DeFi 101 😎 (Part 2 of 2)
how to trade on-chain
GM fren 👋! We have a few new readers this time so welcome and thank you to all those who subscribed 🙏! If you’re completely new to crypto, I recommend reading this.
This is the 2nd part of the 2-part series on getting started with DeFi. In case you missed the 1st part, check it out here. We discussed the emergence of DeFi, the Indian gov’s stance on crypto, and a step-by-step guide to purchasing crypto on exchanges.
Assuming you guys have bought some $ETH or $MATIC or other tokens, let’s drill down on moving them on-chain. This post is a long one due to the images I’ve shared but should be easy to go over. If you have prior experience transacting on-chain, you can skip this post as well.
Creating a crypto/web3 wallet
The 1st step in moving your tokens off the exchange is to create a self-custody wallet where you can keep them safe. We’ll go with the Metamask wallet.
Go to this link and hit “Install Metamask for (insert your browser name)”. A pop-up will ask you to grant the extension some permissions so hit ‘allow’ for the downloading to begin.
You’ll then be directed to the Metamask page asking you to get started.
Assuming you do not have an existing wallet, go ahead and hit ‘Create a Wallet’. Once you do that, click on ‘agree’ on the next page and create a strong password for login.
You’ll be taken to the Security page explaining how to keep the wallet and your funds secure along with best safety practices. Do not skip the video and read through the details!
Great! Now we come to the important part - the Seed phrase or the Secret Recovery Phrase. This phrase grants you access to your wallet or to anyone who possesses it. Be very careful with where you store this information and NEVER SHARE IT WITH ANYONE. If your gf/bf asks for the seed phrase on valentine’s, make sure you never see them again.
Once you hit ‘Next’, you’ll be prompted to enter those 12 words in order, and once done, you’ll be welcomed to the page below with your own public address (starts with 0x…). Great work - you just created a crypto/web3 wallet for yourself 🔥!!
We need to do one last thing before moving our tokens and that is to add the ‘Matic mainnet’ to our wallet. This is because transacting on Ethereum mainnet is kinda expensive so we’ll transact on the matic/polygon network.
Click on the dropdown option on the top-right corner and hit ‘Add network’ from the dropdown.
This will open up the settings page where you’re required to enter details that you can find in the image below.
Fantastic! We’re now done with creating wallets and adding networks. In the future, if you wish to add more networks like Avalanche, Arbitrum, Fantom, etc. this is how you do it. You do not have to create a wallet each time for these networks. Simply do what we did with the Matic network!
Transfer tokens: Binance → Metamask
We’re done with the heavy lifting so now let’s go to our Binance app and hit the wallet section. If you’ve bought MATIC, click on it and you’ll see 2 options at the bottom of the asset page. Click on ‘Withdraw’ and it should take you to this page.
Select ‘Polygon’ for the Network tab.
Enter the amount of MATIC tokens you wish to transfer. Remember that 0.1 Matic will be deducted for transfer to another wallet as shown below.
For the Address field, go to your Metamask page/wallet, and copy the address. Do not try to type it! One mistake and your funds will go to someone else.
Now go ahead and paste it on the Binance app and hit ‘Withdraw’. You’ll be asked to confirm the transaction. For additional security, Binance sends a verification code to your phone and email and once you enter that, and hit confirm, you’ll be shown this page. Wait for a few minutes (3-8 mins) and check your Metamask to see if the funds have arived.
After 7 minutes, the funds hit my wallet and we’re now ready to buy NFTs, exchange tokens, farm tokens, stake to earn rewards, and even gamble! Wooh!
Interacting with DeFi: Swap tokens on a DEX 🚀
It’s all pretty simple from here on. Let’s head to a DEX (decentralized exchange - sushi.com) to make our first public transaction.
Connect your wallet on top right corner. Metamask will pop-up asking you to for permission to connect. Once you do that, you’ll see your address on top. Also, on the left of your wallet balance, you’ll see the network you’re on. It was Ethereum by default but I clicked and changed it to Polygon. Make sure you do that.
Since we have MATIC token, we can switch from MATIC to any token of your choice. In this case, I’ll convert it into GRT token. You can pick any token you like. Once you enter the token amount, hit ‘Swap’.
Once you hit that, Metamask will pop-up asking you to sign the transaction so click confirm and the txn will finalise in a couple of seconds. Now open your Metamask and check if you got it or not. In most cases, it will!
So here we are finally having gone from 0 →1 with DeFi. Congratulations if you read this far and made your first transaction! If you didn’t, no worries. I hope this serves you well in the future whenever you decide to do so.
Some advantages of using DEX over CEX-
DEX is permisionless meaning no one can stop you from making these transactions unlike CEX where trading and can be halted at will and your coins can be seized if they wish to.
You also have the option to buy lesser known tokens that are not listed on CEX and that can be a big investment advantage.
It is a P2P transaction without an intermediary involved meaning no one knows what you hold, where you put it to use, etc unless someone knows about your public wallet address.
You can always view the details of your transaction on this website. Just enter your public address and you’ll get all the details you need.
Thank you for reading this far. If you found this insightful, please consider subscribing and sharing with your friends and family. Those who skipped doing so - NGMI.