I will explain how I send $100 USD from directly linked bank account to Polygon Based dfyn.network to invest on WBTC-ETH liquidity pair and earn mouth watering 43% APR in interest. Instead of keeping your ETH and BTC on centralized exchange and not make any money until BTC reaches that magical $500,000 and ETH $22,000, why not gain some Sathoshi while holding it for the long term. I chose Polygon based Defi exchange because of very low gas fees paid in MATIC tokens. They are sub cents compare to hundreds of dollar in Ethereum based Defi to pay gas fees to provide liquidity. Next, I will show you how to purchase Bitcoin without fees.
Purchasing Bitcoin from Fiat for Fee Free
First I used a Bitcoin Lighting Network based wallet called Strike to purchase my Bitcoin from Fiat. In this example I used $101 USD from US linked bank account to purchase bitcoins. I purchased 0.0015 BTC from $101 at $63223.79. In order to use Strike you need to do Know Your Customer (KYC) with drivers license and US Social Security ID cards. My funds are available right away for withdrawal from Strike. I notice Strike would use around $100 buy spread from actual price of $63123.79 at the time of purchase. Give I have to pay $2.99 in Coinbase and $2 in Binance.US this miniscule spread is more than acceptable. May be in the future when Robinhood crypto will allow you to buy Bitcoin without any fee at all with even less of buy spread.
Getting Polygon (MATIC) Tokens from Centralized Exchange
Second, send this Bitcoin to a centralized exchange. I use Hotbit.IO exchange. Here I can get my Bitcoins purchased from Strike deposited into Bitcoin address. Then converted into Polygon (MATIC) token and send over the Polygon network. Hotbit.IO lets you withdraw MATIC tokens on Polygon network with 0.5 MATIC token fees. I noticed Binance.US does not even provide this functionality to send over the Polygon network. For those of you who not from US can use Binance.com and withdraw Matic tokens over Polygon Network with 0.5 withdrawal fee. If you have not signed up for Hotbit.IO, I will provide a link below to sign up as well. If you use this network to sign up it help this channel as well a you will receive 20% off in spot trading fees. In Hotbit.IO, you can withdraw ETH over the Arbitrium ETH network (a Layer 2 Ethereum solution) without any fees. This is awosome given Uniswap support Arbitrium ETH. Arbitrium ETH is x10 lower fees than ETH network in terms of gas fees. I have paying $100-$200 in fees to provide to a liquidity pool or even swap on any Defi Exchange with Ethereum network wallet. By the way, you can use Hotbit.IO to deposit BTC and withdraw over Binance Smart Chain over BEP20 exchange at fee of 0.0001 BNB. This is in par with Binance.com fee for those of Non US users. I am going to sell my $100 Bitcoin into Polygon tokens to send over to my Polygon (MATIC) network to Web 2.0 MATIC token address with paying 0.5 MATIC in withdrawal fee.
MetaMask Wallet Setup on Polygon Network
You need to get most easiest MetaMask Web 2.0 wallet. If you do not have a MetaMask wallet I will help you set it in video below.
Here are the settings for MetaMask wallet. In the Settings tab you can add:
- Network Name field = Polygon Mainnet
- New RPC URL field=URL https://polygon-rpc.com/
- Chain ID field=137
- Currency Symbol field= MATIC
- Block Explorer URL field=https://polygonscan.com/
Next, copy the MATIC wallet address that is used for depositing MATIC from centralized exchange.
MATIC Withdrawal from Centralized Exchange (Hotbit.IO)
Thirdly, withdraw MATIC tokens from Hotbit.IO. You have to pay 0.5 MATIC as fee to withdraw on Hotbit.IO exchange. Copy your MATIC token address from MetaMask wallet. Paste it into the MATIC withdrawal address. It is crucial you select Polygon as the network. Do not keep the default which is Ethereum network. Never send Ethereum network based MATIC tokens on to Polygon network based MATIC. My MATIC tokens from Hotbit.IO appeared on my MetaMask Polygon wallet within a minute from confirm withdrawal with 2 factor authentication. That is very fast compare other coin withdrawals.
MATIC to Token Swap on Dfyn.network
Fourth, after the funds are deposited into MetaMask Polygon wallet you are ready to provide liquidity to DfYN BTC-ETH pair. Convert almost half MATIC to WBTC and other half to ETH. I would keep 0.5 MATIC to pay for gas on providing liquidity which is $1 worth of MATIC tokens. Before providing adding liquidity to WBTC-ETH pair, you need to Swap half of MATIC tokens into ETH and WBTC. During the Swap of MATIC to WBTC, the liquidity provider fee is 0.1443 MATIC and price impact or price change or slippage is less than 0.01%. This means very good swap route with plenty of liquidity is used for the token swap. It was similarly for MATIC to ETH swap as well. One thing I noticed on MetaMask wallet that it's default MATIC gas price is low than current network gas price. I had to use polygonscan.com/gastracker to get the latest gas price. I used the standard gas price is Gwei. I had to edit the custome gas price and enter it into the MetaMask wallet under the estimated gas fee by clicking Edit and enter Gas Price as 36 in this example. With the lower default MetaMask gas price I had my transaction go stuck multiple times before I increase the default MetaMask gas price. I had to change this for every MetaMask MATIC transactions. You do not have to use Fast or Rapid gas prices because in MATIC network transcation only takes few seconds no matter which one you use -- unlike ETH if you use standard or slow your transaction will take up to 10 minutes to pick up my the miners to include on the next mining block.
Picking Right Defi Exchange and Liquidity Pool to Reduce Risks
Fifth, Go to the liquidity pool of choice. Click on Farms drop down arrow. Click Popular Farms. As you can see there are many liquidity pools with very high APR to chose from. The reason I choice ETH-WBTC pool because both tokens are I want to hold in the long term and it provides 44% APR as of now. If you want to go completely risk averse, you can go with UST-USDC, UST-USDT, USDT-USDC, USDT-DAI stable coin liquidity pools where you will not experience impermance loss. Impermance loss is when value of token drops in price respected to USD or fiat or even respect to the other token pair as oppose to holding token straight out in terms of USD or fiat currence value. All those 4 stable coin liquidity pairs give early APR of 43.7%, 40.0%, 31.8%, and 34.1% respectively way better than hold fiat on your bank account and make less than 0.5% APR. However, other risk you have with Defi investments is smart contract risk of hacker stealing from Dfyn network using a bug exploit. I would say use defisafety.com to get your exchange safety score to get idea of which exchanges to use. You can reduce this risk by using much more established Defi exchanges like Balancer V2, AAVE, Uniswap, Yearn Finance V2, Compound or 0x Protocol with highly audited code. I
Liquidity Provider on Dfyn.network
Finally, After the picking the right Defi network using the defisafety score as measure of how well network is battle tested against hackers and reputation. Next pick a pool with very tokens in demand. Do not go with pools with very high APR because most of those tokens prices are dropping like a rock respect to the USD or other fiat currencies and certainly against the Bitcoin. I picked ETH-WBTC pool. First you enter how much ETH you want to lock. Pay MATIC gas fees to Approve WBTC. Similarly, Approve ETH and pay MATIC gas fees are 0.002222. It is in sub cents range. I have deposited 0.0007469 WBTC and 0.0102 ETH with pool share of 0.0006%. The you click Confirm Supply and pay MATIC gas fees in same sub cents range. You can confirm your pool by click on Pool tab on the top. You will see your WBTC-ETH pool. Click on Manage and you can see how much you have on the pool. I gotten 0.0000000005123 WBTC-ETH pool token. You can click on Remove and see how much if you unstake from the pool in tokens you will able to claim back. I wish this DEFI tool or other like PancakeSwap and Uniswap tell you easily how much is your initial investment grown over time from the initial deposit.
By the way, Dfyn Exchange on Polygon Chain you can buy DFYN tokens directly from the Swap tab. They provider very high APR for staking in on the Exchange.
Getting Detail Analytics of Accrued fees Liquidity Pool
Here is how to see your accrued fees on above provided liquidity pool. Go to Pool tab. Click on your above provided liquidity pool. Click Manage. You will see a link that says View accrued fees and analytics. It is very nice way of seeing cumulative fees earned over time. On the Wallet Stats below tells your total Value swapped, total fees paid, and transactions history with actual links to transactions on the Polygon block chain.
In Summary
I used DfYN.network defi exchange to with Polygon network to deposit tokens into WBTC-ETH pair to earn great APR of 43.6% as of shooting this video. I am plan on dumping tokens here that I am plan on holding for the long term. I know there are risk involve in any defi exchange like smart contract hacks. I am willing to take some risk to grow my saving much better than holding on a centralized exchange like Coinbase and not get any growth in BTC stack. This is certainly way better holding Fiat in regular bank.
Let me know if I am missing anything or other interesting topic you want me to cover in the comments section below. Also, do not forget to tip (it does not cost you anything) this independent author if you like this content!
Here is the step by step video of how this is accomplished:
