Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency or token. The opinions expressed in this piece are those of the writer, and not of Bitbuy. DeFi tokens specifically can be extremely volatile and carry their own set of unique risks.
With Bitcoin and other cryptocurrencies becoming more and more valuable as investments, it’s no coincidence that more and more people are trying to learn how to get DeFi tokens in Canada. What is DeFi and how is the trend helping the world of digital currencies evolve? You’re about to learn all of that!
The word DeFi stands for decentralized finance. You’re probably thinking it refers to digital currencies in general. After all, Bitcoin and all other cryptos are meant to decentralize money. But in this case, the term DeFi actually refers to a broader concept. It’s the notion that entrepreneurs and innovators can work together to re-create the traditional financial instruments as we know them and place them in a decentralized structure outside of the control of governments and companies.
Bitcoin and Ethereum were the first DeFi-friendly assets ever created, but the DeFi world is further evolving and the overall goal of this entire evolution is to every type of financial instrument, not just money itself.
Bitcoin and all things blockchain are now in their second decade of existence in the world of DeFi is seeing the creation of more innovative financial instruments and the decentralizing various aspects of the industry. The top projects all empower the individual to do what a central bank, retail bank, or financial services representative used to handle on their behalf. Take a look at some of the top projects dominating today’s version of the DeFi market.
Compound is a token built on the Ethereum blockchain. It’s ERC-20 compliant. The project allows users to lend money out to investors and profit off of interest. The user lending out the value gets COMP tokens in return as well, so if the value of Compound increases, the lender not only gets a portion of the interest and fees on their loan, they also benefit from the price appreciation of Compound itself.
The market capitalization of Compound has certainly taken off over the last several months, but it’s also has a history of inflating the value of some crypto projects including the stablecoin DAI and the token for the Internet browser Brave, the Basic Attention Token. This is because Compound rewards users with tokens in proportion to whatever markets happen to demand the most lending. It means if users decided DAI, BAT or any other project is the one to be more in demand, the value of those projects can quickly rise and fall artificially based on trading volume alone, not because of any fundamental trading developments.
This idea wouldn’t impact investors in DAI as much because it’s a stablecoin that’s intended to stay close to $1 in value at all times, but across other projects, this kind of sudden increase in demand can send investors straight towards a collapse.
The Synthetix Network Token uses a smart contract infrastructure and offers users incentives in order to maintain the price of the Synth token. The SNX token acts as collateral and stakes a proportional value in order to mint Synths. Just like compound, users are rewarded with a portion of the fees generated by activity on the network. The value of SNX tokens is therefore tied to the network it collateralizes. The network and its token supports a variety of financial services trading, loans, payments, remittance and e-commerce.
Ever heard of eToro? It’s basically a social media platform for investors and day traders who want to follow the trades of investing influencers who are willing to share their knowledge. HedgeTrade takes that same concept and puts it on the blockchain. Traders publish their investing predictions on the network for all to see. The process is powered by smart contracts and a trader’s prediction is referred to as a Blueprint. Traders get rewarded if there blueprint makes a profit for users and if they are incorrect, users get a full refund. HedgeTrade allows you to earn profits without having to pay for advice that ultimately results in a loss.
Ampleforth aims to combine the best of Bitcoin, other cryptos and stablecoins. Like other DeFi projects, its purpose is to act as collateral in exchange for other assets. The supply of tokens changes with the demand. The fact that the token economics of Ampleforth is dynamic in this way is what makes it an intriguing project for your consideration. The goal here is to maintain economic equilibrium, but AMPL isn’t considered a stablecoin exactly because the supply fluctuates dynamically.
ChainLink is a decentralized Oracle network that aims to connect smart contracts with real world data. The LINK cryptocurrency is used to pay nodes who maintain the network, but there’s a built-in reputation management system on that network. This means nodes who have a history of adequately serving the network and provide accurate data get rewarded with more Link tokens and thus can earn larger contracts and greater rewards. ChainLink essentially helps bridge the gap between blockchains and applications.
The above list of DeFi projects is far from a complete list, but the success of said projects can’t be denied. Both Compound, HedgeTrade and ChainLink have skyrocketed to the top of the charts in terms of overall market capitalization and ChainLink is currently in the top five after coming from seemingly nowhere over the last year. Either way its clear there is a strong demand for DeFi focused projects, with more and more protocols and coins coming out each day.
With an abundance of opportunity clearly demonstrating itself across the crypto market, buying into DeFi tokens is a good bet. Using UniSwap is one great way to do just that.
UniSwap is a decentralized crypto exchange that uses smart contracts to facilitate trades between crypto pairings. This means the crypto is locked into smart contracts when you’re making the trades and thus, the value being exchanged through UniSwap is not tied to a centralized server that can be hacked. Every aspect of acquiring DeFi tokens through UniSwap’s decentralized, keeping the power and the value in the hands of you, the individual. Long story short, there are no geo restrictions, and you can use Uniswap to buy DeFi tokens in Canada. Acquiring your preferred DeFi tokens on UniSwap can be done in five easy steps:
Let’s go through each step in greater detail to show you how to go from Canadian dollars to DeFi coin in just a few steps.
Buying Ethereum or (Ether) on Bitbuy is easy. Simply register for a free account at Bitbuy with a username and password and verify your email address to get started. Deposit funds into your Bitbuy account using Interac e-Transfer or bank wire. Be aware that the time it takes for Bitbuy to deposit your funds depend on the method you choose. You can also deposit cryptocurrency you already own onto the exchange.
To buy Ethereum, choose a trading pair that includes your existing currency holdings along with ETH as the trading pair and execute a market or limit order for the desired amount.
With Ethereum/Ether tokens now in your possession, you’re going to need to send them to a wallet that can help you interact with smart contracts that facilitate trades on the UniSwap platform for the currencies you want to buy. The MetaMask wallet is actually a Google Chrome extension, so you’ll have to download it from the Google Chrome Web store found here.
Once the extension is installed, the MetaMask logo (an orange fox) will appear in the top right corner of your web browser next to any other Chrome extensions you may have.
After clicking the logo, you’ll be taken to the MetaMask website and asked to create a username and password. You’ll then receive a 12-word password that represents your private key. Write down these words and never share them with anyone that you don’t intend to share your crypto with. Keep this private.
Once you do that, you’ll be given the choice to either buy ETH, or send ETH you already have to your MetaMask wallet. Click the Send icon to generate your MetaMask ETH wallet address. Remember that all ETH wallet addresses start with 0x.
Go to your Bitbuy account and withdraw your ETH to your MetaMask wallet. The transaction should confirm in a few minutes. The next step is connecting your MetaMask wallet to the UniSwap exchange.
Go to Uniswap and click the pink Launch App button in the top right of the Home screen. You’ll be greeted with a simple Buy/Sell style interface that will allow you to trade your ETH tokens for other cryptos available on the decentralized exchange.
The Buy/Sell interface on UniSwap lists several fields, but ultimately it’s not that complicated. You simply type in the number of ETH tokens you’d like to swap, and select the DeFi project that you would like to swap them for. Let’s pretend in this instance its Compound, which is represented by the letters COMP.
Underneath the Connect Wallet button, you’ll see details that let you understand the impact of the transaction you are completing.
The Minimum Received section refers to the minimum number of COMP tokens you’re guaranteed to get in this transaction if there is a big move in trading volume and your full order cannot be fulfilled. Remember that you’re dealing with smart contracts and ultimately everything has to be confirmed on the blockchain in order for it to go through. While this can happen within a matter of moments, it’s not necessarily instant.
Below that is a Price Impact field that lets you know how much your trade will impact the price of the token you are purchasing. Lastly, the Liquidity Provider Fee is the fee you’re actually paying to UniSwap for completing your transaction. After this step has been completed, you’ll have the DeFi tokens you are looking for in your wallet. Although, there may be other ways to get Defi tokens in Canada, this seems to be the easiest way.
That’s not the only fee you pay however. You also have to pay gas to the Ethereum network in order to give your transaction priority. MetaMask chooses a default gas price for you, but if you choose to increase it, you can give yourself priority in terms of getting the best possible purchase price for your COMP tokens. That’s something to keep in mind if you want the full amount of your order to be fulfilled no matter what and don’t want to settle for any Minimum Received amount. The average gas price for a transaction is usually no more than a few cents worth of ETH, so if you’re thinking that it’s going to cost you a fortune, don’t worry too much about that.
Also keep in mind that in the top right corner of the UniSwap Buy/Sell page, you’ll find a V1/V2 slider button. If you’re looking for specific DeFi token and the transaction won’t go through, odds are your UniSwap is set to the default which is Version 2 of the platform. If you can’t find the desired token you would like to buy under V2, you can click that slider button and change it to V1 and see if the token’s contract exists on the original version of the platform.
If for whatever reason you’re looking for a project that you know should be on UniSwap, you can go to EtherScan.io, search for the project you’re interested in, find the contract ID for that project which will start with the characters 0x and simply paste it into the Buy/Sell interface on UniSwap. If users on the platform are making it available for trading then it should pop up right away.
Now that you’ve learned about DeFi projects, you know that deciding whether or not you should invest in a particular projects really depends on what your goals are. If you’re looking to use existing assets as collateral to earn more crypto, projects like Compound and The Synthetix Network will serve you well. If you’re looking for financial advice, HedgeTrade might be the way to go.
Either way when you’re ready to finally take the DeFi plunge, start your journey with Bitbuy. It’s the most convenient way to purchase ETH tokens at the best possible market prices and makes it easy to send those tokens to MetaMask so that you can keep all of your wealth on decentralized platforms and put the profits of your DeFi adventure in your pocket.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency. The opinions expressed in this piece are those of the writer, and not of Bitbuy. DeFi tokens specifically are extremely volatile and carry their own set of unique risks.
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