How to Earn While Managing your Portfolio with Velvet

Introduction to Velvet

If you have been looking for a DeFi platform that allows you to securely and reliably access DeFi markets either within your own personal vault, or by depositing into somebody else’s, Velvet might be the place for you. In this article we’ll cover why Velvet is exciting, who it should be used by, and most importantly how to use it to make money. In addition to the normal features of the platform, there is also an Airdrop tab for their upcoming token, so if you’re interested in Velvet now is a good time to get a head start.

Background

Velvet Capital is backed by Binance Labs as well as Blockchain Founders Fund, Selini Capital and others, and has recently gained attention for the launch of their deployment on Base as well as the start of the airdrop program for $VLV. The platform has about $4M in TVL at time of writing, which is a strong start however they still have a ways to go. The goal of Velvet is to provide a seamless experience for traders to access any DeFi pool or token they want without leaving their Velvet dashboard, in addition to a social layer that encourages users to interact and work together. This is all brought together by the intent-based architecture that makes up the Velvet backend, allowing for low fees and fast transactions.

Why Should You Use Velvet?

DeFi can be complicated and there are lots of risks involved with needing to go to different websites and protocols to manage your portfolio. Velvet aims to change that, streamlining your portfolio management with their intent-based operating system. You never have to worry about whether you’re getting the best price on a trade due to their integrations with major aggregators and network of solvers, and in addition you can one-click allocate into a number of top yield farms without needing to navigate to each site and decide which is best for you.

While there are a lot of tools available on the site which greatly improve the trader experience, perhaps the most important feature is the vault system. If you’re an advanced user, you can create a public vault which others are able to deposit into for you to trade. In exchange, you get more capital to trade with and can set additional management fees. If your vault performs well, people will see the profits and be more inclined to deposit, creating a reflexive mechanism for the vault owner that results in more profits for them than if they were working with only their own capital.

For beginners, depositing your money into somebody else’s vault may be a good way to learn more about the market without having to direct investments yourself. On the homepage you can search through the available public vaults and see key information like their profitability, the trading strategy, and the total value of deposits into the vault. While these are all good data points, it’s important to remember that past performance is not indicative of future profitability, so practicing good risk-management especially when depositing into vaults is necessary.

How to Use Velvet

Getting started on Velvet is very easy with only a few steps to set up your profile. Since Velvet has recently deployed on Base, we’ll take a look at how to get up and running on that deployment:

Connect Your Wallet

The first step as with any dApp is to connect your wallet to the site. Any wallet that works on Base should be compatible; if you don’t have a wallet yet, you can click this link to download and set up Rabby.

Quick Start

Once you’ve connected your wallet, you have the option of creating your own vault. For first time users, it’s worth choosing the “Quick Start” option first to set up your own vault and see how everything works. If you like the system, you can use the vault to deposit and manage more of your own portfolio. Once you’ve created the vault, the first step is to pick which assets you would like to deposit. For this example, I’m starting my vault off with .01 ETH or about $27.

Deploying Your Vault

Once you have entered which assets you would like to deposit as well as the amount, click the Deploy button in the bottom right. The site will then walk you through a number of transactions, but once you have signed them all your vault is ready to go!

Making a Trade

Now that your vault has been created, you can easily make trades from your vault dashboard. First choose which of the tokens already in your vault you would like to sell, then select which asset you would like to swap into on the bottom. Since we are on the Base chain, Velvet offers a variety of options of tokens from memecoins to DeFi pools on Beefy, Aave and more. Having access to yield-bearing assets like these pools in the same place you trade normal tokens makes things easier, and is a nice quality-of-life improvement over manually doing all this yourself.

Tracking Your Performance

As the value of your vault grows over time, you’ll be able to track your overall performance from the My Portfolio tab. If you’ve created a public vault that people can deposit into, you’ll see the net change of all assets in the vault, including the other users that have deposited into your vault. Towards the bottom of the screen you can see a full breakdown of the assets, as well as the yield they are providing (if any) so you don’t need to go to their respective protocol websites to make sure you are getting the best rates.

Fee Management

There’s no reason to change fees if you have a private vault, but if others are depositing in you might want to charge something in exchange for you managing their money. There’s a lot of options when it comes to how you want to charge, so it’s worth taking a look and deciding what is right for your situation.

Velvet Token Airdrop

The Velvet Airdrop program recently went live, where users are able to earn points based on the funds they keep on Velvet. For every $1,000 you keep on the platform, you will earn 3 points per day. There is no way to value how much these points are worth yet, however with low TVL and a freshly launched program, it's a great time to start earning. Additionally, once the referral code feature goes live you’ll be able to grab a boost for yourself and your friends as well as a share of the points they earn.

While you can definitely earn points by creating and using your own vault, if you don’t want to actively manage yourself you can always deposit into one of the public stable vaults to passively earn points. Whichever you choose, when your main goal is to farm for an airdrop you probably want to stick to trading strategies that are expected to be stable. We don’t have a date for the token yet but it will likely be later this year, so be sure to follow Velvet on Twitter so you don’t miss it!

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