- MakerDAO (TVL of US$6.23 billion) allows users to lend and borrow cryptocurrency and deposit collateral to mint the stablecoin DAI
- There are 203 Defi Projects, 177 (87per cent) of them are listed on the Ethereum platform
- The Uniswap Ecosystem has been integrated with over 300 other projects such as Argent, Sorbet, InstaDapp, Parsec Finance
The rise of DeFi on the Ethereum platform has seen an explosive rise in projects changing the financial systems in the world. According to Defiprime, there are 203 Defi Projects, with 177 (87per cent) listed on the Ethereum platform. DeFi projects have gained much popularity because of their ability to leverage decentralized networks to transform old centralized financial products into trustless, transparent and interoperable protocols that run without supervision from intermediaries.
With the popularity of DeFi projects on the Ethereum platform, we look at the top innovations showing massive potential this year.
Top Defi Projects on the Ethereum platform
The Uniswap protocol is an Ethereum- based decentralized exchange (TVL of US$3.48 billion) that allows users to swap ERC20 tokens. Uniswap popularized the pool-to-peer trading model of Automated Market Makers (AMM) pools used in most decentralized exchanges (DEX).
With Uniswap, you can provide liquidity to earn a cut of trading fees and additional yields. Since its launch in 2018, Uniswap has been the top-performing DEX on Ethereum. The Uniswap Ecosystem has integrated with over 300 other projects, such as Argent, Sorbet, InstaDapp, Parsec Finance.
MakerDAO (TVL of US$6.23 billion) allows users to lend and borrow cryptocurrency and deposit collateral to mint the stablecoin DAI. The developers describe DAI as the first unbiased currency and the leading decentralized stablecoin in the world.
Over 400 apps and services have integrated the stablecoin DAI, including wallets, other DeFi platforms and games, for example, Governance, Migrate, Bitcointrade, Coinbase, etc.
However, DAI is primarily collateralized by centralized stablecoins such as USDC and USDP.
These DeFi projects have a promising future, and developers and traders can dig deeper to know how to join their communities if interested. Ethereum also profits from housing all these great projects and sustains its position as the second-largest cryptocurrency.
Convex Finance is a Defi protocol built on Curve StableSwap to complement the Curve Protocol. Curve achieves efficient stablecoin trades by applying the StableSwap invariant, which significantly lowers slippage for stablecoin trades more than many other popular invariants, such as constant- products. This Defi protocol has a TVL of US$3.05 billion.
Convex allows CRV holders (Ethereum token that powers Curve. fi) and Curve liquidity providers to earn an additional yield on their tokens. How? Users who deposit their Curve Tokens or Curve LP tokens into Convex earn additional rewards from Convex Finance (CVX) and other tokens.
On the downside, Convex might have a challenge in scaling as its concept could be more straightforward for beginners.
AAVE LIQUIDITY PROTOCOL
AAVE (TVL of US$3.90 billion) is a decentralized, permissionless money market that facilitates lending and overcollateralized borrowing. It offers a wide range of products; loans, deposits, staking and gaming. AAVE has locked over US$5.85 billion of liquidity in the protocol across seven networks and over 13 markets. AAVE is also in use in other ecosystems such as Arbitrum, Optimism, Avalanche, Fantom, and many others.
The protocol has earned mileage with J.P Morgan, DBS Bank and SBI Digital Asset Holdings using AAVE in the first real-world application test on DeFi. The Singapore banks intend to conclude on foreign exchange and government bond transactions on the Ethereum Network.
Lido (TVL of US$6.23 billion) is a liquidity staking protocol that allows users to stake assets daily to receive rewards which they can withdraw at any time. The staking assets on Lido totalled US$7.6 billion, with US$339 million already paid. Aside from Ethereum, The ecosystem support liquidity for other tokens such as Solana, Polygon, Polkadot, Kusama, and many others.
How Lido works
Users stake any number of tokens daily to receive staking rewards. The rewards come in liquid stTokens, and they can use the across DeFi to compound more to their daily staked rewards.
Lido has 27 ecosystem applications. However, the 10% fee on staking rewards is high in comparison to other staking platforms.