DeFi beginner? Here are some tips to get you started!

Decentralized Economy: Earn high returns from cryptocurrencies securely and easily. Celia Zeng, DeFi asset manager at capitalexplains how it works.

Decentralized finance, also known as DeFi, has received a lot of attention from investors due to the increasing global prevalence of cryptocurrencies.

What is DeFi and why do we hear so much about it these days?

DeFi is a collective term for financial products and services that are available to anyone with an Internet connection. The goal of DeFi is to eliminate third parties involved in all financial transactions and create a whole new financial system, completely independent of traditional economics.

Over the last year, DeFi has really taken off. Total Value Locked – the total value of assets locked in for transactions – increased from $ 700 million in December 2019 to over $ 200 billion in early 2022. This is Greece’s GDP in 2017. That’s probably why you also heard about DeFi last year. It is developing into an important branch of the economy and in a very short time.

So if you want to invest in DeFi now, I have gathered a few tips for you below that I learned as a DeFi wealth manager. Here we go!

Invest in cryptocurrencies with large market values

According to CoinGecko, there are over 13,000 different cryptocurrencies. Most of these projects are unlikely to succeed. Think of small market value tokens as risky startups – they come and go often overnight.

So if you want to play safe, invest in cryptocurrencies with a large market value. An example is Bitcoin, which remains the largest market value. Cryptos with a large market value have usually existed for a long time and have proven themselves.

Decentralized economy: Utility is crucial

There are a number of cryptocurrencies working on promising projects that could potentially revolutionize the FinTech world. So if you want to assess the value of a crypto project, take a look at its usefulness. In other words, ask yourself, “What problem in the real world can this project solve?”

The advantage of Bitcoin is clear – it is supposed to be a decentralized digital currency. There is no fund, company or person in control of the protocol. Although its applicability is obvious, bitcoin is moving towards becoming the main currency of the internet and perhaps one day the whole world.

Ethereum is one of the best cryptocurrencies in terms of utility due to the booming NFT market. Both NFTs and DeFi support contributed to the sharp rise in the network. You can easily buy Bitcoin and Ether on all crypto exchanges.

It is important to understand the benefits behind the projects. However, it is also true that many projects have no benefit at all. A recent report showed that half of the cryptocurrencies in the top 100 by market value have no use. So do your research before investing in tokens not listed above.

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Earn high returns on your cryptocurrencies

The beauty of cryptocurrencies is that you can not only enjoy the appreciation that comes from holding crypto. You can also earn high returns from them in a safe and easy way.

How does it all work? Most major crypto exchanges, such as Block-Fi, Cabital or Coinbase, allow you to buy cryptocurrencies with fiat money. You then save this on the platform. Now you can sit back and get high interest rates.

Staking offers crypto holders a way to make their digital assets work for them and earn passive income without having to sell them. You can think of betting as the crypto equivalent of a high return savings account.

Ethereum (ETH) is one of the most popular cryptocurrencies today, although it is not strictly a cryptocurrency in itself. ETH efforts require a minimum amount of 32 ETH. Rewards vary, but it is assumed that the return for betting ETH varies from 5 – 17% annually.

Decentralized finance and stack coins

When it comes to betting stack coins, both USDT and USDC are considered to be the most suitable options. One of the main benefits of betting these stack coins is the interest rate. You can get up to 12% APY. This makes it possible to beat inflation and at the same time create profits.

In addition, it is safe to bet USDT and USDC. As the name suggests, these stack coins are pegged to the US dollar. This makes them less volatile than typical cryptocurrencies. So if you are looking for a safe way to bet cryptocurrencies, stack coins are the right choice.

The high interest rates on stack coins allow you to invest in global positions. This finally gives the individual investor the opportunity of a lifetime to invest in projects that were previously only available to hedge funds and wealthy individuals.

Cryptocurrencies will only grow this year, so the possibilities in the DeFi space seem almost endless. To be a part of this digital revolution I would buy some bitcoin, ether and stablecoins and bet them on a crypto exchange. How to achieve passively high returns.

About the author

Celia Zeng is the DeFi asset manager at Cabital. Cabital simplifies investing in the crypto world while leaving behind the noise and unnecessary drama that comes with it.


All information contained on our website has been examined to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action taken by the reader based on the information on our website is entirely at your own risk.

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