Crypto projects that marked the ascent of DeFi

Crypto projects that marked the ascent of DeFi


Due to the massive intervention by institutions after the financial crisis of 2007, many people realized how much the world depends on a few decision makers. A small group of people makes decisions about everyone’s finances.

With the birth of Bitcoin in 2009, there was opposition. From centralization to decentralization. Properties such as censorship resistance, transparency, security, access for all, open source and independence are an axiom of Bitcoin.

First of all, the introduction of Ethereum in 2014 gave the blockchain industry the opportunity to make digital money even more freely programmable using so-called smart contracts.

The combination of decentralization and programmability of money forms the basis of the mega-trend of decentralized finance.

Below we will give a summary of the most important crypto projects that laid the foundations for the prosperity of decentralized finance and the crypto industry.

Ethereum (ETH) is the largest blockchain platform

Ethereum is a blockchain platform on which the vast majority of DeFi protocols and services are based. ETH coins serve as fuel, and are necessary to perform all operations on the Ethereum network.

To try DeFi services, you need to have ETH. If you still don’t have it or it’s too small, you can get it at the Bitcoin Store or online at any time. Before buying ETH, you will need a high-quality wallet that supports interaction with DeFi services.

Along with Ethereum, according to The most promising blockchain platform is Polkadot, which recently launched a network and an avalanche of future (DeFi) projects that are currently under development. But about that another time.

Uniswap (UNI) is the most liquid decentralized exchange office

Uniswap is the most popular decentralized exchange office, the popularity of which is growing rapidly. The daily volume far exceeds even some of the most well-known centralized exchanges, such as Coinbase and Kraken. Unlike centralized exchanges, which are known for falsifying volumes, the volume of Uniswap is real.

Each transaction is recorded in the Ethereum blockchain, and for each transaction you have to pay a huge commission, which can be twenty dollars or more during rush hour. But if you don’t rush anywhere, you can always avoid rush hour, and make deals at reasonable prices.

The solution to expensive transactions is to scale Ethereum. Currently, the most promising technology that Uniswap is likely to use is at the testing stage.

Many unsuccessfully tried to steal Uniswap laurels. The most famous attack on Uniswap was carried out by SushiSwap. The creator of SushiSwapa organized the so-called “vampire attack”, prompting liquidity providers to switch to the Sushi platform.

Due to the high profitability provided by SUSHI farms, a large amount of liquidity has moved to the Sushi platform in the short term. However, such a system is not sustainable in the long term, and most of the liquidity soon returned to Uniswap.

Soon after, Uniswap took tough revenge on SushiSwapa and other competitors by launching the UNI token, with which it further strengthened its leading position. All users before 1.9.2020. at least once having made a transaction through Uniswap, they received 400 or more UNI tokens, which at the peak cost more than 8 ETH.

Given the above, it becomes clear why the UNI token was met with absolute enthusiasm by the crypto community.

Maker (MKR) – decentralized money management

Maker is the oldest DeFi platform on Ethereum, managed by a decentralized organization (DAO) and its management token – Maker (MKR). Token holders have the right to participate in an autonomous organization. Depending on the number of tokens, investors can propose new rules and vote for existing ones. The main goal of the organization is to maintain healthy parameters that ensure a stable DAI value.

The main product of the Maker platform is the DAI stablecoin. Unlike centralized stablecoins (USDT, USDC, etc.), DAI is its own cryptocurrency that anyone can create if they have enough collateral for the requested amount. Currently, you can pawn ETH, BAT, WBTC and USDC in exchange for fresh DAI.

Aave (AAVE) and Compound (COMP) – landing protocols

Aave is a decentralized lending protocol based on cryptocurrency liquidity pools. Users can provide liquidity in exchange for interest or use loans for remuneration. You can use two types of loans. The first and simplest are standard loans that require collateral, while others allow a loan without collateral, provided that you repay the loan as part of the same transaction (term loans).

Compound (COMP) belongs to the same category that was the first to introduce a model of stimulating liquidity providers, through rewards in the form of COMP tokens. This is how the mania for growing liquidity (yield) began, which we will talk about in more detail next time.

In fact, both protocols connect users who want to earn interest with users who need a loan. No registration or KYC is required, everything you need to start using the protocol services.

The role of AAVE and COMP tokens is in the management benefits available to token holders.

Compound is managed by a decentralized community of COMP token holders and their representatives who propose and vote for protocol updates.

Synthetix Network Token (SNX) – trading in derivative financial instruments

Serious traders will like the Synthetix platform, which allows for decentralized trading of derivative financial instruments. There are two types of derivatives (synthesizers) on the Synthetix platform, positive and negative, which together allow you to speculate in both directions of price movement.

You can create derivatives in the same way as DAI, only you will need to use SNX tokens as collateral. An alternative is to buy derivatives directly from Uniswap.

Synthetix supports multiple asset classes:

  • Cryptocurrencies
  • Fiat currency
  • Gold and Silver
  • Indexes
  • Promotions (in preparation)

Nexus Mutual (NXM) – insurance

Nexus offers insurance services against security breaches or failure of smart contracts. Only emergencies, such as hacker attacks, are covered, and user errors, such as the loss of private keys, are not covered by insurance.

Considering that all DeFi services and protocols are in the early stages of development and various vulnerabilities and security issues are possible, Nexus Mutual services become even more tempting.

The Nexus platform offers an overview of all available insurance. Unfortunately, Nexus cannot be considered as a decentralized platform, because it requires KYC, and residents of certain countries cannot use the services. The platform charges a one-time membership fee plus a certain percentage of the insured amount. (YFI) – various packages of DeFi services

YFI, a token published by its founder under the motto of having no financial value. It soon became clear that this announcement was just a test for the IQ of investors, and the price of the YFI token grew at an incredible pace, exceeding all expectations. You should be wondering why.

First we have to explain what is. This is a protocol that optimizes the return of funds to liquidity providers. The protocol automates the process of selecting and distributing liquidity between available services (Compound, Aave, dYdX).

There is also a riskier protocol (Yearn Vaults) that further increases yields using platforms like Curve. The popularity of the protocol is best illustrated by the yETH strategy, which was bought for $150 million in just a few days.

Now we come to the YFI token, which is not currently necessary for the use of the protocol, but its value stems from assumptions about the future value of the protocol. Namely, the owners of YFI have a share in the voting rights and can manage the elements of the protocol. Thus, it is possible to vote for the distribution of part of the protocol’s profits among the owners of YFI tokens.

The main person of the project protocol is Andre Cronje. Andre is so popular that there are groups that monitor his smart contracts and are constantly looking for new opportunities to earn money.

Thus, a new ERC-20 token was recently released, which has not been officially announced. There was only a mysterious Twitter profile and a series of smart contracts, about which there was almost no information, except that they were created by Andre. The news spread quickly, and speculators who wanted to make quick money in a few hours bought the mentioned tokens worth more than $15 million.

Unfortunately for them, the smart contract was hacked on the same day and all the money (DAI) was stolen. Andre later announced that it was a smart contract at the testing stage that had no financial value. The grief of the speculators was relieved by the kindness of the hacker, who returned half of the stolen amount.

Chainlink (LINK) – a bridge connecting the blockchain to the outside world

Although Chainlink does not specifically belong to the category of DeFi tokens, most DeFi services would not be possible without it. Namely, Ethereum can process only the information that is available on its platform, that is, it has no idea about events and information from the outside world.

Chainlink solves this problem by providing reliable information from the outside world using smart contracts on the Ethereum blockchain. Smart contracts most often require real-time price data, which Chainlink provides relatively decentralized from several independent sources.

There are several similar services (oracles), but Chainlink has established itself as an absolute market leader. There is practically no platform that needs external data without using Chainlink as a data provider.

DecimalChain (DEL) – creating an NFT

This project also does not fall directly into the DeFi category, but we`ve decided to include it in the article because it offers certain products that may be of interest to users of the DeFi protocol.

DecimalChain, Russian developers` product is a blockchain constructor. Its uniqueness lies in the fact that it allows any user, both an average trader and corporate-level players, to create absolutely any tokens, including NFT and stablecoins, for their blockchain projects. Non-interchangeable tokens (NFT) are unique tokens that are not divided into smaller units and represent different things.

DecimalChain’s own token, DEL, is a highly liquid cryptocurrency and payment system, no worse, and sometimes even surpassing such payment aggregators as PayPal, Visa, MasterCard, etc.