8 Innovative DeFi Projects to Look for in 2021
It’s reasonable to say that most people are familiar with cryptocurrencies, or at the very least, have heard of bitcoin. Bitcoin’s popularity has risen due to growing interest from some of the world’s most well-known institutions. NFTs have gained in popularity recently, and several celebrities have begun to support them, further focusing the mainstream media on the cryptocurrency and blockchain space. Apart from bitcoin’s recent all-time highs and the growing interest in NFTs, possibly the most important breakthrough in the industry, decentralized finance (DeFi), is also gaining traction. DeFi has swiftly become one of the most, if not the most, fascinating areas of focus within the field for those who pay careful attention to what is happening in the world of cryptocurrencies and blockchain technology.
Here is a list of eight DeFi projects that could have an impact on the financial future:
Aave is an open-source liquidity protocol that allows users to earn interest on cryptocurrency deposits and loans. Aave is a leader in the DeFi market and is non-custodial, which means that it has no control over its users’ private keys or cryptocurrency. Essentially, the company does not engage directly with its users’ crypto assets.
Users can choose to engage as depositors or borrowers. Depositors supply liquidity in exchange for passive income, while borrowers can select between overcollateralized and undercollateralized borrowing. Users who stake the Aave token can earn staking incentives and fees from the protocol, and token holders can vote on Aave improvement protocols.
Now how is Aave different from other DeFi projects?
During the DeFi craze in the summer of 2020, Aave was one of the most popular projects. Aave lets users borrow and lend using over 20 different cryptocurrencies, giving them more options than many of its competitors and establishing it as one of the top DeFi ventures.
The Compound is a decentralized interest rate system that allows users to earn interest on cryptocurrencies and borrow them. It presently allows users to earn interest on 13 different cryptocurrencies as well as borrow them. Anyone who puts supported Ethereum tokens can earn interest or take out a secured loan using Compound.
Compound’s Governance System
Without the involvement of the Compound team, holders of Compound’s native token, COMP, can make improvements to the Compound protocol and vote on whether to adopt changes proposed by other token holders. This distinguishes it from other protocols of a similar nature. Compound tokens can be earned by depositing bitcoin or taking out a loan, or they can be purchased through various exchanges. One of Aave’s main competitors is Compound.
Chainlink is a distributed oracle system. Because blockchains are unable to access data outside of their network, oracles are utilized as data feeds. DeFi investors can use Chainlink to get data from other sources. Investors now have access to the data they need to conduct financial transactions thanks to real-world data. The decentralized oracle network of Chainlink delivers smart contract inputs and outputs on any blockchain. Chainlink extends the potential of smart contracts by giving them access to real-world data.
Uniswap has quickly established itself as a decentralized finance leader. Uniswap is a decentralized and trustless financial infrastructure that allows users to swap tokens and provide liquidity through liquidity pools. The organization also has a strong governance structure that allows the protocol to be owned by the community through Uniswap’s token, UNI. Uniswap was created primarily as a decentralized exchange for swapping ERC-20 tokens on the Ethereum network.
Uniswap by the Numbers
Take a look at the stats to get a sense of how quickly Uniswap rose to become a DeFi leader. Uniswap’s total volume was $196 billion+ at the time of writing. In addition, there are 72K+ liquidity providers in the community, 39 million+ all-time trades, and 200+ DeFi connections.
In addition, on several exchanges, the UNI coin has swiftly become one of the most popular tokens. The governing framework and dedicated community of Uniswap have positioned it to continue to expand and influence in the years ahead.
The serum is an ecosystem and a Decentralized Exchange (DEX). It is well-known for its minimal transaction charges and lightning-fast processing. The serum has distinguished itself by addressing two major concerns in decentralized finance: transaction speed and costs. The serum has distinguished itself by addressing these issues and will ultimately aid in the advancement of decentralized finance and DeFi. DeFi’s fast transaction speed and minimal prices may help it gain widespread acceptance.
Serum is Permissionless
The serum is a permissionless blockchain that operates on top of the Solana blockchain. This means that you don’t require permission to join the community, utilize the DEX, or benefit from the ecosystem.
yearn.finance employs automation to assist users in maximizing their yield farming income. Yield farming is the activity of scanning many loan marketplaces for the best interest rates and deals to earn rewards and interest on cryptocurrency. Yield farming is a complicated process, but yearn.finance employs automation to make it easier for individuals who aren’t as tech-savvy to participate in it.
This allows them to reap the benefits of yield farming without the stress or technical expertise required. yearn.finance was founded to make decentralized finance and yield farming more accessible to the average investor.
Polkadot is a platform that supports many blockchains. It is based on a whitepaper produced by Gavin Wood, the former Co-Founder and Chief Technology Officer of Ethereum. Data can be transferred between connected blockchains using Polkadot (known as parachains). In addition, Polkadot allows data from private, restricted networks to be used on public blockchains.
Polkadot’s Connection to Other DeFi Projects
Polkadot is a smart contract platform, but many developers adopt it to create DeFi projects and tools since it is fast and scalable, two areas where Ethereum might use some work. However, the major goal of Polkadot is to provide a decentralized web in which users have complete control.
MakerDAO is a Decentralized Autonomous Organization (DAO) widely recognized as one of the most well-known DeFi projects. This is because of its ties to DAI, a stablecoin whose value is fixed to the US dollar and one of the most widely used stable coins in the cryptocurrency market.
More about DAI and the Maker Protocol
DAI is a universal currency that anyone can use at any time. Maker allows you to lock your DAI on its platform and earn the Maker community-set DAI savings rate. Token holders of Maker’s governance token, MKR, oversee the Maker protocol, also known as the smart contracts that underpin the DAI currency. Maker is a cryptocurrency ecosystem, and the DAI stable coin has been integrated into over 400 apps and services. Wallets, DeFi initiatives and platforms, blockchain games, and so on are all examples of this.
Future of Finance
The DeFi projects mentioned in this article are just a few of the many that will impact the finance industry’s future. The future of finance will be decentralized as the DeFi field continues to flourish and offer more inventive solutions to the challenges with centralized banking