Navigating Onchain Crypto: A Comprehensive Guide

15 min read
2025-06-23
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One of the biggest advantages of onchain cryptocurrency trading and decentralised finance (DeFi) is early access to projects and tokens, often before they gain mainstream traction.

This early-mover edge can offer outsized opportunities for those who know how to navigate the ecosystem. From setting up self-custody wallets and using decentralised exchanges (DEXs), to deploying Telegram trading bots and understanding gas fees, liquidity, and contract addresses, mastering these fundamentals is essential for operating safely and effectively in the DeFi space.

This guide explains the basics and provides practical housekeeping tips to help you stay safe.

1. Understanding Onchain Crypto and DeFi

For those who are new Onchain crypto refers to cryptocurrency transactions and activities that occur directly on a blockchain, such as Ethereum, Solana, or BNB Chain.

Unlike centralised exchanges (CEXs) like Binance or Coinbase, which manage your assets on your behalf, onchain activities give you full control through decentralised protocols and self-custody wallets.

Decentralised Finance (DeFi) is a subset of onchain crypto that uses blockchain-based protocols to offer financial services like trading, lending, and staking without intermediaries. DeFi platforms, such as Uniswap or Raydium, operate on smart contracts, self-executing code that automates transactions when predefined conditions are met.

Why Go Onchain?

  • Control: You own your assets and private keys, reducing reliance on third parties.
  • Access: DeFi offers a wider range of tokens and opportunities, including new project launches and meme coins.
  • Transparency: Blockchain explorers provide real-time visibility into transactions and smart contracts.
  • Opportunity: Onchain allows you to enter projects early, before the masses have access through traditional means like CEX's potentially providing you a competitive edge.

However, onchain trading comes with risks, including smart contract vulnerabilities, high volatility, and scams like rug pulls (where developers abandon a project and drain funds). Sufficient knowledge and caution are crucial.

2. Setting Up a Self-Custody Wallet

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A self-custody wallet is a non-custodial wallet where you control the private keys, giving you full ownership of your crypto assets. Unlike custodial wallets on CEXs, self-custody wallets allow you to interact with DeFi protocols directly.

Popular Self-Custody Wallets

  • Zerion: Widely used for Ethereum and EVM-compatible chains (e.g. BNB Chain, Arbitrum).
  • Phantom: Popular for Solana-based DeFi.
  • Trust Wallet: Supports multiple blockchains, ideal for beginners.
  • Uniswap Wallet: Designed for Ethereum-based DeFi with a user-friendly interface.

Steps to Set Up a Self-Custody Wallet

  • Download and Install: Choose a reputable wallet (e.g. MetaMask or Phantom) from its official website or app store. Avoid third-party sources to prevent malware.
  • Create a New Wallet: Follow the prompts to generate a new wallet. You’ll receive a seed phrase (a 12- or 24-word recovery phrase). Write it down and store it offline securely, never share it or store it digitally.
  • Set a Strong Password: This protects access to the wallet on your device.
  • Confirm Seed Phrase: Most wallets ask you to verify the seed phrase to ensure you’ve recorded it correctly.

REMEMBER:

  • Backup Your Seed Phrase: Store it in a fireproof safe or split it across multiple secure locations. Losing it means losing access to your funds permanently.
  • Use a Dedicated Device: For high-value holdings, consider a device solely for crypto to reduce exposure to malware.
  • Enable Two-Factor Authentication (2FA): If the wallet supports it, add an extra layer of security.

3. Funding Your Wallet from a Centralised Exchange

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To participate in DeFi, you’ll need to transfer cryptocurrency from a CEX to your self-custody wallet.

Here’s how to do it safely:

  • Buy Crypto on a CEX: Sign up for a reputable exchange like Coinbase, Binance, or Kraken. Purchase a base cryptocurrency like Ethereum (ETH) for Ethereum-based DeFi or Solana (SOL) for Solana-based DeFi. Ensure you have enough to cover gas fees (more on this later).
  • Find Your Wallet Address: Open your self-custody wallet and locate your public address (a long string of characters, e.g. starting with “0x” for Ethereum). Copy it using the wallet’s copy function to avoid errors.
  • Initiate a Transfer: - In your CEX account, navigate to the “Withdraw” or “Send” section. - Select the cryptocurrency (e.g. ETH or SOL). - Paste your wallet’s public address. - Specify the amount, ensuring you leave some funds for CEX withdrawal fees. - Double-check the address, a single typo will result in irreversible loss.
  • Confirm the Transaction: Some CEXs require email or 2FA confirmation. The transfer may take minutes to hours, depending on the blockchain and network congestion.
  • Verify Receipt: Check your self-custody wallet to confirm the funds have arrived. Use a blockchain explorer (e.g. Etherscan for Ethereum, Solscan for Solana) to track the transaction.

Housekeeping Tips

  • Start Small: Test with a small amount (e.g. $10) to ensure the process works before transferring larger sums.
  • Check Network Compatibility: Ensure the CEX and wallet support the same blockchain (e.g., Ethereum mainnet, not a layer-2 like Arbitrum, unless specified).
  • Account for Fees: CEXs charge withdrawal fees, and blockchains require gas fees for onchain actions. Always keep extra ETH or SOL in your wallet.

4. Introduction to Decentralised Exchanges (DEXs)

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A decentralised exchange (DEX) is a platform that facilitates peer-to-peer crypto trading without intermediaries. DEXs use automated market makers (AMMs), which rely on liquidity pools, pools of paired tokens (e.g. ETH/USDT) provided by users, to enable trading.

Liquidity providers earn a share of trading fees, typically 0.3% per trade.

Popular DEXs

  • Uniswap (Ethereum): The leading DEX for ERC-20 tokens, known for its simplicity.
  • PancakeSwap (BNB Chain): Popular for low fees and meme coins.
  • Raydium (Solana): Fast and cost-effective for Solana-based tokens.
  • Jupiter (Solana): A DEX aggregator that finds the best prices across Solana DEXs.

How to Trade on a DEX

  • Connect Your Wallet: Visit the DEX’s official website (e.g., app.uniswap.org). Click “Connect Wallet” and select your wallet (e.g. Zerion). Approve the connection.
  • Select a Trading Pair: Choose the tokens you want to swap (e.g. ETH to USDT). Ensure the token’s contract address is correct (see below).
  • Enter the Amount: Specify how much you want to trade. The DEX will calculate the output, factoring in price impact and slippage.
  • Set Slippage Tolerance: Slippage is the difference between the expected and actual price due to market volatility. Set a tolerance (e.g. 0.5–1%) to allow the trade to complete.
  • Approve and Confirm: For ERC-20 tokens, you may need to “approve” the DEX to spend your tokens (a one-time gas fee). Then confirm the swap, paying the gas fee.
  • Check Your Wallet: The swapped tokens should appear in your wallet shortly. Verify the transaction on a blockchain explorer.

REMEMBER:

Verify the Website: Use only official DEX URLs. Bookmark them to avoid phishing sites.

  • Check Token Availability: Not all tokens are listed on every DEX. Use aggregators like Jupiter to find tokens across multiple DEXs.
  • Monitor Gas Fees: On Ethereum, gas fees can be high during network congestion. Use tools like gasnow.org to time transactions for lower fees.

5. Telegram Trading Bots: Sigma, Banana Gun, and More

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Telegram trading bots are automated tools integrated into the Telegram messaging app that simplify DeFi trading. They connect to DEXs, execute trades, and offer features like token sniping (buying tokens at launch), copy trading, and anti-rug protection. Popular bots include Sigma and Banana Gun.

You should never store large amounts of crypto on bots at any time, only when in use.

@SigmaTradingBot

Overview: Sigma is a multi-chain bot (Ethereum, Solana, BNB Chain, etc) designed for meme coin trading and sniping. It charges a 1% fee per trade.

  • Features: Auto Sniper: Automatically buys new tokens at launch, with anti-rug protection to detect scams. Copy Trading: Mirrors trades of successful wallets across multiple chains. Limit Orders: Set buy/sell orders at specific prices. Rewards Program: Earn points for trading or referrals, unlocking perks like lower fees.
  • Security Note: Sigma faced a hack in September 2024, resulting in $3 million in losses, but the team reimbursed users and added security measures like two-hour transfer delays and 2FA.

@BananaGunBot

Overview: A TG bot operating on Ethereum, Solana, and other chains. It also charges a 1% fee and offers rebates via its native $BANANA token.

  • Features: Token Sniping: Targets new token launches with high-speed execution. Anti-Blacklist: Avoids tokens with restrictive smart contracts. Multi-Wallet Support: Execute trades across multiple wallets to bypass token restrictions (e.g., max wallet size).
  • Security Note: Banana Gun experienced a contract bug in October 2023, causing a price crash, but it recovered and remains popular.

How to Use a Telegram Bot

  • Find the Official Bot: Search for the bot’s official Telegram handle (e.g. @BananaGunBot, @SigmaBot) via its website or verified X account. Avoid random links to prevent scams.
  • Set Up a Wallet: Create a new wallet within the bot or import an existing one. Use a secondary wallet, not your primary one, to minimise risks.
  • Fund the Wallet: Transfer ETH, SOL, or another base currency to the bot’s wallet address.
  • Execute Trades: Enter the token’s contract address (see below) and specify the trade amount. Use commands like /buy or /sell, or follow the bot’s menu.
  • Configure Settings: Set slippage tolerance, gas fees, and optional features like stop-loss or anti-rug protection.
  • Monitor Trades: The bot provides real-time updates on trade status and profitability.

Housekeeping Tips

  • Use a Separate Wallet: Bots require access to your private keys, posing a security risk. Use a new wallet with only the funds you’re willing to risk.
  • Enable Anti-Rug Features: Many bots detect malicious transactions (e.g. honeypots, where tokens can’t be sold). Always enable these.
  • Be Cautious: Telegram bots are convenient but vulnerable to hacks or scams. Research the bot’s reputation and verify its authenticity.

6. Using Dexscreener for Market Insights

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@dexscreener is a real-time analytics platform for tracking tokens on DEXs across multiple blockchains. It displays metrics like price, trading volume, liquidity, and holder count, helping traders identify trending tokens and assess project legitimacy.

Key Features

  • Token Metrics: View price changes (1h, 6h, 24h), market cap, and liquidity.
  • Trending Tokens: Discover tokens gaining traction, often meme coins or new launches.
  • Pair Explorer: Analyse liquidity pools (e.g. ETH/USDT) for trading opportunities.
  • Watchlist: Track favourite tokens for quick access.

How to Use Dexscreener

  • Visit the Website: Go to dexscreener.com and select the blockchain (e.g. Ethereum, Solana).
  • Search for Tokens: Enter the token’s name, symbol, or contract address.
  • Analyse Metrics: Liquidity: Higher liquidity means easier trading with less price impact. Volume: High volume indicates active trading, but beware of artificial “wash trading.” Holders: A growing holder count suggests community interest, but low counts may indicate centralisation.
  • Check the Contract: Verify the token’s contract address (see below) to avoid scams.
  • Filter Trends: Use filters (e.g. 1h or 24h) to find tokens with significant price or volume spikes.

Housekeeping Tips

  • Cross-Check Data: Dexscreener updates faster than some platforms but may lag for new tokens. Use it alongside blockchain explorers.
  • Beware of Pumps: High volume or price spikes may indicate coordinated “pump-and-dump” schemes.
  • Bookmark Tokens: Add promising tokens to your watchlist for ongoing monitoring.

7. Verifying Correct Contract Addresses

A contract address is a unique identifier for a token’s smart contract on the blockchain (e.g. 0x123… for Ethereum ERC-20 tokens). Using the wrong address can lead to scams or loss of funds, as fake tokens often mimic legitimate ones.

How to Find and Verify Contract Addresses

  • Check Official Sources: Visit the project’s official website, X account, or Telegram channel for the verified contract address.
  • Use Dexscreener or CoinGecko: These platforms list contract addresses for listed tokens. For example, on Dexscreener, the address is shown in the token’s profile.
  • Cross-Check with Bots: Telegram bots like Sigma’s verification tools can help analyse contracts for red flags (e.g. high taxes, anti-whale functions).

Housekeeping Tips

  • Copy-Paste Only: Never manually type contract addresses to avoid errors.
  • Beware of Lookalikes: Scammers create tokens with similar names or symbols. Always verify the address.
  • Check Contract Details: On explorers, look for verified contracts, holder distribution, and recent transactions to gauge legitimacy.

8. Understanding Blockchain Explorers

Blockchain explorers are tools that provide transparency into blockchain activity, allowing you to track transactions, wallet balances, and smart contract interactions. They’re essential for verifying trades and investigating tokens.

Popular Explorers

  • Etherscan.io: Ethereum and ERC-20 tokens.
  • Solscan.io: Solana blockchain.
  • BscScan.com: BNB Chain.
  • Basescan.org: Base blockchain.

How to Use a Blockchain Explorer

  • Track a Transaction: Enter the transaction hash (provided by your wallet or DEX) to view its status, gas fees, and timestamp.
  • Inspect a Token: Search the contract address to see its supply, holders, and recent transfers.
  • Check a Wallet: Enter a wallet address to view its balance, transaction history, and token holdings.
  • Monitor Network Activity: Explorers show gas prices, network congestion, and trending tokens.

Housekeeping Tips

  • Bookmark Explorers: Save official URLs to avoid phishing sites.
  • Use for Due Diligence: Before trading a token, check its contract on an explorer for signs of scams (e.g. high taxes, locked liquidity).
  • Track Gas Trends: On Ethereum, use Etherscan’s gas tracker to time transactions for lower fees.

9. Gas Fees, Liquidity, and Price Impact

Gas fees are payments made to process transactions on a blockchain, paid in the native currency (e.g. ETH for Ethereum, SOL for Solana). They cover computational resources and vary based on network congestion and transaction complexity.

  • Ethereum: Gas fees can range from $1 to $100+ during peak times. Use tools like gasnow.org to estimate costs.
  • Solana: Fees are typically low, often $0.01–$0.10, due to high transaction speeds.
  • How to Manage: Set appropriate gas limits in your wallet. For Ethereum, tools like MetaMask let you adjust gas prices. Higher fees ensure faster confirmation but increase costs.

Liquidity refers to the availability of tokens in a DEX’s liquidity pool, affecting how easily you can trade without significant price changes. Low liquidity leads to high slippage and price impact.

  • High Liquidity: Enables large trades with minimal price changes (e.g. ETH/USDT pools).
  • Low Liquidity: Common for new or niche tokens, causing high slippage and volatility.
  • How to Check: Dexscreener shows liquidity for each trading pair. Aim for pools with h

Price impact is the change in a token’s price caused by your trade, especially in low-liquidity pools. For example, buying $1,000 of a low-liquidity token might increase its price by 10%, reducing your received tokens.

  • How to Minimise: Trade smaller amounts, use high-liquidity pools, or set low slippage tolerance (e.g. 0.5%).
  • Check on DEXs: Most DEXs display estimated price impact before you confirm a trade.

Housekeeping Tips

  • Monitor Gas Fees: Avoid trading during peak network congestion to save costs.
  • Assess Liquidity: Before trading, check Dexscreener or the DEX’s pool details. Avoid pools with less than $5,000 in liquidity unless you’re sniping high-risk tokens.
  • Test Small Trades: For low-liquidity tokens, start with a small trade to gauge price impact.

10. Safety and Risk Management

Onchain crypto is high-risk due to volatility, scams, and technical complexities. Follow these best practices to protect your funds.

General Safety Tips

  • Do Your Own Research (DYOR): Investigate projects, teams, and token contracts before investing. Check X, Telegram, and whitepapers for credibility.
  • Avoid Scams: Beware of fake tokens, phishing sites, and unsolicited DMs promising airdrops or recovery services.
  • Use Hardware Wallets: For large holdings, store funds in a cold wallet (e.g. Ledger, Trezor) offline to prevent hacks.
  • Enable Anti-Rug Features: When using bots or DEXs, activate protections against rug pulls and honeypots.

Managing Trading Risks

  • Set Stop-Loss Orders: Many Telegram bots support stop-loss and take-profit orders to limit losses and secure gains.
  • Diversify: Don’t invest all funds in one token, especially meme coins, which are prone to pumps and dumps.
  • Monitor Price Impact: Avoid large trades in low-liquidity pools to prevent significant losses from slippage.
  • Stay Informed: Follow X accounts, Telegram groups, and Dexscreener for real-time market trends, but verify information independently.

Housekeeping Tips

  • Regularly Audit Wallets: Check your wallet for unexpected transactions or token approvals. Use tools like Revoke.cash to revoke unauthorised permissions.
  • Update Software: Keep your wallet and browser extensions updated to patch security vulnerabilities.
  • Limit Bot Permissions: When using Telegram bots, revoke wallet access after trading to reduce risks.
  • Don't connect wallet to suspicious websites or Download suspicious files.

11. Conclusion

Navigating onchain crypto requires understanding self-custody wallets, DEXs, Telegram trading bots, and critical concepts like gas fees, liquidity, and contract addresses.

By setting upOnchain allows you to enter projects early, before the masses have access through traditional means like CEX's potenitally providing you a competitive edge.erify contract addresses, and manage risks through diversification and research.

With these tools and practices, you’re well-equipped to explore the dynamic world of DeFi. Stay vigilant, keep learning, and enjoy the opportunities that onchain crypto offers.