Decentralized Finance or DeFi is the new movement in the cryptocurrency and blockchain industry that has the potential to completely revolutionize the global finance space. In a relatively small time span, the DeFi industry has skyrocketed to extraordinary heights. Various DeFi protocols have been introduced in recent times that cater to different use cases in the financial sector.
The DeFi industry enables the ability to perform and access financial products or services without any centralized institution. Traditional financial instruments like loans, debts, borrowing, mortgage, and insurance can be accessed in a decentralized environment.
The DeFi protocols are decentralized applications that are developed on the top of a blockchain platform and operate through the network of smart contracts. Most of these dApps in the DeFi ecosystem are built on the Ethereum’s blockchain platform. The DeFi industry integrates some of the best Ethereum dApps in the market. In this article, we are going to take a look at the top Ethereum dApps in the decentralized finance domain and the key use cases of these DeFi cryptocurrencies.
Decentralized Applications in DeFi
We have combined a list of protocol tokens and projects in the DeFi ecosystem that have made a large impact on the banking and finance sector. All these tokens can be easily purchased on ChangeNOW in just 5 minutes without registration.
One of the projects that has gained massive popularity in the decentralized finance sector is the MakerDAO project. Developed on the Ethereum blockchain platform, it has a market dominance of about 22% with $1.45 billion USD locked in the smart contract protocol of MakerDAO project.
MakerDAO is a decentralized protocol that allows borrowing and lending of cryptocurrencies without any intermediary in between. It operates through smart contracts for providing borrowing and lending services through its two tokens: Dai and MKR.
Users can deposit Ethereum as Collateralized Debt Position (CDP) to receive Dai, a stablecoin pegged to the US dollar. Instead of the U.S dollars, the collateral held is in the form of Ether. The MakerDAO project facilitates users to earn interest, make payments, or invest in other Ethereum-based asset tokens.
Aave is a DeFi protocol for lending and borrowing services in cryptocurrencies without any centralized entity. The difference between this protocol and other lending protocols is that it offers uncollateralized loans and flash loans. In Aave ecosystem, flash loans allow a user to borrow without any collateral but on the condition that liquidity is returned back to the pool within one transaction block.
The native token of Aave is LEND that offers features like discounted fees for accessing its services. Recently, the protocol has transitioned to decentralized governance thereby allowing users with LEND tokens to have a say in its governance.
A total of $1.26 billion is locked on the Aave protocol and it currently ranks 2nd in the DeFi market.
For any smart contracts to function as per the pre-defined conditions, it needs data from outside feeds. Chainlink is a protocol that facilitates ‘oracles’ so as to provide information to the smart contracts and blockchain networks. DeFi protocols and smart contracts need oracles to access data such as price feeds in order to execute a subsequent action. Owing to the popularity of DeFi projects, Chainlink has gained increased adoption because of the value that it adds to the functionality of DeFi projects.
Its native token, LINK, experienced a growth of more than 600% in 2020. The cryptocurrency has a market cap value of more than $5 billion.
Curve Finance is a decentralized exchange that allows users to trade one stablecoin for another. Along with supporting a number of trading pairs, it allows users to trade with low slippage. Traders can convert one stablecoin into another in one trade quickly and efficiently.
Launched in 2020, this DeFi project has drawn massive attention. It now has a market capitalization value of $1.04 billion and ranks 2nd in the cryptocurrency market.
Synthetix is a decentralized protocol built on Ethereum blockchain that enables tokenizing real-world assets into ‘Synths’. With a market capitalization of nearly $900 million in USD, it currently ranks 4th amongst the DeFi protocols.
Synthetix allows users to trade in real-world assets like currencies, gold, bitcoin, stocks, and more with ERC-20 tokens. It copies the price of assets and allows users to trade them without actually holding the token.
Main DeFi projects of today. Defipulse
Compound is a DeFi lending protocol that allows users to earn interest on their cryptocurrencies. It also allows users to borrow digital assets against the collateral.
This DeFi protocol operates through a network of smart contracts. The Compound protocol allows access to loans by locking the collateral of crypto assets. Moreover, users can earn interest on their crypto assets even while trading them. The interest rates on the crypto assets are determined by the supply and demand of the asset.
The Compound protocol has locked $777 million in U.S. dollars and ranks 5th in the DeFi market.
Yearn Finance is a new DeFi protocol that has gained massive popularity within a relatively small time. It basically offers yield farming opportunities for users to earn maximum interest from different DeFi projects.
Currently, $YFI is available for purchase with 97 different coins!
— ChangeNOW (@ChangeNOW_io) August 12, 2020
The YFI token currently stands at the 6th position in the DeFi market and holds a market cap value of $680 million.
wBTC stands for Wrapped Bitcoin and its central functionality is to provide Bitcoin transactions for Ethereum users. Created on Ethereum blockchain, it is an ERC-20 token that is backed by Bitcoin.
WBTC facilitates users to use their Bitcoins on Ethereum applications and thereby facilitate interoperability between dApps. It currently stands at the 7th position in the DeFi market with $360 million locked in its tokens.
We have listed the top Ethereum dApps list based on the DeFi functionality. ChangeNOW allows you to buy and sell all the DeFi tokens listed above hassle-free. No registration, 100% anonymity, and speed — an average transaction doesn’t take any longer than 5 minutes.
The DeFi momentum does not seem to be slowing down any time soon. The potential of decentralization and blockchain-enabled smart contracts in the banking and finance sector is revolutionary. DeFi has the capability to innovate the existing system as well as innovate the financial ecosystem.
DeFi cryptocurrencies and projects are innovating new use cases that can transform the entire financial ecosystem. 2020 seems to be just the beginning.