The Most Promising DeFi Projects 2021
DeFi is a fast-growing market that consists of various types of decentralized financial projects. According to DeFiPulse, the total value locked in DeFi is only increasing and already reached $50 billion. So there is no surprise that DeFi has become one of the most popular blockchain trends in the past year. This popularity has led to the emergence of many promising products and even more are under development. In this article, we’ll tell you what DeFi is, what the DeFi ecosystem consists of, and how to get started with DeFi.
Table of contents:
- The current DeFi ecosystem
2.1 Decentralized crypto exchanges (DEX)
2.2 Lending/borrowing platforms
2.3 DeFi aggregators
2.4 DeFi payment solutions
2.5 DeFi insurance - How to get started with DeFi
The current DeFi ecosystem
DeFi is on the rise now because it can be a great alternative to traditional financial systems. And if you can create a product that is interesting to the audience, then you can take a good place at the origins of the DeFi market. What are the top DeFi projects? It is difficult to list them all. So we have put together a list of the most popular types of DeFi projects.
Decentralized crypto exchanges (DEX)
A decentralized exchange (DEX) is an exchange that operates on the basis of a distributed ledger. It doesn’t store user funds and personal data on its servers and acts only as a platform for matching bids to buy or sell user assets. Trading on such platforms takes place directly between participants (peer-to-peer) without any financial intermediaries. However, most of the existing exchanges that call themselves decentralized are not completely decentralized: they use their own servers to store trading data, and users keep private keys on their own.
Here is how centralized exchanges work. Centralized exchanges are managed by a specific company or person who is profit-oriented. Exchange managers are responsible for the protection of user data and information about trades, fully control the platform and make decisions that are important for the development of the project. But this is not the case with decentralized platforms. Decentralized crypto exchanges are managed automatically or semi-automatically with the involvement of platform participants in the process of making important decisions. Such platforms provide the technical possibility of direct interaction between the participants and use a distributed ledger (blockchain) to store and process all (or almost all) data.
Examples of decentralized exchanges (DEXs): IDEX, Waves Dex, Bancor Network.
Lending/borrowing platforms
Lending/borrowing platforms are services that provide an opportunity to borrow or lend through a crypto network. Technically, this lending space is similar to a traditional institution that offers financial loans to people and businesses. The only difference is that DeFi does it without intermediaries.
Any blockchain user can transfer coins to a certain lending platform, which will lend crypto to another user at interest. DeFi lending is governed by smart contracts. When a person lends or borrows funds, he or she signs a contract with the other party that specifies all the details, such as repayment period, interest rate, etc. Compared to traditional lending, DeFi offers notable advantages. The most important of them is transparency and simplicity of the process thanks to the absence of third parties. All you need is an account on one of DeFi’s platforms and a crypto wallet.
Examples of lending/borrowing platforms: Compound, MakerDAO, Nuo Network.
