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- The financial sector is going all-digital, and DeFi projects are gaining significance in the sector lately.
- DeFi facilitates the users with efficiency as it cuts down the paperwork that needs an intermediary and eliminates the dependency on others for your transaction needs.
- Here are the top ten DeFi projects that can be considered in the year 2022.
The financial world is fast moving towards digitalisation. And there comes Decentralised Finance into the picture, which focuses on facilitating peer-to-peer transactions. Defi deploys the efficiency of smart contracts based on blockchain technology. De-fi projects provide an individual with the facilities of lending, borrowing, saving, trading, etc., without an intermediary or an authority. The main aim of Defi projects is to eliminate the need for a mediator to fulfil your transaction needs, paperwork, etc. DeFi is soon cutting down the gap between an individual and a financial authority. The top ten DeFi projects to look up to for the year are:
Terra(LUNA)
Terra is a blockchain protocol and a next-generation smart contracts platform that merges decentralised finance with the concept of Stablecoins. The protocol creates stablecoins that constantly tracks the price of fiat currencies. It supports stablecoins which provide instant transactions, cross-border settlements and low fees. Terra’s native token is LUNA, which absorbs price volatility and can be used for governance and mining. Terra is a fast emerging decentralised application network that creates a stable demand for Terra and increases the price of LUNA.
Uniswap(UNI)
Uniswap is a decentralised protocol that aims at allowing the trading of decentralised finance(DeFi) tokens. An Automated Market Maker(AMM) provides liquidity to users through token deposits into smart contracts. Trading tokens on the exchange provides the elimination of risks of centralised exchanges. The popularity of UNI makes it available beyond the DeFi network on investment platforms like Voyager.
Aave(AAVE)
Aave is a decentralised finance protocol based on the Ethereum network. It allows users to lend, borrow, earn interest, etc., without an intermediary. Lenders can earn interest through staking in liquidity pools, and borrowers can borrow against collateral using these LPs. AAVE is the native token of the protocol. It also has a Safety Module(SM) where the participants can stake the native tokens to act as insurance during times of deficit, and they can further earn more tokens. Aave allows Flash loans which are almost instant and do not need collateral, but they have to pay back with the same block with a 0.09% fee.
Maker(MKR)
MakerDAO is an Ethereum based decentralised finance crypto that is continuously emerging in the sector. MakerDAO is a part of the dynamic system called Maker protocol. MKR is the governance token for the protocol. The supply of the token depends upon the protocol’s performance. If its use increases, the supply is reduced and vice versa. MKR tokens can be used for holders to participate directly in the voting process of DAI governance.
Curve DAO Token(CRV)
The curve is a decentralised stablecoins exchange, and Automated Market Maker manages its liquidity. The governance token for Curve finance is CRV. The protocol deployed a complex time-based staking system to exchange CRV into eCRV. eCRV is an internal token for governance purposes and has a right to claim the cash flow generated by the protocol. Curve also caters to users involved with DeFi activities such as liquidity mining and yield farming.
Thorchain(RUNE)
Thorchain was launched via Binance DEX funded through an Initial DEX Offering(IDO) in July 2019. It is a decentralised liquidity protocol that allows users to exchange their crypto assets across various networks without losing absolute authority over their assets in the process. The native token of the platform is RUNE which is also used as the base currency for the Thorchain ecosystem. The token is used for the governance and security of the platform.
Anchor Protocol
Anchor is a DeFi protocol that offers low volatile yields on Terra stablecoin deposits. To borrow the stablecoins from the protocol, the borrower needs to use Bonded Assets as collateral. Deposited stablecoins are symbolised by Anchor Terra(aTerra). Anchor facilitates users with high stable deposit yields, principle protection via liquidity, and instant withdrawals when needed. A permissionless savings protocol allows any third party to connect to them for free and earn interest.
Compound(COMP)
Compound is a DeFi lending protocol based on Ethereum. It allows users to earn interest on their crypto assets by depositing them into any pools supported by the protocol. Compound rewards the depositors with cToken representing the deposit. The connection between lenders and borrowers is via Ethereum based smart contracts. The protocol rewards the lenders with COMP tokens based on the volatile interest rate based on their cTokens holdings in their wallets. More liquidity in the market lowers the interest rates.
Venus(XVS)
Venus was launched on Binance Smart Chain(BSC). It is an algorithmic money market and synthetic stablecoin protocol that introduces easy-to-use borrowing and lending solutions to the DeFi ecosystem. It enables the users to borrow against collateral with fewer transaction fees directly. Venus further allows the users to post at least 200% collateral on the Venus smart contract and mint VAI stablecoins on-demand within a few seconds. VAI token is said to be the world’s first decentralised stablecoins. XVS tokens are used for the governance of the Venus protocol.
PancakeSwap(CAKE)
PancakeSwap is a decentralised application that facilitates users to exchange tokens. It provides liquidity via yield farming and helps in earning fees in return. PancakeSwap uses an Automated Market Maker(AMM) to trade against a liquidity pool. Users fund these liquidity pools and get Liquidity provider tokens in return. It is the largest AMM based exchange on Binance Smart Chain(BSC). PancakeSwap’s governance token is CAKE.
With the increasing and emerging needs for finance without depending upon any third party and authority, The DeFi projects are constantly gaining attention and users as the system allows more freedom and equality to the people and seems to be the future globally.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
