Control your destiny or someone else will.
This resonates deeply. Especially with this social economic paradigm shift that is taking place as I write.
If you haven't read any of my previous articles, you may want to. I am attempting to hone my writing skills and share my experiences as a investor, hodler, buidler and programmer.
Let's continue with yield farming.
Cryptos are by no means a lottery ticket that you buy with hopes to win. This is a basic rundown of some fundamental principles that you can implement in to your process.
A fundamental approach to your potential investment is imperative to your success. These fundamentals will help you to formulate a strategy and having a strategy will more likely yield better results. So, here are a few things that I do that have satisfying results.
1) Consider active addresses on the network. I use this to gage how much the network is being used. Goes without saying, the more a network is being used the more potential it has.
2) White paper. This I believe is one of the most crucial things to consider. Reading the white paper or at least parts of it will help familiarize your self with the development team and understand their objectives and get a sense of what their goals are. The teams track record, who are these people? A simple duck duck go search will usually turn up something. This will help you determine their abilities to develop a useful product.
3) Road map. Again, their objectives, goals and time frame. Are they on track?
Every successful company or project has a few things in common, they develop an outstanding product or service. A cryptpocurrency's product is the code. The programming is what makes it valuable or not. With out innovative programming there is no BTC or Ethereum. Ultimately, the programming is what we are buying.
With yield farming there isn't a one set way to do things. Each platform will have its own set of rules and getting familiar with decentralized liquidity protocols is a great start. A rule that I don't deviate from is staying in control of my investments at all times thanks to DeFi.
MakerDao is a decentralized credit platform that works by creating DAI. DAI is the stable coin that is pegged to the U.S. dollar. Using Maker enables you to mint DAI to use in your strategy. By opening the Maker Vault you can lock collateral assets like the U.S.D.C, Ethereum, BAT and wBTC. This generates DAI as debt against the collateral that you've locked. This debt incurs interest over time, this is called the stability fee.
Aave is another decentralized protocol for lending. Borrowing algorithms are used for adjusting the interest rates based on current market conditions. When using this platform as a lender you will receive aTokens in return for your capital. I started earning and compounding interest immediately after I had made a deposit. You will find that the Aave protocol will make it easier to get started in yield farming. This project is gaining traction and showing explosive potential.
Aave has just been granted an Electronic Money Institution license by the U.K. FInancial Conduct Authority, which is the equivalent to the SEC in the United States. This is great for DeFi and cryptpocurrency as a whole by opening DeFi services to a wider user base and moving us closer to mainstream adoption.
There was a time when buying an altcoin wasn't as easy a process as it is today thanks to Decentralized exchanges, interoperability and liquidity pools.
I will continue this soon