DeFi stands for decentralized finance. The term decentralized stems from the fact that this model of financial transactions does not require any intermediaries. Within DeFi network, peer-to-peer crypto transactions are possible without any bank or non-banking financial companies approving or authorizing them. The decentralized finance applications, or DeFi DApps, as they are better known, are governed by self-executing smart contracts. Once the parties involved in a transaction, such as a lender and a borrower, agree upon a set of predetermined conditions, the contracts execute themselves.
Since the decentralized finance blockchain networks are non-intrusive yet highly transparent, a lot of investors, lenders, and borrowers opt for them. According to the latest estimates, the total value of agreements executable via smart contracts increased from US$2.1 million to US$6.9 billion between 2017 and 2020. The total value of tradable DeFi tokens has also reached a value of US$15 billion.
Such strong market potential has inspired many companies to take up exciting decentralized finance projects. Here, we will discuss some top DeFi projects that we should follow to gain a better understanding of the decentralized finance trends and how these DeFi crypto projects are going to shape the world of finance.
DIA is the acronym for decentralized information assets. The project is promoted as the equivalent of Bloomberg in the world of crypto. It is a Swiss not-for-profit project. The mission of the project is to encourage the adoption of open-access data and oracles. For the market actors, DIA Governance Token is the incentive to participate. The token holders and their delegates are in-charge of DIA’s ecosystem. They are backed by Outlier ventures.
Anyswap enables a crypto user to swap any coin on any blockchain network. The only pre-condition is that the signature algorithm should be ECDSA or EdDSA. Within a month of its release, Anyswap was able to attract US$ 6.58 million to its pool. Besides cross-chain swaps, the features of Anyswap also include programmed pricing and liquidity.
Anyswap offers an annual yield rate of 480%.
Led by the noted blockchain developer Alexey Koloskov, the Orion Protocol entered the market in 2020. It was received with huge enthusiasm. The primary aim of the protocol is to build B2B and B2C solutions on a liquidity aggregator. Elrond, Bitmax, Acheron, and MXC have already struck partnerships with Orion. 33% of the ORN supply has already been pre staked. The token stabilized at over 20X.
Maker is a decentralized credit platform. The smart contracts developed on its protocol are worth over US$600 million. The platform supports the stablecoin DAI. Its value pegged to the US Dollar, DAI is one of the most well-known stablecoins. The DAI stablecoin can perform all the tasks expected from a currency such as lending, making payments, investments, etc. Yet, unlike other dollar-pegged stablecoins, DAI is not dependent on the banking system for its dollar holdings. They use Ethereum smart contracts and are therefore decentralized in the truest sense of the term.
Aleph.im is a chat protocol for machines. Their objective is to provide decentralized computing power and storage. With the demand for public cloud services skyrocketing, the demand for a decentralized solution is also gaining momentum. Aleph is projected to become a leader in that space. Aleph will also act as a partner in running the world’s first decentralized derivatives exchange Serum.
In every defi project discussion, and in every list that tries to compile the top DeFi projects or the best DeFi projects, Synthetix is a sure-shot entry. Why is it so? This is because Synthetix allows its users to create Synths. These Synths are synthetic assets that mimic the price of a real-world asset. Using Synths defi tokens users can place their bet on assets that are traded outside the defi crypto environment. These assets can be stocks, commodities, indexes, and fiat currency or forex. The success of Sythetix’s decentralized finance coins has helped them to pull $140.6 million in trading volume.
Serum is another significant entry in the DeFi projects list. It is a game-changing project as far as the functional spread of defi markets is concerned. It is the first-ever decentralized derivatives exchange. Serum is built to provide the crypto-traders all the facilities of conventional crypto exchange without the intervention of any centralized authority. The favored node operators in Serum are rewarded with access to staking. This project also includes a referral feature known as ‘Leaders’.
A unique entry in the DeFi projects 2020 list. Primarily, It allows users to lend and borrow DeFi crypto. But, more interestingly, it provides the traders with an option to go long and short on the digital assets. The margin is limited to 5X as of now. It is also limited to trading in three DeFi coins, for now, namely, ETH, DAI, and USDC. In dYdX, users can borrow at the interest rate as little as 0.51% per annum. Whereas, for lenders, the earning potential goes as high as 5.10% on some assets.
The central agenda of dHedge is to democratize trading. The project is endorsed and supported by a host of renowned names. Its investors include Blacktower Capital and Three Arrows Capital. It’s also powered by Synthetix. While Synthetix is looking to expand the types of tradable assets on a defi crypto platform, dHedge is aimed at creating new solutions to leverage the derivative trading volume. It will be building new efficient protocols of decentralized asset management.
Like Anyswap, this platform also helps with swapping tokens. It allows swapping tokens that are built on the Ethereum protocol. The swaps can be done privately. The nature of the swaps is non-custodial. Uniswap has a user-friendly interface. One of the unique features of Uniswap is that it uses liquidity pools instead of following the method of order books. The project has been able to bring in more than US$1.3 billion to its liquidity pool. It’s also attracting hundreds of listings each day. Uniswap also holds the record of powering US$250 million in trading volume on a single day in August.
Compound is famous for its DeFi token COMP. It was launched with a roaring success but eventually, it self corrected itself. However, the notability of the Compound has not gone down a bit. Compound functions as a DeFi platform that enables lending and borrowing any asset from the Ethereum protocol.
Lenders can start earning interests from day one. The compound interest is adjusted based on the supply and demand scenario. According to the latest available estimates, the value of assets collateralized in Compound went up from US$100 million to US$790 million in a month. Between June and July to be exact.
The DeFi coin of Yearn Finance is known as YFI. The coin was launched in July, this year. At the time of the launch, the supply was reserved for the ‘farmers’. In the defi crypto environment, the providers of liquidity are known as farmers.
As a platform, Yearn is an aggregator of available crypto lending opportunities. People willing to earn interest can submit their DeFi tokens to Yearn. Yearn then allocates these resources to the most profitable lending opportunity available for the specific token submitted. The YFI tokens are owned by the community. These tokens go through no pre-mining, pre-selling, or team-allocation exercises. The process is democratic in the truest sense of the term.
This DeFi project was launched in the early months of 2020. The primary function of the platform is to allow trade between stablecoins. The algorithm follows the principle of low slippage and low fees. In the curve finance pools, Stablecoin holders can stake their holdings to earn rewards. The rewards can be new currencies. There are currently seven such pools.
As one of the first-ever proponents of Yield farming, Curve finance achieved significant success. It managed to increase the combined worth of its pools to US$210 million from US$15 million within a month between June and July. The platform has also been appreciated for its user-friendly interface and transparent documents.
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