Top Defi Projects To Look Out for In 2021: A comprehensive list
Today we have quite many top DeFi Projects, and it can be challenging to pick the right ones without adequate knowledge. We followed industry experts’ briefings and opinions and compiled the most recurrent answers to create this comprehensive post. Aside from following these DeFi experts’ views, we also researched the subject matter.
If you are a crypto and blockchain enthusiast, you must have heard about the emerging industry called Decentralized Finance(DeFi). This emerging industry has had sustainable growth and is currently worth more than $10 billion. Today everyone is talking about decentralized finance, and some crypto giants like CoinMarketCap already have a separate list dedicated to DeFi projects.
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Why Should You Be Concerned About these Top DeFi Projects?
Before we go further to explore these top DeFi projects, let us understand what decentralized finance is. DeFi is an idea of rebuilding the traditional infrastructure of financial services to a fully decentralized one. It seeks to eliminate the need for third-parties like companies and governments. DeFi has the potential to revolutionize the global financial landscape.
Dune Analytics, a crypto market data aggregator, revealed that the total number of DeFi users has increased by roughly 11 times over the last year. This shows that people are gradually accepting a world of decentralized finance. There are many great DeFi projects that we will discuss in this post. If you are a crypto investor, you shouldn’t take our word for it 100%. Do your due diligence before committing your money. The purpose of this post is to draw your attention to some of these wonderful top DeFi projects with huge potential.
We conducted thorough research on the best DeFi projects to look out for as we go further into 2021. Here are the top 5 on our list.
Top 5 DeFi Projects In 2021
For clarification, this list of top DeFi Projects is in no particular order.
Chainlink is a decentralized data feed that connects blockchains to off-blockchain data. It is a decentralized oracle and provides reliable tamper-proof inputs and outputs for complex smart contracts on any blockchain system. Chainlink has the capacity to access information in and out of blockchain in a secure, trustworthy, and decentralized manner. This project deserves its place on the top DeFi projects in 2021.
Chainlink’s token usage ecosystem is what separates the project from the crowd of other decentralized finance projects. Smart contract owners use the Chainlink token (LINK) to pay Chainlink nodes to access their data. The number of LINKs a node has is proportional to how reputable that node is. Therefore, oracle providers are incentivized to hold as many LINKs in their Chainlink nodes. It gives them more usage and profit.
Another promising DeFi project to watch out for is Compound. It is a software that runs on Ethereum, and it allows borrowers to take out loans and lenders to offers loans. Lenders provide these loans by locking their crypto assets into the protocol. The crypto asset supply and demand determine the interest rates that borrowers pay and lenders receive.
With Compound, lenders receive interest faster than simple interest on the money the lender already has. The network achieves this through its unique and efficient lending system. As the length of time you hold your balance with them increases, the greater the potential interest you are able to ear on Compound.
This is arguably one of the best DeFi projects available in the market. The Uniswap protocol allows users to exchange ERC-20 tokens on Ethereum. Uniswap offers a user-friendly and low latency interface for direct ETH and ERC-20 token swapping. Due to the decentralized nature of Uniswap, it doesn’t take any fees for itself. The project is designed to function as a public good.
Most users prefer Uniswap to other exchanges because Uniswap does not have an order book. Uniswap employs a mechanism known as “Constant Product Market Maker.” This mechanism determines the exchange rate and price slippage. There are three main users on Uniswap; casual users, liquidity providers, and arbitrageur. Each of these users plays a vital role in the Uniswap ecosystem.
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The liquidity providers are incentivized to provide capital and earn transaction fees generated by the casual users. On the other hand, arbitrageurs are also incentivized to provide external price information by earning spreads between Uniswap and other exchanges.
Another one of the top DeFi projects on our list is Yearn Finance. It is a decentralized finance platform that performs a lot of functions. Yearn Finance functions as an aggregated liquidity and automated market maker by moving provider’s cash from one platform to another.
The platform allows access to advanced earning mechanisms, thus giving people easy access to new investment strategies. If you hold $YFI in its protocol, you will earn a percentage share of the platform’s fees generated by other users.
Last but not least, of our top 5 DeFi projects is Polkadot. This project aims to deliver the most robust platform for security, scalability, and innovation. One of the reasons why many people are talking about Polkadot today is because it is more scalable than Ethereum. Instead of using the traditional blockchain nodes, Polkadot uses several parallel chains to execute transactions.
It is also a cross-blockchain protocol with the capacity to transfer data between two different blockchains. Although Polkadot is a smart contract platform, many developers are using it to build DeFi tools and projects.
There are other great projects other than our top 5 DeFi projects. Although it is still very early in terms of DeFi adoption, these 5 featured Defi projects may gradually grab the spotlight they deserve with time. The ultimate movement of all these DeFi projects is to be free from the monetary control of centralized financial institutions. In the past year, the growth of decentralized finance has been one of the biggest cryptocurrency stories. In the end, we still have a long way to go with the mainstream adoption of DeFi projects