DeFi Part 10: Getting Started in Decentralized Finance

At this point, you’re familiar with most of the popular DeFi applications, their advantages and drawbacks, and a general understanding of how this space operates. Now it’s time to take the leap and join this fascinating new frontier of finance.


At this point, however, many aspiring DeFi investors are intimidated by the steep learning curve involved. There are so many applications and more than a dozen ways to do everything.


With that in mind, we’re going to highlight the primary resources you need to get started. This way you’ll know enough to take the plunge and learn as you go.


Table of Contents

  • Things You Need to Get Started
    • Buy Cryptocurrency
    • Transfer to Your Wallet
    • Get on Decentralized Exchanges
  • Importance of Social Media
  • Key Takeaways

Things You Need to Get Started

There are three primary things you need to get started. Let’s consider each below.

1. Buy Cryptocurrency

It all starts with the purchase of cryptocurrency. Just like the real world, you need money to make any trades happen, and cryptocurrency happens to be the gateway currency of this space.

If you’ve never bought a cryptocurrency before, here are some ways you could go about acquiring it:

  • Popular Exchanges: There are many exchanges that let you not only trade cryptocurrencies but also buy some for the first time. You can trade your fiat currency by paying with a bank transfer or debit/credit card. Some of the most popular exchanges with support for fiat include Coinbase, Binance, and Crypto.com. Each of those is a legitimate and regulated organization. So your risks are minimal as far as the actual purchase is concerned. However, this also means that you’ll probably have to verify your identity due to the Know Your Customer and Anti-Money Laundering legal requirements.
  • P2P Exchange: Using centralized corporations that track your data to buy cryptocurrencies is probably the most ironic part of this experience. However, if you’re a staunch believer of decentralization, you can opt for P2P exchanges, which are short for person-to-person. The system will match you with someone who wants to sell the cryptocurrency that you want to buy. Most platforms like Paxful and Binance’s P2P offer escrow services, so you’ll have some protection. However, you can also cut out these platforms by finding someone locally and buying directly from them.
  • Crypto ATMs: There’s a network of ATMs around the globe that support the sale and purchase of Bitcoin and other popular cryptocurrencies. If you’ve ever used an ATM, you’ll have no issue figuring these out.

2. Transfer to Your Wallet

While exchanges like Binance and Coinbase come with built-in wallets where you could store your assets, it’s generally a bad idea to let your crypto sit there. These are custodial wallets, which means the company is holding the assets on your behalf. Legally speaking, however, they could use one of many reasons to confiscate your entire portfolio and lock you out of your account. The internet is filled with horror stories of people who went through this ordeal because they triggered some red flags in the exchange’s systems.

This is where non-custodial wallets come in. While there are more sophisticated options available, you can use user-friendly options that install directly on your phone or into your browser. This way you’ll have easy access whenever you need them. However, you should only use this wallet for temporary storage for regular transactions.

MetaMask and Phantom are two of the most popular non-custodial wallets. Through intuitive applications, these services let you get your wallet up and running in minutes. The main thing to remember, quite literally, is your seed phrase. This is a 12-word sentence that lets you log into your wallet without having to remember the insanely long private key.

We cannot stress the importance of remembering your seed phrase enough. If you lose it, there’s no customer support that could restore it for you. You’ll lose your wallet along with all the assets on it. It’s set up this way so even the creators of these services could not access your wallet if they wanted to.

3. Get on Decentralized Exchanges

This is the most important part. For you to take advantage of the applications and protocols we’ve highlighted in this series so far, you’ll have to enter the wild world of emerging DeFi assets and protocols. Decentralized exchanges are your gateway into it.

Centralized exchanges like Coinbase only carry the most popular and successful cryptocurrencies only. To unlock the opportunities with the most lucrative upsides, you’ll have to interact with decentralized exchanges and convert your popular cryptocurrencies into emerging tokens. Many people use Ethereum as the primary cryptocurrency.

To exchange ether tokens, you’ll first have to transfer them from your chosen centralized exchange (from step one) to a non-custodial wallet. We recommend either MetaMask or Phantom as both are tested and trusted.

Next, you’ll have to connect your wallet with the decentralized exchange. This is easy. All you have to do is click on the “Connect Wallet” or similar button on the exchange’s website. This will trigger a pop-up prompting you to give wallet access. Once you approve the request, you can start exchanging assets without any hassle.

However, you should only connect your wallet to trusted applications. Always make sure that you’re on the right website. You don’t want to give wallet access to a fake website as it could steal your assets.

Importance of Social Media

With the technical side covered, let’s talk about the other aspect of getting started. Almost all the innovation in DeFi happens across a select few social media networks. So if you want to stay on top of emerging opportunities and secure the earliest buy-in into a project, you cannot ignore these channels.

Here are the primary avenues you’ll have to familiarize yourself with:

  • Twitter: This is the network of choice for all types of projects, from crypto tokens and NFTs to protocols and everything else in between. People prefer privacy in this space so don’t let cartoon avatars as profile photos mislead. Some of the brightest minds in this space go with pseudo identities.
  • Discord: Most projects, especially those with gaming/NFT elements use Discord for ongoing collaboration and communication. Discord is like Slack for gamers. But it’s also widely used in the crypto and DeFi space now.
  • Telegram: This is the most intimate line of communication between creators and their community. By joining a Telegram channel of a project, you become a part of their tribe and get regular updates. That’s what most teams use Telegram for.

Key Takeaways

  • Centralized exchanges are great for converting fiat currencies into cryptocurrencies. But if you want to invest in emerging projects, you’ll have to interact with decentralized exchanges.
  • Getting started is as simple as acquiring some popular cryptocurrencies, transferring to a non-custodial wallet, and then connecting with a decentralized exchange to invest in up-and-coming projects.
  • DeFi and crypto in general are full of people who prefer privacy. As such, don’t let cartoon avatars put you off.
  • The vast majority of interactions, from community to team collaboration, happen on social media. Twitter, Discord, and Telegram are the three primary channels that you should consider joining.

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