Step 3: Choosing Coins to DeFi with
Getting coins that make interacting with DeFi cheaper and easier
My Step-By-Step series is not financial advice, and for all extents and purposes, people will probably tell you the coins I recommend buying will not make you rich or good financial investments. There will be some who argue that it is excellent and these coins will “moon.”
I am trying to show you most cost-effectively and efficiently how to interact with Cryptocurrency and Decentralized Finance. I want to enlighten you enough to give you the confidence to do your research and make your own decisions on what Crypto ecosystems to join.
My recommendations are based upon what coins will give you exposure to more Crypto and will cost the least amount to do that.
In Crypto, anytime you make a transaction, it costs “gas,” basically a tiny portion of your coin to pay the network fees to run your marketing. Banks and credit card companies also require transaction fees, but they hide them from the consumer and pass it on as fees for other products.
You’ll also notice coins’ names read like stock ticker names. Ethereum is ETH, and Bitcoin is BTC. I will probably use these interchangeably throughout, and I’ll try to be consistent.
STX and AVAX
I recommend getting STX and AVAX if you start in Crypto to learn fundamental DeFi principles like NFT, Pooling, Farming, Ponzinomics, and Governance.
STX and AVAX both have robust ecosystems and, more importantly, have very cheap transaction costs. So conceivably, you can explore the entire ecosystem and never spend more than $20 in transaction fees.
Today’s lesson will focus primarily on using the OKCoin EARN feature for STX to earn interest on the coin.
STX:
STX has a lot of great qualities as a blockchain system. And has a passionate fanbase.
I think it is best to get cheaper NFTs, accumulate passive income in interest, mining, and finally lend.
Here is an excellent breakdown of STX https://kriptomat.io/stacks/
and here are STX documents
https://docs.stacks.co/
AVAX:
AVAX has a lot of features that ETH has, but the gas is much cheaper. One knock on AVAX is that it is nothing but a copy-paste of ETH and many ETH projects. That is why I think it is an excellent blockchain to start on because it is cheaper to use than ETH while showing the same great qualities ETH has brought to DeFi.
Here is an excellent breakdown of Avalanche (AVAX) https://www.gemini.com/cryptopedia/avax-coin-avalanche-crypto-ava-labs
Here are the official documents for Avalanche (AVAX)
https://docs.avax.network/
STX Earn
You can get STX on OKCoin, and you can then lock up your STX to earn BTC. You make Bitcoin because the STX network helps BTC miners become more efficient in mining, and after every cycle, BTC miners pay STX networks a small fee as thanks for helping mine BTC.
Then go and select the STX option, where the reward is BTC. Note the caption on top lets you know when the next “cycle” happens. The STX cycle occurs about every two weeks, and you have to lock up your STX before the cycle begins. If not, then you have to wait two weeks for the following process to start.
Hit the deposit, and it lets you select if you want to "lock" your coins for one cycle (~2 weeks) or 12 cycles (~6 months)
If you do 12 cycles, you cannot contribute more STX until all 12 cycles are over (basically six months). So you have to decide if you will be buying any more STX and if it is worth it. If you do one cycle, you currently cannot participate in the next cycle because the lock-up period ends after the start of the next cycle. You can only contribute every other cycle, which reduces your 10% APY.
Personally, the STX ecosystem is constantly changing, with exciting projects happening all the time. I don't particularly appreciate having my STX locked up for too long because I want to make sure I have enough liquidity to participate in other
AVAX Earn:
It is the same process as STX, but the APY is 7.40%, and you lock it up for 15 days at a time. There is no cycle start date, and if you remove the coins before the end date, you are penalized.
You earn AVAX rewards because you are providing “liquidity,” meaning that OKCoin does not have to keep as much Avax on hand. Much like how CDs lock up cash for a certain period, it helps the network calculate how much they need. The interest is the fees OKCoin gets in creating transactions and gives a portion back to you. Much like banks has an interest rate for savings accounts.