Decentralized finance (DeFi) has seen dramatic growth last year as it rose to prominence during the industry-labeled ‘DeFi Summer’. It can be argued that the DeFi industry will be the next big thing in the financial world. A fact made stronger by the growing number of use cases as we enter 2021. Moving forward DeFi is here to stay, and that’s why we take a look at five DeFi projects you should pay attention to in 2021.
The maturity shown by the DeFi sector at this moment in time is quite remarkable. Weekly headline figures, expanding trading volume, ever-evolving projects, and new opportunities for retail users have all come to the fore.
The overall decentralization of finance has been a dream of many for some time and many of the projects have lived up to that promise. However, some are centralized. With a surge in worldwide interest in DeFi products, any investor needs to understand projects fully to draw any conclusions about which are worth time and money.
Clear peaks in interest can be observed in 2020. Interestingly, the first spike occurred around the time of the March the 12th 2020 market crash and the same moment when Covid-19 restrictions impacted the world. Another spike can be seen around the launch of SushiSwap and finally, as we progress into 2021 we see an evolving upward trend.
Whether you are a newbie interested in earning a passive interest on your Crypto holdings or a traditional stock market trader looking to pivot slightly. Here are some of the most innovative DeFi projects you should check out in 2021.
PancakeSwap
Token: CAKE
PancakeSwap is a decentralized exchange running on BINANCE Smart Chain, with further features allowing users to earn and win tokens. It is a decentralized exchange for swapping BEP20 tokens similar to Ethereum exchanges Uniswap and SushiSwap?
PancakeSwap uses an automated market maker (AMM) model. That means that while you can trade digital assets on the platform, there isn’t an order book where you’re matched with someone else. Instead, you trade against a liquidity pool.
JUST
Tokens: JST and USDJ
As with MakerDAO, JUST is all about locking collateral into a smart contract and using its value to mint a stablecoin as a loan. For MakerDAO, users lock-in ETH (or various other ERC20 tokens) to mint DAI, while in JUST users only have the option to lock in TRON’s native token TRX, in return, minting dollar stablecoin USDJ.
Also, as with MakerDAO, users have to maintain a liquidation ratio of at least 150%.
This means if you lock in $150-worth of TRX, you can mint up to 100 USDJ (or $100-worth) of stablecoins as a loan.
AAVE
Tokens: AAVE, ALINK, AETH
Originally launched as a crypto savings and loans dapp ETHLend, finance protocol Aave has quickly developed into one of the key DeFi dapps on Ethereum.
In its simplest form, it allows users to deposit certain tokens and earn real-time interest from their deposits as other users borrow those tokens at a higher interest rate. However, Aave has also become known for its flash loans, which enable users to pay a small fee to borrow very large amounts of token value.
1Inch
Token: 1INCH
During 2020, the 1inch dapp has more than doubled its daily activity, becoming one of the top DeFi dapps on Ethereum. Partly this rise has been driven by DeFi’s overall momentum, but 1INCH has performed particularly well even within this category, thanks to its simple UX and smart features.
At heart, 1inch is a decentralized exchange, enabling users to trade ERC20 tokens. The clever element, however, is the aggregation part, which enables it to leverage the liquidity of other DEXes such as Uniswap, Kyber, and Oasis Trade.
This is particularly important when exchanging large token amounts as it reduces the price slippage, ensuring trades are optimized for the best price.
Badger
Token: BADGER
Badger Finance is a community-run DAO that aims to build the products and infrastructure needed to bring more Bitcoin into the DeFi ecosystem.
The Badger team incentivized active governance participants of well-established DeFi projects such as Yearn and Sushiswap and seems to have all the makings of an all-star DeFi project run by anons. Surprisingly four public individuals are helping to run Badger Finance until control of the project can fully be handed over to the community.
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