Diving into DeFi: Part 4: DeFi opportunities for Steem Community.
An economic system that is governed by code(smart contract) not by any individual, third party, emotions, etc is known as DeFi. It is different from the traditional banking system in a way that financial access, trust, opportunity, absolute control of the fund, etc all are governed by the code, hence making the system permissionless, trust-less.
DeFi use cases are not limited to lending/borrowing, yield-farming only. Although the dapps catering to those use-cases are really hot now, in the driving seat of DeFi and most of the values are flowing into the yield farming, interest rate, etc, fundamentally DeFi is not limited to that. In fact, it is endless, in the future also many use-cases will be catered with the smart contract as and when the community and their requirements need to be addressed.
Steem economic model since its inception has some generic DeFi use-cases, even when the DeFi was non-existent or non-prevalent. For example, earning interest for simply powering up STEEM into SP, delegating SP to another user/community, and making an agreement to earn a return. At any point, the owner of the fund remains in absolute control.
In addition to the above, the Steem users can now access and leverage the Tron DeFi with @projectw WST. The representative token is the new concept of interoperability when it comes to bringing the value of one chain & leveraging benefits of the other chain, thereby creating an opportunity for both the chains.
Therefore, the DeFi use-cases for STEEM are:-
- Power up the STEEM into SP and earn interest rate(current APR 4.33%)
- Delegate SP to another user or community, earn a return based on the agreement between the two parties.
- Swap STEEM to WST and gain access to Tron DeFi.
(1) Power up STEEM into SP, earn an interest rate
Steem, the decentralized social platform is the underlying infrastructure that inset all types of socializing. SP is a key component of proof of brain and governance in Steem Blockchain. The liquid STEEM when powered up, is known as Steem Power or simply SP.
The power-down schedule of SP is 4 weeks. So a user gets his liquid STEEM back in 4 weeks (4 equal installments each week).
SP is an influence token which plays an important role in governance(selection of witness who runs and secure the Steem network, voting in Steem DAO). SP is also the influence power to distribute the reward in PoB, also earns curation reward.
So SP has its own important use-case in Steem. However, when we talk about DeFi, we primarily intend to make some money on the top of the stake without doing any additional activity/job.
Steem Blockchain has a reward pool in which the STEEM tokens are minted at a certain fixed-rate (as per the inflation rate).
Of the total reward pool, 15% of the newly minted tokens are distributed to the vested token holders(SP). That means, without doing any additional task/job, you can earn an interest rate for your SP. Currently, APR stands at 4.33%. However, this figure could vary, subject to Blockchain variance.
(2) Earn by delegating SP
In the first use-case, we get to know that SP holders are earning as much as 4.33% APR for simply holding SP. Now there is another feature of Steem Blockchain which is known as "Delegation". This is one of the powerful features which enables a user to delegate his SP to another user, yet remain in absolute control to undelegate at any point.
This feature leverages the economic model of Steem Blockchain in which the unused resources can be utilized to its full potential and fulfill the objective for the entire community, a win-win case for both: delegatee & delegator.
For instance, user A is making effort to build a community, he might need resources like SP to curate the community members in Steem. He does not have sufficient SP, so he seeks to lease SP. Another user B whose SP is sitting idle, and he does not have time to curate. Now B can delegate his SP to A & earn a return if both reach an agreement.
Dlease is such a market place where the delegatee and the delegator meets. As per the current trend, the delegators are making as high as 25.07% APR, without doing any additional task/activity, just by delegating their SP.
So on the top of the interest rate(APR, 4.33%), the SP holders can potentially earn another 25.07% APR(as per the current trend) by delegating it to another user. That's a low-risk lucrative APR if we compare it with the traditional banking system.
In the lease market of Dlease, you can see a number of lease request with the APR in the descending order, you can fill any of them of your choice, ideally, the one which is for a longer span and with a better APR.
How to fill a lease request in Dlease:-
- Go to https://steem.dlease.io/market
- Click on "Login". A pop-up will appear with a number of options to login with. The ideal options are Steemconnect & Steem Keychain. Select any of them. I will choose Steem Keychain.
- Enter Stem Account name. For example, sapwood. Then click on "sign in".
- Authorize it, Click on "confirm".
- Now click on "Delegate". You can choose to fill any of the lease requests from the list.
- Then confirm the delegation, sign the transaction. Start earning "daily payout" as mentioned in the lease request.
(3) Swap STEEM to WST and gain access to Tron DeFi.
Steem and Tron are two heterogeneous blockchains. Tron DeFi is an emerging market. Both the chains are well known for better scalability with block producing time 3 seconds only.
STEEM can not be transferred to Tron Blockchain, however, the representative token is the name of interoperability in DeFi market. To gain access to the Tron DeFi ecosystem, a representative token contract can be created in Tron pegged with 1:1 STEEM and then it can create an opportunity for Steem.
@projectw has already introduced WST which is a representative token/wrapped STEEM pegged 1:1. A Steem user can swap his/her STEEM to WST, gain access to Tron DeFi. In Justswap TRX/WST pool is available, one can swap for other tokens of the Tron family or simply go for yield farming by contributing to the TRX/WST pool.
How to swap STEEM to WST:-
- Go to https://www.projectw.io/swap
- Fill the quantity of STEEM, there is a swap fee of 0.3%, the minimum fee is 0.1 STEEM in any case.
- Enter your Stem username without @, for example, sapwood.
- Click on "Swap".
Make sure, you are logged in TronLink as well as Stem Keychain to perform this operation.
- Click on "confirm" in Steem Keychain.
It can take up to 5 minutes to complete the transfer(WST). So check your TronLink wallet after 5 mins.
How to contribute to the LP pool TRX/WST in Justswap:-
- Go to https://justswap.io/.
- Connect your TronLink wallet.
- Click on "Pool", then "Add Liquidity".
- One side is TRX always, the other side you need to select which is WST in this case.
- On both sides, the token worth must be the same when you contribute to a pool. Enter the Input.
- Click on "Supply". Then click on "Confirm Supply".
- Then you need to authorize it in the TronLink wallet. Click on "Accept". You are now done with adding liquidity to TRX/WST pair.
You can power up your STEEM into SP and then potentially earn 4.33% APR as interest for holding SP and in the open Delegation market, you can earn as high as 25.07% APR(as per the current trend) with a daily payout. Not to mention, if the token value appreciates you will earn significantly over the base value.
With @projectw's WST, now you can enter Tron DeFi and go for yield farming by adding to the TRX/WST pool.
So Steem users also have multiple DeFi options, make the most of it now, ride this wave of DeFi.