard of Bitcoin and even know someone who has it. While various causes have contributed to its success, decentralized finance as a whole has seen comparable rapid development. The key growth factor of DeFi has been considered to be the number of total value locked (TVL). The value of all money associated with DeFi projects is used to calculate the growth rate of this indicator.

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We can see that the rise of DeFi between 2019 and 2021 was unparalleled by this metric. As of late spring 2021, a TVL of over $80 billion was reported. This has increased from a low of $1 billion in 2019.

  • DeFi is still in its infancy

Despite the growing interest in DeFi, the widespread adoption of decentralized finance is still a long way off. The market is dominated by highly experienced traders and individuals who know the industry well. Due to the late adoption of DeFi, regulation is still in the early stages of development. Regulation, like any other financial asset, is crucial to addressing concerns including market manipulation and value volatility.

There are several concerns to consider when investing in DeFi as it is still lagging behind in this regard.

As stated above, the existing risks of decentralized finance are mainly due to its lack of regulation. Here are some of them:

  • Cyber ​​Security Concerns
  • DeFi “Rug Pulls” is an example of online fraud.
  • The coins and tokens are used illegally.
  • Errors in technology and human error.
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What is a Rug Pull, exactly? This word refers to a fraud in which a shady exchange collects payments from people before closing the project and walking away with their money. Most of these threats, as well as this scam, can be mitigated through regulation. However, these are issues to watch out for in the meantime.

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DeFi is profitable

The money you will earn in the future is perhaps the most crucial element of an investment. Investing in DeFi coins and tokens allows you to earn more than you would with a standard banking partnership.

The possibilities of DeFi are almost endless

Trading DeFi tokens and coins is a novel method of making a lot of money in a short period of time, and the options are only limited by your trading preferences. Day trading, which is a higher risk methodology that uses liquidity and volatility to anticipate crypto prices, is one of the most prevalent methods of trading. Traders who want to buy and sell crypto on the same day use this short-term approach, as the name implies.

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There are a variety of options available under the banner of day trading, including:

  • trade in the range
  • High frequency trading
  • scalp
  • Arbitration
  • trading with bots

But this is just the tip of the iceberg in terms of how you could use this DeFi investment technique.

Coin staking begins with allocating your assets to a blockchain network to verify crypto transactions. To put it another way, you lock a part of your cryptocurrency for a certain period of time to maintain the blockchain and earn cryptocurrency.

  • Automatic Investment Plans

Automatic Investment Plans (AIPs) are a novel technique that allows you to choose or modify a basket of crypto assets and then set them to purchase at regular intervals. You can also use our “buy the dip” tool to buy during short-term buying opportunities. Crypto mining, yield farming, hodling and many more alternatives are available in addition to those described above.