How to Use DeFi Wallets A Step-by-Step Guide to Storing Crypto

Centralized wallets store your crypto assets on your behalf. To open an account using a centralized wallet, first verify your identity and fulfill know-your-customer requests. 

If you ever forget your password the wallet’s support team can help you retrieve it. Transactions made in centralized wallets are processed almost instantly within their ecosystem with zero network fees.

In contrast, decentralized wallets like MetaMask are non-custodial. Simply put, MetaMask is an interface enabling you to create and import wallets as well as display and manage your crypto assets which are stored on-chain.

You have full ownership and control of your crypto so if you lose your password you’ll need your 12-word recovery phrase or your private key. Since no identity proof is required the risk of data breaches is also lower.

You can view your wallet balances on explorers like Etherscan by inputting your wallet address but your recovery phrase is required to access and spend your crypto assets. All transactions on DeFi Wallet are processed on-chain.

Most DeFi protocols, or DeFi applications, are built on the Ethereum network. 

To execute and confirm a transaction you need to pay network fees for the computational effort that’s required to validate and confirm the transaction. It is usually paid in the network’s native token.

For example, the Ethereum network requires ETH to send, swap, deposit, and withdraw your ERC20 tokens. The amount of the gas fees depends on the blockchain’s consensus mechanism transfer speed, network traffic, and the transaction’s complexity. 

Remember: Always backup your recovery phrase and keep it safe. In doing so, you’ll be able to easily regain access to your crypto assets on any non-custodial wallet.

The history of all modern-day crypto developments, including DeFi wallets, starts with Bitcoin. 

The limitations of the Bitcoin programming language, Script, led to developers looking for other avenues to create more expanded decentralized applications using blockchain.

Wallet development has come a long way to enable integration with more dApps and decentralized protocols. Early DeFi wallets were clunky, slow, and simple. 

Bitcoin-Qt was the first Bitcoin wallet that was a full client meaning that you had to download all the blockchain history for it to synch.

There are many types of DeFi wallets. Keeping your funds secure is extremely important and should be at the top of your priority list. It’s important to carry out plenty of research about the wallet’s security features.

Data in the crypto wallet is highly precious. The best sign of a good cryptocurrency wallet is compatibility with different devices. 

The last thing that you should remember is that not all wallets support all coins, and some are designed to hold only one token. 

Then It is a must to check if the wallet supports the cryptocurrencies you want to store. Here are some of the top DeFi wallets:

Trust Wallet is an open-source, decentralized, anonymous, and multi-chain cryptocurrency wallet that helps you to store, send and receive your crypto assets.

You can also earn interest on the crypto in your wallet, view collectibles NFTs and track charts and prices within the app. It is a mobile DeFi wallet that has more than 25M users and is available for IOS and Android.

Trust Wallet was released in November 2017, and the next year, Binance exchange acquired Trust Wallet. 

This wallet supports multiple coins and tokens. If you store money on your Binance account it doesn’t mean that you are storing your money in the Trust Wallet.

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