New to DeFi? Here Are The Top 5 Things a Crypto Newbie Needs to Know
You have done your research on the web, Reddit, or Medium. You have joined a few blockchains, crypto, and DeFi project communities on Telegram. You are following some key accounts on Twitter to keep abreast of market news, trends and fluctuation. It's fair to say that you are ready to take the next step and actively participate in the cryptocurrency and DeFi landscape.
Here are five key things you should know.
1. There are different types of DeFi Wallets
Not all crypto wallets are equal. Some are very simple and serve their purpose — they store public and/or private keys for crypto transactions. The keys keep track of what crypto you own, spend or receive. A public key gives others the ability to make payments to you, and the private key lets you spend from that address.
Most beginners start their journey with a custodial wallet which is when private keys are stored by a third party. Since custodial wallet operators store the private keys, they have full control over the users’ crypto funds. Users are able to send or receive payments from the custodial wallet, but they are not directly responsible for storing the crypto funds and keeping them safe.
A non-custodial crypto wallet lets you keep the related private key and have full control over your crypto funds. With a non-custodial wallet, you are your own bank.
Eidoo operates under this premise. You own your private keys and are the only one responsible for your funds and keys, so data breaches are less likely, but if you lose your key, there is no way to get a backup or gain access to your wallet again.
Eidoo wallet supports LTC, BTC, ETH, and all Ethereum-based tokens, such as ERC-20 and ERC-223. The wallet is accessed via the Eidoo app, which hosts an array of other opportunities.
2. Decentralized Exchanges offer more variety
Once you have decided on a wallet, it is worth noting that to trade currencies, you will need an exchange to do it on. You will, of course, need to exchange your fiat money for crypto to start with. Exchanges are used to buy and sell crypto. There are centralized and decentralized exchanges.
Centralized exchanges rely on a trusted and a verified third party to conduct and allow transactions, similar to a bank. Decentralized exchanges take out the middleman and utilize peer-to-peer exchanges, so a third party never holds the currency or funds, but it’s the smart contract that regulates the validation of transactions.
Eidoo has integrated swap functions from some of the best DEXes in the market such as Balancer, Kyber Network, and Uniswap. Also, thanks to the Eidoo WalletConnect integration, it is basically possible to interact with all the protocols available in the ethereum crypto space.
The eidooCARD is linked to the Eidoo wallet via the app. Apart from doing the exchange from fiat into crypto, you can use it as you would any other personal debit card. The eidooCARD is backed by Visa and available in the European Union and the UK.
Spending your crypto has never been easier, and the exchange from one currency to another never as speedy or seamless!
3. Research is key when exploring DeFi
In explaining what crypto wallets do and are capable of, we alluded to security and the importance of your keys, especially in the case of non-custodial wallets. It is essential that any information relating to your keys and their accompanying seed phrases, which could help access your wallet, be kept safe. With the Eidoo wallet, the security of your assets is in your hands.
Furthermore, as you start to explore crypto and the world of DeFi, be careful where you lend from, with whom you stake and mine, and which projects you actively invest in. Research is essential, and tracking and monitoring news and trends is a big part of the crypto culture. Always look into how crypto and DeFi projects run their projects, treat their community, and how transparent they are. Also, look into their code and see how often the code is updated (if listed) on Github.
Eidoo has been around since 2017, and we believe that the proof is in the pudding — check out one of our latest blog posts on the Eidoo journey so far. We think you will see the ecosystem we have been building is rock solid.
4. DeFi is the gateway to a whole new world of finance
Decentralized Finance (DeFi) encompasses digital assets, decentralized applications (DApps), financial smart-contracts, and projects/protocols that run on public blockchains. The financial assets and applications are completely decentralized, transparent, permissionless, trustless, and programmable. DeFi takes the crypto sphere up a notch and fulfills crypto purists' desire for true decentralization of financial services.
Below are a few examples of Defi’s offerings and potential. We could speak for hours about this revolutionary environment but in a nutshell, DeFi broadens the financial services offered in the crypto environment with the possibility of no interest or no-collateral loans, flash loans, and even mortgages. Interest for your deposits can be very generous, returns can reach up to a three-figure percentage.
How is this possible? There are a few components involved:
DeFi benefits from the composability of different protocols, where the success of one becomes the success of many.
Liquidity farming is a way for projects to make themselves known and is a great use of automated market-making.
Automated market-making generates trading fees which are redistributed to token holders so the community shares in the success.
DeFi purists promote code controls access to financial resources, not a central institution or government. People who haven't been able to qualify for certain financial services may have the ability to do so now. That said, DeFi is new terrain and although it has massive potential, as we recommend above — do your research about the DApps you will use.
Inside the Eidoo app, we have several DeFi offerings that include various incentivized yield farming strategies. Yield farming is also called liquidity mining, and this activity allows you to earn "interest" on the amount of money you put into a liquidity pool.
5. DeFi is easy with Eidoo
Eidoo is the perfect choice for a crypto newcomer; the ecosystem we have built over the last four years has grown organically and exponentially according to market demands and because we have an active and robust community. We are known as the Swiss Army Knife of crypto offerings because as the industry evolves, we ensure that we do so with security and safety in mind.
As you now know, the Eidoo app hosts the wallet, an exchange, is linked to the Eidoo Visa debit card, is secure, and offers access to DeFi offerings.
The app also features fiat off- and on-ramp functions. With INSTANT SEPA, European users can buy digital assets in minutes instead of hours, with a quick confirmation of $DAI purchases for low to no fees. Conversely, you can swap your DAI, USDT, USDC, and EURM tokens for Euros using our in-app wire transfer and pay only a 1% cashout fee.