While it would be accurate to say that 2020 was a year for cryptocurrencies, it would also be true to say it of the DeFi ecosystem. The crypto loan sector grew very quickly this year and here is a short summary.
2020 has been a very rewarding year for cryptocurrencies. Even in the midst of a pandemic scenario like the one the world experienced, with the economies of the countries on the floor, the crypto industry was able to grow and continue to position itself and part of that growth is palpable through the DeFi ecosystem.
The Decentralized Finance ecosystem, DeFi, was one of the fastest growing crypto fields this year. According to DeFiPulse data , there is more than USD $ 14,000 million in blocked funds for different projects in this area.
As DiarioBitcoin previously reported, the objective of the DeFi ecosystem is to offer a whole series of products and services based on a decentralized infrastructure such as Blockchain technology . One that allows interaction between the user and the platform directly, without the need for intermediaries such as banks, for example, to intervene.
Among these DeFi tools are digital assets, protocols, dApps, etc. As such, we can conceptualize DeFi as a decentralized and open ecosystem where initiatives / projects related to financial services are developed.
Thanks to DeFi, entrepreneurs can recreate traditional financial instruments in a decentralized architecture, outside the control of companies and governments. DeFi allows users to access various financial activities such as transactions and loans and also generates the possibility of earning interest by lending money in cryptocurrencies.
Now for the data. As of December 31 of last year, the DeFiPulse counter totaled $ 671 million in locked funds, while at the time of writing the figure is over $ 14 billion. This represents a growth of 2,060% .
Why the DeFi fever ?
To understand the success of DeFi it is necessary to take a look at traditional systems. These systems are centralized and regulated by a single authority. Which can often lead to problems if a crisis occurs.
Basically, the success of DeFi is similar to that of cryptocurrencies . It works because it can solve problems that traditional systems cannot, and it offers a range of opportunities that make it attractive to different people.
DeFi allows you to create decentralized ecosystems that anyone can access. This gives people more freedom and control. Simply put, it can be said that DeFi's success like crypto's is based on two points: decentralization and less complicated access.
Among the things that people can access through this ecosystem are loans. This steady growth throughout the year is due to a rise in demand for DeFi loan services, decentralized protocols that allow users to access loans without the need for a bank or other entity to act as an intermediary.
Faced with such an opportunity, the demand for these services did not wait and today we can see the success it has had.
Here is a list of the top ten DeFi tokens and their projects for the end of this year. The prices outlined in this note are equivalent to those of December 30, 2020. To see the current prices, click on the link on the symbol of each of the currencies.
1.- MakerDAO ( MKR )
Maker is the governance token of the DeFi MakerDAO loan project . MKR is used for making decisions about major changes to the Maker protocol . As of December 30, it has a value of USD $ 568 per unit and a market capitalization of more than USD $ 567 million.
So far, this project is the one with the most funds in guarantee for its protocol with more than USD $ 2.8 billion.
2.- Compound (COMP)
Comp is the governance token of Compound , another lending protocol, and it gives its headline holders the opportunity to vote on key changes to the protocol. It currently has a value of USD $ 151 per unit and a capitalization that exceeds USD $ 667 million.
It was only launched in June of this year and in this short period of time its value has been very volatile, it even became for a moment the DeFi token with the highest capitalization.
3.- Aave ( LEND )
LEND is the governance token of Aave, another DeFi loan project whose success places it in the top 3. The value of LEND is USD $ 0.5 while its market capitalization exceeds USD $ 570 million.
As in other DeFi lending protocols , LEND allows its holders to make decisions about changes to the project. At the same time, LENDs can be collateralized for a loan and present earnings to its holder.
4 .- Uniswap ( UNI )
Uniswap is a decentralized on-chain protocol for the exchange of tokens on Ethereum that uses pools of liquidity instead of order books.
Anyone can quickly trade between ETH and any ERC20 token or earn fees by supplying any amount of liquidity. And anyone can create a market (that is, a pool of liquidity) by providing an equal value of ETH and an ERC20 token . Its native token is UNI, which is priced at $ 4.23 per unit.
5.- Synthetix ( SNX )
SNX is the asset of the DeFi Synthetix project , a decentralized platform for asset issuance based on the Ethereum chain that can track other assets using oracle price feeds and some economic incentive mechanisms.
SNX currently has a value of USD $ 7.7 and a market capitalization that exceeds USD $ 800 million.
6.- SushiSwap ( SUSHI )
Sushiswap is a fully decentralized on-chain protocol for exchanging tokens through an automated market-making (AMM) process that uses 'liquidity pools' instead of an order book.
This innovative system allows anyone to create a liquidity pool for their own token by providing ETH and an ERC20 of their choice, and it guarantees automatic price discovery.
SushiSwap is community-managed by voting on project governance issues, and fees collected by SushiSwap are shared between $ SUSHI token holders and liquidity providers (LPs). At the time of writing, the SUSHI token is worth $ 2.60.
7.- Curve Finance
Curve is a decentralized exchange liquidity pool on Ethereum designed for trading stablecoins. Launched in January 2020, Curve allows users to trade stablecoins with a low-fee, low-slip algorithm specifically designed for stablecoins and profit fees.
Behind the scenes, tokens held by liquidity pools are also supplied to the Compound or iearn.finance protocol where they generate more revenue for the liquidity providers.
Curve currently has no native token . Although the team plans to launch a CRV token eventually. Each Curve group has its own ERC20 token.
8.-Balancer ( BAL )
Balancer is a project to create automated market (AMM) based on the Blockchain of ethereum similar to uniswap . However, unlike Uniswap's two- token liquidity pools, Balance r offers the ability to open pools made up of up to 8 different ERC20 tokens .
BAL is Balancer's governance token and allows its holders to make decisions about the protocol. The project just launched this year also offers a liquidity mining campaign, in which Balancer users are rewarded with BAL on an ongoing basis.
Currently BAL has a value of USD $ 13.15 and when it was launched in June it barely traded USD $ 12 per unit. On the other hand, its capitalization exceeds USD $ 91 million.
9.- Harvest Finance (FARM)
Harvest was created for those looking for a convenient way to develop the latest projects that are producing returns for stakeholders.
When a user deposits their tokens ( DAI, USDC, WBTC, and other backed assets) at Harvest.Finance, they go to work on high-yield return opportunities and receive an asset (fDAI, fUSDC, fWBTC) that earns a proportional share of the income from farming .
FARM token holders can earn a share of the income from yield farming, receive incentives for providing liquidity on Uniswap, and vote to help decide the direction of the cooperative.
10.- RenVM ( REN )
RenVM is a Ren product that was launched in May 2020 and provides interoperability for decentralized finance, allowing anyone to seamlessly connect digital assets to and from the DeFi ecosystem.
It is not a product or an application itself, but rather a network (and an accompanying SDK) that enables developers to provide interoperability to their DeFi applications . It has its own native token called REN which has a value of USD $ 0.326.
