DPI holds up well taking a passive approach, as it is inspired by index products from traditional finance which historically has outperformed more active strategies. This DeFi Pulse Index (DPI) guide to token productivity introduces DPI tokens holders to:-
In traditional markets, one of the safest bets for participating in a financial market is to hold an equally weighted basket of companies, picked by a credible research firm. This model is very efficient and comfortable, as holders don’t have to worry about constantly researching and rebalancing the portfolio.
For many in the crypto ecosystem, DPI does just that. However, because this index is built on Ethereum, it acts as a DeFi money lego that unlocks new and innovative ways to allocate capital and earn yield. DeFi also allows users the opportunity to take advantage of a myriad of services only found in traditional finance.
Liquidity provision gives DPI holders the unique opportunity to become market makers for DPI. Thanks to the business model of decentralized exchanges, anyone that holds an equal amount of each asset can facilitate trading on the platform and earn passive income on their deposit. When tokens are deposited into a liquidity pool, the platform automatically generates a new token that represents the share the depositor owns of that pool. These generated tokens are known as Liquidity Provider (LP) tokens, and they can be used for a multitude of functions both within its native platform and other decentralized finance apps. The LP position allows the DPI holder to earn trading fees for any trades that take place within this pair. DPI currently has two main liquidity pools.
Uniswap V2 APY: 8.77%
Sushiswap APY: 5.34%
Yield farming allows for maximizing profits even further, after having deposited their assets into a liquidity pool, and receiving LP tokens, a DPI holder can stake the LP tokens they receive in order to earn additional rewards. Currently, users can stake their ETH/DPI LP tokens from Uniswap and Sushiswap on multiple different farms in order to earn rewards. For example, users can stake their DPI/ETH LP tokens on Index Coop to earn INDEX.
Index Coop Uniswap LP APY: 10.15% (INDEX rewards)
Furthermore, additional opportunities exist if you would like to earn other platform tokens with your DPI/ETH LP. For example, earning ALPHA tokens on Alpha Homora V2, FARM tokens on Harvest Finance, or IMX tokens on Impermax. Below are the additional yields you can earn by staking on these platforms.
Alpha Homora V2 Uniswap LP APR: 20.21% (ALPHA), 20.59% (INDEX) Sushiswap LP APR: 20.21% (ALPHA), 23.53% (SUSHI)
Harvest Finance Uniswap LP APR: 1.5% (FARM), 7.36% (INDEX)
Imperamax Uniswap LP APR: 62.14% (IMX)
Decentralized finance has revolutionized the financial sector in many ways, and one of them is the easy accessibility to lending and borrowing of capital. You can easily deposit your crypto in a lending and borrowing platform and earn yield from borrowing demand on the asset. Currently, DPI holders can deposit their DPI tokens to earn a yield on two protocols:
CREAM Finance APY: 0.60%
Alpha Homora V2 APY: 7.16%
One of the advantages of holding DPI is the fact that you do not need to sell your assets if you need liquidity. A DPI holder has the ability to borrow stable coins against their DPI position. This means a holder can put up DPI as collateral to take out a loan in stable coins and use this liquidity for various cases outside and inside crypto. In finance this is called collateralized debt position (CDP) and is available for DPI holders on the following platforms:
Unit Protocol Loan to value: 64% Debt: USDP Coin Interest rate per annum: 10%
Sushiswap Kashi Loan to value: 75% Debt: sUSD Interest rate per annum: 0.25%
Before exploring the above opportunities we recommend that you do your own research. Make sure you deep dive into the project’s Gitbook and documentation to understand how the protocol works and how to use it. Jump into the project’s Discord and follow their Twitter to keep up to date with any news in relation to the protocol so you are not surprised by any changes that may affect your assets. Lastly, make sure you understand the risks involved with using these platforms. We have highlighted a few of them below you should be aware of.
To conclude, we will be releasing a 4 part series that goes into detail for each productivity opportunity for DPI. What users should look out for and how to take advantage of each opportunity.
There are three main ways to buy $DPI: 1. You can exchange fiat currencies directly for an Index Coop product via an Ethereum wallet 2. Use a decentralized exchange to trade another cryptocurrency for an Index Coop product 3. Or, buy it on a centralized exchange If you’re looking to exchange a fiat currency, like the U.S. dollar, directly for $DPI, then you’ll want an Ethereum wallet like Argent, Metamask, or Rainbow. With each of these wallets, you can connect to your bank account or debit card, which allows you to exchange fiat currencies directly for Index Coop products like NAME. Buy Index Coop products with fiat currencies: 1. First, you’ll need to download one of the above apps. (Metamask also has a browser extension if you prefer not to use your mobile phone.) 2. Next, you’ll set up your new wallet and connect your bank account 3. Once you’ve deposited fiat currency in your wallet you can exchange it for Index Coop products like DPI contain COMP.
Disclaimer: This content is for informational purposes only and should not be construed as legal, tax, investment, financial, or other advice.