Decentralised Finance, also known as DeFi, has become increasingly popular in the crypto world. It is important to learn how to use a web 3.0 wallet for DeFi users.
What is DeFi?
DeFi often refers to the general and open financial activities on the public blockchains consisting of Web 3.0. Unlike traditional finance, no banks or big financial institutions are needed in the DeFi world. Featured by permissionless access and financial inclusion, DeFi has cultivated many successful products including stablecoins, loans, decentralised exchanges (DEX), insurance and more. Yield farming, for example, is a lending and staking system which provides yields for users who participate automatically and has become the biggest growth driver of the DeFi market.
Why We Need a Web 3.0 Wallet
A Web 3.0 wallet will be the most important tool for DeFi users as it is integrated with multiple functions including storing digital assets and accessing different Dapps. Wallets function similarly to bank cards in the traditional financial world. You can send and receive money through your wallet without going through AML or KYC procedure, thus keeping the privacy and safety of an asset as long as the private keys of the wallet are well preserved.
The thriving crypto market has developed a number of wallets nowadays. Metamask, imToken, TokenPocket and hard wallet Ledger are popular among global crypto communities. As for DeFi users, it is recommended to use Metamask because it has the biggest documented number of active users worldwide and is by far the most popular wallet for Ethereum DeFi users. imToken or TokenPocket are also great options as they have different DeFi Dapps embedded into the interface of their wallets.
How to Use a Wallet for DeFi
In the following part, we will take Metamask as an example to show how to use a wallet for DeFi.
Step 1: Create Your Own Wallet
Metamask has two versions, one is the Mobile app version and another is the Chrome extension version for PC.
Starting with the Chrome extension for PC; go to the chrome web store and add Metamask as a plugin for the Google chrome browser.
Once it is plugged, click ‘Get Started’ and ‘Create a Wallet’; or ‘Import Wallet’ to type the old seed phrase if you already have one.
Write down the seed phrase and set up a password for the new wallet; make sure they are not accessible to anyone else except you.
Step 2: Get Familiar with the Basics
Metamask has three basic functions on the main account page and you can buy, send or swap tokens directly by clicking corresponding buttons. You can buy ETH through Wyre or TRANSAK with a credit card or debit card. You can also send ETH to this new Metamask wallet by transferring tokens from crypto exchanges like Coinbase; Click ‘Send’ and input receiving address if you want to transfer ETH to another wallet; Click ‘Swap’ if you want to exchange ETH with different tokens.
Go straight to the main account page and click ‘Add Token’ if you want to add different coins to Metamask.
Click the top of the main account page and you will be able to switch to a different blockchain network or add a new network by clicking ‘Custom RPC’.
If you want to connect Metamask to your hardware wallet or create a new account, you can click the profile pic sitting on the top right corner of the main page.
Step 3: Select the Dapps for DeFi and Have Fun
Once the wallet is ready, you can select different Dapps to use for DeFi. Uniswap is a decentralised exchange and you can connect your Metamask to it if you want to exchange ETH into different coins. If you want to try yield farming, for example, you can connect your Metamask wallet to AAVE or Compound to be a happy “farmer”. Do your own research before giving consensus or signature of your wallet to Dapps and enjoy your DeFi adventure.
