FAQ - KOVAN Testnet: A DeFi deep dive Part 1

Credits to the proper student to made this guide: @Y2z3H, thank you for this guide!

KOVAN Testnet: A DeFi deep dive

I would never attempt to do any of this on mainnet because the fees would be abysmal…


Treat this as a guide only! This guide is my own personal experience of using the Kovan testnet and it may serve as a calm starting point for anyone who is trying to get involved with DeFi through the testnet.

Anything you decide to do beyond this walkthrough is entirely your responsibility and any losses or glitches you come across is not my fault! I am not a professional nor am I a financial advisor! It’s important that you know the risks of crypto and do your own research before diving into DeFi

*It’s important to note that because I’m using a testnet, I won’t be able to generate an actual interest on my assets, but instead, I can test out different protocols and see what things would be like if I were to do the same things on the mainnet (You can make mistakes on the testnet without severe financial repercussions since the assets have no value).

*These are the steps I took which enabled me to do this assignment. Please treat this as a guide that you can use to boost your knowledge of the DeFi world using Kovan!

Without further ado, let’s gogogogogo!


OH my days! This assignment has been quite challenging to do! Especially on the Kovan testnet! Nevertheless, I have been able to use the Kovan Testnet to save DAI on the Oasis save app. I have also been able to use the Oasis borrow app to use testnet ETH as collateral to get 100 more DAI, which was then used to deposit into the chai.money app and the Oasis save app.

I’ll go through my journey below and provide links to all the resources I used to help me do this!

  1. Getting Testnet ETH

So to start things off, I needed Kovan Testnet ETH, and I tried to use the Kovan faucet, but the website was down, at the time of writing. So I searched far and wide on the internet looking for a solution to how I can get some Kovan Eth, because your boi was not tryna use real assets and potentially get liquidated :laughing:!

I eventually found out that mycrypto wallet released a faucet, so I requested for as much ETH as I could, going through the whole captcha thing several times, before they finally said I had reached my daily limit.

So now I have testnet ETH and need to acquire Testnet DAI.

  1. Getting Testnet DAI via DAI Faucet

I was searching the world wide web once again putting in the search bar, " how to get testnet DAI", “Kovan DAI faucet” etc. I then stumbled across a github page that talked me through the process of acquiring Kovan DAI by interacting directly with the smart contract.

From your MetaMask wallet, send ETH to the DAI faucet address, “0x786e3c83cd270414649079A758Ad92f961EDdA0A” in order to receive Kovan DAI. Do make sure that the gas limit is high enough otherwise the transaction will fail; failed transactions still take a bit of ETH from your total balance (gas fees), but it isn’t a lot (since we are in the testnet).

Ofc, I made my fair share of mistakes by not setting the gas limit high enough, which made some of my transactions fail. After adjusting the gas limit to at least 200,000, I was able to send ETH to the DAI faucet Smart contract and receive DAI.

2.5) Getting DAI via Uniswap

When I received my DAI, I was a bit surprised about the exchange rate between ETH and DAI, however, the github page does mention that the exchange rate can be far off from the mainnet.

Kovan Exchange rate:

Mainnet Exchange rate:

As you can see, ETH is worth a lot less in the Kovan Testnet, the difference took me by surprise, lemme not lie :sweat_smile:, but we move!

I essentially used Uniswap to swap ETH for DAI, which is similar to step 2, but with a cool interface. Just follow along the steps (May start with approving an asset then going into the actual swapping) and eventually you will have DAI! Be careful not to use all of your ETH for the swap cause you still need some for transaction fees when interacting with the DeFi Protocols.

  1. Oasis Savings

Once I reliably had DAI, I now went to the Oasis save app to deposit some DAI into the savings account.

I have already done this using my testnet Account, so I’ll be showing the steps which someone would take if doing this for the first time, using a fresh account.

  1. Select “Start saving”

  2. Select the “DAI savings rate” product (The only available choice):

  3. Select “Continue anyway” (remember, we are just testing the functionality of the protocol, so don’t expect to generate interest):

  4. Create a Proxy and confirm:

Confirm the transaction through MetaMask:

  1. Once the proxy has been completed, set permissions:

Confirm the Transaction:

  1. Deposit your DAI:

Create DAI savings:

Confirm via MetaMask:

I am now saving X amount of DAI via Oasis!

(Do note that the final amount is different to the previous amount shown on the “Create DAI savings” step. This is the case because I had to get more testnet ETH by selling some DAI on Uniswap to cover fees xD! This is why its important to have enough ETH to cover Transactions!)

On this screen, you can now see my deposited DAI on the clean Oasis GUI, earning 0% interest :laughing:!

So now I know how to save, I will go into how I managed to put some collateral, in order to generate DAI, which can be used for more DeFi on Chai!

This comment is getting kinda long now so I will continue the second part of the guide as a reply later on!

If you made it this far, you’re a real one! Thanks for reading and stay tuned for part 2, dropping soon!