DeFi you are the future

I've been interest in crypto currency's (BTC/ETH) etc) for a few years, I had (and sold) some coins in the 2017/2018 boom and crash, got scared due to its volatility and then dived back in again last year during the pandemic.

I kept hearing the word DeFi, but never really understood what it was, just that people kept saying it was the future, so this week I've decided to have a bit more of a deep dive into it.

The thing that really got me interested was watching the gas fee's on the Ethereum network go crazy a couple of weeks ago (I think at one point the average fee was hitting over $20). If you don't know what a gas fee is then in simple terms its how much it costs for a transaction on the Ethereum network.

While is was reading about the high gas  fee's I started reading about the Polygon network. This is pretty much a copy of the Ethereum blockchain, but with the goal to make the transactions much faster, and a lot cheaper. Like much cheaper, less than a 1c in most cases. This opens up the world of DeFi to normal retail investors, as moving you money into the DeFi exchanges and swapping your assets no longer costs a fortune.  

My first DeFi Transaction

So first of all I need to get some of my collateral onto the Pollygon network, so you need a bridge. I had some USDC on the BSC that I could play with, so the first thing I did was send that to Metamask, that was probably the first expense as I had to pay about 30c or something to get it into there.

Next I needed to swap the coins onto the Pollygon network. I was originally going to use bridge.orbitchain.io but that only supports a small subset of coins on the BSC that I didn't have. After a bit of searching I came across xpollinate.io. From here you can go from the BSC to the Pollygon network with one of the stablecoins. Win!

NB - There was a slight issue the first time I tried as there wasn't enough liquidity for my coin. If thats the case give it a bit of time and try again later

Once I'd told it to swap, I had to allow the transaction in Metamask, and a few minutes later (I think I had to wait about 5 minutes) I had the USDC sat in my wallet in the Pollygon network, sweet!

DeFi Exchange

Next I needed an exchange. Now, as I'm new to the space I wanted to start out with something as low risk as possible, where I could just add my assets to a Liquidity Pool and let them earn some interest, and if possible some staking rewards as well.
My first thought was to use Aave as I had heard lots of people talking about them on reddit/youtube. Using them you can add your assets to an LP, and then get a loan out using your staked asserts as collateral that you can then go and invest in other project. At the time I was looking you also get paid to take the loan out more than the interest on the loan! While this all seemed tempting I wasn't really ready to get that deep into it yet. That's when I stumbled across polygon.curve.fi

So curve is pretty much a LP for stablecoins, you can stake on one of their various pools, getting a reasonable APY and also rewards (such as Matic and Crv). This looked like it was probably what I was looking for. Decent APY and reward tokens as well.

The next part is where DeFi comes into its own. When you want to use one of these services, there's no sign up, no verification, no nothing. Its not like Coinbase or Binance where you need to get verified before you can buy anything. All you need to do connect your wallet and your good to go, it really is that simple. The only thing with curve is the interface takes a bit of getting used to, its a bit like an old school console application!

So I simply picked a pool, and deposited my USDC tokens into it, and that's it! My tokens are now in the LP pool, earning interest and I'm also earning Matic and CRV on top of them as well. I can easily withdraw my assets anytime I want, or just go and claim my rewards if I want them.

Be your Own Bank

So now using services such as these, you can effectively be your own bank. You Choose where you want to invest your money, where you loan you money out to based on the projects/companies that you like and serve your best interests. Obviously its still early days, and you have to be very carful where you deposit your money but going forward this is giving the average person much more control of their own finances.
Oh, and this is not financial advice, always do your own research!

Update - So, since writing this originally you can now withdraw from Binance directly to the polygon chain, so you don't have to mess about with a bridge anymore, game changer!

This only seems to be available for the Matic token but this doesn't really matter. When you go to withdraw now just pick Matic, input your wallet address, pick the Matic network and boom!

Compaired to normal polygon transactions the fee is a bit high (10c) but that's nothing really compared to the ETH network. It's a bit of a pain at the minute depositing onto Binance as they have been blocked by quite a few banks, but you can always transfer your funds in from other exchanges.