Dipping into DeFi
2 - The Review
Welcome BACK to the Review
The Review will be a weekly look at a few recurring topics, like short threads & expanded thoughts, recent news in the ecosystem or art & development projects + dialogue. This week on the Review, I only dipped my toes into the World of DeFi, reviewing concepts & beginning to explore the dApps on SOL leading this charge on the crypto and NFT sides.
Once again please join me in reading. Also consider subscribing for free if you haven’t already. If you have thoughts & want to discuss, I’d love to chat more! Please reach out below, on twitter, ScarfDAO general chat or DMs.
In this article:
What is Decentralized Finance? Value is Coming…
SMOL Supply & Liquid Pools
DeFi Content & Diving In
WTF is… DeFi?
To get a grasp of DeFi, one needs to understand the basics. As a fast review, above is a Twitter thread in a quick summary series. You can also see below for a few words from ChatGPT if you’d like to skip the thread:
DeFi is the shift in the financial-tech sector which will have lasting impact on the way we see money & arguably already has, with the States & other countries pushing to adopt their own cryptos. With a coming globalized change in currency, understanding how the system works & finding out what is possible is important to utilizing these new structures to your advantage.
Big Community, 1 Supply
SMOL was an airdrop following the wake of BONK, FRONK, and the other memecoins & is the first pitstop in our journey through Solana DeFi. To get a quick summary on the coin, check out the quick thread:
With this coin, I ended up trying out Raydium to farm liquidity & refresh my DeFi understanding. I reasoned that if the coin went up or down, I could reap rewards from those fluctuations through assigning my SMOL & equal value in USDC paired up in a pool with others. One application that provides an application & interface to use these pools is Raydium, one of the early adopters of SOL DeFi, although there are other great protocols like Orca or Tulip.
Here I deposited my liquidity in smol-USDC pair as described & shown above. Then I staked my liquidity in the appropriate pools, I chose the ongoing week as well as the next period to split my funds up.
Once I did this, I ended up farming over the next few days before pulling out my earnings & liquidating my holdings after understanding more about SMOL’s future tokenomics. I sold although the 1 supply was a great meme for me & I love the community forming around it. I may revisit this coin as the devs are doing something, releasing a wallet-enabled application to make smol pfps & developing a platform for empowering smaller artists through SMOL.
DeFi Docs
In collaboration with ScarfDAO, with a goal of exploring decentralized finance starting on Solana & making it understandable to the average person, The DeFi Docs will be added to as I trek through liquidity pools, NFT-enabled protocols & more.
DeFi Docs will serve two purposes:
To follow along from beginner to explore in-depth DeFi concepts
Set standards for Scarf educational content via ScarfDAO
With help from the readers & the community, these threads will become better over time. I ask that you follow along for the journey & contribute along the way however you see fit, even if its as much as your time spent reading.
Diving into DeFi?
Coming from centralized finance to DeFi, the shift can make you do a lot of somersaults in your head. It’s honestly something I’ve seen before and need to go back over & fully understand as I’ve gotten more into the crypto world. Many of these concepts only need basic understanding to use & extract value but can have complex & even dangerous outcomes.
One such example is impermanent loss, which can reduce your liquidity & rewards’ value to zero. Newly learning or reviewing this knowledge is beneficial to those who take the time & this is a topic surely to be covered in DeFi Docs in the future.
Either way, taking time to learn concepts has been helpful to me especially here in DeFi and I’d recommend.
-Caleb
P.S. Tap in to support the Chop Up this Tuesday night, we got blue-chip NFT projects coming as guests & prizes for listeners:
LFG
let’s go Caleb