The DeFi world is embracing proliferating growth and for all the great reasons. The international DeFi market is projected to grow at a CAGR of 42.5 percent by 2030 from 2022. The DeFi ecosystem is aimed to revolutionize financial services by offering an economical and faster access to financial services. According to several fintech experts, DeFi won’t take long to foray into the mainstream finance scene. Thus, a growing line of investors are lining up to invest in the DeFi scene. One of the best ways to invest in DeFi is through DeFi coins. You can easily buy and sell defi coins in crypto exchanges.
If you are new to the DeFi space and want to know more about the DeFi coins, this post is just for you. Here is a brief on the DeFi coins and the steps to invest in them. Mex Group
DeFi coins- and overview
DeFi coins are the native coins or tokens of a DeFi service platform. The platform could be associated with insurance or lending, or any other financial service in a decentralized environment.
The contemporary DeFi world features multiple types of DeFi tokens and coins. The most common DeFi tokens or coins are governance tokens. One of the best aspects of DeFi is that it is aimed to put the control in the user’s hands. In that light, the DeFi platforms offer governance rights to users as well. DeFi governance token is the currency through which DeFi platform users participate in the governance of a DeFi platform.
DeFi platforms that offer governance rights to users allow them to actively participate in decision-making procedures of the platform. To attain that right, users would have to buy and have ownership on the DeFi governance tokens of their chosen platform. In regard to top DeFi governance tokens, it’s UNI that takes the #1 spot as of now. The coin was introduced to the DeFi market back in 2020 with a 400 token-worth airdrop.
It’s to note here, the level of governance power of users in a DeFi platform depends largely on the volume of their holdings. Those who would hold a larger share of coins would always have higher voting or decision-making power in comparison to those with lesser share of holdings. The rationale behind this policy is that investors with higher volume of shares are more enthusiastic and confident about the success of the DeFi project which made them invest a good deal of money in the coin. As a result, they would make sure to land up with the right decision that will eventually help the project to scale up to greater heights. Thus, it’s only fair that they would receive more power in regard to future decisions about the DeFi project.
Another kind of DeFI token is utility tokens. These tokens do not render governance rights but these serve as passwords that offer access to certain resources offered by the DeFi platform.
Some DeFi asset tokens represent certain kinds of assets, such as physical assets, say real estate. These assets also represent exclusive digital artworks, say paintings, and so on. Investors who would want to invest in these assets would have to invest in these DeFi coins or tokens that come in the form of NFTs.
Mention must be made of fractional NFTs here. These are the same as discussed above but the difference of “co-ownership”. In fractional NFTs, the asset is divided into several fractions to allow more access to the asset. Thus, the investors here don’t have to buy the whole NFT, rather they can simply buy a few shares of the main NFT, as per their budget.
You can say that it is somewhat like investing in Bitcoin. BTC can be divided into several parts. As a result, Bitcoin investors don’t always have to shell out money to buy 1 whole Bitcoin which is extremely costly. Rather, they can just buy fragments of Bitcoin to participate in Bitcoin investment yet without ripping their pocket.
Steps to invest in DeFi coins and tokens
Research about the DeFi products
You can’t just put your money in any random DeFi coin or token you would come across online. The first thing that you would have to do here is to make a shortlist of at least 5-6 potential DeFi coins and tokens. Then, you would carry an in-depth study on them. Choose coins based on your specific interest. For example, if your goal is to invest in a high-profile asset, you would have to look for asset DeFi tokens. But, if you are passionate about a DeFi platform and want to proactively take part in its administration and decision-making, then, you will have to invest in governance tokens.
You need to sign up with a wallet to store the DeFi tokens. Look for a reliable and leading name that has adopted upgraded safety measures. You will need to link the wallet with the platform from where you will buy and sell defi coins,
Where to buy DeFi tokens and coins?
If you are looking to invest in asset DeFi tokens or NFTs, you will have to make the purchase from the NFT marketplace. Otherwise, you can buy and sell defi coins at crypto exchanges. Centralized crypto exchanges allow purchase and trade of DeFi coins and tokens.
There are crypto and DeFi coin listing sites online that offer complete information on the market place for the coin/token as well the currency you can use to buy the coin/token. The most preferred form of payment in DeFi coin purchase is fiat currency, say USD. The key benefit of using fiat is that you are familiar with the currency method. Then, fiat currency is stable in value and does not fluctuate frequently.
However, if you are planning to purchase asset DeFi token or NFT, you will have to use cryptocurrency as NFTs only accept crypto payments.
Store in wallet
After you make the purchase, store the coin in your wallet. Read more to buy bitcoin.