Help! I'm a defi n00b!

BbyA...nMtW
19 Apr 2023
69

Defi is a really really interesting space. It's currently mostly financial but it's not just financial. BULB uses a bunch of defi concepts and designs that have been battle tested in financial defi. BULB is defi in many ways.
But defi is also very new and we've not seen a lot of standardisation yet so it can be quite overwhelming for new comers.

Never fear, there's heap of resources to help you get started and you'll see, despite the outward appearance, defi actually pretty simple when you get down to the core concepts.


Where oh where to start?



I cannot recommend defi information aggregator stalwart, Defi Llama, 2022 #defi review more highly as a great starting place for people new to defi. Find it under 29 December 2022: 2022 EOY Report

It’s both a review of 2022 and a review of #decentralizedfinance history to this point. For someone new to the defi space the information available can be little short of overwhelming. There is a lot going on and most of it assumes you already have the backgrounding necessary to understand it. The Defi Llama report doesn’t act as a an explainer for defi rather it acts as a high level map of the industry by showing all the important events along that timeline from inception to today and explaining why those events were important and what they meant practically speaking.


If you’re new you won’t know many of the terms, but the way the report is written you won’t have to. That’s because in each case the Llamas have given you the plain English version of what happened and it’s impacts. But they don’t totally dumb it down, they’ve added enough low level information that you can easily research each thread to learn more.



Be guided by your curiosity

It’s counter-intuitive but it works.
You could hit any of the sites I've list further down and then try and figure out what articles you should read, and in what order, but that is daunting for most. To be fair all the resources listed below are really good but they're still long lists of articles and courses with no “map” to show you where you’re going and why you’re going there. Defi Llama just gave you that map.

So I’d encourage you to read through this report once to start with, then start again from the top and follow each strand that interests you.

I could spend many words here trying to summarise key concepts but it would soon turn into a wall of text. Below are excellent places to start pulling on those strands and to further your knowledge in general.


Defi news and education resources

There are a lot of crappy crypto site out there. It's only getting worse with AI tools. These are the sites I have come to rely on for reliable and deep reporting about defi

Decrypt https://decrypt.co/ - check out their learning sections. You can earn NFT certificates in their University section. This is one of mine below.


Coindesk https://www.coindesk.com/ - check out their learning sections. You can earn their DESK token for reading and doing courses which can be redeemed for rewards from Coindesk
The Block https://www.theblock.co/
The Defiant https://thedefiant.io/ - check out their learning sections
Blockworks https://blockworks.co/
Delphi Digital https://members.delphidigital.io/home
DeFi Llama News https://www.dlnews.com
Milk Road https://milkroad.com
Cryptocurrency for Beginners | CoinGecko https://www.coingecko.com/learn - good set of courses for newbies
CoinMarketCap Alexandria (similar to CoinGecko's offering above) https://coinmarketcap.com/alexandria - good set of course for newbies
Binance Academy https://academy.binance.com/en - good set of courses for newbies, can earn rewards if you have a Binance account



The Block's shady past aka defi journalism is still a bit 'the wild west'

The Block has come under some much deserved criticism after links to FTX were revealed. The Block never disclosed their links to FTX, some of which were very financially lucrative for their upper management. The Block was and still is home to some excellent resources for defi and crypto in general. It appears the linkage to FTX was not widely known within even the publication itself and the CEO has resigned over the scandal, but it’s key to keep that in mind when reading historical articles here.

It’s not unusual for industry media to be funded by the industry. Coindesk is owned by DCG for example. The difference is Coindesk clearly states that link whenever reporting about DCG or their related entities.

Defi is still a little bit 'the wild west' when it comes to journalism. There are some excellent resources I've listed above but there aren't yet many standards in the industry like you see in traditional finance journalism (though there's problem there). Be careful to make sure when you're consuming news where it's come from.

For example Decrypt has an course on the TRON blockchain. See below for my NFT certificate I got doing it.
But it was sponsored by Tron themselves.
So you have to take some of the course content with a large grain of salt.








Defi analysis

Crypto is based on the blockchain which means data is freely available. That's what makes defi so interesting is that the kinds of analysis that is locked behind very expensive paywalls in traditional finance is available to all in defi.

Coin Explorers

The place to start is the coin explorers.

CoinMarketCap and CoinGecko are the leaders. They have good onboarding guides and heaps of data for you to answer all the initial questions you might have. Good place to confirm a token's name and project website (see scams section later on)

CoinGecko has recently launched a terminal as well. It's an expanded version of their standard coin explorer products and similar to the trading terminals you see most DEXs (decentralised exchange) and CEXs (centralised exchange) use.


Defi protocol and LP (liquidity pool) analysis

If you're analytics inclined and you're looking at investing in the protocols longer term (staking protocol tokens) or looking to assess yield farming opportunities you'll need more detailed analysis than the coin explorers can give you.

Defi Llama is the OG in this space and still the best. It might seem a bit overwhelming at first, and there isn't any good onboarding guides offered, but if you search for the token/protocol/chain you're interested in then it's all pretty self explanatory from there. Great place to search for yield opportunities on chains you like or on certain tokens/protocols.

Good place to double check the figures you're seeing from a protocol LP too. Not all protocols offer good analytics, but you can normally find the LP you're looking at on Defi Llama and get more detailed stats.



Want to go deeper still?

Good for you! Curiosity is it's own reward but it will also often lead to other rewards in defi and help you avoid losses.

Research the project online. Preferably at the resources I listed above. Good protocols often have had journalists and analysts in the space write about them.

Jump into community analysis portals like Dune and Flipside and look for analysis there. And if there isn't any you can start your own! This space is still really new so you can easily build a name for yourself by simply building stuff you find useful in your analysis.




Beware scam projects

There are a lot of very well constructed scam projects out there.
Avoid the spammy news sites as much as possible. A well versed scam design is to seed the internet with article promoting a token/project to give it the appearance of legitimacy.
Docs can be easily faked with AI tools or simply copy pasting from other projects. Same with blogs
Discords and Twitter profiles can be filled with bots faking engagement.

It's still 'the wild west' days for defi (as mentioned before). It's much harder to fake hard numbers as that takes real money (and often lots of it).



Yield Aggregators: Defi simplified

I personally prefer to use yield aggregators for the defi investing I do. They are protocols that automate the process of investing in defi products to achieve higher rewards and lower cost via smart contracts tuned to a certain strategy. These contracts are commonly referred to a: vaults. The basic functions of most vaults are:

  • Auto compound rewards back into the vault
  • Spread the costs of compounding across all vault stakers to significantly lower costs


More advanced vaults might incorporate extra strategies like:

  • Auto rebalancing for concentrated liquidity pools to achieve much higher returns
  • Automating more complex reward schemes (e.g., GMX and GLP strategies)
  • Using derivatives and leverage to conduct a complex market strategy (e.g., ETH price decreases over time)





Some of the yield aggregators I use and like


Solana

Kamino Finance - they have a series of excellent blog posts going into how yield aggregation works and the different strategies you can use. Highly recommend reading.


Francium - also offers leveraged vaults. Lots of good tools to adjust your risk
Tulip Garden


Mulit-Chain

Yearn Finance - The OG of OGs of defi for many Yearn remains to this day a powerhouse

Beefy Finance - The most comprehensive offering in all defi in terms of vaults and chains. Great place to find out about new protocols as if they make it into Beefy you know they're at least off to a solid start. Beefy also offer excellent analytics (especially since their recent upgrade to the analytics module) on vault so you have heaps of information to make informed investment decisions.





Defi is an incredible place to learn about the cutting edge of finance and digital ownership in general so I encourage you to look around and learn all you can.





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