In our last podcast, we discussed how the United States baking system works in the favor of the large banks rather than in the favor of the depositors. Catching up to inflation is impossible if you depend on Banks to be your main source of yield, and it is imperative to evolve with the changing world around us.
It is in our best interest to begin saving dollars onchain at least, so I'm creating a guidebook on how to save dollars onchain. These are just a few steps.
How to pick a Chain?
Ethereum is now home to a multitude of chains and it is imperative that you focus on just a single one. I would pick a chain that has easy on board and off board access with whatever centralized exchange you decide to use. I hate that that allows us to limit which changes that we use, but it is important that your chain can communicate easily with your centralized exchange in the event that you need money.
This is what Coinbase offers to me and I assume this is what it offer to most users. It is imperative that you select one of these but I will go ahead and select a forerunner for you.
Base is ran by Coinbase company and when you send asset from Base to Coinbase it settles almost instantly.
Arbitrum is a decentralized Ethereum Layer 2, built by Off Chain Labs. It is a great place to save dollars because it is also home to a large Decentralized Finance (DeFi) Ecosystem.
Optimism is a notable mention and is a worthy option to save. Regardless you will need about 10 USD worth of Ether to send to your wallet, alongside the USDC. DO NOT SEND TO ETHEREUM!
What do I save?
This is the simplest answer ever. USDC. I would ask that you eventually move down the totem pole to more risky assets (riskless if you ask me, but I do this). There are competitors to USDC and they offer unique benefits to users across DeFi, but USDC is what you send to Coinbase or Kraken to cash out when that time comes.
Above we have fiat backed stablecoins or just dollars on a blockchain. They should always be equal to 1 USD and most of them are pretty close to that. USDC & USDT lead this category because they are the most reliable entities at maintaining that dollar value. Using any of the top five stable coins listed wouldn't be anything frowned upon.
How to pick a wallet?
The first rule of picking a wallet is don't pick metamask. Yes it is the most trusted and reliable wallet out but that is just because it is the oldest. There are many teams which are building out better and better Ethereum Wallets. I will try to rate them.
Coinbase Wallet
This is an easy to use wallet and it is connected to Coinbase. Within the app are tasks where you can get paid for using the wallet. This wallet has been complicated over time as the developers add more and more to it - they just announced they are adding a social media app within it. I think it is nice simply because it has a direct connection to coinbase.
Swap & Bridge Fees: Coinbase Wallet looks to charge you out of the wazoo, so I'd advise against use to swap. Having to go to an Decentralized App to swap is extra work for a new user so 1/10
Ease: The app has a lot of information when you open it as if it looks to advertise use. I think this can be inundating for a new user, but good because it will control experiences. 7/10
Browser: The web browser does what it's supposed to do, but it isn't super composable. If an app doesn't have Connect to Coinbase Wallet, it kinda won't work. 6/10
Zerion Wallet
This is a wallet for experts, but experts get a lot of things right.
Swap & Bridge Fees: Fees are like 0.5%, which is negligible with small amounts. 9/10
Ease: This app is easy and bright with a decent user experience. I think it is fairly easy to get used to. 8/10
Browser: This is where Zerion is the best. It is composable so you can use Connect with Metamask where you don't see Connect with Zerion and still get into an app. 10/10
Rainbow Wallet
This is a wallet for FUN!
Swap & Bridge Fees: Fees are variable but negligible with small amounts. It is very usable to swap, but there are times where using a Dapp is the better choice. 7/10
Ease: This app will help you along the way and feels the most natural for people. 10/10
Browser: This browser is, much like Zerion, composable with limitations I don't think matter for Base & Arbitrum Users. 9/10
How to pick an app?
You don't pick an app. You JUST USE AAVE. I will beat this drum to the end. In the game of a new person looking to save onchain, it would be best that you don't navigate the thicket of DeFi and just use the largest and most secure application onchain.
Whether you use on Arbitrum, Base or Optimism, you'll find rates of interest greater than anything you can get in a bank account with more sovereignty.
Arbitrum is home to 1.61 Billion USD worth of deposits on AAVE & Base has 758 million offering 4.66% and 5.38% in interest respectively. Interest rate oscillate, when prices move up people borrow more. When they move down, people pay off their debts or get liquidated. Either way you earn interest incessantly.
