Everyone in the world seems like using crypto already but you haven’t yet. And it’s gone so far that now you even feel shy to ask where to start. Don’t worry, it’s okay: many people get overwhelmed by the huge amount of information related to crypto and don’t know where to start.
There is a certain cost associated with active exploration of the crypto world. For example, the transaction fee on the Ethereum network can reach the price of ETH (today = 1340 USD) per single transaction. And to start getting a feeling of this technology you need to make at least a few of them. Not everyone would feel comfortable spending that much just to satisfy their curiosity.
The idea of this article came to me after reading How to Learn Defi in 2022. I think it’s a great checklist, but $100 might still be too much. So I decided to make a shorter list that can be accomplished for the approximate cost of $10 and within 30 minutes. Then you can decide if you want to learn further.
So here are the steps:
- Choose a “cheap” chain
- Create crypto wallet
- Get some crypto
- Make your first token exchange transaction
- Add liquidity
- Farm liquidity
- Harvest the reward
And now let’s look at them in detail.
0. Step zero before you begin it to get mentally ready to burn those $10 for educational purposes and never see them again. Actually, you can end up returning some coins, but the biggest part of this budget will be spent on different fees.
- Choose a “cheap” chain — the chain with a low transaction fee. Ethereum is popular but quite expensive. There are plenty of more affordable ones, for example, Cardano, Litecoin, Ripple…and many others. I’ll use Algorand as an example.
- Create the crypto wallet that supports this network. For Algorand it can be My Algo for desktops or Pera Wallet for mobile. It’s up to you which one to choose. If you never created a crypto wallet before, the process might feel a bit unfamiliar with all these long seed phrases, but these two wallets I mentioned above have quite detailed onboarding instructions.
- Get some crypto. If you already know alternative ways to purchase crypto — go for it. I’ll use Humble DEX (Decentralized Exchange). Unlike other Algorand DEXs there you can add money directly from your credit card and skip the step of getting it from somewhere else. Use SendWire to get ALGO. SendWire is a 3d party service and it will charge you around $5 for this transaction. So for your $10 budget, you will get approximately $5 worth of ALGO. When I was writing this, the exchange rate was 0.36, so I could buy 14 ALGO. Be aware that crypto rates are volatile, so on the day you’ll be doing it the rate might be different and you can get more or less ALGOs for your $10. Congrats: you got your first crypto!
4. Make your first token exchange transaction. On the Swap page of the Humble app exchange not more than half of ALGOs you have (in my case 7 ALGOS) for another trustworthy token, for example, USDC. You probably heard a lot about scams in crypto, but on Humble, you can see the little label next to the token name that tells you if the token is verified and trustworthy.
You need to do a couple of confirmations on the app, and then sign the transaction on your Wallet. This is a common pattern for the majority of crypto products with a high level of decentralization: you will be prompted to confirm every transaction from your wallet.
The transaction will take a few seconds and you will get a notification that you got your USDC. Congrats: you learned how to exchange crypto and you own two different tokens now!
5. Add liquidity. If you have more than one token you can lock some amount of this pair in the liquidity pool. DEXs normally give some reward (fraction of the exchange fee) to those who provided the liquidity because it helps them to keep the exchange rates of their tokens less volatile. But don’t get too excited, providing liquidity is not always beneficial in the long run. If you want to learn more about why, there is plenty of info on the internet, for example here.
So, select some amount of ALGOs and USDC (they normally are added in 50/50 proportions) and add the liquidity. The tokens will be taken from you but instead, you will get a corresponding Liquidity Token. On Algorand, if you are doing it for the first time, you’ll have to Opt-in the Liquidity Token first on your wallet. So adding liquidity might take two signings. Congrats, you added the liquidity! If you want to remove it and get your ALGO and USDC back, you can do it at any time.
6. Farm liquidity. Farming is one of the popular ways how many people are making money in crypto. If you are interested to learn more details about how Farms work, here is a good source for it . In short, you are staking your Liquidity Tokens in the corresponding farm (in fact — locking. You can take it back at any time), and after some time the farm rewards you and other investors. The longer you will keep your money staked there, the more reward you will get. But since the reward is distributed among all people who staked liquidity, the more people are participating the less your share of the reward will be.
So add your Liquidity tokens to ALGO/USDC farm. Sign the transaction. Congratulations, you started farming.
7. Harvest the reward. In a few moments after you staked the liquidity to a farm, you will start seeing that your reward started getting accumulated. Now at any moment, you can harvest your farm — claim the reward. Click that button, sign the transaction and you will see that your available ALGO balance got increased a bit. These are the first crypto that you’ve earned, congratulations!
I hope this article was useful. Please comment below if you succeeded in going through these steps and if there was any issue on the path.