How to Use DeFi Llama to understand DeFi (Tutorial)
https://www.youtube.com/watch?v=kE52zJwh-l4
Transcript:
DeFi decentralized finance. This is a way that we can earn a return on our tokens. In the previous tutorial we covered Orca and how we can earn tokens on the Solana blockchain. I hope you followed along and tried it out even if it was only with a small amount, like a few dollars. Now I want to give you more information on DeFi in general.
So the website we’re at is defilama.com and this graph shows the total value locked in all the blockchains. Total value locked, also known as TVL, is a metric that refers to the amount of locked tokens in smart contracts, used as part of DeFi. Smart contracts, put simply, are just code in dApps that allow you to do a certain thing, such as deposit tokens, earn a yield, borrow tokens, borrow USDC, buy an NFT, sell an NFTft borrow or rent an nft they’re just some examples so let’s have a look at d5 way back in 2018 d5 was low basically it
didn’t exist and then it grew and grew and in 2020 this is when it actually started to become more of a reality we then had this crazy bull run which which is normal and part of cycles. And we hit about $180 billion locked in DeFi. This continued and it went down. And then it came up a little bit. And then everything collapsed. And then it collapsed again.
And then it collapsed again when FTX went under. And now we’re growing a little bit. So we’re interested in Solana. So let’s select Solana. You can see this explosion here however this metric was completely off to be perfectly honest things were being double counted triple counted and it was a bull market so let’s ignore all of this and let’s look at 2023.
we’ll pull the slider over and we’ll zoom in to 2023. start of 2023 205 million dollars at present 313 million dollars. And this is in a bear market. These are sometimes called crab markets because a crab just walks sideways and this is hardly going up or down it’s basically going sideways. We’ve got other metrics that we can see as well such as a volume, revenue, users.
This is pretty important. Let’s see if the users have been growing recently. We’ll turn off these. So DeFi Llama isn’t showing us the users, unfortunately. But we can see the transactions. So these are the transactions. You can see there haven’t been a lot of transactions recently. It’s still very much a crab market.
So this is why I think it’s a great time to learn, because I do believe good opportunities can definitely come along. These are the protocol ratings. The top ones are Marade and Lido. These are liquid staking tokens. They relate to staking and we’ll cover these in another tutorial.
Then we’ve got Solend, which relates to lending. And we just played with Orca, which is a dex. Jito is liquid staking, same as the top two. And Radium is also like Orca, as is Aetrix. I would say Radium and Orca are the two biggest DEXs on Solana. Radium was really big in the bull run. We have another DApp called Camino. We’ll cover this in the intermediate course.
It’s still pretty simple, so by the time you get to the intermediate course, you should understand DeFi enough to be able to understand this with ease. This uses the liquidity pools in Orca or Radium to earn a higher APY, an annual percentage yield. And it does this by harvesting the rewards and redepositing the tokens back into the liquidity pool so it grows. This is a fantastic tap.
So when you get to that video, enjoy it. This is Radium’s website. And if you go to farms, this is where you can see different farms under Radium, fusion and ecosystem. Maybe radium picks up again in the next bull run. If we have a look at the APR, we can see some of these have a very, very high APR. Whatever this token is, 8-bit and USDC, it’s getting rewarded with this token.
And yearly, it’s earning over 10,000%. The amount of liquidity in the pool is only $3,000 though, so it’s not very much. I prefer to change the TVL to go to the highest amount. However, I’m not even sure what the LTX token is. It’s earning good rewards and it has quite a bit of TVL.
You will see on Radium and Orca, they use their own token as part of the liquidity pools. These are inflationary tokens, very inflationary. So let’s have a look at them on CoinGecko. Let’s have a look at Radium. We can see the price is 21 cents. Let’s zoom out to say one year. It’s been in a downtrend for quite some time.
If we go max, it’s been in a downtrend forever. Now I do expect it to go in a bull market up and then downtrend. However, to downtrend like this shows that this token is not valuable, in my opinion, and this is not financial advice. If we have a look over 90 days, I guess it’s been somewhat stable, but longer term, it’s not a good hold.
Now this is the ORCA token. Once again, if we go max, we can see downtrend from the bull market, which is expected. We’ll have a look at 180 days. Over the last days other than a recent dip it’s been fairly stable we’ll cover tokens and tokenomics in the intermediate course because there’s quite a bit to know personally I won’t be doing any farming with the orca token in the previous tutorial you may have seen that the marinate token was given as a reward as well so let’s have a look at that over the last 180 days
it’s also been pretty stable this is a governance token and it basically gives you more say over marinade so you may find this a little bit more valuable now it’s not just like this on solana of course we can go and find other exchanges on other chains like pancake we can zoom out to max we can see the all-time high was basically 44 and now it’s currently a dollar.50.
And over the last 180 days, it has not done well. It’s just been going down and down. I can show you plenty of examples like this. This one’s pretty crazy. This is a quick swap on Polygon. It reached this crazy high of almost $1,600 and now it’s $53. And it’s been downtrending as well. Now remember there’s something called divergence loss also known as impairment loss we covered that in the previous tutorial so i won’t cover it again essentially my goal is to get more rewards than what the divergence loss would be we have no way
of knowing if that’s going to be the case we can only anticipate generally with things like sol and usdc or maybe msol and sol these are going to have a lack of divergence loss, generally. Something like RLB, Roll Bitcoin and USDC, this is going to have much higher divergence loss, because this token can go really up and then really down. It’s far more volatile.
Bonk is a meme coin on Solana, and Bonk and Sol can quite often get a lot of rewards. However, the divergence loss can be quite insane. You should also have a look for incentives, such as this pool here, which earns some Orca tokens and some Helium tokens every week. This could do quite well. But you have to keep all those things in mind.
Remember, if DeFi in a bear market was really easy, everyone would be doing it and we’d all be making lots of money. So I think it’s fantastic to learn about it and understand it and keep up to date with it. But please only risk what you can afford to lose. And in bull market, things can be completely different.
