What are the top DeFi projects for users? Below is a summary of all the most prominent projects that HoldingB has compiled to introduce to you.

Decentralized finance, or DeFi, is focused on providing decentralized financial services that anyone, anywhere can access. DeFi platforms are available for lending, staking, trading, liquidity mining, minting, insurance, and liquidity.

Some of these DeFi platforms act as decentralized exchanges for cryptocurrencies. A decentralized exchange (or DEX) is a peer-to-peer marketplace where transactions take place directly between cryptocurrency traders.

Other DeFi platforms for investing and trading in cryptocurrencies follow the principle of the DAO, that is, a decentralized autonomous organization powered by blockchain.

We have looked at Total Value Locked (TVL) as a guide metric to analyze the top exchanges.

CURVE

What? Curve is a decentralized exchange (DEX) based on Ethereum and specializing in stablecoins.
Construction year: 2020
TVL is worth $20.86 billion.
Ethereum is a blockchain.
Tokens: CRV tokens, admin tokens, and utility tokens.
Products include a liquidity pool, an incentive pool, and a CRV token.
Fee: 0.04% swap fee

Managed by smart contracts, Curve allows users and other decentralized protocols to exchange stablecoins. The Curve uses liquidity pools like Uniswap. To achieve this, Curve needs liquidity (tokens) and is rewarded by those who provide them.

Every time someone makes a trade on Curve, the liquidity providers receive a small swap fee that is divided equally among all providers. Trading volume is the key to profit. Curve liquidity pools are also made available to Compound’s similar interest-collecting protocols in the background, so you get extra interest on trading fees.

The Curve rewards loyalty. Curve’s governance token, CRV, is used to vote on proposed changes to the protocol. CRV tokens can be locked for a period of one week to four years. In exchange for their locked tokens, Curve’s users’ VECRVS tokens have the ability to gain additional voting power. In addition, users can use VECRVS to increase their team reward up to x2.5. VECRVS can also be used to get some protocol fees back.

MakerDAO

What? An Ethereum-based DAO protocol that creates the Dai stablecoin and facilitates collateral-secured loans.
Construction year: 2014.
TVL is worth $19.63 billion.
Ethereum is a blockchain.
Dai, ERC-20, and MKR tokens, as well as governance tokens
Maker Vaults, Massive Savings

MakerDAO is a decentralized autonomous organization (DAO) that develops and operates Maker, a smart contract platform for borrowing, saving, and issuing stablecoins. The Multi Collateral (MCD) system allows users to create a stablecoin called DAI by collateralizing assets accepted by the Maker governance community. DAI is softly pegged to the US dollar, and its stable value makes it a good cryptocurrency for issuing loans, sending remittances, and hedging against volatility.

DAI can be purchased from centralized and decentralized exchanges. Investors can also generate DAI when opening the maker’s collateral. Formerly known as collateralized debt positions (CDPs), vaults are smart contracts that run on the Ethereum blockchain and hold collateral as collateral until the borrowed DAI is returned.

To trade a stablecoin DAI loan through MakerDAO, you can deposit any Ethereum-based asset as collateral as long as the asset has been approved by the MKR holders who manage MakerDAO. Once borrowed, DAI is one of the most integrated digital assets across all blockchains. In particular, it is used in the decentralized finance (DeFi) ecosystem and in the burgeoning blockchain-based collectibles and games sector.

UniSwap

What? A decentralized exchange protocol for providing automatic liquidity on Ethereum.
Construction year: 2018.
TVL is worth $10.32 billion.
Ethereum is a blockchain.
Token: UNI, governance token
Products: Liquidity pool, centralized liquidity pool, swap, flash swap, staking, UNI token

Developed by Uniswap Labs, the UniSwap protocol is a peer-to-peer system designed to exchange ERC-20 tokens on the Ethereum blockchain through smart contracts. The big attraction of Uniswap lies in the variety of cryptocurrencies on the platform. This is partly due to UniSwap’s near-zero coin listing fees. Absolutely any ERC20 token can be listed on Uniswap. Each token has its own smart contract and liquidity pool, and if none exists, it can be created easily.

When adding liquidity, users need to contribute equal amounts of both cryptocurrencies to the pool. For example, if you choose the Ethereum/Dai pool, you need to lend Ethereum and Dai. In return for your contribution, Uniswap will pay you a portion of the gas fees for that liquidity pool. Remember that gas fees depend on congestion at the time of the transaction, not the amount of the transaction. This makes Uniswap a bad choice if you only trade a small amount. It doesn’t make sense to pay $30 in fees for a $50 transaction.

Whenever a new ETH or ERC20 token is contributed to the Uniswap liquidity pool, the contributor gets a common token, which is also an ERC20 token.

Pool tokens are generated whenever funds are deposited into the pool, and as an ERC20 token, the pool token can be freely exchanged, moved, and used in other dapps. When the coins are withdrawn, the common tokens will be burned or destroyed. Each pool token represents the user’s share of the pool’s total assets and a share of the team’s 0.3% transaction fee.

PancakeSwap

What? A DEX protocol and yield farm on the Binance Smart Chain.
Construction year: 2020
TVL is worth $6.87 billion.
Binance Smart Chain (Blockchain)
CAKE, a governance token
Liquidity pools, profit farming, flash loans, and swaps are examples of products.

PancakeSwap is the first and largest decentralized exchange on the Binance Smart Chain.

Liquidity providers collect rewards in the protocol’s token, CAKE, which can also be staked in syrup pools. According to CoinMarketCap, the total value of CAKE locked (TVL) was $6.6 billion at the end of August 2021, and the market capitalization was $5.4 billion, according to CoinMarketCap.

AAVE

What? An open source, non-custodial protocol for earning interest on deposits and borrowed assets.
Construction year: 2017
TVL is worth $16.49 billion.
Ethereum is a blockchain.
Aave, a governance token
Liquidity pools, yield farming, flash loans, and swaps are examples of products.

Aave is a KYC-free DAO and DeFi protocol built on top of the Ethereum network. Aave allows investors to lend and borrow cryptocurrencies without having to go through a centralized intermediary. Aave hosts a variety of cryptocurrencies, from stablecoins to altcoins. These cryptocurrencies can be borrowed at a stable and variable interest rate, or users can lend cryptocurrencies to liquidity pools and earn interest on deposits.

Borrowers can swap a variable rate for a fixed rate and vice versa. This gives users the freedom to get the best possible interest rate at any given time.

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