Decentralised Finance, or DeFi, is a term that can no longer be ignored in the crypto space. In the summer of 2020, DeFi first exploded in popularity, and today it is arguably the mainstay of crypto and what crypto stands for. But what is DeFi?
DeFi is the decentralised form of CeFi (Centralised Finance). CeFi is a term that encompasses the traditional financial system as we know it today. Borrowing, saving, investing etcetera. Most of it goes through the bank or some other centralised institution. DeFi makes it possible to do all these financial transactions without a middleman, through a touch of blockchain magic.
In this article, we discuss the top 10 DeFi coins. A DeFi coin is a rather undefined term, but in our case it includes all coins that are important to DeFi. Not just the DEX (Decentralised Exchange) coins, in other words. Read along quickly!
10. Fantom (FTM)
is an open-source decentralised smart contract platform for DApps and digital assets that was created as an alternative to Ethereum. Fantom aims to overcome the limitations of previous-generation blockchains and balance three components: scalability, security and decentralisation.
The project provides a set of tools to simplify the process of integrating existing DApps, as well as a detailed reward system for strike and built-in DeFi tools.
9. The Graph (GRT)
The Graph (GRT)
is an indexing protocol for blockchain data, and specifically for data on Ethereum's blockchain. Over the years, a huge amount of data has been added to this blockchain, making it difficult to organise this data now.
When people want to retrieve data, they may encounter problems doing so. After all, it does not work as simply as, say, the Google search bar. This is why the developers behind The Graph have made sure to develop a protocol that takes care of this.
8. PancakeSwap (CAKE)
is an automated market maker (AMM) - a decentralised financial (DeFi) application that allows users to exchange tokens, provide liquidity via farming and earn fees in return.
It launched in September 2020 and is a decentralised exchange for exchanging BEP20 tokens on Binance Smart Chain. PancakeSwap uses an automated market maker model where users trade against a liquidity pool. These pools are filled by users who deposit their funds into the pool and receive liquidity provider (LP) tokens in exchange.
These tokens can later be used to recover their share of the pool and a portion of the trading costs. These LP tokens are known as FLIP. PancakeSwap also allows users to farm additional tokens such as CAKE and SYRUP. On the farm, users can deposit LP tokens and be rewarded with CAKE.
7. Maker (MKR)
is the governance token of the MakerDAO and the Maker Protocol - respectively a decentralised organisation and a software platform, both based on the Ethereum blockchain - that allows users to issue and manage DAI stablecoin.
Maker was originally conceived in 2015 and fully launched in December 2017. It is a project tasked with operating DAI, a community-managed decentralised cryptocurrency with a stablecoin value that is soft pegged to the US dollar.
MKR tokens act as a kind of voting share for the organisation managing DAI; while they do not pay dividends to their holders, they do give holders voting rights over the development of the Maker Protocol and are expected to increase in value in line with the success of DAI itself.
The Maker ecosystem is one of the earliest projects in decentralised finance (DeFi).
6. Aave (AAVE)
is a decentralised financial protocol that allows people to borrow and lend crypto.
Borrowers earn interest by depositing digital assets into specially created liquidity pools. Borrowers can then use their crypto as collateral to take out flash loans with this liquidity.
Aave (meaning "ghost" in Finnish) was originally known as ETHLend when it launched in November 2017, but the rebranding to Aave happened in September 2018.
AAVE offers holders discounts on the platform, and it also serves as a governance token - giving owners a say in the future development of the protocol.
5. Theta (THETA)
is a blockchain-powered network built specifically for video streaming. Launched in March 2019, the Theta mainnet operates as a decentralised network in which users share bandwidth and computing resources on a peer-to-peer (P2P) basis.The project is advised by Steve Chen, co-founder of YouTube and Justin Kan, co-founder of Twitch.
Theta features its own native cryptocurrency token, THETA, which performs various governance tasks within the network.
Developers say the project aims to shake up the video streaming industry in its current form - centralisation, poor infrastructure and high costs mean that end users often have a poor experience. Content creators also earn less revenue due to the barriers between them and end users.
4. Tezos (XTZ)
is a blockchain network based on smart contracts, in a way that is not too different from Ethereum. However, there is a big difference: Tezos aims to provide an infrastructure that is more advanced - meaning it can evolve and improve over time without ever risking a hard fork.
This is something both Bitcoin and Ethereum have suffered from since their inception. People with XTZ can vote on proposals for protocol upgrades submitted by Tezos developers.
3. Chainlink (LINK)
, founded in 2017, is a blockchain abstraction layer that enables universally connected smart contracts. Through a decentralised oracle network, Chainlink lets blockchains communicate securely with external data feeds, events and payment methods, making the critical off-chain information needed for complex smart contracts the dominant form of digital agreement.
For example, Chainlink provides real-life price feeds to a large number of DeFi applications. The price feeds ensure that prices on such applications always reliably match actual prices.
2. Uniswap (UNI)
is a popular decentralised trading protocol, known for its role in facilitating automated trading of decentralised financial (DeFi) tokens.
Like PancakeSwap, UniSwap uses the Automated Market Maker (AMM). Indeed, PancakeSwap is a literal copy of Uniswap, but on the Binance Smart Chain instead of Ethereum. Uniswap launched in November 2018.
Uniswap aims to keep token trading automated and fully open to anyone holding tokens, while improving trading efficiency compared to those on traditional exchanges.
Uniswap creates more efficiency by solving liquidity problems with automated solutions and avoids the problems that plagued the first decentralised exchanges.
In September 2020, Uniswap went a step further by creating and assigning its own governance token, UNI, to former users of the protocol. This added both profitability potential and the ability for users to shape the future - an attractive aspect of decentralised entities.
1. Avalanche (AVAX)
is a layer one blockchain that functions as a platform for decentralised applications and custom blockchain networks. It is one of Ethereum's rivals, aiming to supplant Ethereum as the most popular blockchain for smart contracts. It aims to do so by offering a higher transaction output of up to 6,500 transactions per second, without compromising scalability.
Such transaction speeds are needed for large-scale use of DeFi, which is exactly what Avalanche is targeting.