3 Things To Do In DeFi

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Solid Week For Digital Assets

3 Things To Do In DeFi

This week we thought we would build on last weeks article, Metamask: A Step by Step Guide. If you don’t have a Metamask wallet yet we would recommend going through last weeks email again.

Today we are going to use an exchange, set up a dollar savings account and invest in an index. All without the need for complicated recourse deterring guarantees of intermediaries. The systems you will use today use mathematics and computer science to achieve the same guarantees you are afforded at traditional financial institutions.

You will notice that you don’t need anyone’s permission to interact with these financial networks, that you don’t need to reveal your identity to these apps and that control of your funds is truly yours and yours alone.

The future of financial services starts here. Yes, many of these still look like a toy and we won’t deny that there is an enormous amount of work to be done before these networks reach functional equivalence with TradFi incumbents.

We hope you enjoy this tutorial and that it serves as a glimpse of where finance is going.

Make An Exchange On Uniswap

Go to https://uniswap.org/ and click on Launch app.

Once in the app, click on connect wallet in the top right-hand corner and confirm the connection in the MetaMask dropdown.

Once your wallet is connected you are ready to exchange ETH for USDC.

Determine the amount of ETH you would like to exchange for USDC.

Press Swap, you will now be met with a full description of what the transaction entails. How much ETH you are selling and how much USDC you will get in return, as well as other important information such as the slippage you will incur and potential price impact you may have. Once you are happy with the information press Confirm Swap.

You are now one step away from completing a successful swap. Once you have confirmed the swap you will see a MetaMask notification pop up. This serves as your last final check and tells you what gas fees you can expect to pay. Click Confirm.

Uniswap will prompt you to add USDC to your MetaMask wallet, we suggest that you do this.

Well done for getting this far, you have completed your first exchange.

Set Up A Savings Account on Compound

Go to https://compound.finance and click on the app (top right corner).

Once in the app click on Connect Wallet in the top right-hand corner and confirm the connection in the MetaMask dropdown.

Once your wallet is connected you are ready to set up a US dollar savings account.

Firstly inspect the interest rates on offer for stablecoins (DAI, TrueUSD, USDC and USDT)

For simplicity sake, we are going to go with USDC (USD Coin). Click on USDC, a pop up will prompt you to enable your MetaMask wallet to allow funds to be sent to Compound smart contracts. Click enable and confirm in MetaMask.

The next step is deciding on how much you want to deposit. Here we’re going to deposit $100 of USDC, we’re expecting to earn around 1,99% in interest and an additional 1,28% of invested capital in COMP token (we will discuss this in a separate article).

Click supply when you are happy with your deposit amount. Inspect the gas fee and confirm your transaction on MetaMask.

Congrats, you just opened a US dollar savings account in cyberspace earning 2% a year in interest and an extra 1,2% in rewards.

Invest in a DeFi Index Fund with Index Cooperative

Go to https://www.indexcoop.com/ and connect your MetaMask wallet.

Once connected click on products and select the “DeFi Pulse Index”. Information about the Defi Pulse Index (DPI) should be on display.

Decide how much ETH you would like to invest in the DPI.

Click buy and confirm in your MetaMask wallet.

Congrats you have now successfully invested in a DeFi index fund. However, there is one more step. You will need to add the DPI to your MetaMask wallet.

Adding assets to your MetaMask wallet.

  1. Go to https://www.coingecko.com and search for the asset you want to add to MetaMask. In this case, we are searching for Defi Pulse Index or DPI.

  2. A successful search will bring you to the DPI page and display all relevant information pertaining to the DPI.

  3. You want to copy the contract address of DPI.

    1. Once copied, open your MetaMask, scroll down to the bottom and click on “Add Token”

    2. Select custom token and paste in the copied contract address.

      1. Click next and DPI will be viewable in your MetaMask Wallet.

Well done if you were able to perform all three tasks. If you have any problems in completing this tutorial please drop us an email and we will be happy to assist.

Notable Articles and News Stories This Week:

Federal Reserve Keeps Rates Near Zero, Still Sees Inflation as 'Transitory'

On Wednesday, after its two-day monetary policy meeting, the Fed's Jermone Powell announced that they will be keeping rates near zero and will continue their asset purchases amounting to around $120 billion a month. When asked what would prompt the Fed to wind down its asset purchase program, Jerome responded with, "we monitor a broad range of data about different aspects of the labor market," Powell said. "We have some ground to cover … I would want to see some strong jobs numbers."

Read more of what he said here

Uniswap's Growth Pushes DeFi to Three Million Total Users

Users of Decentralised Finance (DeFi) protocols are now around the three million mark. We have witnessed a 160% rise in users in 2021 alone. This is a staggering growth figure. This has primarily been driven by the popularity of Decentralised Exchanges, otherwise known as a DEX. The number of users of a project like Uniswap has grown by around 256% this year and now accounts for about 63% of the total DEX market share. Uniswap has rivalled many centralised counterparts when it comes to 24-hour trading volume and shows how popular these services are becoming. 

Read more here

IMF Intends to 'Ramp Up' Digital Currency Monitoring

According to a report by Reuters, the International Monetary Fund, or IMF, plans to "step up" its monitoring of digital currencies. As published in an IMF paper Thursday, this intent details how the fund plans to "manage this far-reaching and complex transition" toward a digitised economy.

"Rapid technological innovation is ushering in a new era of public and private digital money," the report reads, highlighting the benefits of digital assets. "Payments will become easier, faster, cheaper, and more accessible, and will cross borders swiftly. These improvements could foster efficiency and inclusion, with major benefits for all."

Read more about the story here

Whilst we all have the option to look, to seek to understand, it’s often easier not to. Bitcoin, Ethereum and distributed ledger technology are complex systems that require significant due diligence. At Etherbridge, we aim to lower the barriers to understanding this fast-growing digital economy.

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This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.