How to Invest in DeFi – Invest in DeFi (UK) In Under 5 Minutes Today
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Ever since Decentralized Finance (DeFi) tokens came on to the scene, millions of investors have added projects to their portfolios. Many investors develop an interest in DeFi projects for varying reasons.
One notable feature of these tokens is the commitment to decentralization and creating an inclusive platform for all users. If you’re curious about how to invest in DeFi in the UK, this guide will cover all the relevant aspects you need to know before entering the market.
Table of Contents
#1 Broker to Invest in DeFi in the UK – eToro
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How To Invest in DeFi in the UK – Choose a Broker
While DeFi tokens currently have impressive traction in the cryptocurrency markets, investing in these projects requires due diligence. The first thing to do is choose a credible broker that lists the token you intend to buy. For that purpose, the three platforms below are the best you can use.
- eToro – Best Place to Invest in DeFi
- Binance – Largest Exchange to Invest in DeFi
- Capital.com – Trade DeFi Projects With Leveraged CFDs
We have assessed the above brokers based on the quality of their services, especially in relation to DeFi tokens. Further down, you’ll find the full review of these DeFi service providers.
How to Invest in DeFi in the UK – A Quick Guide For 2021
With a brief walkthrough on how to invest in DeFi projects, you can buy any token within a few minutes on eToro. To show you the process involved, we’ll use one of the top DeFi projects — the Uniswap token.
So, here’s how to invest in Uniswap with eToro:
- Step 1: Open an eToro account – Creating an account on eToro is easy. Once you’re on the website, follow the on-screen instructions and provide all the required details. This will include your name, home address, and email.
- Step 2: Upload Your ID – The broker will request that you upload a copy of your driver’s license or passport to pass the KYC step.
- Step 3: Add Funds – You cannot invest in a DeFi project if you haven’t made a deposit into your account. On eToro, the minimum amount you have to add to your account is $50.
- Step 4: Search for the DeFi Project – So, suppose you want to invest in Uniswap, you’ll have to enter the token name into the provided box on the broker’s homepage. Consequently, the broker will display the coin and you’ll click on ‘Trade.’
- Step 5: Invest in DeFi – Clicking on ‘Trade’, as instructed above, will take you to the order page. Here, the broker will provide you with an order box where you’ll enter your stake and open your DeFi investment.
The steps above can be replicated for any of the supported DeFi tokens on eToro. You simply have to follow the guide above precisely and you’ll be done in no time.
Cryptoassets are highly volatile unregulated investment products. Proceed at your own risk.
Where to Invest in DeFi in the UK – Full Broker Reviews
Suppose you’ve found a DeFi project that interests you – a credible broker is all you need to get started with investing in the token. In this section, you’ll find full broker reviews of the top service providers that allow you to invest in DeFi in the UK.
Two of the most important things to consider are competitive fees and security. An investment platform that ticks these two boxes is worthy of consideration. So, below are our top three picks following a thorough assessment.
1. eToro – Overall Best Place to Invest in DeFi
eToro is a distinguished broker because the provider allows you to invest in DeFi projects in a low-cost manner. This is because the broker only charges a 0.5% fee when you’re investing in a DeFi token using any of the supported payment methods. We consider this low because some brokers – such as Kraken, will charge a 3.75% fee for debit/credit card transactions. Additionally, eToro is a spread-only platform, meaning you don’t incur variable commissions that you may find on many other broker sites.
In terms of security, eToro also fits the bill as a credible place to invest in DeFi tokens. The broker is regulated by different financial bodies including the FCA in the UK. Other regulators included are the SEC, CySEC, and ASIC — which indicate that eToro is a highly secure platform in the cryptocurrency industry. With the presence of these bodies, eToro is mandated to make its fee policy open to all users to ensure complete transparency.
Another thing to note about this broker is that you have different payment methods to utilize for your DeFi investment. You can choose to use your debit/credit card or any of the numerous e-wallets supported by the broker. You also have the option of a bank wire if you find that more suitable. Using any of these methods, the broker’s minimum deposit amount required is $50 (about £36). This is another notable perk – because a broker like Capital.com sets £250 as the minimum deposit you have to make when using a wire transfer.
In terms of DeFi projects, eToro lists dozens of tokens that you can add to your portfolio. This includes Uniswap, Chainlink, Maker, Tezos, Compound, and many other coins in which you can invest. This way, if you’re interested in more than one DeFi token, you can diversify your investment seamlessly. After purchasing your token, you can proceed to access the broker’s wallet for the storage of your coins. This way, when you want to sell the tokens, you can easily do so from your portfolio.
Finally, in terms of investment tools, we also rank eToro very high. First, this broker provides you with a copy trading platform tool that you can utilize to passively make investments. Essentially, this feature allows you to copy the trades of an experienced investor. Furthermore, you can also make use of the broker’s social platform to interact with many other investors and traders. Lastly, should you wish to learn more about your selected DeFi token, eToro has a research section for that purpose.
Pros
- Invest in cryptocurrencies on a spread-only basis
- Minimum investment per trade from just $25
- Supports debit/credit cards, e-wallets, and local bank transfers
- Regulated by the FCA, SEC, CySEC, and ASIC
- 20 million+ clients
- Highly suitable for newbies
- Features a copy trading tool and a social platform
Cons
- Advanced traders might consider the platform too basic
- No support for MT4 or MT5
Cryptoassets are highly volatile unregulated investment products. Proceed at your own risk.
2. Binance – Largest Exchange to Invest in DeFi
With millions of cryptocurrency enthusiasts using the platform, Binance is the largest cryptocurrency exchange. In fact, the platform records billions of dollars worth of trades on a daily basis. If you’re searching for a credible place to invest in DeFi, this is one of the platforms you can use. The exchange lists 100+ cryptocurrency tokens – including dozens of DeFi coins you can buy. However, to invest in DeFi using this platform, you’ll need to first purchase USDT and then exchange the token for your chosen DeFi coin.
If you’re a beginner, this might appear a bit challenging since you won’t be purchasing the token with your debit/credit card directly. However, this process can be completed within a few minutes once you understand how crypto-to-crypto exchanges work. After purchasing your DeFi tokens, Binance allows you to store them on the platform. Alternatively, you can move your coins to Trust Wallet, which is endorsed by Binance.
Notably, however, using your debit/credit card to deposit funds on Binance will cost you a 1.8% fee as a UK client. Meaning, if your transaction amount is £2,000, you’ll be paying £36. You might consider this a small amount. However, when you compare this fee structure to that of eToro – where you’re charged just 0.5% of the transaction amount, you’ll realize there’s a significant difference. Nonetheless, if you don’t consider this a drawback, Binance is a great exchange with high regard for security measures to protect its users.
Pros
- Facilitates billions of dollars in daily trading volume
- Supports hundreds of digital asset pairs
- Near-instant deposits via debit/credit card
- Trading commission starts at just 0.1% per slide
- Offers crypto savings accounts
- Suitable for both pro traders and beginners
Cons
- Debit/credit card payments do not apply to all supported markets
- Doesn’t support e-wallets for deposits and withdrawals
at eToro, #1 Broker in the UK
Cryptoassets are highly volatile unregulated investment products. Proceed at your own risk.
3. Capital.com – Trade DeFi Tokens With Leveraged CFDs
If you’re looking to trade contracts-for-differences (CFDs), Capital.com is one of the best places for that purpose. Trading CFDs means you’re investing in DeFi based on the token’s value without taking ownership of the coin. You’ll find this suitable if your aim is to take advantage of the constant market fluctuations to secure a profit on your DeFi trades. This way, searching for a secure storage facility for your tokens will not be something that you need to worry about.
Furthermore, Capital.com is a broker regulated by the FCA, CySEC, and ASIC, indicating that the platform is secure for your DeFi trades. At this broker, there are over 200 cryptocurrency markets listed, including numerous DeFi tokens. The broker also has an impressive user interface, making it easy for investors to navigate the platform even as a beginner. More importantly, you can gain access to your chosen DeFi token on a 0% commission basis when using Capital.com.
To get started with this broker, you’ll need to add a minimum amount of £20 if you’re using a debit/credit card. However, if you’re using a bank wire, this amount increases to £250. You can then proceed to upload your valid ID and start opening DeFi trades. While opening your positions on this platform, you can use leverage to increase your purchasing ability. You should, however, be careful with this feature, as you can incur substantial losses quickly.
Pros
- Top-rated spread betting and CFD broker
- Approved by the FCA
- £20 Minimum deposit (debit/credit cards and e-wallets)
- All tradeable markets attract 0% commission
- Tight spreads and no deposit/withdrawal fees
- 4,000+ financial markets supported
- Beginner-friendly
Cons
- Might appear basic for pro traders
- £250 minimum deposit on wire transfers
- Not available in the US
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.25% of retail investor accounts lose money when trading spread bets and/or CFDs with this provider.
How to Invest in DeFi in the UK – Detailed & Explained in Full
Suppose this is your first time investing in DeFi – the brief walkthrough provided earlier might be insufficient. You’ll need a more comprehensive explanation that elaborates on the relevant details that you should understand.
Read our explanation below to gain all the insights you need into how to invest in DeFi in the UK.
Step 1: Open a Broker Account
To create an eToro account, you’ll have to visit the broker’s website. Then, click on ‘Join Now’ to get started. The broker will provide some boxes that you have to fill with the relevant information. Take a look at the image below.
After filling in the required details, the broker will attempt to gain an insight into your investment experience. Your answers here will determine the trading platform services that eToro will offer you.
Cryptoassets are highly volatile unregulated investment products. Proceed at your own risk.
Step 2: Upload ID
It’s mandatory for all users to verify their identities with a regulated broker such as eToro. Until you’ve completed this step, you’ll be unable to access some features on the platform. Most importantly, you won’t be able to invest in DeFi in the UK.
Therefore, you’ll have to provide a copy of your driver’s license or passport for identity verification. You’ll also need to upload a copy of a utility bill or bank statement issued within the last three months, containing your home address.
Step 3: Add Funds
eToro’s minimum deposit requirement is $50 – or about £36. This means that you must add this amount to your account before you can invest in DeFi.
The broker provides you with different payment options that you can use for this purpose. You can choose to use your debit/credit card or Paypal among other e-wallet options. The broker also supports bank transfers if that’s your preference.
Step 4: Search for DeFi Token
Here, you’ll have to enter the name of the DeFi token you intend to buy. For instance, you might be looking to invest in Uniswap — a leading DeFi project. In that case, all you have to do is to input ‘Uniswap’ into the search box.
Then the broker will display the results, from which you’ll click on the ‘Trade’ button.
Step 5: Invest in DeFi UK
You will now see an order box – like in the example image below. Here, you’ll enter the amount you wish to invest in the DeFi coin. When using eToro, the minimum you can invest in a DeFi token is just $25 – or about £18.
If you wish to invest more, you simply have to increase the stake. Once you’ve entered the amount you want, you can complete the process by clicking on the ‘Open Trade’ button. Following that, eToro will add the tokens to your portfolio.
Best Ways to Invest in DeFi
There are different ways to invest in DeFi in the UK. You can choose to use a cryptocurrency exchange or you can decide to utilize a broker.
However, you’ll only be able to make an informed choice when you understand the features of these two different options. This section will answer all questions you have in this regard.
Online Cryptocurrency Broker
When you decide to use a broker, chances are that the platform will be regulated. For instance, eToro and Capital.com are licensed by numerous regulators including the FCA.
- Having regulators licensing a platform means such a broker is mandated to operate with certain measures. One of the key measures here is to operate with complete transparency.
- Meaning, the broker will need to keep your investment funds in segregated bank accounts.
- Additionally, since a regulated broker is recognized by the relevant bodies, you can invest in DeFi with your debit/credit card.
Furthermore, with a regulated broker such as eToro, you gain access to a wallet that you can use to store your tokens on the platform.
Online Cryptocurrency Exchange
On the flip side, some investors choose to utilize cryptocurrency trading exchanges for gaining access to DeFi tokens. This choice can be based on different reasons, some of which we’ll highlight here.
- First, you might not have to complete a KYC step when you use a cryptocurrency exchange. This is because most of these exchanges are unregulated.
- Additionally, a number of these exchanges offer a low-fee structure, which many investors consider a perk.
- There are numerous cryptocurrency exchanges with millions of users. For instance, OKEx has more than 20 million clients. Essentially, this lends credence to such a platform despite being unregulated.
However, regardless of a cryptocurrency exchange’s growth in the market, the absence of regulators behind a platform makes it super risky to invest in DeFi through such a provider.
Additionally, with an unregulated cryptocurrency exchange, you might only be able to utilize crypto-to-crypto exchanges to buy DeFi tokens. This method can be pretty challenging, especially if you’re a beginner. Ultimately, if you’re concerned about the security of funds – which you should be, a broker is your best bet to invest in DeFi in the UK.
Best DeFi Investments UK
As a smart investor, you’ll want to know about the best DeFi projects in the market. After all, once you’ve learned how to invest in DeFi, the next thing to do is to find the best project you can put your money behind. Therefore, we shall discuss five projects that many investors consider important in the DeFi market.
- The first is Uniswap, which is popularly known for its contribution towards automating the trading of DeFi tokens. The protocol seeks to democratize access to trading and allow people to hold any token they want.
- Another project worthy of consideration is Chainlink — which was created to bridge the gap between blockchains and external data feeds. The network is driven by its active community which has thousands of developers.
- Tezos also makes our top picks in terms of DeFi investments to consider. Although the protocol shares some similarities with Ethereum, Tezos seeks to offer users more advanced infrastructure that allows the protocol to avoid a hard fork.
- However, if you’re looking for a project that offers you a notable level of control in managing a stable coin, Maker is a token that fits the bill.
- The final token on this list is Compound, which you’ll find appealing if you’re concerned about earning interest from your cryptocurrency holdings.
All these projects are leading tokens in the DeFi market. A key factor accounting for the growth of these tokens is the practical use cases of their protocol. As more investors utilize the networks, the tokens also witness some traction in the cryptocurrency marketplace.
Is DeFi a Good Investment?
Now that you understand how to invest in DeFi in the UK, you should consider whether this niche marketplace is a good investment. After all, you’re in the cryptocurrency industry to make a profit.
Investors take different approaches in this regard. Some decide to follow online predictions while others seek to understand the project in which they want to invest. We would argue that doing your own research is the best option here. As such, let’s take a quick look at DeFi and what the term really means.
What is DeFi and What Purpose Does it Serve?
In simple terms, DeFi seeks to promote open finance by creating a system that grants access to everyone. More than 350 DeFi projects have since been launched with the aim of advancing this objective of finance for all.
- Most DeFi projects are built on the Ethereum blockchain and utilize smart contracts to promote financial services.
- DeFi aims to provide an avenue for the unbanked to access financial products without hindrances.
- These projects aim to create a trustless system for money-related services that are independent of traditional finance.
Essentially, DeFi seeks to bring true decentralization to the cryptocurrency space, which is a feature many developers and investors find appealing. If you’re contemplating investing in a token in this space, ensure such a project has impressive features that make it worthy.
Should I Invest in DeFi?
You might be unsure about investing in DeFi. After all, the general cryptocurrency space is characterized by volatility and constant price fluctuations. As such, you cannot be certain about whether a token will move upward or in the opposite direction.
If you find yourself at this decision-making phase, the smart thing to do is to research the project you’re contemplating. This is how you can ensure you make the right decision that’s backed by tangible information. Nonetheless, below we discuss some of the key things to consider before you invest in DeFi in the UK.
The Project’s Use Cases
When contemplating whether to invest in DeFi, you are either just getting started with the process or already have a few tokens in mind. Either way, one of the key things to consider is the usefulness of the token you intend to buy. This is because tokens with practical use cases provide users with an avenue to utilize the network, which is a significant factor that drives traction to the protocol’s coin.
For instance, Compound is a network where users can deposit cryptocurrencies into different pools and earn interest accordingly. A use case like this drives more users to the platform and this might impact the value of the COMP token in the market. Therefore, you should focus on this part of the project you’re considering before deciding on whether to go ahead or otherwise.
Low Price
Another factor that investors consider when assessing DeFi projects is the price of the respective token. This is an important consideration because investors look to buy tokens when the price is remarkably low. This way, you’ll receive a large number of tokens and hope to secure a substantial profit if and when the price increases in the future.
For instance, Tezos has a price of just over $7 at the time of writing in early October 2021. On the flip side, Maker is priced at over $2,500. This means that while a $500 investment in Tezos will give you about 71 tokens, the same capital will only get you 0.2 MKR.
Community Governance Structure
If you’ve spent some time in the cryptocurrency industry, you’ll realize that investors want to be active participants in the activities of their token’s network. In fact, this is a significant factor of DeFi projects since these networks seek to advance true decentralization.
- Therefore, you should consider the community governance structure of the project you’re looking to add to your portfolio.
- Certain protocols allow you to contribute to key issues without locking your coins while some require you to do so.
As such, you’ll need to assess the quality of stake you’ll have in the protocol and whether it’s worth your investment.
Year of Creation
This consideration is crucial in terms of assessing a project’s market performance. When a token has spent some years in the cryptocurrency market, you’ll have sufficient data to determine whether there’s a pattern to the coin’s price movement. This informs your position and allows you to make reasonable choices.
Therefore, you might want to consider projects that have spent at least a year or two in the market. Exercise some care concerning new DeFi projects since you might not have sufficient information on them.
The Cost of Investing in DeFi UK
You haven’t completely learned how to invest in DeFi in the UK if you don’t understand the cost you might incur during the process. When you have this information to hand, you can adequately estimate your potential returns if the market moves as predicted.
Let’s consider some of the key fees you should know about.
Deposit Fees
Investment platforms will require you to deposit some funds into your account before you can buy a DeFi token.
- For instance, eToro requires you to add a minimum of $50 to your account while Capital.com’s minimum deposit requirement is £20 for debit/credit cards and £250 for a bank wire.
- When you make this deposit, you’ll incur a fee depending on the broker you choose. Here, eToro will charge you a 0.5% fee. However, a broker like Coinbase charges 3.99% when investing in a token via your debit/credit card.
Essentially, the broker you choose determines the cost you incur in terms of deposit fees.
Commissions
You also have to contemplate the commissions charged by a broker before opening an account. While some platforms have a fixed commission policy, others will charge you an amount based on the transaction size.
- Nonetheless, eToro is a spread-only platform that makes a profit from the mark-up between the ‘ask’ and ‘bid’ price when you’re investing in a DeFi token. In even better news, this spreads starts at 0.75%.
- On the other hand, when you invest through a broker like Coinbase, you’ll incur a 1.49% trading commission.
Essentially, eToro provides you with a low-cost option to invest in DeFi in the UK, which is a notable factor to consider when assessing brokers.
How to Invest in DeFi in the UK – Conclusion
This guide has carefully explained all the important things you should note when contemplating investing in DeFi as a UK investor. While it’s essential to exercise care when choosing a project to add to your portfolio, you must ensure you select a credible broker that offers you a low-cost option to invest in DeFi.
Here, eToro is distinguished as the best broker in the UK. This is a spread-only platform that is regulated by the FCA and allows you to invest in DeFi from just $25 – or about £18.
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FAQs
How to invest in DeFi?
Best place to invest in DeFi?
Should I invest in DeFi?
How can I safely invest in DeFi?
How do I cash out my DeFi investment?
