Decentralized finance (DeFi) is a so-called independent financial ecosystem that helps people keep track of their money and perform any kind of transaction without any government or bank intervention. Interactions in decentralized ecosystems occur through a P2P scheme, meaning market participants handle transactions on their own. DeFi:
- Saves time;
- Saves money;
- Maintains privacy.
There is a top-10 of DeFi protocols of 2021:
Uniswap (UNI)
Uniswap is a protocol that is based on Ethereum. This protocol provides a unique solution to make the exchange of ERC-20 tokens without any third parties easier. This means users manage their own funds and do not depend on any centralized resources.
Uniswap as one of the first DeFi exchanges aims to change the traditional DEX with its unique liquidity protocol that is automated. Uniswap is different from the other exchanges: it withdraws the usage of an order book to regulate prices. On the contrary, the protocol implies the total liquidity be a constant in the pool. In order to make this order work, it considers sources of liquidity. Then, it creates a pool that supports decentralized trading and lending. Such a process does not involve an order book, it uses listing and swapping ERC-20 tokens.
Compound (COMP)
The DeFi lending protocol helping people to gain interest on their cryptocurrencies by means of placing them into one of several pools is called Compound. A user receives cToken in return of tokens that were placed into a Compound pool as a deposit. When the exchange rate of cTokens to the underlying asset increases, meaning that you can exchange them for more of the underlying asset than you originally deposited.
Aave (AAVE)
A decentralized protocol for lending and borrowing on the Ethereum blockchain is called Aave. It has become one of the most successful lunches and projects of the growing DeFi scene. This protocol as Compound allows you to earn interest and borrow on your crypto assets. AAVE has its own coin and it can be staked via the protocol trying to contribute to its security and performance.
Yearn.finance (YFI)
An open-source DeFi lending protocol based on the Ethereum blockchain is Yearn.finance. It is a pooled return platform to maximize a user’s investment by moving their money between DeFi lending protocols such as Compound, Dydx, Curve, or Aave automatically. YFI is a management token that boasts an autonomous protocol, this makes it different from Bitcoin. Thus, the platform users can vote on the regulation of the protocol that suits their intentions best. YFI is currently one of the largest Ethereum-based tokens prioritized for yield farming. This platform is made to move user funds to the most profitable projects autonomously, it also finds the protocol which can offer the best APR (annual percentage return). YFI is thought about as a revolutionary breakthrough in DeFi because of its potentially high yield in parallel with stabelcoins. Yearn.Finance can be considered a decentralized credit platform that allows users to deposit ERC-20 stablecoins into the protocol. In exchange for these, users receive an equivalent amount of yToken. Instead of crediting deposited stabelcoins to any particular protocol, the Yearn Finance platform automatically switches tokens to the protocol with the highest yield in order to maximize the user’s profit.
Maker (MKR)
The Maker ecosystem is one of the earliest projects on the decentralized finance (DeFi) scene. This industry hinges around the creation of decentralized financial products on top of blockchains that support smart contracts such as Ethereum. Maker consists of the MakerDAO control token and Maker Protocol, they are a decentralized organization and software platform. These units are Ethereum-based, that helps users to issue and manage DAI staplecoins. MKR tokens act as a sort of voting stock for the organization that manages DAI. While they do not pay dividends to the holders, they do give them a say in the development of the Maker Protocol. They are expected to rise in value following the success of DAI itself.
PancakeSwap
PancakeSwap is a decentralized exchange for exchanging BEP-20 tokens. It is considered to be one of the clones of popular Uniswap. PancakeSwap uses the Automatic Market Maker (AMM) model. This means that there is no order book in which you are matched against other traders in the process of trading digital assets on the platform. Instead, you trade with a pool of liquidity. These pools are filled with users’ funds. Users deposit funds into the pool, receiving liquidity provider tokens (or LPs) in return. These tokens can be used to pay back their share and receive a portion of the trading commissions.
Hybrix
HY is a first-of-its-kind token for moving value between registries. It can now be moved, stored, bid, and exchanged between different blockchains. Once the Hybrix HY protocol is fully integrated, it stores its data in all blockchains at once. The ecosystem consists of a wallet 2.0 service, Wallet 2.0 allows you to store, exchange, send and receive tokens. It supports a huge number of tokens on many different native blockchains (30+). No need to open multiple accounts for different networks.
0x (ZRX)
0x is a peer-to-peer, decentralized exchange protocol for one type of Ethereum token to another. It is an open standard that is freely used and integrated into DApps applications. Its main goal is to become a basic blockchain capable of working with different protocols. It is not a ready-made token exchange application. Rather, it is the core for creating your own independent exchange. In the long run – cheap exchange of different tokens on the basis of Ethereum, and for the creator of the exchange – income from the commission.
This protocol writes only the final value, without referring to the blockchain with intermediate records, which reduces the load on the network. Another advantage of 0x is true decentralization. 0x implements a so-called trustless network, where any ERC20 token can be exchanged. Transactions in such a network take place without the counterparty’s participation. The service does not charge a commission for its services, only gas for repeaters is paid. In addition to the basic protocol now being tested, 0x OTC (Over The Counter – over-the-counter), which allows you to make transactions directly, without the involvement of repeaters. Thanks to this development, transactions may become free altogether.
Clever
Clever ICO Marketplace operates on a Clever Token transaction basis and fully integrates Clever Token into the service to maintain usage and relevance. It uses blockchain technology to store transaction details and dispute resolution records (for conflict resolution). The marketplace itself has a global reach with a state-of-the-art experience similar to Letgo (connecting buyers and sellers worldwide, e.g. eBay). Moreover, the project generates interest to CLVA token holders on a fixed cycle. The protocol uses an automated interest payment mechanism that generates 11% interest to CLVA tokens every 14 days.
SYNTHETIX
Synthetix is a decentralized finance protocol that provides blockchain access to a wide range of crypto and other assets. The protocol is based on the Ethereum blockchain and offers users access to highly liquid synthetic assets (synthetics). Synthetics duplicate fluctuations in the price of the underlying asset and allow users to earn without having to hold the asset directly. The platform aims to expand the use of cryptocurrencies by introducing non-blockchain assets, providing access to a more reliable financial market.On the platform, synthetic assets can be traded and exchanged autonomously. There’s also a stacking pool where token holders can put their SNX and be rewarded with a share of the transaction fees on the Synthetix exchange. The platform tracks underlying assets using smart contract price delivery protocols called oracles. Synthetix allows users to trade synthetic assets seamlessly without liquidity or slippage issues. It also eliminates the need for third-party facilitators.