Decentralized finance has been on the radar of all crypto enthusiasts for the past few years. Everything is thanks to a comprehensive list of benefits, such as total anonymity, safety, and high value. In this sector of the blockchain ecosystem, people can carry out operations using DeFi tokens. These digital assets represent a list of cryptocurrencies located on decentralized exchanges, such as http://saddle.finance/, and much more. The coins operate with the help of a smart contract system.
DeFi token holders get access to a variety of services on the platform. Clients can lend, stake, borrow and even earn income. More than 75 billion dollars worth of coins is locked in the blockchain network. This indicates the extreme interest of the community in such technologies. Let’s take a closer look at the DeFi tokens concept so that everyone can quickly dive into this promising crypto direction.
What are the DeFi tokens?
DeFi tokens, in the simplest sense, are virtual assets that transfer the value of a product during a transaction. Most of these coins stably operate thanks to a blockchain network. They get product names like Uniswap, Chainlink, Compound, Aave, Maker, and others.
These digital assets are the so-called key that opens access to all the platform’s functionality. The average user cannot benefit from DeFi products. Only token holders have access to an extensive list of tools like yield farming, lending, borrowing, and much more. There are also other unique features that the coin holder’s system offers. These tokens can represent real-world assets, such as bills, real estate, and so on.
Where to buy a DeFi token?
Many may think purchasing such assets is available only through particular DeFi protocols. But in fact, they are traded on all known crypto websites, such as Binance, FTX, and Coinbase. Clients can buy or exchange these tokens just like any other cryptocurrency.
If one wants to gain access to protocol governance, holding tokens on specific DeFi wallets is imperative. After that, people need to connect their wallets to the system and participate in the decision-making process.
Why should you buy DeFi tokens?
Clients who have never been familiar with this type of digital asset before do not fully understand the reasons for purchasing such tokens. Below, people can see the list of benefits that DeFi tokens offer.
- Ability to make a profit. DeFi tokens offer an extensive range of earning opportunities. Crypto enthusiasts can lock the assets in lending and gain income from this investment. People can engage in peer-to-peer borrowing and lending without spending money on intermediaries. Some platforms allow you to sell luxury goods with DeFi tokens.
- Entire transparency. Thanks to total decentralization, all DeFi tokens receive extreme openness. The registry with the protocol data and transactions is in the public domain. It improves diligence and reduces the number of hacker attacks. Crypto investors can easily avoid scammers and protect their assets.
- Permissionless access to all services. DeFi token holders get easy access to all tools and products. There are no more regulatory bodies that can hinder the movements. The interaction process within the ecosystem is also straightforward.
DeFi tokens offer customers not only complete protection of their money but also tremendous earning opportunities. Every year they come up with more and more directions that will allow getting profit from almost everywhere.
What are the risks of DeFi tokens?
Despite the multi-layered protection system, some scammers can steal money. Regardless of where the client purchased DeFi tokens, there is a risk of being deceived through centralized exchanges.
A similar situation is possible if the protocol has gaps in the code. So, for example, at the end of 2021, the price of COMP token dropped sharply due to the withdrawal of tens of millions of dollars from the treasury. In addition, changes in project management can also cause a price decline. But, despite all the risks, you should try to invest in this technology.