Blockchain technology has innovated faster than we can imagine. It has become an inspiration for other products like decentralized finance (DeFi). DeFi is the complete opposite of its counterpart, the centralized finance (CeFi). DeFi eliminates the intermediaries like brokerage, exchanges, banks, or other financial institutions. Generally, it refers to digital assets and financial smart contracts, protocols, and decentralized applications (DApps) built on Ethereum. DeFi is often referred to as the “future of finance”. So, what are the benefits of DeFi?
- Programmability
- Immutability
- Interoperability
- Transparency
- Permissionless
- Self-Custody
DeFi offers a handful of use cases that can be adopted by small startup companies to giant companies. Here is a list of the potential use cases of DeFi.
- Peer-to-peer transactions and payments
- Digital identity
- Digital marketplaces
- Energy and data marketplaces
- Borrowing and lending
- Tokenization
- Decentralized exchanges
- Analytics
- DAOs and governance
- Insurance
- Margin trading
- Prediction markets
- Asset management tools
- Infrastructure and dev tooling
- Staking
According to reports, the total number of DeFi projects is now 217 with 205 built on Ethereum. In recent data by Coingecko, DeFi total market cap has now reached $81B with a total value locked of 40.16B according to DeFi Pulse. From its total market cap of $25B only at the start of the year, it has significantly increased by 215% in just merely a month. In data by Dune Analytics, the number of users has tremendously increased to 1.4M. Undeniably, DeFi is a booming industry where investors can earn. Now, let’s take a look at the top DeFi projects for 2021. Last year, we also published a list of DeFi and NFT projects that we believed are worth investing in. Let’s see if those projects are still on our list for 2021.
DeFi Projects Worth Investing in 2021
- Uniswap is a decentralized exchange with a protocol built on Ethereum for swapping tokens without the need for an order book. It was created by Hayden Adams, a former mechanical engineer at Siemens. It uses the “Constant Product Market Maker Model” as its pricing mechanism. You can earn in Uniswap by becoming a liquidity provider through a pair of assets like ETH and DAI. These assets are then used as liquidity for traders. You get incentivized by receiving trading fees. Uniswap charges 0.30% for every completed trade that takes place on the platform.
Token: UNI (ERC20)
Use(s): Governance
Date Launched: September 16, 2020
Total Supply: 1,000,000,000
IPO Price: $0.26
Current Trading Price: $26.17
Total Market Cap: $ 8,152,416,291
2.Yearn Finance is a decentralized finance (DeFi) lending protocol based on the Ethereum blockchain. It helps to grow the user’s investment by automatically moving the user funds between DeFi lending protocols (Compound, Dydx, Curve, or Aave). It was introduced by Andre Cronje on July 17, 2020. There are three possible ways to earn in Yearn Finance.
a. You can deposit 98%-2% DAI and YFI to the Balancer protocol, which can be exchanged for BAL tokens. BAL tokens are deposited in YGov in exchange for YFI tokens.
b. Deposit stable coins in annual financing
c. Deposit YFI and yCRV on the Balancer exchange. Later on, you can exchange this with BPT (Balancer pool) tokens. Deposit the tokens in YGov and you get YFI tokens in return.
Token: YFI
Use(s): Governance
Date Launched: July 17, 2020
Total Supply: 36,666
ICO Price: 0.04 ETH
Current Trading Price: $35,083
Total Market Cap: $ 1,226,667,751
- Chainlink is a decentralized oracle network that provides reliable, tamper-proof inputs and outputs for complex smart contracts on any blockchain. It was created in 2017 by Sergey Nazarov, a tech entrepreneur. You can earn by becoming a node operator though the process is a little complicated. But you can also earn by providing a loan that earns you an interest rate through lending protocols such as Aave (1.28%), Nuo (0.65%), and Argent (1.26%).
Token: LINK (ERC 677)
Use(s): Application
Date Launched: July 17, 2020
Total Supply: 1,000,000,000
ICO Price: $0.110
Current Trading Price: $27.05
Total Market Cap: $ 11,165,884,730
- Compound Finance is a decentralized lending protocol running on Ethereum that allows anyone to lend or borrow crypto assets directly from their wallets. It was founded by Robert Leshner in August 2017. You can earn by becoming a loan provider to borrowers on the platform. Interest rates vary since it is determined by supply and demand of each crypto asset.
Token: COMP (ERC20)
Use(s): Governance
Date Launched: June 16, 2020
Total Supply: 10,000,000
ICO Price: $34
Current Trading Price: $437.45
Total Market Cap: $ 1,901,698,797
- Kava is a multi-asset DeFi platform that offers stablecoins, loans, and other financial services for users of major cryptocurrency assets such as BTC, XRP, BNB, ATOM, and a lot more. It was founded by Brian Henning Kerr and Scott Stuart. You can earn by depositing your tokens at a staking service like exchanges that support KAVA. You can also earn by delegating. Delegating is when you bond your tokens to a validator and earn rewards in return. You can also run your own staking node and earn KAVA rewards directly from the protocol.
Token: KAVA (ERC20)
Use(s): Governance and Staking
Date Launched: October 22, 2019
Total Supply: 116,534,983
IEO Price: $ 0.460
Current Trading Price: $3.56
Total Market Cap: $ 211,383,913
As you can see, most of these projects started at a very low price as compared to their current value. From the list that we published last year, Yearn Finance has made it on our list again this year. Why not? The value of YFI speaks for itself.
Top DeFi Startup Projects
For new investors who would like to become early adopters, here is a list of promising DeFi startup projects for you.
- Venus Protocol is a decentralized money market built on the Binance Smart chain that allows users to borrow and supply collateral onto the platform without intermediaries. The protocol is governed by its native token XVS which can now be mined (farmed) by liquidity suppliers, protocol borrowers, and stablecoin minters. XVS has a total supply of 30,000,000. XVS price was recently on a price rally and recorded a 900% according to a report by Cointelegraph. In recent data by Crypto.co, XVS is now at $80.11 and has now a total market cap of $687,095,679.
- Oasis Network is a privacy-first, proof-of-stake, decentralized network. A network designed to give users back control and ownership of their data, while supporting new privacy-first applications and use-cases. It was founded in 2018 by Dawn Song, Bobby Jaros, Noah Johnson, and Raymond Cheng. The network’s native token, ROSE, is used to stake and to pay for transaction fees. ROSE token has a total hard cap of 10 billion. Currently, it has a circulating supply of 1,500,000,000 and has a total market cap of $ 189,051,136. ROSE token is now at $ 0.125999 in data by Crypto.co.
- MahaDAO is a decentralized autonomous organization governed by the MAHA community. It is part of the Build for Bharat program under the Binance Smart Chain. In this community, MAHA token holders make all the decisions and play a centralized role in fulfilling MahaDAO’s true potential. It uses two main tokens in its ecosystem, the MAHA, and ARTH. MAHA is the governance token while ARTH is the valuecoin of the MahaDAO ecosystem. MAHA token has a total supply of 9,999,151 and a total market cap of $ 10,170,743. Currently, the MAHA token now trades at $ 9.97.
- Orion Protocol is an open-sourced, decentralized finance project mainly created to aggregate liquidity from different major liquidity providers i.e. exchanges. It helps users get the best return out of their funds while lowering the risks associated with going onto multiple exchanges (both centralized and decentralized). It was founded by Alexey Koloskov and Kal Ali in 2018. ORN token is the native token of the protocol. ORN token has a total supply of 100,000,000 and a total market cap of $ 175,236,883. In recent data by Crypto.co, ORN token is now at $ 8.50.
- 1INCH Exchange is a decentralized cryptocurrency exchange (DEX) aggregator used to buy or sell digital assets across multiple DEXs. Orders are split across multiple DEXs to find the best market price available by using arbitrage bots. It was founded in 2019 by Russian developers Sergej Kunz and Anton Bukov. The platform uses 1INCH as its governance token. 1INCH has a total supply of 1,500,000,000 and a total market cap of $ 452,889,900. 1INCH token is now at $ 4.77.
Aside from these projects, there are still a lot of DeFi projects that are worth investing in this year. But just like any other investments, DeFi investments may come with risk. So, before even investing, always find time to check the authenticity of the project. If you are doubtful in any way, it’s better not to invest. There are a lot of projects where you can choose from without necessarily getting yourself at too much risk.
