How to Invest in DeFi Pulse Index (DPI) In 2023
Published November 28, 2022.
The world of decentralized finance (DeFi) has been growing at a rapid pace over the last few years. This is because DeFi offers many features and benefits over TradFi (traditional finance), making it attractive to investors and users in the space.
However, with so many DeFi projects appearing, how can you know which one to invest in?
This is exactly what the DeFi Pulse Index (DPI) is—a way to simultaneously invest in the best DeFi projects, effectively offering broad exposure to the entire DeFi market in a single token. You can think of it as the S&P 500, but for projects in the decentralized finance space. So, how can you invest in the DeFi space through DPI? Read to find out.
» Learn more about TradFi vs. DeFi and their differences and similarities
The Simplest Way to Buy DPI in 2023
1. Research Crypto Exchanges
First things first, you need to find a crypto exchange where you can buy DPI. Finding a crypto exchange that offers the DeFi Pulse Index as an asset is not difficult, but finding a reliable one is the tricky part.
Make sure to do your due diligence and research the different exchanges available to make sure that they offer what you're looking for in terms of security, fees, user experience, etc. Some of the most popular exchanges that have DPI include KuCoin, Uniswap, and SushiSwap.
2. Create an Account on an Exchange
Once you have researched and chosen the crypto exchange that you want to use, it's time to create an account. The account creation process typically involves providing some personal information such as your name, email address, and other contact details.
Keep in mind that, nowadays, the majority of CEXs (centralized exchanges) require a KYC (Know Your Customer) process to finish the registration process. This means that you'd have to upload pictures of personal documents like an ID card or a passport. On the other hand, you can stick to DEXs (decentralized exchanges) like Uniswap where none of this is required.
» Read more about DEX vs. CEX and which is better
3. Purchase DeFi Pulse Index
Once your account is set up and approved, you're ready to purchase DPI. To do this, simply navigate to the trading page on the exchange and select the pair you'd like to buy (e.g., ETH/USDT). Next, enter how much DPI you'd like to purchase and click “Buy”—it's that simple.
Now, all you have to do is wait for your purchase to go through and for the DPI tokens to be credited to your account. With that, you now own DPI and are effectively part of the DeFi Pulse Index.
Should You Invest in DPI in 2023?
Although 2022 was quite a rocky year for crypto (DeFi included), chances are, most analytics and forecasts predict that 2023 will be much better for the industry as a whole.
As of December 2022, DPI currently trades at around $70, with an all-time high of $656 reached in May 2021. So, if the DeFi space can recuperate in 2023 and DPI manages to reach its all-time high again, you're looking at a potential 800% increase in the value of your DPI tokens.
So, buying DPI while the tokens are at a relatively low price might be a smart investment in the long term.
Nevertheless, it's worth mentioning that the macroeconomic climate of the markets is still unclear, so a full recovery might not happen in 2023. Other risks associated with investing in DPI include:
- The tight correlation between the price of DPI and Ethereum might lead to limited diversification.
- Occasionally low liquidity, causing difficulties in closing/opening positions.
- High volatility, as is the case with the majority of crypto projects out there.
» Continue reading about DeFi Pulse Index and its pros and cons
In summary, the DeFi Pulse Index (DPI) is the best way to gain broad exposure to the entire DeFi space in a single token. As long as you do your research and choose an exchange that offers DPI tokens, investing in it should be relatively straightforward.
Additionally, if the DeFi space can manage to climb back up in 2023, investing in DPI can be a great way to experience some solid profits. With that being said, always do your own research and make sure to analyze the current market conditions before making any investment decisions. Good luck!