How to be a smart investor in #Defi if you are a newbie

So you finally decided to take the leap of faith and get some crypto because you heard about bitcoin going over $50K, DodgeCoin was promoted by Elon Mask and Coinbase IPO.

You created the Coinbase account and now what?

Well first of all, Coinbase is the most expensive place to buy crypto, so don’t buy any tokens there. Instead buy USDC, which is their stable token and it will cost you $0 to aquire it. USDC is a stable token because pegged to a $, so it keeps its value at all times no matter what. It will take you up to 7 business days to actually receive funds in your Coinbase wallet so you can send it. Sending $25K will cost you around $20 given the gas fees right now.

Once you receive it, send it to your MetaMask Wallet. MetaMask is a decentralized wallet not connected to any centralized exchange so your transactions are private. MetaMask works with Google Chrome as a plug in. Download it here. Read the FAQ so you know how to use it. You need wallet such as MetaMask as this is a Web 3 wallet that can connect you to the world of #defi.

IMPORTANT!

Learn how to use MetaMask and security around it as if you loose your funds, seed phrase, connect to phishing site, or send funds that get lost, nobody will help you recover them. They are lost forever!

You are responsible for the security of your funds!

My favorite site to swap tokens or purchase one for another is Sushi. Please do not be alarmed by all the food and other strange names in Sushi or #Defi, its gamified and its fun so go with it!

Sushi is one of the largest Decentralized Exchanges (DEX) that does not require you to register and go through KYC(Know your customer) process that is required to do on centralized exchanges; so all you need to do is connect your wallet and exchange tokens.

So once you send USDC to your MetaMask wallet (do not forget to add Custom Token in MetaMask for it, it only has ETH automatically), you can exchange USDC for ETH as on the screen below by choosing SWAP on navigation menu. You can easily create custom Token without knowing the token contract address as MetaMask has top tokens pre-filled. However new tokens, LP tokens etc, you will need to know the address (more on that later).

You will need to Connect your wallet, Approve the transaction and do the actual SWAP. You will do 3 steps, and for last 2 you will pay fees.

• Connect the Wallet- FREE (this is where you are connecting your MetaMask Wallet to Sushi DEX)
• Approve transaction- Sushi Fee (This is where Sushi charges you a fee for using their pool to exchange tokens. This fee is split between the Liquidity providers who put their USDC and ETH into this pool)
• SWAP -Network Fee or gas fee (Fee paid to Ethereum network)

Once you SWAP, do not forget to create custom token in MetaMask so you can see your USDC like below

Now you can have your assets work for you. First is to put your funds into a Liquidity pool so you can earn a nice APY. Sort of like a savings account for your crypto. So go to Pool menu, and search for USDC and ETH pool. Stable token pools are less riskier than any other ones; because you are protected on one side since stable is pegged to $1 at all times; and since the market right now only moves up, you should be ok with ETH.

When you are adding your tokens, you are adding liquidity to the USDC/ETH pool and you become an LP or a liquidity provider.

Click Supply and Confirm the transaction. This will cost you a network fee and you need to make sure you have enough ETH for this in your MetaMask Wallet. As you can see, I added $20 worth of USDC and the application matched it in ETH.

Sushi is what is called AMM (Automated Market Maker). There is no order book here and there is no match that happens; so you are providing funds on both sides of transaction. Please keep in mind to earn serious APY, you need to put in serious $. But please be sure to invest responsibly and you are not putting in more than you can afford to loose.

You are now a proud LP in the sushi rewards pool and you are earning SLP token, here is my position below. You can leave this here or you can make the SLP work for you and stake it into another rewards pool that takes SLP token

Now you can go and invest SLP into another protocol that can you give you a great APY. I am going to Force DAO (Disclaimer: I am a contributor to this project)

On Force DAO site, navigate to Strategies and connect your wallet. Deposit SLP by clicking Deposit or +. I have already SLP in the vault, so mine is showing under Active Positions

In Deposit window, choose Max and it will port all your SLP tokens. Note ETH/USDC combination here represents SLP. Click Deposit. In the next step you have to approve the transaction in MetaMask and pay the gas fee.

Now under Active Positions, you will see $50 SLP deposited as my position went from $69 to $109.

Harvest of rewards happens every couple of days so your earnings will be updated once that happens. Happy investing!