Last year I wrote about how Cardano was in the process of launching a DeFi ecosystem that competes with Ethereum. Now, that ecosystem is well on its way to being a thriving place to grow your Cardano holdings. However, the dApps do not come without their challenges.
Unlike Avalanche, Cronos, Binance Smart Chain and a host of other DeFi platforms that simply copy & pasted Ethereum’s code, Cardano has been building its systems from scratch.
It still has copied mechanisms and concepts like liquidity pools and automated market makers (AMM’s), but they’ve opted to start from square 1 in order to build a better and more efficient decentralized financial system.
In this letter, I’m going to tell you about my experience of adding liquidity to minswap, one of the leading liquidity pool dApps on Cardano.
Eternl Wallet
In order to interact with minswap and add liquidity, I first had to download and synchronize my Cardano wallet. I opted to use a wallet called Eternl upon a recommendation from a friend.
After initializing the wallet, and seeding it with some funds, a few more steps were needed in order to be able to use the wallet with a Cardano dApp.
From the main interface, I had to click a button that said “Enable dApp Account”. I’m assuming this is a security measure so my wallet cannot automatically connect to a site and interact with dApps.
This step was sort of a hassle if you didn’t know you had to do this, but nonetheless appreciated.
MinSwap
The next step is to connect the wallet to MinSwap. If you’ve ever connected your metamask wallet to any DeFi app or site, then it’s the exact same process.
Once connected, you will see your address appear in the top right hand corner. This is how you know that you’ve successfully connected to the site.
Adding Liquidity
I have two options to add liquidity. I can either create LP tokens by supplying equal amounts of two tokens, or I can “Zap In”. Let’s focus on the first instance.
Again, if you’ve ever used or seen a liquidity providing interface on Ethereum, Solana, or Cronos, then you will be well acquainted with providing liquidity on Cardano.
As I stated earlier, they’ve borrowed all the same concepts and interfaces from other DeFi ecosystems and have simply replaced what happens behind the scenes.
Because I don’t have any other token on Cardano, I won’t be showing you how to add liquidity by supplying equal amounts of two tokens. Instead, I’ll “Zap” into a liquidity pool.
Zapping In
Zapping into a liquidity pool is a quick and easy way of supplying liquidity to a pool. If you have one token you want to supply liquidity for, but not the other, this is where Zapping comes in.
You’d normally have to swap some of TokenA for TokenB, then create the LP tokens. Zapping combines those two operations into a single transaction.
The above screenshot shows me zapping 100 ADA into 90,176,950 ADA-MIN LP tokens. After hitting the Zap button, my ccVault wallet pops up and prompts me to sign a transaction with my “spending password”.
After the transaction is approved, the tokens are automatically staked in a pool.
Creating and staking LP tokens on Cardano is more or less the same process as on other blockchains. With that being said, Cardano is a little clunky at the moment. They’re progressing at a decent rate, constantly improving the infrastructure, but the user experience could definitely be better.
Cardano Handle (NFT Domain Names)
The other thing that I experimented with recently is Cardano domain names. They’re called Cardano handles, and you can reserve your own handle at handle.me. I bought two today, $keegan and $gofullcrypto. Here was the process.
Step 1: Get in line. You need to put yourself in the queue to buy/mint a domain. Once you get an email, you will get a link that leads you to this screen.
Step 2: Register a domain and pay for it. You will be prompted to send an amount of ADA to a specific address. Copy the address and make the transaction on your wallet (in my case ccVault).
Step 3: Receive the NFT. After making the payment, and receiving confirmation for the transaction, the domains will be queued to be minted and sent to your address when they’re created.
It took about 12 hours for my NFTs to be minted, and I can see the two that I created here below.
What these domains do is obscure my long and complicated Cardano address. Instead, you can send money to $keegan or $gofullcrypto and it will end up in my wallet.
I also own gofull.crypto on Unstoppable Domains. I think there is a real use case to decentralizing domain names. However, there is no clear winner in the decentralized domain space.
They’re not like .com wherein every company needs to have one. But I have a feeling that once this technology has been around for a decade, the domains on the winning smart contracts platform (ex. Ethereum / Cardano) will be worth quite a bit of money.
This means .eth, .crypto, .bitcoin domains all have the potential to be worth more, as long as the platform itself begins to be used by the masses.
Conclusion
I will need to do another update on Cardano in the future as I just barely scratched the surface with what can be done.
Additionally, there are cool staking pools wherein specific pools will give rewards in the form of other tokens. So not only will you get your 4-5% APY from staking Cardano, but some of them will also give you additional tokens which you can keep or sell.
When I started playing around with Cardano, I honestly expected a better user experience. But I’m prepared to give Cardano the benefit of the doubt, and wait for them to step up their game. They’ve always delivered steady upgrades to the entire ecosystem, and I don’t see any reason why they would slow down now.
Expect more newsletters in the future about Cardano, and be prepared to follow along!
Regards,
Keegan
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