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29 September 2020

Investing in DeFi? Bet on diversification, not short-term gains

Investing in DeFi? Bet on diversification, not short-term gains


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The decentralized finance space has grown exponentially over the last few months, to the point where more than $9 billion worth of crypto assets were locked in its protocols before crypto prices started dropping.

Put simply, yield farming — or liquidity mining — allows DeFi users to generate rewards with their cryptocurrency holdings by interacting with protocols that distribute governance tokens.

Farming yield can be a profitable venture on its own, but the tokens being farmed often see their price surge as well.

One of many examples of this is YFI, the governance token of Yearn.finance, a site that helps users find the best yields in DeFi protocols.

One famous case is that of Yam Finance (YAM), a DeFi project that saw users lock in over $500 million worth of crypto assets on it before a bug that was discovered made it impossible for the community to reach a quorum.

While the creators of Yam Finance did warn users that their smart contract was unaudited, the pursuit of short-term gains saw users lock in over half a billion dollars in it — even though the protocol’s token was not listed on top exchanges — before tragedy struck.

To help you create a portfolio that will let you gain exposure to DeFi, OKEx has created a DeFi tokens tab where you can now access 35 different tokens related to different protocols.

Users can also margin and swap trade a variety of DeFi tokens on the OKEx platform, enabling them to execute strategies to maximize profits while hedging their trading risks.

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