Bitcoin is a decentralized digital currency that is based on blockchain technology. It allows for secure and transparent transactions without the need for intermediaries, such as banks or governments. This unique characteristic of Bitcoin has led many people to view it as a tool for enabling sovereign individuals, or individuals who have the freedom and power to make their own decisions and shape their own lives.
If you have already read the book The Sovereign Individual, you absolutely should. It provides a view of the world not commonly held among the ‘professional-managerial’ class.
Bitcoin, Digital Economy, and the Sovereign Individual
One way that Bitcoin enables a sovereign individual is by providing access to a global, digital economy. With Bitcoin, individuals can easily and securely send and receive money from anywhere in the world, without the need for traditional financial institutions. This allows individuals to bypass traditional gatekeepers and participate in the global economy on their own terms.
Another way that Bitcoin enables a sovereign individual is by providing financial privacy and security. Traditional financial systems often rely on central authorities, such as banks or governments, to manage and regulate transactions. This can lead to the loss of privacy and security, as these central authorities have the power to monitor, control, and censor transactions. Bitcoin, on the other hand, is decentralized and allows individuals to control their own transactions, without the need for intermediaries. This gives individuals the power to protect their financial privacy and security, and to make their own decisions about how and where to spend their money.
Alternatives to Central Bank Currencies
Furthermore, Bitcoin enables a sovereign individual by providing an alternative to traditional currencies, which are often subject to inflation and other economic challenges. Traditional currencies are typically backed by governments or central banks, which have the power to manipulate the supply and value of money. This can lead to inflation, devaluation, and other economic challenges, which can erode the value of people’s savings and purchasing power. Bitcoin, on the other hand, is not subject to these challenges, and its supply is limited and transparent. This allows individuals to protect the value of their money and make long-term financial plans without worrying about inflation or other economic challenges.
In conclusion, Bitcoin enables a sovereign individual by providing access to a global, digital economy, financial privacy and security, and an alternative to traditional currencies. It is a powerful tool that gives individuals the freedom and power to make their own decisions and shape their own lives.
This guide will help you buy RON token of Ronin sidechain. Ronin is an Ethereum scaling solution (Layer-2 on Ethereum) that has helped Axie Infinity grow from 1000 users to 2 million users in a year.
Tldr – RON is flying under the radar because it is not yet transferrable and there is no market price. But you can buy RON perpetuals on FTX. It has higher TVL and more users than all of Polygon/Matic, the most valuable Ethereum L2 today but is trading at a fraction of its price. If you are already farming RON and want to hedge, sell RON PERPs via FTX.
Update – RON token is now released! Read more about it on the announcement post.
What is Ronin Sidechain / Ethereum L2?
Sky Mavis, the developer behind Axie Infinity built Ronin as an Ethereum sidechain to help scale Axie Infinity, the most valuable NFT game in existence today. In fact, Axie Infinity has been so successful that its marketcap rivals some of the largest names in traditional game studio world.
The Axie team built Ronin because it was all too aware of how Ethereum’s scaling issues can kill a nascent game economy like Axie. Today, Ronin is one of the most successful scaling solutions on Ethereum.
Not many know this, but Ronin has the highest TVL locked into any Ethereum bridge to date at $6 billion. This is higher than some other better known scaling solutions like Matic (Polygon). You can run or modify this Dune Analytics query to see the results.
The best thing for investors is that Ronin and RON token have gone under the radar so far because RON is not transferrable yet. Once it is released, you will see a lot more interest from crypto investors in owning a piece of the largest scaling solution on Ethereum today with both highest bridge TVL as well as highest number of unique wallets (over 100k+).
Therefore, if you think Ronin is undervalued based on usage and TVL metrics, you can buy RON token.
This graph from CryptoSlam showing blockchains by NFT sales volume should tell you everything you need to know about usage and volume. Sales volume is harder to fake than users (users are Sybil attacked with ease as creating new blockchain addresses is free). Ronin only trails Ethereum mainnet in terms of total traded volume, and is miles ahead of Polygon, the nearest Ethereum L2 competitor (ahead by over 10x).
What is RON Token?
RON is the native token of the Ronin sidechain. This is similar to how MATIC is the native token of the Polygon sidechain. In the future, all transaction fees on Ronin will be payable via RON, so RON is used as gas on Ronin.
The team will likely reserve some RON for yield farming and liquidity incentives purposes which can further increase the TVL on Ronin. Currently, 10% of RON is emitted for AXS/ETH and SLP/ETH LP stakers on the native DEX called Katana.
If you are bullish on the Ronin sidechain, then you should buy RON which is expected to become more valuable as usage of Ronin increases.
Future of Ronin and RON
Here is where this gets so much more interesting. Today, Axie Infinity is the only game on Ronin sidechain and all contracts are whitelisted and deployed only by the Sky Mavis team. They are taking a slow and steady approach. There is a native DEX Katana and the contracts to stake AXS and LP tokens like AXS/ETH and SLP/ETH. Then there are some claim contracts and that’s pretty much it.
However, as we have seen with all kinds of new blockchains or L2s, this is just the beginning. Once Ronin opens up to developers, there will be a whole host of DeFi applications and contracts built on top of Ronin.
The big advantage that Ronin has is in terms of installed wallets. Over 2 million people have downloaded and installed the Ronin wallet. This is very important because if you are just starting to build an NFT game, why would you not build on an ecosystem with millions of users and installed base already? Ronin can become the most used NFT gaming sidechain.
How to Buy Ronin’s RON Token
RON is currently released and listed on Ronin’s native Decentralized Exchange (DEX) Katana.
You can also farm for RON on Katana via AXS/ETH and SLP/ETH LP (liquidity provider) tokens and now also with RON/ETH LP tokens. From Feb 3 to Dec 31 2022, this the reward structure for farming RON on Katana:
This is a guide on how to buy ICP Token from Dfinity, dubbed the Internet Computer. After a wait of half a decade, Dfinity is releasing a public launch of its network and also its ICP token which powers the internet computer. The genesis launch took place on May 7th 2021. ICP is expected to start trading on May 10th 20211 at 10am PT. Therefore, you should be able to buy ICP tokens starting this date. ICP stands for Internet Computer Protocol.
Since I am getting a lot of questions on this, the only legitimate place to buy ICP right now (pre-launch) is FTX which supports ICP perpetual futures contract. This is the most liquid with best price discovery by far (not the IOU from MXC). Sign up and trade on FTX if you want exposure to ICP pre-launch. No KYC for up to 2000 USD withdraw per day. VPN friendly. Don’t buy MXC stuff. Otherwise, just wait for regular exchanges (see below)
But first, let’s dive deeper into Dfinity, its vision, and how to relates to the broader blockchain and crypto ecosystem.
What is Dfinity?
Dfinity has been building an “Internet Computer” since 2016-2017 and has raised several billion dollars from VCs like A16Z in the process. It has several unique features such as how nodes come to a consensus and how data is treated inside the network. We suggest doing some reading on their blog as the details are hard to summarize. If Dfinity can do 10% of all it promises, it could be a game-changer.
Dfinity hopes that popular apps like Facebook and TikTok will be recreated on a decentralized network and the Internet Computer is ready to handle any load. It is far easier for developers to manage since compute and storage are managed in a single place and scaled by the Internet Computer, which means the developers don’t need to manage things like databases, firewalls, load balancers, etc.
What is ICP Token?
The ICP token is the native token of Dfinity. You can stake the ICP token for governance and collect fees. This isn’t a gimmick like several other governance tokens. Besides, you’ll be rewarded the more the network is successful, which aligns the interests of token holders and network users and builders well.
In addition, Dfinity did a broad community “airdrop” via CoinList in 2018. Those users get 1.25% of the entire network. Every participant here would have 119 ICP in their CoinList account. CoinList is well known to mess up big launches and we don’t expect the ICP launch to be any different. Therefore, expect some early troubles.
In addition to the crowdsale, Dfinity has raised several billion dollars from some of the most prominent venture capitalists in Silicon Valley, most notably A16Z. A16Z has led multiple successive rounds for Dfinity over the years, which proves their deep conviction in the project (in addition to providing a way to deploy their hundreds of millions of dollars in a single shot).
That in a nutshell is how ICP will be distributed prior to the launch.
What are ICP’s Tokenomics
ICP (previously DFN at crowdsale) is both a governance and utility token inside the Internet Computer ecosystem. Therefore, if you are a developer who wants to build on Dfinity’s Internet Computer, then you will buy some ICP and convert them into cycles. This is somewhat analogous to how gas works in Ethereum i.e. you need to pay for compute using the native token.
However, if you want an upside in network ownership instead, you will lock up your ICP into what is called “Network Nervous System” (previously blockchain nervous system) or NNP. This creates “neurons” that can then be used for network governance. Governance actions will earn voting rewards inside the network.
Therefore, there are two inflation sources:
Paying nodes for compute (data centers for example)
Paying governance participants
and there is one deflation sink:
Burning ICP when it is converted into cycles by app developers
Voting rewards are higher for higher lockups. There is a complicated governance system via NNS which we’ll cover in more detail in a later post. App developers will need to know how to buy ICP tokens to make sure their apps are functioning right. This creates a continuous demand for ICP token. Depending on the usage, ICP could end up deflationary which would be a first in the space (other than possibly Ethereum’s EIP 1559 being adopted and gas remaining high).
Node operators get ICP payments but denominated in “cash equivalent” units. This is understandable because node operators have fixed hardware costs determined in USD or local fiat equivalent, not in ICP. Voting rewards are denominated in ICP though since these are longer term stakeholders of the project.
ICP inflation for governance starts at 10% of total supply and drops to 5% of total supply by Year-8. There is no information on inflation numbers for data center rewards yet.
How to Buy ICP Token from Dfinity
ICP has been released. The previous holders of DFN tokens via the seed round can access their ICP by following the instructions in this post. Airdrop recipients via CoinList will receive their ICP drop vested equally over 12 months.
Coinbase is listing ICP token at launch. This is probably the simplest way to buy ICP at launch. This of course was not the least bit surprising since A16Z is one of the largest investors in both Coinbase ($COIN) and Dfinity ($ICP). Note that after you sign up for Coinbase, you’ll need to log into Coinbase Pro in order to start trading ICP. It is expected that regular Coinbase users can buy ICP in the future, but the launch is on Coinbase Pro.
You can buy ICP futures on FTX which is the easiest and most liquid way to get leveraged exposure to ICP at launch. FTX’s perpetual futures are the simplest way to leverage up your ICP exposure. They are far more reliable for futures trading than Binance. You can leverage up to 100x, but please don’t do that unless you really know what you are doing. Keep it at a more modest 2-10x.
OKEx has announced it will list ICP token at launch (and also a $10MM fund to support the ICP ecosystem)
Kucoin will also be trading ICP at launch, with ICP/BTC and ICP/USDT pairs.
Binance is expected to list ICP soon after launch.
CoinList, which hosted the 1.25% community airdrop in 2018, is also expected to launch ICP trading. However, due to their poor ability to handle loads combined with poor liquidity and poor user experience and hard to complete KYC requirements, we suggest using other exchanges to trade ICP. If you are an airdrop participant though, you will need to go through CoinList to get your ICP. If you want to sell your ICP, it may be better to transfer it out to another exchange and then sell for BTC or USDT/USDC or another supported pair.
A bunch of smaller exchanges might list ICP after launch too. We’ll update the post over time to include them.
Warning: Be aware that ICP is not an ERC20 token and therefore does not exist on Ethereum. It is the native currency of the Internet Computer by Dfinity. Expect a bunch of scam ERC20s to launch on Uniswap. Don’t fall for them and stay safe out there.
Dfinity ICP Circulating Supply
The ICP circulating supply is a bit of a complex topic. This is because not all ICP is tradable in the markets. There is a lockup of ICPs in the form of neurons, and there is a “dissolve delay” before which ICP from these neurons can be obtained by a user in their wallet to sell on the markets. This mechanism is a bit different from other lock/stake protocols.
At genesis, the ICP token supply is expected to be 469,213,710 ICP i.e. about 469 million ICP. Circulating supply will depend on network conditions and economics, but is around 26% i.e. around 122 million ICP.
Not all of this is going to be liquid, however. The team has not been upfront about how many will be locked up in neurons and what the dissolve delay will be set at and whether the seed and institutional investors will get one neuron per entity or multiple. Therefore, there are a lot of questions about liquid and circulating ICP supply at launch that the team has failed to answer adequately. We’ll update this post when we get more details from the team about initial circulating supply numbers.
How to Earn ICP
The easiest way for everyday users to earn ICP is via voting rewards. If you run specialized data centers and willing to invest in dedicated hardware, that may be the better route to go. However, unlike other protocols like Filecoin, you cannot just contribute compute to Dfinity’s internet computer. Governance will need to approve every data center added to the network.
Therefore, for most users, voting (governance) is the way to earn ICP. Make sure to set the rules to delegate your votes so you don’t miss out on any rewards.
You can earn ICP by locking up your existing ICP into “neurons”. This is part of the “network nervous system” or NNS that forms the backbone of Dfinity’s internet computer.
In order to maximize your ICP returns, you should
Ensure that you are voting directly or in a delegated manner for every single vote.
Neurons lock up ICP. The more ICP you have locked up into your neuron, the more ICP your neuron will earn.
Dissolve Delay is like lockup. This can be set from 6 months to 8 years to earn governance rewards. If you set this to a maximum of 8 years, you get 2x the rewards compared to 6 months.
Age of neurons matter. Older neurons earn more ICP with a maximum of 25% bonus capped after 4 years.
Therefore, if you have a 4 year old neuron with 8 years dissolve delay, you will earn 2.5x more ICP than a neuron that was just created with a 6 month dissolve delay.
Dfinity makes it easier to compound. The network sends rewards to users in the form of new neurons. These neurons start with a dissolve delay of 1 day. You can therefore dissolve them immediately or simply increase the dissolve delay for your ‘child’ neurons. This is an easy way to compound your ICP to earn even more ICP but of course at the cost of reduced liquidity. Also note that neurons will not be tradable as trading them has security implications for the network.
Note: If you trigger to dissolve a neuron, when the delay is below 6 months, you will stop earning ICP tokens.
If you want to watch the event live, register for the Dfinity mercury genesis launch event, including details on ICP token and when it unlocks. Event takes place 7pm CET / 10am PT on Friday, 7th of May 2021. ICP token will be released at 9am PT on Monday, 10th May 2021.
If you were a seed investor in Dfinity, here is a guide on how to access your ICP (warning: technically challenging. The team made it very hard for seed investors to access their neurons and ICP by not integrating with the app and instead using command line tools).
ICP and Dfinity Resources
The Dfinity blog is fairly comprehensive – we suggest giving it a read.
This is a guide on how to buy BANK token from Float Protocol and diving deeper into how Float works, what the protocol is trying to accomplish and the role of BANK token in the ecosystem.
What is Float Protocol?
Float protocol is a new “stablecoin” protocol except it is trying to be a crypto-native unit of account with low volatility as opposed to a traditional stablecoin like DAI that wants to be pegged to the USD. The token that does this is FLOAT. The advantage of a crypto-native denomination is that with minimal day to day fluctuations, the FLOAT token can become the default unit of account in the space while retaining some upside as the crypto market rises. An additional benefit is to reduce the risk of the US government clamping down on traditional stablecoins. In that scenario, an independent unit of account unpegged to the USD would be very valuable.
For the Float Protocol to accomplish its goals, it needs the BANK token to absorb some of the upside and downside volatility as the crypto markets see-saw. BANK is also the governance token of the protocol. Therefore if you are bullish on Float, then buy BANK and not FLOAT. The comparison here would be that BANK is similar to MKR and FLOAT to DAI.
It belongs in a category that several other projects are building too, notably RAI and FEI. However, Float Protocol seems to have several advantages such as a team that has delivered to date and a fair launch of the BANK token with really active community of holders and voters.
Float is also notable in creating a very fair initial token launch that rewarded active Ethereum protocol users as opposed to Whales. During the initial Phase-1 mining of BANK token, the team implemented a whitelist of addresses that previously participated in governance of other protocols. In addition, each address could stake at most $30k. This created a huge number of early satisfied users who have continued to remain active. Float has seen some of the most active governance participation rate in the entire DeFi ecosystem, which is a huge plus for it going forward especially compared to some VC coins. This has been instrumental in its steady rise in value since launch.
Step-3: Accept the confirmation on MetaMask and wait for the transaction to get mined
Note: If you are paying with ETH, you can also directly go to the Sushi exchange to buy BANK. Currently, the Sushi pool is incentivized and not Uniswap, so although Uniswap also trades BANK, you are better off trading via 1inch to get the best order routing across all DeFi exchanges.
At the moment, BANK has a yield farming operation via the BANK/ETH LP on Sushi. This can earn you some BANK by being a liquidity provider for BANK with ETH on Uniswap. In order to participate, you will need to add liquidity to the existing BANK/ETH Uniswap pool. This will give you the UNI-LP tokens for this pool. Stake them here to start earning BANK.
This is a guide on how to buy AlchemistCoin before the official release.
As you probably know, this crypto season DeFi is the hottest thing in town, and then NFTs arrived as hotter still. Everyone from Bloomberg to New York Times is writing about NFTs.
So naturally, as with all things crypto, the next biggest thing is to combine NFTs and DeFi in an ever exploding hype cycle while taking advantage of the market. Welcome to crypto 2021.
One of the hotter such projects is the AlchemistCoin. Speculation abounds on VC interest and connections to Paradigm. We are not interested to write about that, but we’ll help you buy the token if you’re not deterred by the above aka a true degen.
What is the AlchemistCoin?
The AlchemistCoin is a new way to yield farm. It is a way to provide LP tokens to get an NFT that you can then use to stake multiple LP tokens. This provides for a more flexible paradigm for yield farmers.
It actually has nothing to do with gaming or art NFTs that are hot, but in this hype, does it even matter? It combines NFTs and DeFi. This is its current chart –
The token hasn’t been widely released to the public and even sites like CoinGecko don’t currently have it listed. Their website isn’t even live at the moment. We’ll try and update the article with more information as it comes out.
How to Buy AlchemistCoin
Step-1: Go to 1inch and select your token to convert to ETH. Alternately, you can get ETH from centralized exchanges like Binance and Coinbase. If you already have ETH, skip to Step-2.
Step-2: Go to Uniswap app to buy AlchemistCoin with your ETH (direct link).
Step-3: Connect your Web3 wallet and finish the trade. Make sure to set a reasonable slippage threshold.
In case you’re starting from BTC or other non-Ethereum based tokens like Litecoin, use Binance to convert to ETH first, then withdraw to your Web3 wallet like MetaMask. Then use that ETH to participate in the DeFi ecosystem. Learn how to buy fractions of Ether.
Make sure you buy the right token since this is not yet listed on places like CoinGecko. This is the Etherscan link to the token. This is the Uniswap info page.
This is a guide on how to yield farm on BSC and an overview of DeFi on BSC. BSC, or Binance Smart Contract Chain is a new blockchain from Binance that is smart contract enabled and is compatible with EVM among other things, making it easier for Ethereum app developers to move to. It has seen a dramatic rise in usage and popularity among crypto users of late.
A lot of this interest is due to the fact that Ethereum gas prices have become really high.
A simple borrow from AAVE could set you back by $200 or more even if you are willing to wait for several hours for the transactions to complete. This is not sustainable for the small users. Even if you have a million dollar portfolio, and assuming you invest 1% of your portfolio i.e. 10,000 USD into a position, getting in and out and harvesting your yield farming assets could easily eat up 2-5% of the position size, a significant amount.
Unsurprisingly, users are looking for an easy way out of this. DeFi seems to be the first to make the move in a big way. DeFi on BSC has been increasing at an exponential rate, along with the price of BNB over the last week.
As an amazing milestone, it seems that Pancakeswap on BSC overtook Uniswap on ETH volumes. Some volume could be manipulated, but this is still a mind blowing milestone that most people in crypto would never have imagined even a month ago.
Obviously, the DeFi on BSC ecosystem is not as mature and well developed as Ethereum, but lots of users are moving to BSC in search of low fees and alpha.
BSC vs. ETH – Pros and Cons
Let’s be very clear – most current DeFi on BSC projects are copycats of similar projects on Ethereum. However, most of the “food farming” on ETH were also copies of others. For example, once Sushiswap came out with SUSHI there was a whole host of other food farms that were simply copy-paste. So we should not dismiss BSC outright.
As with most things, this will likely drive innovation forward in the entire crypto space. Hopefully the ETH projects can learn from some of the successes of projects on BSC.
Our take right now is simple – gas on ETH is making it unusable for a subset of users who are moving to BSC. However, projects need to prove themselves beyond simple yield farming on BSC by innovating. The jury is still out.
Pros of BSC
Cheap gas. Transactions currently cost around $0.10 or 10 cents for yield farming, which about 100-1000 times less than on ETH.
Faster confirmations. BSC users proof of authority/proof of stake so transactions get confirmed faster than ETH.
More potential upside for yield farming. Newer projects with lower marketcap means the degenerate yield farmers have more fun and higher potential returns while the music plays.
Cons of BSC
BSC is centralized. Pretty much all nodes that can build on the blockchain are whitelisted by Binance.
BSC lacks the robust ecosystem of Ethereum.
Most projects currently are copy-paste from Ethereum projects.
With that out of the way, let’s dive into how you can yield farm on BSC and explore the DeFi on BSC worlds.
How to Yield Farm on BSC (DeFi on BSC)
We’ve outlined a 5-step procedure below on how to yield farm on BSC with the emerging DeFi on BSC. This assumes you are already familiar with yield farming and DeFi on Ethereum. If not, we wrote a guide for Bitcoiners on DeFi.
This is not totally a beginners guide, so if you’re stuck at any stage, leave a comment below and we’ll try to help.
Note that BSC users BEP20 token standard similar to Ethereum’s ERC20 standard for fungible tokens.
Step-1: Set up your environment
Install MetaMask on Chrome/Brave. If you already have MetaMask you can use the same address on BSC (although we suggest creating a new one for privacy reasons). You will need to configure your MetaMask for BSC.
To do this, click on MetaMask > Networks (center top) > Custom RPC. Then enter the following values:
Register an account with Binance and buy BNB using any other crypto or fiat. You can withdraw up to 2 BTC worth of BNB without KYC but make sure you’re not logging in from US (use a VPN if you’re in US).
Easiest way is to buy BNB using BTC but if you have ETH, you can easily swap ETH to BTC and then to BNB. Alternately, Binance has a simple ‘Swap’ functionality like Uniswap these days but the fees will be higher.
Step-3: Transfer BNB into your MetaMask on BSC chain
Once you’ve purchased BNB, withdraw it to your MetaMask account. You can confirm the withdrawal via BSC Scan. This should also show you any other BEP20 tokens you hold.
Step-4: Find out the yield farming projects on BSC
This of course is where the real alpha is. These are the resources that we currently use:
You can get into specific Discord and Telegram channels to try to get ahead of the game.
Step-5: Start yield farming and sell your harvests
Since the transaction fees on BSC are low and a lot of projects are currently in the “fly by night” mode, you would be wise to yield farm and sell your harvest frequently. This is especially true if you are yield farming in pool 2 or death pool.
Also, always remember to check 1inch for the best price. This is because similar to Uniswap/Sushiswap dynamic and others like Bancor and 0x on Ethereum can split liquidity, the same is happening on BSC as well. Therefore, the best way to buy BEP20 tokens is via 1inch. Since the gas is so low on BSC, the higher transaction fees that 1inch generally has is not a concern on BSC.
Here is an example of how 1inch can route a trade on the BSC network. This is to convert from BUSD, the stablecoin on BSC, to BNB token.
Useful protocols and resources for DeFi on BSC
Pancakeswap to sell your harvest. Similar to Uniswap or Sushiswap
Venus to borrow BNB or other BEP20 tokens like stablecoins, similar to AAVE or Compound.
Sign up to Binance to buy BNB and other BEP20 tokens quickly and cheaply.
Bitcoin is a decentralized, censorship resistant store of value. DeFi, or decentralized finance is a while suite of financial applications all accessible to anyone with an internet connection. All these “DApps” are censorship resistant smart contracts on Ethereum and can work with all sorts of assets – ETH, tokenized BTC, tokenized USD (e.g. USDC, USDT, DAI, etc.) and a host of other assets.
Together, these form a web of interoperable protocols that have capability far beyond what’s possible in traditional finance.
You can use “tokenized BTC” as collateral to enter the DeFi world if you still want to retain BTC exposure. The way to do this is via WBTC or renBTC. More details below. However, note that these tokens have additional counterparty risk than simply holding BTC on the Bitcoin network.
The first thing you’ll need to do before you get started in DeFi is to set up your Ethereum wallet, sometimes referred to as a Web3 wallet. Unlike Bitcoin wallets that are primarily used to store BTC, a Web3 wallet does a lot of things for you –
Store ETH safely in a non-custodial manner so you never have to trust an exchange or third-party to hold your assets.
Store ETH-based tokens, including ERC20 tokens (fungible tokens), ERC721 tokens (non-fungible tokens), ERC1155 tokens, etc.
Interact with DApps (Decentralized Applications) on your behalf so that you can use an entire ecosystem of applications in a completely trustless manner, especially the DeFi apps.
For these reasons, MetaMask is by far the most popular Web3 wallet in use today. It is a simple chrome extension which prompts as a popup whenever you try to use a DApp like Compound or Uniswap. You can verify and sign the transaction to interact with the Web3 ecosystem.
MetaMask also supports hardware wallets like Ledger and Trezor. If you have substantial amounts of money, we strongly suggest using a hardware wallet in conjunction with MetaMask.
The steps here are as follows:
Download and install MetaMask for Chrome or Brave.
Create a new wallet. Make sure you keep the 12 words secret and secure, and backed up. The 12 words can be used to derive all your private keys used by MetaMask. If you’re using a hardware wallet, this step can be omitted. Instead, connect MetaMask to your hardware wallet.
Set a strong password.
Enter the Ethereum Ecosystem
If you already have Bitcoin, then there are several ways to enter the Ethereum ecosystem.
You can start from BTC and trade it for ETH on centralized exchanges. For most people, Coinbase or Binance should be the preferred options for this trade since they are the largest and most trusted exchanges.
If you want higher safety, go with Coinbase. If you want more options, including trading a bunch of DeFi and other tokens, and be able to margin trade, go with Binance. These days, Binance has become the preferred exchange for most serious people and traders in crypto due to all the extra features it offers. More on buying fractions of Ether.
Cons: Lack of privacy, need trusted intermediaries
There is current a way to go from BTC to ETH in a fully privacy preserving way so your BTC and ETH addresses do not get associated with each other. This is via the Ren Protocol.
Note that this will cost around 0.1% in initial conversion from BTC to renBTC and another 0.3% or so from renBTC to ETH.
Step-1: Go to Ren bridge and create a BTC deposit.
Step-2: Wait for the transaction to complete.
Step-3: Create the transaction to redeem your renBTC on Ethereum. We suggest allowing an arbitrary time to pass to increase privacy.
Step-4: Go to 1inch and convert renBTC to ETH. Make sure to connect your wallet (via the MetaMask popup) and confirm the transaction that pops up in MetaMask. Note that you may need to do 2 transactions – one approval and one actual exchange.
1inch will automatically split and route your order via all the decentralized exchanges to give you the best price.
As you can see, 1inch is able to create complex routes through the entire DEX ecosystem to bring you the best price.
Step-5 (optional): Use Tornado Cash to enhance privacy. If you want to improve privacy, make sure to deposit the ETH you obtained into Tornado and withdraw it in another address. This is a completely trustless smart contract based mixer (unlike several BTC mixers that have been mostly scams).
However, be aware that the gas price is fairly high to use, so we suggest using this for 10 ETH and above.
At this step, you should have converted your BTC into ETH successfully!
Note: There may be other bridges coming online that convert BTC to ETH in a decentralized or semi-centralized manner. Do your research on how safe these are. When your intention is to immediately convert renBTC to ETH, the bridge is reasonably safe. We don’t recommend holding renBTC since there are additional centralization risks still with Ren.
Pros: Decentralized, privacy preserving.
Cons: Gas costs and other costs add up – expect close to 0.5%-1% depending on how much BTC you start with for the whole process.
Protocols and Tokens
Once you have the ETH in your MetaMask, it is time to go to town playing with DeFi!
The first two primitives we suggest are exchange and borrowing.
For exchange, if you want to buy any tokens, simply go to 1inch to get the best pricing. 1inch will source liquidity from over 20 protocols for you and find the best pricing and order routing. You can also go directly to exchange protocols like Uniswap, Sushiswap, and Balancer.
You can check out CoinGecko for some of the projects. CoinGecko is usually on top of adding new DeFi and other Ethereum projects.
Then, check out lending. You put in excess collateral and borrow against it. The best place for this is Aave. Another option is Compound.
Some of the DeFi blue chips are AAVE, SNX, LINK, UNI, YFI. You can also simply buy DPI, which is a DeFi index tracking several tokens.
If you’re feeling adventurous, check out some of the yield farms. Yield farming is a way to distribute a project’s tokens widely to users and other value providers. Make sure you thoroughly understand the risks you’re taking including smart contract risks and impermanent loss when you’re being a market maker.
As a first pass on smart contract validation, vfat has a good list of yield farms and a consistent and easy to use interface.
There are other DeFi ecosystems that you can also explore. This is outside the scope of this guide, but you can check out Polkadot, Cosmos, Ava, BSC, etc. There are also primitives on arguably lower quality blockchains like Tron, and EOS as well but we do not recommend them as such.
Along with Ethereum, BSC (Binance Smart Chain) has entered into a thriving ecosystem of DeFi primitives and apps being built. One advantage of BSC is the transactions are far cheaper compared to Ethereum. The biggest disadvantage is its centralization risk. Read more about DeFi and yield farming on BSC if you’re interested.
However, if you’ve only been in BTC all these years, we strongly suggest getting familiar with the DeFi ecosystem on ETH since it is the most established and trusted.
Want us to cover something in greater depth or have any questions on the above? Drop us a comment or email us and we’ll be happy to help.