Taking your first steps in DeFi

To summarise DeFi in brief, it offers products and tools for anyone in the world to leverage sophisticated financial applications with minimal capital, and without having to trust a third party. DeFi is for everyone, not just Wall St traders.

DeFi’s ecosystem is composed of several sectors, with platforms offering one, or a combination of these tools:

  • Lending and borrowing cryptocurrencies
  • Decentralised exchanges (DEXs)
  • Derivatives
  • Insurance
  • Asset Management

What is TVL?

If you’re reading about DeFi, you will probably see that many platforms use the abbreviation TVL. This stands for Total Value Locked, and it means that when funs are deposited into a DeFi protocol, it adds to the TVL. You could say the amount of a project’s TVL shows its popularity.

You need crypto for DeFi

If you’re joining a DeFi platform that runs on Ethereum, as many do, you’ll need to own ETH, the Ethereum network’s token. So, you will need an account on a crypto exchange, such as Coinbase, Kraken or one of the many others available.

Once you’ve purchased your ETH, you’ll also need an Ethereum wallet, such as Metamask. It’s very important to note that you must store your secret recovery phrase somewhere secure. If you forget a password for your wallet, there’s no way to recover it. You can now send ETH from your exchange account to your ETH wallet. Now you can interact with a DEX.

Connect to Aave or Compound

Aave is one of the more popular DeFi lending protocols, and one of the ones available on Creditum. You can connect a Metamask wallet (or similar) to Aave, where you can deposit stablecoins, such as DAI and USDC, bought with your ETH. This allows you to lend them and earn interest from your loan.

Creditum also uses Compound, which alongside Aave are two of the most trusted DeFi protocols. As users progress in the DeFi sector, they may move onto yield farming, which allows you to earn an added return on your capital for completing value-added actions in various DeFi protocols.

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Creditum is the mobile application integrating regular cash with Crypto, Holding, Buying, Exchanging and Spending

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Creditum.io

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Creditum is the mobile application integrating regular cash with Crypto, Holding, Buying, Exchanging and Spending

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