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Decentralized Finance (DeFi): How Do You Get Involved?

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By , Updated On February 10, 2022

Decentralized finance, also known as DeFi, is a system that uses blockchain and cryptocurrencies for managing financial transactions. It aims to democratize finance by shifting it from centralized legacy and centralized organizations to decentralized systems. Instead of only relying on traditional financial organizations to perform financial transactions, everything is run on a peer-to-peer basis. You are simply taking control of your finances!


What are the Benefits of Using DeFi Platforms?

Before looking at how you can get involved, let’s start by understanding the main benefits of Defi platforms. Today, almost every aspect of banking, trading, and lending is managed centrally. It is also managed by gatekeepers, and when you need to make a transaction, a list of middlemen has to be involved. If it is a car loan, you have to deal with multiple parties, from car dealers to guarantors and financing organizations.

In Singapore, investing in securities is guided strictly by the Securities and Futures Act (SFA) and foreseen by the Monetary Authority of Singapore (MAS). MAS has installed a long list of rules, and before companies can list on the markets or individuals can trade, they are subjected to comprehensive scrutiny. Although installed with good intentions, they greatly limit the people who can be involved or access financial services. For example, people outside the banking system are likely to get left out, not because they do not want to trade on the markets, but because of rules and bureaucracies.

Decentralized finance came to help remove all the challenges. Well, banking services are necessary, but banks and most centralized institutions are not. Instead of walking to a bank to be able to send funds to a friend, DeFi and blockchains help you to do it right away on your home computer. Here are other benefits of using DeFi platforms:

  • Sending funds or making financial transactions is easy.
  • The cost of sending funds, whether locally or abroad, is very low compared to using the traditional banking system.
  • Allows you to run financial transactions, from sending money to taking loans, with the utmost confidentiality.
  • Provides the satisfaction that you are in full control because there is no third party that is involved.


How to Get Involved with DeFi?

The benefits we have listed above about DeFi platforms are only a few. The list is way longer, including the ability to take loans without background scrutiny. There is so much to enjoy from decentralized finance, but how do you get involved?

  • Make Sure to Have a Crypto Wallet 

Almost all activities related to DeFi require you to hold some crypto coins. This is why you should always start by acquiring the right wallets. Common options you might want to consider are hot wallets, cold wallets, and software wallets. Remember to ensure you only select the wallet that supports the coins of interest.

  • Stake Your Coins for Passive Income 

Instead of leaving your coins idle in the crypto wallets, it will be a good idea to stake them for passive income. This means that you lock the coins to a network that uses proof of stake (POS) protocol so that they can help to validate transactions. In return, you get some rewards. Remember that you are not selling your coins.

  • Trade Digital Assets 

Like stocks, you can also trade cryptos and get some awesome rewards. This means that you target to buy the coins when their price is low and sell later when it increases. If you want to get long-term gains, consider buying right away and waiting a couple of years. Make sure to target high-end coins with potential for growth to optimize returns on investment.

Decentralized finance (DeFi) is the new trend in finance, and it is expected to alter the way we know banks, banking, and most financial systems. Do not be left behind as others join the preferred DeFi platforms to reap the benefits we listed in this post. You, too, can become part. Visit Mantra Dao, the best Defi platform on the market, to learn more about blockchain and optimize returns.