DeFiChain (https://defichain.com), a Bitcoin fork that brings DeFi to Bitcoin and aims to connect it to Ethereum via its MetaChain layer, was the star of the crypto investing world in Q3 2023. After going through a rough patch in the previous months, with Bitcoin consistently underperforming, it has now completely rebounded and looks set to become one of the top performers soon.
Naturally, after such a 60% rally, people who have been on the sidelines are wondering if they should still get in on the action, and if so, how.
First, allow me to explain why I, personally, believe this is just the beginning of a long-term DeFiChain bull market. Then let me show you seven ways to maximize your profits… and one way if you think this is all wrong and bet against it all. Of course, for full disclosure, I have a DFI bag myself, and none of this is any kind of investment advice, but rather my personal line of thinking on this investment.
At the beginning of August, a few things changed for DeFiChain all at once that made this bull run possible:
- Bake started offering Dollar Cost Average in DFI and thousands of people have taken advantage of it. While it is not publicly known how many people are DCA-ing, since Bake is not an exchange, they are doing it all on-chain, which can be tracked and is currently at a few million USD almost every day. This is very strong buying pressure that is unlikely to go away as it is repeated every month.
2. Second, in August, the DeFiChain masternodes voted to use 90% of the collateral of their wrapped coins that are stakeable (Ethereum, Solana, Polkadot, Matic and Sui) to spin up nodes, stake them and use the rewards to buy and burn DFI. Currently, this is about $2,000 per day in additional buying pressure that is not only holding but increasing.
3. Next, at the same time, DeFiChain masternodes voted to reallocate bonus rewards to the liquidity mining pools (which is liquidity for the native DeFiChain DEX) for the above coins, which increased the utility and demand of DFI. Millions of dollars are being traded every day, generating returns of 100%, just as Binance makes more money when coins are traded there as well.
Bake announced to support this promotion with zero fees, so atm. you can actually mine liquidity with zero fees in these pools on https://bake.io
4. On top of that, the DFI sell-and-burn bots have been turned off by the master nodes, which worked really well about a year ago, but have since been rather destructive to the DFI price. Since they are off, net buying on the DEX is through the roof.
5. Last but not least, the big kahoona is coming in late September/early October: MetaChain Layer https://blog.defichain.com/metachain-blazing-ahead-tech-talk-with-u-zyn/. It looks like the DeFiChain core devs managed to release the final RC (Release Candidate) of the main net this week.
MetaChain Layer attracts many projects that build on top of DeFiChain, making DFI even more useful.
As you know, in the short term, price follows sentiment (which is extremely positive and hyped right now) and in the long term, price follows value. The short-term momentum is already insanely good and I think it will continue, mainly because based on the five factors above, value is actually rising rapidly at the moment. The formula for value is this:
And in DeFiChain, the three factors are steadily increasing, here’s why:
1. More LM Pools
2. More MetaChain layers
More People: More People:
1. Bake’s reach of nearly 2 million users
2. Positive momentum at a time when most projects are down and DFI’s price is up 60% is creating massive buzz in the industry.
1. Using the security of staking coins to get rewards that buy and burn DFI
2. Gas on MetaChain is paid in DFI
3. Turning off the burn bots
Of course, I could be wrong, but the data is clear. While most projects are struggling in price (bitcoin even went into a scary death cross chart pattern), DeFiChain is booming.
You have to make up your own mind, of course, I can only show you the underlying data. If you decide to invest in DFI, the next question is how to do it and how to maximize your returns. Unfortunately, because it can sometimes be overwhelming for a newcomer. Happy because it means you can make 100% a year if you know how. I have worked out seven ways for you, analyzing them with the SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) and how to implement them if you are interested. And at the end, I’ll give you a strategy if you think this is all a bunch of bull and you want to put your money where your mouth is. Here we go… check out option 7, which is my favorite right now!
Option 1: Buy DFI and bet on further cash flow
Strengths: This is the easiest and simplest way to profit from all of this. Very low risk. If it all sounds too confusing, this is the way to go! https://support.bake.io/hc/en-us/articles/900003427506-Bake-Services-Simply-Explained
Weaknesses: You are not maximizing your current opportunities.
Opportunities: You can buy DFI on many exchanges, but for this option it is best to go to https://bake.io and take advantage of their current DCA promotion. Use the 1-year fixed option where you can maximize your returns by activating your recurring purchase. Current stakes rewards are 8% and you can get an 11% bonus on top of that. Absolute no-brainer.
Threats: You have no real threats other than trusting Bake with your private keys and the DFI prize. But the DFI price is also the main underlying risk factor for all other options. This is the least risky option.
Option 2: Buy DFI with up to 4x leverage on Bitmex
Strengths: Here you are betting more on DFI’s price increase over the coming months than on the cash flow reward.
Weaknesses: You may get liquidated if there is a lot of volatility in the price, and you may not get any cashflow either.
Opportunities: Buy and leverage DFI with USDT on Bitmex with up to 4x leverage: https://www.bitmex.com/app/trade/DFIUSDT If DFI goes up 25%, you will double your money with 4x leverage.
Threats: Liquidations! You really need to know what you’re doing and watch your margin requirements.
Option 3: Buy DUSD and put it in Yield Vault on Bake
Strengths: DUSD is DeFiChain’s native stablecoin, and it depegged from $1 USD when Terra’s UST depegged in 2022. It’s structured differently than the UST, so it won’t crash to 0, but it has been hovering around 25–30 cents. Investing in it is a bet that the DeFiChain ecosystem will recover, giving you a solid 4x on your money, plus cash flow on top of that: https://julianhosp.medium.com/resolving-dusds-peg-at-1-usd-once-and-for-all-bd1c0ef4914c
Weakness: There is currently a 30% penalty for selling DUSD. So if you get into DUSD, you may be in there for quite a while before you can get out without a penalty. How long does that take? This is impossible to predict, so the trade-off is where can you make a faster 4x? On DFI or on DUSD?
Opportunities: I, personally, bet 80% on DFI and 20% on DUSD. I do this by buying DUSD on https://bake.io and then putting it in YieldVault, which gives me an additional 10% per year: https://support.bake.io/hc/en-us/articles/15674576285465-YieldVault-FAQs
Threats: The main threat is if DUSD doesn’t recover to 1 USD and you have to pay a 30% penalty to sell it.
Option 4: Combine DFI with Bitcoin
Strengths: DeFiChain is a bitcoin fork which is closely related to bitcoin. The most natural way to use it is together with Bitcoin, for example with Liquidity Mining. Here you provide DFI and BTC liquidity to the DeFiChain DEX and get paid for it: https://support.bake.io/hc/en-us/articles/900003762406-What-is-Liquidity-Mining-
Weaknesses: Liquidity mining is relatively complex, especially because of the impermanent loss. So either do it with a small amount of your assets or fully understand what you are doing.
Opportunities: You can either do this natively on DeFiChain using Birthday Research’s Lightwallet (https://defichain.com/explore/wallets) where you control your own private key, or you can do it on https://app.bake.io/liquidity-mining where you trust Bake. Currently, you get about 10–12% for your DFI and Bitcoin, which is absolutely fantastic! On Bake, you can start with just Bitcoin, which will be exchanged for DFI, or you can supply both BTC and DFI.
Threats: Impermanent Loss is the main thing here. Start with a small amount to get used to it.
Option 5: Use DFI in vaults for dToken trading
Strengths: DeFiChain has an entire dToken system attached to it that allows you to buy, sell and trade decentralized tokenized assets like dTSLA, dGLD, etc. This is absolutely unique and a core utility. On top of that, you get about a 30% return for adding DFI to a vault and then minting DUSD, which you can then use to buy the other assets. Since you mint the DUSD yourself, you are not subject to the 30% penalty from above: https://blog.defichain.com/what-are-decentralised-stock-tokens-and-how-do-they-work
Weaknesses: You have to monitor your vaults and really understand what is going on.
Opportunities: Download the Lightwallet, add DFI, create a Vault and mint DUSD. Then buy more dTokens and mine liquidity with them if you want. The opportunities are huge! https://blog.defichain.com/decentralized-assets-dtoken-faq/
Threats: This is a very complex option. It takes some study and you need to monitor your vault.
Option 6: Arbitraging DFI over the CEX and DEX
Strengths: If you understand the system and see some price discrepancies across different DEXes and CEXes, you can make good money arbitraging. Most of the time, you will benefit the most if you add liquidity either via DFI or via the wrapped coins (mainly Ethereum, Polkadot, Sui, Matic and Solana) over the DEX: https://coinmarketcap.com/community/articles/63fdef4557facf64f57f0f58/
Weaknesses: You need to understand the system.
Opportunities: Add liquidity here: https://quantumbridge.app/
Threats: Price volatility. But you can hedge that with the perpetual on Bitmex.
Option 7 — The Winner ATM: 100% with DFI Liquidity Mining with the Promo Pairs
Strengths: Option 7 is my favorite right now because it has returns of over 100% per year right now. This is due to the ongoing promo liquidity mining pairs with Solana, Matic, Polkadot, Ethereum and Sui.
Weaknesses: It is still liquidity mining, so there is some complexity.
Opportunities: Since Bake has their zero-fee promo, it makes the most sense to do it directly there, unless you want to control your own private key: https://app.bake.io/liquidity-mining
Weaknesses: Impermanent Loss on Liquidity Mining
Which options do I use? Except for the arbitrage option, I use all of them, especially option 7 right now, simply because of the amazing returns.
Now here is the last one, for the haters and doubters: If you think this is not true, talk is cheap! Put your money where your mouth is. Short DFI and profit if I am wrong. How? On Bitmex, just like the leverage above. You actually take the other side of all the people leveraging DFI.
Please let me know if you have any more questions or need help.
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