Top 10 DeFI projects to watch for in 2021
If you have been following Blockchain industry development, you have most likely heard of the recent emerging industry known as DeFi (Decentralized Finance). Decentralized Finance is an industry that has experienced massive growth over the last few years. Many DeFi assets are coming up, some of which provide great returns on investment. Currently, DeFi is estimated to be over $14 billion.
It is now time we evaluate the top DeFi projects to look forward to this year, 2021. The aim is to eliminate third parties, including governments and companies controlling the mainstream financial services. DeFi offers the unique opportunity to revolutionize the global financial landscape. Check out our crypto telegram group for more understanding.
1.Uniswap – UNI
Topping the list of the most promising DeFi project in 2021 is Uniswap- a protocol for exchanging ERC-20 tokens on Ethereum. Uniswap offers some of the most user-friendly and low latency interfaces for direct ETH and ERC20 token swapping. Developers of Uniswap look at it as a public good, hence do not take any fee from users. Many users opt to use Uniswap as opposed to other exchanges because the former does not have an order book. It uses the mechanism known as “Constant Product Market Maker”, which they use to determine the exchange rate and price slippage.
2.Band Protocol – BAND
Band protocol comes second in the list. This is a cross-chain data oracle network used to aggregate and connect real-world data and APIs to smart contracts. The application allows smart contract applications to predict markets, and provide games to build on-chain without necessarily relying on a centralized oracle. In 2020, Band Protocol had one of the most noticeable growth, rising by 3,200% from the previous year.
3.Yearn Finance – YFI
Yearn Finance is a DeFi platform that aims to perform a host of functions, including aggregated liquidity and automated market-making by moving providers’ funds between platforms. It works with platforms such as dyDx, Compound, and Aave. The platform also offers a mechanism where users can get advanced earnings. Holding $YFI in Yearn Protocol will earn you a percentage share of the fees generated by other users on the platform.
4.Chainlink – LINK
Chainlink makes the list of top 10 DeFi projects because of the kind of impact it’s having in the financial industry as a whole. LINK project is enhancing the capability of smart contracts. It enables access to real-world data, events, payments, and more while maintaining the security protocol and reliability inherent to Blockchain technology. LINK performed so well in 2020, growing 600% YTD. Its popularity is based on the fact that Blockchain cannot access data outside their network, hence oracles are needed to function as data feeds in smart contacts.
5.Kava – KAVA
The lending industry is growing, even in the Blockchain industry. Kava is taking advantage of the decentralization of financial services with its next-generation decentralized lending platform. The platform seeks to bring a flexible lending system to the market with its cross-chain cryptocurrency swapping feature. It allows users to swap cryptocurrencies that exist on different blockchains.
6.Kyber – KNC
Kyber makes it to this list due to one specific reason- the ability to offer a protocol allowing decentralized token swaps to be integrated into any application. The feature enables seamless exchanges between all parties in the ecosystem. Kyber is one platform that seeks to use the developers’ skills, as the latter can build payment flows and financial apps. The aim is to ensure any token is usable anywhere. It’s not surprising that KNC has grown by more than 400% in the past year.
Compound is a software that allows borrowers to take out loans, lenders to provide loans by locking their crypto assets into the protocol. Running on Ethereum, Compound works in such a way that interest rates paid and received by borrowers and lenders respectively are determined by the supply and demand of each crypto asset.
Compound stands out because it works perfectly both for lenders and borrowers. While lenders receive profit at a faster rate than simple interest on the money you already have, the unique lending system also allows users to borrow faster than most lenders in the same category. As a lender, the longer you hold a balance with the platform, the greater the potential interest you’ll earn.
The loan industry is never complete without mentioning DAI. As a stablecoin, DAI was created to help decentralize the lending industry to reach more people traditionally locked out by the mainstream lending institutions. DAI is created when a loan is taken out on a MakerDOA with collateral. Its stability is assured because it’s pegged on US Dollar and offers stability and transparency through decentralization.
Users benefit from the fact that they can use multiple cryptocurrencies as collateral instead of just ETH. It means that users can offer their crypto as collateral to enable them to take a loan. Borrowers pay back the loan for the same price of their crypto, even if the price has increased in value. Unlike most centralized stablecoins, it’s impossible to manipulate DAI, making it one of the most reliable stablecoins in the market today.
Described as a protocol for building synthetic assets, UMA aims to allow users to write self-enforcing smart contracts with economic guarantees. The platform is designed to facilitate financial innovations, which is made possible by its public blockchain. It uses concepts borrowed from fiat financial derivatives. The platform defines an open-source protocol that allows any two counterparties to design and create their financial contracts. What makes UMA stand out is that its contracts are secured with economic incentives alone, which makes them self-enforcing and universally accessible to anyone.
The one DeFi project closing our list of top 10 is Metronome. Based on the desire to have a protocol that can transfer value across many blockchains, Metronome enhances the decentralized nature of cryptocurrencies in an open-source protocol working autonomously.
Metronome is becoming popular every day, courtesy of its advanced payment features, such as Mass Pay. It’s the option that allows users to transfer the token MET to multiple addresses in a single transaction. The process makes mass payment cheaper, and Metronome is making use of multiple blockchains in the market to build on its wider usage.
We can conclude that DeFi projects are the future of investment for those interested in crypto and blockchain technology. The huge surge in value over the last 2 years shows that people are beginning to think of DeFi as an alternative to the bureaucratic and expensive mainstream financial industry. However, just like any investment, you must evaluate your investment moves if you’re interested in any DeFi project. Check out our crypto telegram groups ranking to pick your best crypto signal providers.