My name’s Khashayar Abbasi, but you can call me Kash for short.
Today I’m going to introduce you to the exciting (and VERY profitable) world of Decentralised Finance, AKA “DeFi”.
DeFi is the new kid on the block in the world of cryptocurrencies…
You can think of it as a niche of cryptos taking on the areas of traditional finance that Bitcoin hasn’t touched… like lending, borrowing, and even decentralised betting and trading exchanges (think RobinHood, but no one can stop you making money).
These industries add up to a whopping $22 trillion… a mind-bending amount of money and exactly why CoinTelegraph says, “DeFi, in many ways, is Bitcoin 2.0.”
We’ll get into the “how” and “what” of DeFi in some of the next emails… first I want to share with you the “why”… why you should care about DeFi in 2021…
So, here are my top 3 reasons you’ll love DeFi…
1. DeFi Turns Back The Clock On Bitcoin Gains (Turning £100 Into £600 In 90 Days)
Bitcoin is the big “headline hitter” when it comes to cryptos…
And its recent surge from $10,000 in October to $40,000 in January was very impressive (and trust me I’m very happy that I’ve been holding Bitcoin since 2014!)…
But when you think about it, that’s “only” four times your money… which is certainly much better than most other financial assets, but not the kind of ridiculous returns Bitcoin was generating back in its 2017 heyday.
The truth is, to double your money on Bitcoin today, it will need to jump from $40,000 all the way up to $80,000… I believe this will happen at some point, and maybe sooner that most people think, but that’s still a way to go “just” to double your investment.
On the other hand, the DeFi crypto market is packed with smaller, cheaper cryptos, churning out gains similar to Bitcoin back in 2017…
To give you an idea of what I’m talking about, take a look at the following chart…
It shows the gains from a basket of the top 10 DeFi cryptos…
It’s more than doubled in 30 days…
And if you go back a bit further to the beginning of November, you could have bought this basket of DeFi cryptos for just $60…
As you can see, it’s now selling for $391…
In other words, you could have made more than SIX TIMES your money in the last 90 days.
In cash terms, that’s like turning every £100 you invested into £600… £1,000 into £6,000… you get the idea…
So, those DeFi returns beat Bitcoin’s recent gains by a fair bit.
But, here’s something important: those returns are from simply buying the top 10 DeFi cryptos and sitting on them…
If you were to pick and choose the coins with the most profit potential like I try to do, your gains can be a lot bigger.
For example, take a look at the returns from the top 5 individual DeFi coins over the last 7 days…
As you can see, the top coin has returned 367% this last week… with plenty of other opportunities to make 100%+… again in just 7 days…
Can you see why I say DeFi is like Bitcoin back in its 2017 heyday?
I think the evidence shows this is where the most exciting crypto gains are to be had in 2021, and that’s certainly been my personal experience.
And I haven’t even told you the best part about DeFi yet…
2. DeFi Cryptos Pay You A Daily Income (Grab Your Scarecrow We’re Going “Yield Farming”)
How much is the interest on your bank account right now?
Basically non existent I expect, as the UK average for 2020 was 0.64%… it’s kind of insulting, isn’t it?
Worse, this week the Bank Of England told high street banks to prepare for negative interest rates within 6 months, that’s when you pay your bank to hold your money…
These are the same banks that your tax money bailed out after 2008, but we won’t get into that right now…
Whether your bank decides to force a negative interest rate on your money, or simply gets rid of free bank accounts altogether like HSBC was suggesting back in October…
You can’t escape the fact that interest on your money is at an all time low… and is likely to get even lower (somehow!).
This is where DeFi cryptos step up to the plate again… presenting a very exciting alternative, even for a small allocation of your money…
You see, not only can you make 347% 7-day returns investing in the right DeFi crypto… you can use them to earn a daily income too.
This phenomenon is known as “yield farming” in the crypto community… and it’s where you “stake” a DeFi crypto you own in a “pool” of crypto with other people, which is then lent out… and you receive a share of the interest payment for doing so.
I won’t get into the weeds of exactly how this works right now, as I’d like to lay that out for you in more detail in a future email.
But let me walk you through an example and some comparisons to give you an idea of why this is so exciting if you’re looking for a yield rate that’s not insultingly low…
Say I plonked £730 into the DeFi crypto called Dai… at £0.73 per coin, that’d give me 1,000 coins…
And according to DeFi Pulse (a great site for all things DeFi), I could collect a yield worth £230 per month….
Now, to get these higher yields takes a bit more initial setup work, but where else are you going to get income returns anywhere near that?
I mean, take a look at some of the “traditional” options right now…
? Leaving money in the average UK bank account: 0.64%
? Investing in stock dividends on the FTSE 100: 2.85%
? Renting out an average property: 3.53%
? Lending money on peer to peer platforms: 6% (and that’s the top rate!)
Now, check out the yield on these 5 DeFi coins right now (the “Reward” column on the right)…
That top yield is 18,493% more than what you’d get from the average UK bank account!
And remember, any yield you’re collecting is in addition to the gains you can get as these coins increase in value.
It’s like a “double whammy” of profits, similar to stocks with dividends… except way more profitable!
I hope that gives you more of an idea why I allocate 30% of my entire crypto portfolio to DeFi coins… and yield farming in particular.
And that percentage is likely to grow throughout 2021…
3. Big Money Is Flooding Into DeFi (And Even Bigger Returns Could Be On The Horizon)
This last year, the DeFi crypto market has seen crazy growth…
It went from $1 billion in May 2020…
To $32 billion today…
In other words, it grew 32 times bigger… in less than a year!
And the individual growth of DeFi platforms is even more impressive, for example in 2020…
AAVE grew 6,372%
Yearn.Finance grew 2,729%
And THORChain grew 1,700%
That rate of growth is exceptional… even for the rapid moving crypto space.
But according to many experts, and my own opinion, 2021 is the year when DeFi will really explode in popularity…
Why?
Because now big institutional money is getting in.
Take the crypto investment firm Grayscale as just one example…
At first they were stocking up on larger cryptos…
Investing in over HALF A MILLION Bitcoin… and a total of $13 billion worth of other crypto…
But now there’s reports of them getting into the DeFi market… check out this headline from a recent CoinDesk article…
What do you think will happen if they start buying up lots of DeFi coins like they did Bitcoin? Simple supply and demand suggests the prices will only go up.
Here’s my main takeaway from what I’ve shown you today…
Right now, we’re at the “tipping point”, where DeFi is not quite in the mainstream, but it could be very soon… and when it does tip over, that’ll only fuel even more explosive growth.
In 2021 your nan won’t be asking, “Should I buy Bitcoin?” like she was in 2018…
Instead, she’ll be asking “Should I invest in DeFi?”.
I hope today I’ve proven to you why DeFi should at least be on your radar if you’re interested in making the most out of your investments and savings in 2021.
Soon, I’ll be sending you Part 2 of this write up, where we’ll talk about…
? What the relationship between Ethereum and DeFi is (and why this can boost your crypto gains even more)
? How DeFi is taking on the entire financial services industry (not just payments like Bitcoin)
? And how the DeFi sector just got super accessible to the average person (no more remembering stupidly long series of numbers)
By the way, if you have any questions about DeFi or crypto in general…
Simply email your questions to clients@thebetchat.com, and I’ll make sure I cover them in the days and weeks to come.
Thanks for taking the time to read this.
