In this article we’ll show you how to buy 1 token for exposure to over 50% of the total value locked in all of Decentralized Finance with the DeFi index called DEFI5 created by Indexed.Finance.
With the recent hype around Decentralized Finance many newcomers are entering the space and asking us for advice about which tokens to invest in. This is an incredibly tough question.
One great starting place is a crypto ETF or Index. Diversifying one’s risk across a basket of assets is the number 1 lesson in any Finance 101 course and the same holds true for DeFi. Especially in a high growth market, an index of tokens tends to perform better than actively managed portfolios.
Imagine you had been an investor in the internet dot com era. What would have been the odds that you identified Amazon as the promising company among all the companies that went bust later. Holding an index of tech stocks would have been easier and performed extremely well.
Many novice (and expert) investors could benefit from exposure to DeFi as a whole as a foundation of their crypto portfolio. We’re glad we can now point them towards the DEFI5 token! DEFI5 is a DeFi index token from Indexed.Finance that uses an automated trading mechanism to hold the top 5 Defi tokens in its vault.
The balances of each token adjust with their real time prices. This re-balancing and re-weighting to follow the trends in the market sector is done by fund managers in traditional finance but in the case of Indexed it's happening 100% on-chain thanks to smart contracts. DEFI5 tokens represent a user’s share of those top projects. By holding the top 5 DeFi coins the index captures the value of the market share of about 60% of the Ethereum DeFi ecosystem (about 47 Billion of the roughly 78B in DeFi at time of publication). That is similar to the S&P 500’s 75% share of the US stock market.
What tokens are in the DeFi5 Index?
Currently the DeFi index is targeting the tokens in the chart above which also shows their target weights. The target weights are derived from the square root of their market caps. Indexed Finance uses this square root of market cap to enhance the weights of the "smaller" projects.
How has DEFI5 performed since inception?
How to buy the DeFi Index Token
Currently, the index tokens from Indexed.Finance are only available through apps that connect to a personal crypto wallet. They will be available on central exchanges soon. Central exchanges are the big names like Coinbase, Bittrex, Binance, etc. So if you do not have a crypto wallet you need that first and here are some options we wrote about in another article. Dharma is a fairly new wallet designed to help onboard new users so they can learn and benefit from DeFi. Dharma could be a great option if you are just stating out.
Here is a referral link giving you $50 of ETH after you connect a bank account and buy at least $500 of crypto or use referral code RFXJSB.
Metamask is the most widely used wallet in DeFi. Metamask can be used on its own or in conjunction with a hardware wallet. Find an in depth walkthrough of setting up a Metamask wallet here
Once you have your wallet you will need to fund it. This is generally called a “fiat onramp”. This could be done from any of the major cryptocurrency exchanges or directly in Ethereum wallets such as the Argent or Dharma who have built in ways to send money from your bank or credit cards to your crypto wallet.
OK - so you have a crypto wallet with some funds, now we can talk about ways to buy the DeFi index DEFI5.
Where to Buy the DeFi Index?
- Buy/Trade on Uniswap (Ethereum Chain)
- Buy/Trade on Quickswap (Polygon/Matic Chain)
- Purchase through apps like Zapper & Zerion (Ethereum Chain)
- Purchase through wallets like Dharma, Argent or Rainbow
- Mint or Buy on Indexed.Finance through their Uniswap plugin
How to Buy the DEFI5 Index Token on Uniswap (Ethereum)
First, head to Uniswap. Currently the Indexed family of index tokens are available on V2 of Uniswap and have not migrated to V3. So if you get a message that there’s no liquidity on V3 like the picture below on the left, just click on the trade with V2 button to head to V2. Then input the token you want to use to purchase DEFI5 and the quantity and click “Swap”
Note, if you haven’t approved Uniswap to access either of the tokens in your trade you will need to “Approve” them first. Each approval will be a separate confirmation in your wallet and will require a gas fee.
Once the transaction is complete you will have your DEFI5 tokens, congrats. In some wallets you may need to add the token address to your wallet so it looks up and displays your balance. The contract address for DEFI5 is 0xfa6de2697d59e88ed7fc4dfe5a33dac43565ea41 or if you are adding it to Metamask you could use the little fox link on the Coingcko page to add it automatically.
How to Buy the DEFI5 Index Token on Quickswap (Polygon)
Buying DEFI5 on Quickswap is very similar to buying on Uniswap. Quickswap is a “fork” or copy of Uniswap. The big difference is Quickswap is on the Polygon/Matic network.
The main benefit to buying on Quickswap is lower transaction fees. This is a major factor if you are buying anywhere from zero to say a few thousand dollars worth of DEFI5. At those amounts you may want to consider Quickswap since a greater portion of your purchase will go towards DEFI5 and not fees.
1) Connect to the Matic/Polygon network
When you go on the Quickswap page, you will see a button in the navigation bar that says "Switch to Matic". If you click this button your Metamask wallet will automatically be connected to Matic instead of the default Ethereum network. You can imagine this like connecting to a different WiFi network,.
2) Get funds on Polygon
If you need to bridge funds say from Ethereum to Matic you have a few options, one is the Zapper bridge or use the official Matic bridge. Both do the same thing but the Zapper interface is arguably more user-friendly.
If you don't have any funds on Ethereum to transfer, you can also use the “Buy” tab on Quickswap to purchase crypto with a credit card (see image) and get it delivered straight into your Metamask account on Polygon.
3) Buy DeFi index on QuickswapOnce you have funds you can use Quickswap to swap ETH, USDC or any other token to buy your DeFi index.
There will be an approval confirmation and a trade confirmation, but notice the miniscule transaction costs! Each transaction on Polygon costs just fractions of pennies right now.
How to Buy the DeFi Index through Zapper (desktop/mobile browser app)
Zapper.fi is a convenient place to buy DEFI5. Zapper is a dashboard/portfolio app with built in functions for trading, staking, bridging, etc - this method requires a crypto wallet and does not have a method to add money via bank/credit card.Once you have funds in your Ethereum wallet you can make trades at Zapper.fi.
Head to the “Exchange” tab and select the token you want to exchange to buy DEFI5Once you complete your purchase you can switch over to the Dashboard tab and use that to track your investments
How to Buy the DeFi index through Zerion
Zerion is a popular app (Apple/Android/web) is a Crypto/DeFi portfolio tracker. It gives you a dashboard of information, transaction history and a built in trading page you can use to buy the DEFI5 index. it also gives you the option to buy crypto using bank tranfer or credit card if you don't have any crypto funds to begin with.
Once you have funds in your Eth wallet you can make trades at https://app.zerion.io/exchange. Simply, head to the “Exchange” tab and select the token you want to exchange to buy the DeFi index.Once you complete your purchase you can switch over to the Dashboard tab to track your investments. Zerion will give you your hourly, daily, weekly, monthly and yearly portfolio performance.
How to Buy the DEFI5 Index Token through Indexed.Finance
Indexed.Finance gives users a few different ways to buy their index tokens.
- Mint with all tokens
- Mint with single token
- Mint with uniswap
- Swap through Uniswap directly on Index.Finance
For users buying less than about $10,000 the last option, “Swap through Uniswap…” will probably be your best bet.On Index.Finance scroll down and click on “DEFI5 Top 5 Index”. The default option should be “Buy DEFI5” which is what you want as opposed to MINT, BURN, SWAP.
Use ETH to purchase DEFI5 - this option only works if you are buying with ETH. If you want to buy with another token head to Uniswap directly.
The minting options above require more transactions and computations which means more gas in order to complete the order. If you are looking to make a larger purchase (>$100k) however, the minting option could be worthwhile. Check out this guide on minting or join the Indexed.Finance Discord group and ask questions. Community or team members will walk you through the minting process.
Conclusion
The DeFi index token, DEFI5 by Indexed Finance is an awesome way to get warm with DeFi. We’ll make sure to shill it to whoever asks us for investment tips and we can’t wait to see the ingenious ways it will be integrated into other DeFi projects.
What do you think about the DeFi5 Index from Indexed Finance? Tag us @DeFiCoach @cryptotesters on Twitter and let us know!
FAQs
How do I invest in the index DeFi? ›
Use your ETH to buy DeFi Pulse Index in the trade tab
Tap “choose coin” and select DeFi Pulse Index. Input the amount of ETH you'd like to exchange for DeFi Pulse Index. Remember to leave enough for transaction fees. Confirm your purchase and follow the instructions on the screen to finalize.
The DeFi Pulse Index is a digital asset index designed to track tokens' performance within the Decentralized Finance industry. The index is weighted based on the value of each token's circulating supply.
What coins are in DeFi pulse index? ›Underlying tokens in the DPI Index: Aave, Balancer, Compound, Cream, Farm, KNC, Loopring, Maker, meta, REN, Sushi, Synthetix, Uniswap, Yearn, Instadapp, Badger, Rari Capital, Vesper.
What is indexed Crypto? ›Indexed Finance is a set of capitalization-weighted index pools designed to replicate the behavior of index funds. Indexed Finance token: $NDX. Indexed Finance contract address: 0x86772b1409b61c639EaAc9Ba0AcfBb6E238e5F83. $NDX Charts and Liquidity.
How can I participate in DeFi? ›First, get a wallet that supports Ethereum and can connect to various DeFi protocols through your browser. MetaMask is a common choice. Second, buy the relevant coin for the DeFi protocol you plan to use. Right now, most DeFi protocols live on Ethereum, so you'll have to buy ETH or an ERC-20 coin to use them.
What are the risks of DeFi? ›Like all software, DeFi protocols have two main software risks – coding errors, "bugs," that may cause the software to malfunction, and security vulnerabilities that allow thieves, "hackers," to break in and steal funds from the protocol.
Is there a DeFi index fund? ›The Bitwise DeFi Crypto Index Fund is a simple and secure way to gain diversified exposure to one of the fastest-growing segments of the crypto ecosystem.
Where are the next DeFi projects? ›- #1. Colony Lab: Best De-Fi Project on Avalanche Blockchain.
- #2. Aave: Decentralized Finance Platform Showing Liquidity Protocol.
- #3. Fantom: Digital Assets, dApps, & Smart Contracts.
- #4. PancakeSwap: Most Popular Decentralized Platform.
- #5.
DeFi Pulse Index (DPI) is an index product provided by Index Cooperative. DPI is a capitalization-weighted index that enables investable access to DeFi. The index includes large DeFi governance tokens, covering the major DeFi exchanges, lending protocols, and more.
What is indexing and why do we need it? ›Answer: An index is a schema object that contains an entry for each value that appears in the indexed column(s) of the table or cluster and provides direct, fast access to rows. The users cannot see the indexes, they are just used to speed up searches/queries.
What is indexed access? ›
What is an index? You can use an index to help Access find and sort records faster. An index stores the location of records based on the field or fields that you choose to index. After Access obtains the location from the index, it can then retrieve the data by moving directly to the correct location.
Where can I buy Degen index? ›DEGEN Index is only available through Coinbase Wallet. Assets on Coinbase Wallet are not held by Coinbase. Use of Coinbase Wallet is subject to these terms.
Can you stake index token? ›Most DeFi indexes are managed by DAOs who use liquidity mining as an incentive to bolster market liquidity and as a way to distribute governance tokens. When you stake index tokens, you're eligible to earn further rewards.
How do you sell DPI? ›You can convert or sell your DPI with the same exchange you bought it through: Sign in to the exchange you have DPI on. If you store your DeFi Pulse Index in a digital wallet, compare crypto exchanges to convert or sell it on. Choose Sell or Convert and place a sell order.
What is Tornado cash Crypto? ›Tornado Cash (also stylized as TornadoCash) is an open source, non-custodial, fully decentralized cryptocurrency tumbler that runs on Ethereum Virtual Machine-compatible networks.
What is the best DeFi platform? ›- Kraken. Kraken is a web-based bitcoin exchange that allows you to buy and sell bitcoin in euros, US dollars, Canadian dollars, British pounds and Japanese yen. ...
- Nexo. ...
- Coinbase. ...
- Defi Swap. ...
- Aqru. ...
- Binance. ...
- Youhodler. ...
- Defi Platform Smart Contracts.
...
The most popular trackers are:
- Defipulse.
- Defiprime.
- Defi.
- Defiscore.
- Defirate.
- Binance.US: Best for low fees.
- Public.com: Best for a wide range of investment options.
- Uphold: Best for no-fee crypto trading.
- Gemini: Best for nationwide availability.
- Coinbase: Best for beginners.
- Kraken: Best for newbies and experienced traders.
- Cake DeFi: Best for USA lending and borrowing.
Failed transactions. Failed transactions are yet another way to lose money while swapping in DeFi. Many failed transactions are caused by the token rate dropping below the allotted slippage tolerance for a swap. A transaction can also fail if it was sent with too little gas.
Is DeFi the future? ›Unlike traditional financial institutions, DeFi also allows you to remain in custody of your financial assets. This is a very modern and decentralized way of doing things. DeFi technology is the future since it brings solutions to traditional financial problems.
What is the disadvantage of DeFi? ›
A growing literature debates one of the main drawbacks of the DeFi market, which is a lack of regulation and legal compliance (Anker-Sørensen & Zetzsche, 2021;Aramonte et al., 2021;Chen & Bellavitis, 2019Johnson, 2021;Popescu, 2020; Stepanova & Eriņš, 2021; Wronka, 2021). ...
Is there a crypto index fund? ›Investing in a crypto index fund can be an ideal option for passive investors who are looking to get exposure to the cryptocurrency market but can't research all the different cryptocurrencies. Crypto index funds also offer investments in various complex indices based on the leading crypto assets and themes.
Are ETFs and index funds the same? ›The main difference between an ETF and an index fund is ETFs can be traded (bought and sold) during the day and index funds can only be traded at the set price point at the end of the trading day.
What is grayscale DeFi fund? ›Grayscale Decentralized Finance (DeFi) Fund (the “Fund”) holds digital assets that make up the CoinDesk DeFi Index. These digital assets are drawn from the universe of investable digital assets native to decentralized finance or DeFi.
What is the largest DeFi protocol? ›Uniswap. The UniSwap protocol is also one of the leading DeFi protocols today. As of right now, it is the most popular decentralized exchange in the DeFi space.
Which crypto is the DeFi leader? ›DAI (DAI) – Top DeFi Coin for Stablecoin Investors
The reason for this is that you can deposit the stablecoin into a staking platform like DeFi Swap with the view of earning an attractive rate of interest on your funds.
- Maker. A DeFi project for borrowing.
- Aave. A DeFi project for borrowing and lending.
- Uniswap. A decentralized exchange (DEX) for trading volatile cryptoassets.
- 🤩 Crypto security never looked so good. ...
- Curve Finance. ...
- Lido.
DeFi Pulse Index Price(DPI) Note: This coin is not listed on Binance for trade and service.
How do I get dpi for Metamask? ›- Download a Metamask Wallet. ...
- Set up your Metamask. ...
- Buy Ethereum as Your Base Currency. ...
- Send Ethereum From Binance to Your Crypto Wallet. ...
- Choose a Decentralized Exchange (DEX) ...
- Connect Your Wallet. ...
- Trade Your Ethereum With the Coin You Want to Get.
- Bibliographic and database indexing.
- Genealogical indexing.
- Geographical indexing.
- Book indexing.
- Legal indexing.
- Periodical and newspaper indexing.
- Pictorial indexing.
- Subject gateways.
What are techniques to be used in indexing explain with example? ›
Example: suppose a company contains several employees in each department. Suppose we use a clustering index, where all employees which belong to the same Dept_ID are considered within a single cluster, and index pointers point to the cluster as a whole. Here Dept_Id is a non-unique key.
How does indexing improve performance? ›Indexing makes columns faster to query by creating pointers to where data is stored within a database. Imagine you want to find a piece of information that is within a large database. To get this information out of the database the computer will look through every row until it finds it.
How do you use index? ›Using a Book Index
Turn to the very back of the book, where the index lives, and look up the topic you're interested in; topics are listed in alphabetical order. Once you find your topic, the page number next to your topic tells you which page to turn to so you can read about that topic.
Create the index
Click where you want to add the index. On the References tab, in the Index group, click Insert Index. In the Index dialog box, you can choose the format for text entries, page numbers, tabs, and leader characters. You can change the overall look of the index by choosing from the Formats dropdown menu.
DegenScore looks at how much a wallet has interacted with DeFi smart contracts and protocols. After you connect your wallet you get a score — to see how much your wallet has 'endured'… 'Degen' is community slang for a heavy DeFi user.
Can I buy stocks in DeFi? ›No.
However, Coinbase is the only one that is publicly traded. By default, this makes it one of the top DeFi stocks to buy. Coinbase's main platform lets users easily buy/sell crypto.
Where to Buy DeFi Tokens. Plenty of U.S. based exchanges allow you to buy and sell DeFi cryptocurrencies. Of these choices, eToro, Webull and Binance.US are among the most trusted options.
What are the top DeFi platforms? ›- Kraken. Kraken is a web-based bitcoin exchange that allows you to buy and sell bitcoin in euros, US dollars, Canadian dollars, British pounds and Japanese yen. ...
- Nexo. ...
- Coinbase. ...
- Defi Swap. ...
- Aqru. ...
- Binance. ...
- Youhodler. ...
- Defi Platform Smart Contracts.
- Buy cryptocurrency on the fiat currency exchange.
- Create a software wallet to store your cryptocurrency.
- Transfer your digital assets from the exchange to a crypto wallet.
- Transfer your cryptocurrency from your wallet to a crypto bank and receive the interest.
HydraDX is a Basilisk cross-chain liquidity protocol on Kusama founded by Mattia Gagliardi and Jakub Greguš. Binance is a cryptocurrency exchange founded in 2017 by Changpeng Zhao. Kava is a platform providing for accessing Decentralized Financial (DeFi) apps and services.
What are examples of DeFi? ›
- DeFi is a technology alternative to relying on centralized financial institutions such as banks, exchanges, and insurance companies. ...
- As a simple example, you could write a smart contract stating that you will pay $500 to another person if the Cardinals win the World Series this year.
Uniswap is the most popular decentralized exchange. It has attracted more than 3 million users and has processed trades worth more than $1 Trillion in the last three years. It is also one of the most valuable DeFi protocols with a market cap of $4 Billion and more than $7 Billion in total value locked.
Which coins are DeFi? ›DeFi coins are built on and often named for their unique, native blockchain networks. In spring 2021, Maker, Compound, Uniswap, Aave, Chainlink, and Ankr are among the most popular DeFi coins. DeFi tokens also transfer value, but not necessarily always in a financial sense.
Is Ethereum a DeFi? ›Short for decentralized finance, DeFi is an umbrella term for peer-to-peer financial services on public blockchains, primarily Ethereum. DeFi (or “decentralized finance”) is an umbrella term for financial services on public blockchains, primarily Ethereum.
Which crypto is the DeFi leader? ›DAI (DAI) – Top DeFi Coin for Stablecoin Investors
The reason for this is that you can deposit the stablecoin into a staking platform like DeFi Swap with the view of earning an attractive rate of interest on your funds.
Unlike traditional financial institutions, DeFi also allows you to remain in custody of your financial assets. This is a very modern and decentralized way of doing things. DeFi technology is the future since it brings solutions to traditional financial problems.
Is Cardano a DeFi? ›Cardano implemented decentralized finance (DeFi) services on September 12, 2021, including an upgrade to enable smart contracts and the ability to build decentralized applications (DApps).
What is the best DeFi project? ›- PancakeSwap. Pancake Swap is a BNB chain-based decentralized exchange (DEX) project that allows users to swap BEP-20 tokens in an easy and affordable way. ...
- UniSwap. ...
- Metaple. ...
- panKUKU. ...
- Sushiswap.
The simplest way to earn a passive income through DeFi is to deposit your cryptocurrency onto a platform or protocol that will pay you an APY (annual percentage yield) for it.
What is the best DeFi exchange? ›- Binance.US: Best for low fees.
- Public.com: Best for a wide range of investment options.
- Uphold: Best for no-fee crypto trading.
- Gemini: Best for nationwide availability.
- Coinbase: Best for beginners.
- Kraken: Best for newbies and experienced traders.
- Cake DeFi: Best for USA lending and borrowing.