I realize there will be a certain amount of people that may read this just looking for a simple way to get into trading tokens they can’t get on a centralized exchange. While the intent of these articles is to get more of the SHIB community to understand the market they’ve chosen to be a part of, not everyone will have the patience to read this in its entirety. Much less the articles to come. So, with that in mind, I’m going to create a simple list of things to do to gain access to those blockchain only tokens. It will be very general while also including all necessary info for anyone to get started. My hope is that those same people will return to try to understand even more about the benefits of investing in DeFi. We’ll get started with the main part of the article immediately after the list.

  1. Identify the token you want to buy. Every token runs on a specific blockchain. Without going into too much detail about what a blockchain is, you can find this info by simply Googling “What blockchain does ____ run on”. The most popular tokens usually run on Ethereum or Binance Smart Chain. Ethereum tokens are called ERC20 tokens and Binance Smart Chain tokens are called BEP20 tokens. There are many other chains than this but, it is unlikely the token you heard about on Twitter or Reddit doesn’t run on one of these blockchains.
  2. Make sure that blockchain is usable where you are located. While Ethereum blockchain is easily usable almost everywhere, Binance Smart Chain is not. People in Texas, New York, and a few other states will have a difficult time utilizing BSC based tokens.
  3. Understand you will have to pay gas fees. Gas fees are fees you will have to pay for each transaction you create on a blockchain directly. For the Ethereum blockchain, you will have to use ETH to pay for gas. For Binance, BNB. While most other chains are much cheaper to make transactions, Ethereum remains the most popular one. Paying gas fees mean you will not only have to trade a similarly valued amount of one token to get another, but you will also have to pay ETH to make the transaction itself. Ethereum gas fees for swapping tokens vary widely based on traffic on the blockchain. Low traffic times you may pay $20 per transaction. High traffic times you could pay $100 and above per transaction. If you are choosing to go this route of DeFI, make sure you always have some ETH or BNB on hand for transactions.
  4. Find a non-custodial wallet that is usable on the blockchain your selected token is on. Some wallets are usable on multiple blockchains, but most are meant to run on only a single one. You can scroll down to the non-custodial wallet section to see a list of popular wallets and the blockchains they’re used for. For example, ShibaSwap runs on Ethereum and can be accessed using MetaMask and Coinbase Wallet.
  5. Launch the wallet you pick and follow the directions included. When you get to receiving your keys (seed phrase) make sure you write it down and store it somewhere safe. Don’t ever keep your seed phrase written down in an app on your phone or computer. Seed phrases are the only way to access your wallet outside of the device you originally launch it on will be your seed phrase. Recording it digitally means you’re vulnerable to someone else accessing it. Especially if you connect your device to public WiFi such as at a hotel, restaurant, or Home Depot.
  6. Buy directly in the wallet or transfer tokens from a centralized exchange to use in your wallet. If you’re going directly to an exchange to buy a new token, it’s best to transfer the tokens you use for gas fees. ETH is available on every centralized exchange. I say “transfer” because some locations won’t allow you to connect a bank card to your wallet. Transferring from a centralized exchange involves initiating a “withdrawal” in the exchange. You’ll be asked where you’re transferring the tokens to. Select “custom wallet”, copy your wallets address from the wallet itself, and paste it in the text box when the centralized exchange requests it. Verifying your wallet will probably tale seconds but, transferring tokens can take a few minutes during high traffic times. Centralized exchanges charge a fee for transferring in the token you transfer.
  7. Find the token you want to buy in the wallets exchange option. Most wallets will already have a protocol for trading tokens directly within the wallet itself. Finding this section in your wallet should be fairly easy. Most popular tokens can be found by typing their name in. For lesser-known tokens you will need the tokens smart contract ID/Address. This can be found by Googling “Token ID for ____”. Once found, copy the address. In your wallet there should be a “add custom token” option. Select this option and paste the ID for the token you picked. It should pull up the token within the wallet. This will need to be done for every token you want to transact in your wallet.
  8. Ensure you have enough for gas fees and create the transaction. This part will be pretty self-explanatory once you start it. One thing about the Ethereum blockchain is that transactions can fail if they’re not verified fast enough. When a transaction fails you lose the gas fee for that transaction forever. In order to mitigate this, set your gwei to FAST. You’ll see this option when creating the transaction. This just means you’re willing to pay a bit more to ensure your transaction is verified as soon as possible.
  9. Stare at your new tokens in your wallet and wonder why the price of them went down as soon as you bought them. I’m obviously kidding. This is a common meme within the DeFi market, and it became so for a reason. Tokens you can by on centralized exchanges are already volatile. Tokens you buy that aren’t listed on any exchanges are going to be even more so. Don’t spend more than you’re willing to lose and don’t pull all of your eggs in one basket. Also, don’t buy all the eggs for one basket at one time. Save yourself some powder for later in case you need to dollar cost average down to a lower buy-in average. It is joked about constantly but it the least funny thing watching a large amount of money get flushed down the drain because you were sure DinkDoink Token was going to be the next 100x investment.
  10. Do yourself a favor and read at least a little bit of the information that’s out there. It doesn’t have to be this newsletter but, find a palatable way to absorb at least a little info about DeFi and the protocols that govern it. Crypto isn’t just a money machine. Blockchain technology serves a specific function and learning a bit about it could give you the edge you need to make the most out of this market.

Now then, let’s get started...

What is “Decentralized Finance”?

Decentralized finance simply applies to the ecosystem of financial applications being built with blockchain technology. The term DeFi was created through a conversation between a few of Ethereum’s developers and entrepreneurs in a Telegram conversation they were having back in August of 2018. They wanted to figure out a name to call the “movement” of financial applications available to everyone being built on Ethereum. While names like Open Network and Lattice Network had previously been discussed, DeFi eventually won because of its phonetic similarities to the words DEFY. There are a few specific characteristics to what is now defined as decentralized finance.

Characteristics: