Best DeFi Projects of 2021
Decentralized finance (DeFi) is an umbrella terminology that describes various financial technologies built on blockchain networks. These applications are geared towards disrupting traditional monetary systems by eliminating all intermediaries. With DeFi, the focus is shifted towards transparent financial services that do not require any central authority permission.
Uniswap is a decentralized exchange built on Ethereum’s blockchain for swapping ERC 20 tokens. It offers a user-friendly and quicker interface for ETH-ERC20 token swapping and automatic liquidity provision on Ethereum. Uniswap is relatively cheap; it is a decentralized token, thereby eliminating any party that may claim rights to transaction fees.
In September this year, Uniswap announced their token-UNI and distributed what seemed like the biggest token distributions ever to all prior Uniswap users. Although there are doubts about how much a UNI token is worth, there is a huge demand for decentralized protocols in the market. Uniswap had earlier made news after it overtook Coinbase, one of the largest centralized exchanges.
2. Yearn Finance
The yearn platform was launched in 2020 as a liquidity aggregator. This DeFi lending protocol maximizes the rate of interest by moving the provider’s assets between similar lending protocols (Aave, Compound) to get the best possible interest rates. The protocol automatically keeps monitoring market leaders and ensure placed funds remain in the highest paying pools. YFI smart contracts- vaults, continuously shift assets between platforms in a manner designed to generate the highest annual percentage yield (APY).
As for now, YFI offers functionality and efficiency not easily available in the market. Therefore, it has higher prospects of reigning in the market, even in 2021, among the most popular DeFi applications. Furthermore, it charges a fee accessible only to YFI token holders because of its asset and network maintenance efforts.
Compound is a lending and borrowing platform that deals with more popular cryptocurrencies such as Dai, Ether, and Tether. Compound finance boomed in the market and shifted the focus off of Bitcoin for a bit because of its abundant investor earnings from yield farming. By lending assets over the compound protocol, investors keep earning compound interest continuously.
Compound recently introduced a governance token, COMP, that lets token holders and delegates vote on key functional decisions such as borrowing limits and interest rates models. Holders with more than 1% of the supply are the only users permissible to make new proposals. In June, when it launched, investors would purchase a COMP token at $65 to more than double the current value of USD 153.4. It has dutifully earned its listing on Coinbase and Binance and will likely remain a top DeFi project to invest in 2021.