DeFi (or Decentralized Finance) is a revolutionary new way to send, save and spend. It aims to give people more control over their money and lower the barriers to new financial opportunities. DeFi is not a token, a company, or a stock to invest in. It's a whole new financial system.
Here's how to get started with DeFi in just a few steps.
There are three main things you'll need:
It's not finance without money, and it's not DeFi without crypto. Fortunately, getting your hands on some crypto is easier than ever nowadays.
As DeFi mainly runs on Ethereum, we recommend first getting some Ether (ETH), as you can use this to trade, invest, and pay for transactions.
Most people buying crypto will either use an exchange, or a payment processor (like Moonpay or Sendwyre). For either, if you are making large purchases you'll need to do KYC (Know Your Customer), which involves some simple ID checks.
2. A wallet
You can think of your crypto wallet like the banking app on your phone. A good wallet should let you easily and securely store, send, earn interest and invest.
When choosing a wallet you should check whether it is custodial, or non-custodial. With a non-custodial wallet you have full control over your assets.
Another choice is between hardware wallets (basically a memory stick-type device) or software. The original mobile wallets were prone to hacks and poor UX, so some people preferred to buy a hardware wallet to secure their crypto. Fortunately, with the rise of a new generation of wallets, such as Argent, that are built on smart contracts, you can combine top tier security with the convenience of an app.
Argent uses features such as daily transfer limits, recovery without a seed phrase and easy locking to help protect you. You can read more on our security model here.
3. A little knowledge
We're dealing with the future of finance here, after all. Although you don't need to be an expert, it helps to understand the basic terms and to do your own research on the risks (and opportunities).
Also, you should see this as an ongoing process, so don't hold off just because you're still learning new things.
Once you have a wallet, some crypto and a bit of understanding, you're ready to try out some investment options. We've come up with some ideas to get you started:
PoolTogether is an incentivized savings game that runs entirely on Ethereum. The assets in each pool accumulate interest through Compound, a lending protocol. The interest is then won by a ticket holder, picked at random, each week.
How is it no loss? The prize comes from the interest generated, not the deposits. So you can withdraw your full deposit any time.
You'll need some Dai (or USDC) to buy tickets. Dai is a stablecoin, which means its value tries to be as close as possible to the US dollar. If you're using Argent, all you need to do is tap 'Exchange' from the wallet screen, then select 'Dai' to get some.
For a guide on using PoolTogether in Argent, see here.
Compound is a decentralized finance (DeFi) project that lets people earn interest on their crypto assets. The interest comes from others paying to borrow. In contrast to traditional bank savings accounts and loans, Compound is entirely autonomous and open source. There are no middle-men.
For a guide on using Compound in Argent, see here.
When you invest with Compound, you will also immediately start earning the COMP governance token as well. This is a great opportunity to learn more about what governance tokens are. Read our guide to COMP here.
TokenSets brings automated asset management to crypto. There are two types of trading strategies available: Robo Sets (which are based on algorithms created by the Set team) and Social Trading Sets (which are built by a trader).
Both are decentralized - meaning you remain in control of your assets. To get exposure to a strategy you simply buy a token that represents a portfolio of assets managed according to that strategy.
For a guide on using TokenSets in Argent, see here.