DeFi Apps You Need to Know About
Thanks to it’s security and trust-less technology, DeFi will reshape every financial industry as we know it.
The Most Popular DeFi apps:
Decentralized exchanges (DEXs): Online exchanges which connects users directly so they can trade cryptocurrencies with one another without trusting an intermediary with their money. DEXs like Uniswap typically funciton automatically with DAO’s built on liquidity pools.
- Uniswap: a leading decentralized exchange that is currently dominating the DeFi market. It employs an Automated Market Maker system (AMM) to ensure that there is sufficient liquidity for the ERC20 tokens traded on its site.
- Synthetix: one of the fastest-growing decentralized exchange that allows users to swap tokens on the platform. What makes Synthetix unique is that it allows users to mint their own synthetic assets — called ‘Synths,’ which are financial instruments that track the value of an underlying asset. Synthetix and other exchanges often use Chainlink to feed their platfform with massive amounts of real-time data
- 0x: a DeFi protocol that allows developers to build their own decentralized cryptocurrency exchanges
- PancakeSwap: a decentralized exchange that allows you to swap BEP20 tokens on the Binance Smart Chain, a convenient and inexpensive alternative to Ethereum
Stablecoins: A cryptocurrency that’s tied to an asset outside of cryptocurrency (the US dollar or euro, for example) to stabilize the price.
- DAI: a DeFi crypto coin built on the Ethereum blockchain and has its value pegged to that of the US dollar.
- Tether: A fiat-pegged stablecoin built on top of Bitcoin via the Omni Layer Protocol
- USD Coin: a fully collateralized US dollar ERC20 tokens founded by CENTRE, a joint venture founded by Circle and Coinbase.
Lending platforms: These platforms use smart contracts to replace intermediaries such as banks, which take massive fees and damage a market’s natural liquidity.
- Aave (AAVE): Aave is an open-source DeFi platform that functions as a crypto lending service and allows you to earn interest as well as borrow on your crypto assets. The AAVE coin can be staked via the protocol to contribute to its security and performance.
- Compound: another leading decentralized borrowing and lending platform that enables users to accrue interest on their crypto assets
- Maker: similar to many other DeFi lending platforms, it hosts a dual token model: Maker, and Dai and was funded as a means to circumvent the volatility of the cryptocurrency. Hence, it’s DAI is pegged to the dollar for lending and borrowing once the smart contract terms are met.
Prediction markets: decentralized markets for betting on the outcome of future events, such as elections without intermediaries.
- Augur: pioneering protocol within the crypto prediction market space, which aims to “democratize” finance by allowing for user-generated markets with low fees
- TotemFi: a staking-based prediction markets platform which offers non-punitive predictions, meaning that users incur no loss of their initial stake if their prediction turns out to be inaccurate
- OptionRoom: a fully decentralised forecasting protocol, which allows users to speculate on the outcomes of real-world events.
Digital Wallets: Non-custodial DeFi crypto wallets permit you to have full control over your assets and private keys in a secure environment.
- MetaMask: a web browser extension that could also serve the role of a DeFi wallet
- Coinbase Wallet: a non-custodial web3 wallet from the house of the biggest centralized exchange, Coinbase
- Argent: presents a radically improved crypto wallet for freedom from paper backups, free transactions, and simple addresses
Wrapped tokens: a cryptocurrency token pegged to the value of another crypto, that allows the wrapped version to be created on another blockchain. Since different blockchains offer different functionalities, wrapped tokens serve as bridges between different blockchains.
- Wrapped Bitcoin: Bitcoin itself cannot run in the Ethereum blockchain so some people mint their Bitcoins (BTC) and use their newly Wrapped Bitcoins (WBTC) on the Ethereum network to operate every service that the latter offers
- Basic Attention Token: One of the most popular wrapped tokens on Ethereum, which tackles advertising problems on the Web.
- OMG Network: increases the efficiency of the Ethereum network,
Asset Management Protocols: DeFi supports frameworks that allow users to pool funds for investment products such as automated investments and asset aggregators.
- Set Protocol: a sector-leading asset-management product, Set Protocol allows users to leverage sophisticated trading strategies by purchasing ERC20 tokens called Sets. Users can “set and forget” as Sets rebalance automatically relative to their target strategy, meaning passive investors can capitalize on market trends without having to make those trades themselves.
- Zapper: tracks positions across top DeFi protocols like Uniswap liquidity pools and Synthetix in tandem with rising projects like Curve and see how your DeFi positions are spread out by % using their Protocol Allocation tool.
- Zerion: unified dashboard to quick track position across an endless number of DeFi products
Yield farming: For savvy traders who are willing to take on risk, there’s yield farming, where users lending out certain cryptocurrencies. In return, you get interest and sometimes fees, but they’re insignificant The real payoff comes if that coin appreciates rapidly.
- Liquidity Providing on Uniswap: ~20% to 50% APR
- Earn interest on Aave: ~0.01% to 15% APR
- Yield farming on PancakeSwap: ~8% to 250% APR
Liquidity mining: When DeFi applications entice users to their platform by giving them free tokens.
- Curve Finance: a DeFi exchange designed for Stablecoin trading. Curve offers low slippage for lending and borrowing funds and less volatile for impermanent loss
- Balancer: an AMM that operates on Ethereum which comes with customizable pools like shared pools and private pools to earn rewards.
Composability and Money Legos: DeFi apps are open source, meaning the code behind them is public for anyone to view. As such, these apps can be used to “compose” new apps with the open source code as building blocks to new applications.
- Alchemix: a self-repaying loans prgoram
An example of money legos at work:
- Take out a loan of DAI on Compound
- Split that DAI into two even amounts
- Put one half into Oasis and generate 8% interest
- Put one half into a leveraged position for ETH on DeFi Zap
- Pull out the funds from both at a given price level of ETH
- Repay the loan and interest back to Compound
- Keep the remaining balance earned from the leveraged position (assuming ETH price went up)