DeFi is coined with two words 'Decentralised' and 'Finance'. DeFi allows crypto users greater control over their funds. It consists of multiple financial products and services, which are easily accessible to anyone from anywhere via the Internet.
Before starting you should be aware that, buying or selling crypto assets is taxed at a standard rate in India. Any kind of cross-border transactions are regulated by FEMA law and guidelines provided by the Reserve Bank of India. Please, get advice from OZG FEMA Lawyers as per your requirements.
How to start with DeFi?
It is important to do your research about the various aspects of a DeFi protocol. This post is provided here on the ODFC page of your place to educate yourself about DeFi as there are several risks associated with it. Risks such as rug pull scams, fake projects, exit scams, and others, so learn about them before investing in any DeFi protocol.
Here are some of the steps to get started with DeFi:
1) Set up a Crypto Wallet -
Crypto wallets are digital wallets that allow you to store crypto and interact with various DeFi protocols. Usually, there are two types of digital wallets: Cold and Hot wallets. Choose a crypto wallet that best serves your financial interests and goals. Get help from OZGiAN Support Chat and subscribe to the exclusive ODFC services.
2) Acquire Crypto Coins -
As you may know in Demat Account, where you need a bank account/UPI to load cash in your trading account to invest money in the stock market, similarly here you need to acquire crypto coins to participate in and interact with various DeFi protocols. Some wallets are on crypto exchanges, where you can purchase crypto coins. Most protocols are built on the Ethereum platform, so it is advisable to start with ERC-20 tokens.
3) DeFi Investment Opportunities -
Now, look at some protocols that make it popular for investments.
a) DeFi Staking -
One of the most common crypto investment options is staking. It is essentially a buy-and-stake investment strategy to earn profits in the long run. It involves locking up crypto tokens to validate transactions in the DeFi protocol. You can earn profits from transactions made within the protocol you help validate. Some Crypto staking options can make you more money than traditional savings accounts. It is a good option if you have a large amount of crypto sitting in your wallet and want to put it to good use. Most popular crypto exchanges offer staking services, which can prove profitable, especially now as huge investments are being put into new blockchain protocols.
b) DeFi Lending -
Similar to traditional lending, crypto users can earn interest by lending their crypto to borrowers. Decentralised applications, or dApps, connect borrowers to lenders based on loan size and crypto collateral.
c) DeFi Trading -
You can also earn by trading various DeFi-related crypto on popular crypto exchanges. Subscribe OZGinvest chat to learn more about better offerings.
d) Interest in Savings Accounts -
Another investment option in DeFi is to create a crypto savings account. You can earn interest by transferring crypto sitting idle in your wallets to a crypto savings account. DeFi savings accounts can offer higher yields compared to banks' savings accounts. For example, some crypto savings account providers offer flexibility to users by not putting conditions on locking their crypto and allowing them to withdraw whenever they wish.
e) DeFi Yield Farming -
Crypto-yield farming is a more complex version of staking, and the term comes from how farmers maximize their yield by switching from one crop to another. Similarly, DeFi yield farming is about rotating your crypto investments to different yield farms. This DeFi protocol uses smart contracts to lock crypto tokens and pay interest.
4) What are the Risks?
Failure among start-ups business is common, so new companies using DeFi technology may not succeed, resulting in a loss of funds.
Additionally, DeFi protocols do not provide insurance like our traditional banks and NBFC companies in case of theft or if you become a victim of a crypto scam.
5) Important Note:
Crypto products and NFTs are kind of unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Every investor must do his/her research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs.
Disclaimer -
The views, thoughts, and opinions expressed here are not a piece of investment advice, and the ozgian/ozgindia/ozgfinance/odfc shall not be held liable for any acts or omissions, or losses incurred by the investors.
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