The DeFi space is growing at breakneck speed.
Take it by the numbers: the total value locked (or TVL) in DeFi skyrocketed to as much as $120 billion this past November, which marks a 1,200% increase since June 2020.
That’s uncharted territory for such a new system of financial services, which seeks to both modernize and democratize the banking industry. Whether you’re a new or experienced investor — and regardless of how bullish you are on crypto as a whole — DeFi’s sky-high upside is nothing to scoff at, capable of bringing in huge returns.
But with that comes risk. DeFi, often called crypto’s “Wild West” of finance, is still unregulated, prone to security issues that leave you unprotected if you’re not taking proper precautions. Or investing wisely.
That’s where tools come in. In the vast and complex DeFi ecosystem, these handy platforms make the investment process easier. Some of them are “dapps,” or decentralized applications, while others are compatible with other asset classes, and vital for anyone hoping to get the most out of their exposure.
Let’s dive in.
What is DeFi?
First things first, a quick refresher on what people mean when they talk about DeFi:
Short for “decentralized finance,” DeFi is the umbrella term for a digital system of financial products and services available to the public on computer programs — often called “protocols” — that use blockchain technology. Since these products are decentralized, they exist outside the control of intermediaries, like banks or brokerages.
While every intermediary tends to use its own, separate ledger to record financial transactions, DeFi’s blockchain technology tracks and stores all of them on a single, open-source database online, available for anyone to see at any time.
DeFi protocols are also non-custodial, meaning that middlemen have zero control over your funds, and don’t manage them on your behalf. So if you’re using DeFi protocols to hold crypto, you maintain complete autonomy over your assets — allowing you to borrow and lend them without losing ownership.
How Does DeFi Work?
DeFi services are stored on the blockchain through “smart contracts,” which first automate, then monitor the agreement terms between each party of a transaction. This is designed to keep trades fairer, more transparent, and secure.
Similar to how holding crypto is a digital alternative to holding fiat currency, DeFi aims to be an online option for all the financial services banks and brokerages traditionally facilitate — like buying, selling, borrowing, and trading money — but with way less barriers to entry.
For example, while you may need to provide private information and get pre-approved to take out a loan from a bank, or trade stocks through a brokerage, anyone can trade DeFi assets anonymously on a decentralized exchange (known as a DEX), like Uniswap or Sushiswap.
Such exchanges can make trading easier by grouping crypto assets together in liquidity pools and eventually paying out those liquidity providers. You can also lend and borrow DeFi assets at favorable interest rates.
Most DeFi services run on Ethereum’s platform, which has its native cryptocurrency: Ether (or ETH), the second biggest digital token behind Bitcoin.
But Ethereum is also an expansive technology network that hosts most dapps and protocols. And separate from normal crypto, Ethereum also hosts trading for digital assets known as stablecoins, or digital assets pegged to fiat currencies and thereby less volatile.
6 Essential DeFi Tools to Get the Most Out of Your Investments
If you want a successful foray into DeFi investing, it pays to solicit some help.
That’s why no matter your crypto fluency or investment experience, you should consider these handy DeFi tools. Depending on your use case, they can help with everything from investment strategy — like yield farming or lending to a DEX — to asset management.
Keep in mind — this list doesn’t include Zapper, Zerion, or DeBank, which are all powerful tools for tracking and trading your DeFi assets. To see how those compare, read our guide here.
Kubera: The All-in-One Portfolio Tracker
Kubera isn’t uniquely a DeFi tool. But that’s the exact reason why it’s the most helpful platform at your disposal.
Because most portfolio management tools are only compatible with a select few asset classes. That means you can’t see how the component parts of your (hopefully!) diverse portfolio are performing alongside one another.
But Kubera uses custom-built financial aggregation architecture to gather everything you own and track it all in one place. That means you can monitor your DeFi, crypto, and traditional assets all from a single dashboard.
You can easily link all of your financial accounts to Kubera, whether it’s a stock brokerage, crypto exchange, or just about anything else (the full list is here). Afterwards, their value will update automatically, in real time.
Kubera works especially great with DeFi assets because you can track them on multiple blockchains, including Ethereum, BSC, and Polygon. You can easily check your ERC20 token balance, and even monitor your Maker Vaults and Uniswap liquidity pools side by side on the same page.
MetaMask: The Best DeFi Wallet
MetaMask is a crypto wallet designed to interact with the Ethereum blockchain. It works as a browser extension compatible with Google Chrome, Firefox, Brave, and Microsoft Edge, and also as a mobile app.
Once installed, MetaMask gives you access to a huge library of Ethereum-based dapps that allow you to buy, store, send, and trade all your digital assets — even non-fungible tokens (or NFTs). For instance, it’s compatible with Compound, a lending protocol that lets users throw their crypto into lending pools for borrowers.
MetaMask is easy to use. And since it lets users connect with multiple DEXs, it’s the swiss-army-knife of crypto wallets, compatible across various DeFi platforms.
Plus — as an added bonus — MetaMask links with Kubera.
DeFi Llama: The Best DeFi Tool For Advanced Analytics
DeFi Llama is a one-stop-shop for comprehensive data on DeFi protocols. It tracks helpful metrics like total value locked and change in value over different time periods. The tool supports protocols across multiple blockchains, including Ethereum, Solana, Avalanche, Binance Smart Chain (B2C) and Polygon. And its intuitive dashboard lets users sort data according to 12 helpful categories — like DEXs, yield, and airdrops.
DeFi Pulse: The Best Leaderboard Database of DeFi Protocols
DeFi Pulse calls itself the “decentralized finance leaderboard,” and allows you to find and track the most up-to-date rankings and metrics of DeFi protocols. The rankings track the total value locked into the smart contracts of an underlying DeFi asset — giving you the skinny on all the dapps and protocols performing the best. The front page lets you sort by lending, DEXs, derivatives, payments, and assets.
This tool also compiles an updating list of best resources in DeFi, and even runs a newsletter on industry news and trends called the DeFi Pulse Farmer, which is helpful for beginners.
Dune Analytics: The Best DeFi Tool for Blockchain Research
Dune Analytics is a powerful software platform that lets users seize and visualize data on the blockchain. Instead of running a specialized script to query Ethereum data, Dune does all the grunt work for you, aggregating the raw numbers into SQL databases that are easy to sift through and manipulate.
The software comes with pre-built querying templates, but you can also design your own. No matter the route you take, Dune comes with slick visualization features that provide helpful graphic representations of the blockchain on its dashboard. Just keep in mind that you can only run three queries at a time for free. After that, pricing starts at $390 per user, per month.
Coinbase Wallet: An Easy-to-Use DeFi Tool
Bitcoin enthusiasts probably know Coinbase as one of the more prominent crypto exchanges. But the platform also has a separate, standalone product that serves as an Ethereum-based wallet for any kind of crypto you have. It also functions as a dapp browser.
So if you’re familiar with crypto but are looking for a smooth transition into the DeFi space, specifically Coinbase Wallet is a great option.
You can use Coinbase Wallet without joining the Coinbase exchange. It supports the most popular cryptocurrencies, DeFi tokens, and NFTs. It’s also a secure way to store your digital assets right on your phone and gives users an opportunity to earn interest on them.
Coinbase Wallet ensures your assets are non-custodial, giving you complete control and private access to your funds. That’s different from Coinbase, which keeps assets on a centralized exchange. It’s also an easy-to-use portal for accessing dapps and DEXs.
Make the Most of Your DeFi Investments With Kubera
With so many DeFi projects out there, the right tools allow you to buy, trade, and store all of your digital assets with confidence. But if DeFi is just one piece of your overall portfolio, you need a tool that brings all your assets together, for the full-scale picture of your finances.
Kubera has your back. Both within the world of cryptocurrency (across wallets, blockchains, and exchanges), across more traditional asset classes (like real estate holdings and stocks), and with just about anything else, Kubera seamlessly gathers and then beautifully arranges every piece of the puzzle that makes up your financial journey.
If you use Kubera alongside the other tools in this guide, you’ll be able to confidently navigate the DeFi space, all while seeing how your digital assets are performing alongside the rest of your investments. It’s a helpful step towards meeting any and all of your financial goals.
But don’t just take our word for it. See Kubera in action by signing up for a subscription now.
Or, show your financial planner Kubera’s white-label solution.