How to Make Sense of DeFi?
5 Platforms for
Crypto Analysis
Crypto industry has grown out of the experience of traditional financial institutions. Sooner or later, the alternative to the banking sector had to appear there. That is what happened after DeFi creation.
DeFi is a set of blockchain-based tools, services, and apps. It replaces traditional financial technologies with open-source protocols. It's called "smart contract".
All of these give people access to decentralized lending and new investment platforms, avoiding the banking sector. People, in turn, can get passive income from crypto assets and save money on transfer, loan, and deposit fees.
DeFi is a set of blockchain-based tools, services, and apps. It replaces traditional financial technologies with open-source protocols. It's called "smart contract".
All of these give people access to decentralized lending and new investment platforms, avoiding the banking sector. People, in turn, can get passive income from crypto assets and save money on transfer, loan, and deposit fees.
07.12.2022
Traditions vs Innovations
Firstly, we need to understand that the crypto industry took the concept of earning from assets from the traditional financial system. There was no need to reinvent the wheel.
There are two basic approaches: venture capital investment and trading.
The main factor is time over which one wants to make profit. In case of venture capital investments, it can take several years. As for trading, it's about minutes, days, and weeks.
DeFi has one main difference from traditional financial systems. There is no intermediary between the asset and the investor. It means that participants have additional responsibilities when they make decisions. They evaluate the assets themselves without anyone else's help and buy them at their own risk.
Let's find out how to analyze the assets we want
to invest our money in.
Firstly, we need to understand that the crypto industry took the concept of earning from assets from the traditional financial system. There was no need to reinvent the wheel.
There are two basic approaches: venture capital investment and trading.
The main factor is time over which one wants to make profit. In case of venture capital investments, it can take several years. As for trading, it's about minutes, days, and weeks.
DeFi has one main difference from traditional financial systems. There is no intermediary between the asset and the investor. It means that participants have additional responsibilities when they make decisions. They evaluate the assets themselves without anyone else's help and buy them at their own risk.
Let's find out how to analyze the assets we want
to invest our money in.
DeFi liquidity
As with traditional finances, it's better to invest money in liquid assets.
The DeFi market was born around 2017. As CoinMarketCap says, it has capitalization of around
$35 billion. To compare, the Paris budget in 2022 was less than $10 billion.
Of course, as with all emerging markets, DeFi isn't a remedy for volatility, downs and making mistakes. However, the development and the formation of basic infrastructure are doubtless facts.
As with traditional finances, it's better to invest money in liquid assets.
The DeFi market was born around 2017. As CoinMarketCap says, it has capitalization of around
$35 billion. To compare, the Paris budget in 2022 was less than $10 billion.
Of course, as with all emerging markets, DeFi isn't a remedy for volatility, downs and making mistakes. However, the development and the formation of basic infrastructure are doubtless facts.
About transparency
DeFi transparency allows to analysethe assets because the system is blockchain-based. All applications have open-source protocols, so all data is available for users.
With that in mind, we want to remind you that anonymity in this area is just a myth. It's possible to find the main information about senders, balances and other metrics. No bank or broker would give this data to their clients in the traditional financial system.
Here is another example. A bank has $1 million in deposits and $2 million in loans granted. If all depositors come to take their money back, the bank will become insolvent without help from the regulator. But bank clients have no idea.
This example shows that transparency of financial service provider data is not always bad for us as investors. At the same time, users can examine DeFi contracts and evaluate the trading activity of the protocols.
DeFi transparency allows to analysethe assets because the system is blockchain-based. All applications have open-source protocols, so all data is available for users.
With that in mind, we want to remind you that anonymity in this area is just a myth. It's possible to find the main information about senders, balances and other metrics. No bank or broker would give this data to their clients in the traditional financial system.
Here is another example. A bank has $1 million in deposits and $2 million in loans granted. If all depositors come to take their money back, the bank will become insolvent without help from the regulator. But bank clients have no idea.
This example shows that transparency of financial service provider data is not always bad for us as investors. At the same time, users can examine DeFi contracts and evaluate the trading activity of the protocols.
Where can I learn more?
You can start the analysis of DeFi applications with the research of the blockchain. It can be, for example, Ethereum because most existing DeFis are based on it.
You could start your research with the Etherscan platform or you could take a look at CoinGecko.
Also, there are project chats where you can find the answers.
You can find more detailed analysis of smart contracts at Dune.
Platform developers decrypted Ethereum contracts and you can find out more via SQL requests.
On Dune you can find information about certain pair of protocols or certain dex, on a particular pair.
The graph shows the inflow and outflow of funds for UNI V3 on the Polygon network.
On the RugDoc platform, you can look for the cons of applications smart contracts. References help us understand how crucial mistakes are to make a rating of investment attractiveness. By examining the content, you can find new protocols to explore and invest in.
RugDoc has a full-fledged training platform. Developers of the platform even say it's possible to audit through their algorithms.
Also, you could take a look at DeFiLlama. It's one of the most convenient platformsto explore what's happenning to the DeFi market. You can follow the whole market or just take a closer look at specific areas, e.g. FTM lending. They are constantly working to improve the platform, so you'll find great flow
of infirmation.
You can start the analysis of DeFi applications with the research of the blockchain. It can be, for example, Ethereum because most existing DeFis are based on it.
You could start your research with the Etherscan platform or you could take a look at CoinGecko.
Also, there are project chats where you can find the answers.
You can find more detailed analysis of smart contracts at Dune.
Platform developers decrypted Ethereum contracts and you can find out more via SQL requests.
On Dune you can find information about certain pair of protocols or certain dex, on a particular pair.
The graph shows the inflow and outflow of funds for UNI V3 on the Polygon network.
On the RugDoc platform, you can look for the cons of applications smart contracts. References help us understand how crucial mistakes are to make a rating of investment attractiveness. By examining the content, you can find new protocols to explore and invest in.
RugDoc has a full-fledged training platform. Developers of the platform even say it's possible to audit through their algorithms.
Also, you could take a look at DeFiLlama. It's one of the most convenient platformsto explore what's happenning to the DeFi market. You can follow the whole market or just take a closer look at specific areas, e.g. FTM lending. They are constantly working to improve the platform, so you'll find great flow
of infirmation.
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