f(x)Wallet Deposit and open-source De-Fi protocols explained
f(x)Wallet is a decentralized non-custodial wallet, serving as an easy way for users to easily interact with the blockchain networks, as well as the smart contracts for the likes of Aave, Compound, and others.
Via f(x)Wallet, you can interact with the open smart contracts as depositors – by depositing some assets into the reserve pool of funds, you are providing liquidity to a de-fi provider of your choice and will earn passive income from it.
What is an open-source De-Fi protocol?
De-Fi, short for Decentralized Finance, leverages open source software and decentralized networks to transform traditional financial products into secure and transparent protocols that operate without unnecessary third-parties.
f(x)Wallet provides users access to the De-Fi protocols, such as Aave, to earn interest by becoming depositors. Aave is a decentralized non-custodial liquidity market protocol. The protocol is completely open-source, which allows anyone to interact with the user interface client, API, or directly with the smart contracts on the Ethereum network. It is entirely transparent, trackable, and auditable by anyone.
How are interest rates determined?
Each asset has its own supply and demand with its an APY (Annual Percentage Yield). The interest rate of each asset fluctuates based on the supply and borrowing demand of the specific reserve pool of funds from the open-source de-fi providers.
For example, if many people want to borrow ETH and there is a limited supply, the interest rate will increase to incentivize more deposits. This also works the other way around. If ETH supply is high but less borrowing demand, the interest rates for ETH depositors will be lower.
How do I deposit?
Tap the keypad icon on the lower right-hand side. You will be able to browse the “All assets” section and find the asset you’d like to deposit. Select your desired asset and then choose "Deposit". Select the amount you'd like to deposit and submit your transaction*. Once the transaction is confirmed, your deposit will be successfully registered and you will begin earning interest.
*The first deposit of one asset will require an additional approval transaction.
Is there a minimum or maximum amount to deposit?
There is no minimum or maximum limit. You can deposit any amount you want. Still, it's important to take into account that depositing a small amount will see the transaction cost be higher than the expected earnings. It is recommended that you estimate the possible earnings versus the amount you are planning to deposit.
Where are my deposited funds stored?
The funds are stored in a De-Fi protocol’s smart contract of your choice. If you choose Aave De-Fi protocols, your funds are allocated in an Aave smart contract. The code of the smart contract is public, open-source, formally verified, and audited by third-party auditors. You can withdraw your funds from the pool on-demand.
f(x)Wallet does not store your funds once you perform a deposit with a De-Fi protocol to earn interest.
What are aTokens?
All deposits in Aave Protocol have a corresponding “aToken”. This is an Aave interest-bearing token pegged 1:1 to the value of the underlying asset.
For example, if you deposit 100 ETH, you will also get 100 aETH. These aTokens accrue interest in real-time directly and continuously in your f(x)Wallet.
How do I withdraw?
To withdraw you can go to "My Deposits" or the Asset Overview page of the asset you’d like to withdraw. Tap “Withdraw”, fill in the withdrawal amount, and submit the transaction.