5 Ways To Use DefiLlama That Will Give You Unparalleled Edge When Trading Crypto Altcoins

As a crypto trader, you’re always on the lookout for new online tools that will put you ahead of the curve. You search for hidden gems that will help you spot 100x projects before they take off.

We’ve all been there.

The problem with this is that you can stumble upon a holy grail crypto resource, but its sheer complexity will discourage you from investigating further and harnessing its true power.

For me such a tool was DefiLlama. When I first discovered it, I quickly realized its tremendous utility for those who are savvy enough to decipher the data it provides.

But for me, its countless metrics were a complete puzzle.

Many hours of research and tutorials later, I finally have a much better grasp of the tremendous value DefiLlama has to offer.

You might never have heard of it, or you might have checked it out a few times and given it up as a bad job.

In this post, we are going to change that.

We will look at what exactly is DefiLlama and how you can get ahead of the game by leveraging its full potential.

What is DefiLlama?

Simply put, DefiLlama is a data aggregator used to track chains and their dApps.

According to its site, DefiLlama is the largest TVL aggregator for DeFi (Decentralized Finance). Their data is fully open-source and maintained by a team of contributors from hundreds of protocols. They focus on accurate data and transparent methodology.

Let’s look at 5 strategies you can take advantage of on DefiLlama to maximize your profits when trading, your passive income when staking, and get free money with airdrops.

1. Profit from TVL rankings

The key function of DefiLlama is its TVL (Total Value Locked) ranking. TVL is the number of assets that are currently being deposited in a specific protocol, including staking, lending, liquidity pools, and dApps.

TVL is a very interesting metric because it lets you see how the money is flowing in and out of DeFi projects and which projects are gaining in interest and adoption rate.

A higher TVL indicates a bigger and healthier ecosystem with more activity, less inherent risk, and better yields for traders.

TVL is also used by investors to determine if a project’s native token is undervalued or overvalued.

If the market capitalization of a token is high relative to the TVL of the project, the token is likely overvalued. Vice versa, the token is likely undervalued if the market capitalization is low relative to the TVL.

You can see the Mcap/TVL ratio on DefiLlama’s dashboard by clicking on DeFi and Overview. A value below 1 indicates undervalued projects and a value above 1 means a project is overvalued.

For example, right now we can see that of all protocols the one with the highest TVL is Lido on the Ethereum blockchain with almost $9 billion locked in. We can also see that its Mcap/TVL ratio is O.27, so way below 1, which makes its native token, $LDO, undervalued. This can be a great reason to put $LDO on your crypto radar and do further research.

If you look at Chains, you’ll see that right now Optimism is the most undervalued chain, with a Mcap/TVL ratio of 0.6. On this chain, Velodrome has seen its TVL explode in the recent month and has a Mcap/TVL ratio of only 0.1. So, this is another project I’m keeping a very close eye on.

2. Find the best staking pools

One of my favorite features on DefiLlama is its Yields aggregator. Click on Yields and Pools and you will have a list of all staking pools on all existing chains with their current API and TVL.

If you want to stake any coin, for me, this is the only place you need to look at to find the best pools. You can filter them by many criteria to see the pools that fit best your trading portfolio and risk tolerance.

For example, let’s say you want to stake ETH only on the Ethereum blockchain itself. You want to do single-sided staking with no impermanent loss, and you want the pool to have a TVL of at least $1 million.

You can set all those parameters in the filter section and then sort the pools by APY. This way you will get all pools that fit your criteria with the highest APY on top and you can do further research.

3. Monitor stablecoins

If you click on Stables and Overview, you will see a list of all the stablecoins on the market.

This allows you to know which stablecoins are holding their peg and have the biggest market cap. Right now, SEC is putting a lot of pressure on BUSD, so BUSD is losing portions of the market, but it’s still holding its peg. We can see that the money is flowing out of BUSD and into USDT and TUSD.

In light of recent events where we’ve seen popular stablecoins depeg and fail, this is a very important metric to monitor.

If you see a stablecoin losing its peg, this means any related projects will also be affected. By monitoring stablecoins activity daily, you can limit your losses if another unexpected event occurs.

On top of that, you can use the Yields -> Stablecoins function. This allows you to see which stablecoin pools are generating the highest yields.

Staking your stablecoins is a relatively low-risk way to earn passive income. By moving stablecoins around to best-performing pools, you can maximize your profits.

4. Follow smart money

If you want to know how much VCs are investing and where you can check out the Raises dashboard of DefiLlama.

This is possibly the feature of the entire application that gives you the biggest advantage because it lets you see when big VCs and funds are entering projects.

For example, if you scroll down a bit, you can see that recently Binance Labs invested $10 million in a ZK project called Polyhedra. This is a very recent project with only a few thousand Twitter followers, and you can’t invest in it yet.

But now that you have the information that Binance is supporting this project, you can keep a close eye on it for a potential airdrop, pre-sale, and listings.

On the top of the Raises page, we also have a chart that displays how much smart money is being invested in DeFi every month. We see that there was a spike in November 2021 with $7 billion invested, and then the trend cooled down. If we start seeing new spikes, this can very well mean that large funds are becoming more confident about the start of a new bull market.

5. Hunt for airdrops

One of the coolest features of DeFiLlama is their Airdrops dashboard. If you go to DeFi and Airdrops, you will see a list of all tokenless projects that may airdrop in the future.

Bear in mind that this doesn’t mean that the airdrop is confirmed. You should check out the project’s Twitter account and Discord channel to see if there’s actually any talk of an airdrop.

This will only take you a few minutes per week but from time to time, you will stumble upon very high-potential giveaways.

I like following these projects on Twitter and adding them to a dedicated Twitter list to quickly be informed when any of them start talking of an airdrop.

Airdrops are essentially free money and can be very profitable for those lucky souls who discover them early.

Final thoughts

Mastering the crypto markets is becoming insanely difficult. With new technologies and trends coming out every month, staying on top can seem like a daunting task.

This is when crypto data aggregators become your best friends. They’re one-stop platforms to get the information you would otherwise spend hours manually researching and compiling.

One of the best crypto applications of the moment is DefiLlama, but most people aren’t using it right.

In this post, we went over 5 key DefiLlama strategies you can use to analyze crypto projects and spot new opportunities.

Now is the time to do your research.

Finding out which will be the next strong crypto narratives and projects before the next bull rally is essential to your trading success. And DefiLlama can be of an outstanding aid for those who learn to capitalize on its potential.

PS: If you want to learn how to make a consistent profit from the Metaverse in 2023 and beyond, check out my free guide How To Make Your First $1000 In The Metaverse.

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Disclaimer: This content is for educational purposes only and should not be considered as financial or any other advice. Always do your own due diligence before investing your hard-earned money.

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