Defi has been stealing news headlines for quite some time now, ushering a new paradigm shift in digital assets across the globe. According to the leading DeFi space monitor, DeFi pulse, there is currently about $44.89 billion worth of tokens locked within the DeFi space.
This indicates that we may be seeing a significant increase in DeFi investments in the coming months. Here are a few leading projects paving the way in the DeFi space.
DEXES Enables the Functionality of the DeFi Landscape
Decentralized exchanges (or “Dexes“) are one of the primary institutions that make the DeFi possible. Anyone anywhere can exchange assets without the need for a central order book.
Dexes use smart contracts to execute peer-to-peer exchanges, whereby each exchange upholds a decentralized order book that matches the demand and supply of specific DeFi token pairs.
Uniswap Enables Seamless Digital Asset Exchange
Launched in November of 2018, Uniswap has become the leading Dex for the DeFi landscape, and is the largest one by trading volume. Unique for being able to solve the liquidity problem that most Dexes face using the “constant product market maker model”, Uniswap provides a starting point for developers who want to list their tokens.
It has been able to ensure constant order fulfillment for its users using liquidity pools, and has also become the go-to place for individuals to swap their DeFi tokens on the Ethereum blockchain.
SushiSwap Gives Users Greater Control
As a hard fork of Uniswap, SushiSwap offers similar exchange experiences, but with a different focus in mind. The holders of the SUSHI token can vote and have a say in the direction of the development of the exchange.
This also improves the governance of DeFi projects whereby users and token holders now have greater control over their assets.
PancakeSwap is the New Kid on the Block
PancakeSwap is another hard fork of Uniswap. In this case, however, PancakeSwap works off the Binance Smartchain.
The PancakeSwap ecosystem caters to the BEP-20 token- the standard built primarily for the Binance SmartChain. Pancake Swap’s emergence is critical to the future of DeFi, as interest is growing in other blockchains besides Ethereum.
Apart from the DEXES, Flash loan platforms are also giving the Defi space some liquidity.
Flash loans have created a different type of financial product where transactions start with a loan and end with repayment in a single transaction. The entire process occurs without collateral.
Aave’s Flash Loan Protocol Allows for Seamless Integration
Aave is a decentralized lending protocol that works off the Ethereum blockchain, and is the single largest flash loan platform out there in terms of liquidity. This protocol allows anyone to borrow tokens, affect different types of transactions and pay back in the same, single transaction. Lenders can also stake their tokens and expect decent returns on Aave platform.
Akropolis Provides a DeFi Ecosystem for Everyone
Akropolis is another DeFi ecosystem provider. Its prominence in its applications to the DeFi space lies in its ability to provide under-collateralized loans, in which the borrower only has to provide 50% of the collateral value to obtain the loan.
There are also other products in development within the Akropolis ecosystem that allow traders to benefit from the existence of the loan product.
bZx Lending Protocol Allows for Margin Loans
Another flexible flash loan platform that has significantly been shaping the DeFi landscape is bZx. This platform allows for margin lending and trading in a way that leverages the positions of DeFi traders.
It also allows for staking and swaps of different kinds.The best thing about bZx is that its products are flexible and the participants in its ecosystem have choices, making the experience of interacting with its financial products easier.
bZx also allows for aggregators and their selection that presents information on the current offers for token swaps and DEXES. As such, it provides optimal arbitrage trading where profits are made on price differentials between two or more digital asset listings. Aggregators provide information to members of the DeFi space at a glance for easy decision-making.
1Inch Dex Aggregator Provides Optimal Dex Prices
The 1Inch Dex aggregator provides information for arbitrage to DeFi participants.
1Inch launched its version 2 in November 2020, and its 1Inch governance token in December 2020. This aggregator provides the tools for DeFi token traders to take advantage of price disparities across several DEXES. All traders have to do is connect their wallets and pay gas fees in order to trade.
All of this occurs via an intuitive interface that gives the traders real-time information on the different token prices. 1inch has allowed savvy traders to take advantage of arbitrage opportunities when they arise in the markets. Occasionally, these opportunities may go unnoticed. Nevertheless, they do keep occurring from time-to-time.
Messari Provides Data Tools for Cryptocurrency Traders
A unique property about the cryptocurrency space is that information moves extremely fast. There is an overload of information, and traders have to deal with this on a constant basis. In response, Messari has created several data tools that allow for intelligent analysis of the cryptocurrency space.
The strategic advantage of this is that traders can take advantage of the DeFi boom without stress. After all, information is power for those who use it quickly and accurately.
2021 Will be the Year of the Non-Fungible Token (NFT)
The Non-Fungible token (NFT) has taken center stage. Like it or not, these tokens will dot the DeFi world for some time to come. The emergence of several marketplaces will become the go-to places for DeFi enthusiasts this year.
OpenSea Ensures Seamless NFT Trading
OpenSea is one of the leading NFT marketplaces. Its competitive edge lies in its effective “plug-and-play” approach, making it a point of reference for many other platforms. The signing of wallets allows for the effective use of the platform, and permits any trader to mint an NFT and sell it to buyers within its vast marketplace.
Rarible’s Intuitive NFT Trading Marketplace Creates a Global Community
Rarible is another intuitive NFT platform that holds a lot of promise because it fosters community spirit among the marketplace participants. Minting NFTs on this platform is made easy with two transactions.
The first is to create the store, while the second deals with the transaction fees for the platform. Although user verification is thorough, it often does take longer to process. In many cases, it may take up to two weeks. However, the sense of community allows for the inclusion of new members in the NFT space, and may be a tradeoff that is very well worth it to many.
On a last note
As a heads up, research reported in September 2020 that DEXs could be a potential threat to Centralize Exchange having already eclipsed 5% of total crypto volume. Some of their main limitations still remain their intimidating and confusing interfaces, the lack of customer support and recent record gas fees among other aspects.
Although centralized exchanges played a crucial role in fostering crypto adoption and acceptance among retails investors and institutions, some of them are realizing the upcoming storm and disruption DEX will bring to the digital asset ecosystem.