The world of DeFi may still be in its infancy but is beginning to grow into a prosperous and popular industry. While cryptocurrency itself has been booming since 2020, a great number of DeFi services are only now beginning to enter the mainstream. But what useful DeFi services are currently on offer, and how can they help you with your crypto funds?
## A Quick Overview of DeFi
While we won’t be going into too much detail about the concept of DeFi itself here, it’s best to remind ourselves what DeFi is on a surface level before discussing the best services out there.
In short, DeFi (decentralized finance), involves the decentralized management of money and offers people a new way to take care of their finances. As the name suggests, DeFi operates using decentralized networks and blockchain technology, meaning that it is very difficult for cybercriminals to infiltrate DeFi platforms and steal or alter data.
Overall, DeFi is safer and more transparent than traditional, centralized finance and offers a promising future for the world of digital currency. If you want to read about DeFi in more depth, check out our article all about DeFi and what it offers.
Now, let’s get into the most useful DeFi services out there.
Aave is an open-source DeFi protocol that offers lending and borrowing options for users. Founded in 2017 and based in Switzerland, Aave has become a widely popular platform, trusted by thousands to lend their crypto and borrow crypto from other users. But why would anyone lend out their crypto to a stranger?
Well, Aave lets users earn interest from lending their crypto, offering a great way to earn passive income safely. What’s more, lenders don’t have to deal with any financial intermediaries, making the whole lending process much quicker and easier. Aave makes use of smart contracts, meaning no middlemen are required, as a distributed network of computers can take care of executing transactions and similar functions.
Aave also offers quick flash loans, which are automated loans that must be repaid via one single Ethereum transaction. Flash loans also don’t require any collateral. What’s unusual about these loans is that they are reversed and effectively erased if the full amount isn’t paid back in time.
But, because Aave is a DeFi protocol, it’s not made for lending or borrowing traditional currency. Using Aave, you can lend or borrow 17 different cryptocurrencies, including Ethereum, DAI, and Gemini Dollar.
The CRD Network improves interoperability between the centralized and decentralized finance realms (DeFi). It operates on Hyperledger Besu, a business blockchain based on Ethereum, and makes use of CRD Nodes and APIs. Third-party developers can construct a wide range of financial apps on top of this infrastructure. To assure enough potential adoption, the network pairs developers with certified social influencers to create tailored applications that tap into the influencer’s following. The CRD Network is intended to increase DeFi acceptance and use through the following process: The first stage is to identify qualified influencers, assess their demand, and identify a solid product-market fit for their target audience. The third phase is to leverage the CRD Network’s financial capital as a bootstrapping mechanism, investing in chosen pairings of fintech businesses and influencers. The second phase is to provide developers with the technical and financial resources they need to design and deploy specialized blockchain apps that can feed the influencer’s audience.
## Terra Luna
Founded in 2018, Terra Luna is the second-largest DeFi protocol behind Ethereum. This open-source platform specializes in the development of algorithmic stablecoins. Stablecoins are cryptos pegged to an external asset or currency, like the U.S dollar. They are pretty commonly used in DeFi for lending or borrowing purposes, as you’d see with Aave.The stablecoins produced on Terra Luna are both fiat- and crypto-backed. The platform uses validators to lower the volatility of stablecoins via the uses Tendermint Delegated-Proof-of-Stake (DPoS) mechanism. It offers smart contract technology to create stablecoins, and the stablecoins created on its platform can also be converted into the network’s native token, LUNA. This can be used to pay network fees. With its popularity increasing every week, Terra Luna is said to be an up-and-coming competitor for the Ethereum blockchain.
Kusari is a decentralized financial payment network that rebuilds the traditional payment stack on the blockchain. It utilizes a basket of fiat-pegged stablecoins, algorithmically stabilized by its reserve currency bKSI, to facilitate programmable payments and open financial infrastructure development. As of December 2020, the network has transacted an estimated $299 billion for over 2 million users.
## Badger DAO
Badger DAO is an open-source DeFi platform built on the Ethereum blockchain founded in 2020. DAO stands for decentralized autonomous organization, which relies on smart contracts to function (as they define the organization’s rules and hold its treasury). So, what exactly does Badger DAO offer?
Badger DAO was built to serve the increasing need for Bitcoin in DeFi services. Its native token, BADGER, functions mainly as a governance token. Whoever owns BADGER funds can vote on the proposals put forward by other community members.
The platform also allows users to create both yield farming and liquidity mining tools and has a focus on Bitcoin. These tools are supported by smart contracts, and let you maximize your BTC funds. It’s a great way to earn DeFi yields on your Bitcoin.
Uniswap is a widely used decentralized exchange built on the Ethereum blockchain. Launched in 2018, Uniswap offers a wide range of different features that let you build your crypto portfolio, make a profit, or even earn a passive income.
Uniswap is popular for a key reason: it’s easy and convenient to use. You can swap your crypto tokens without even creating an account on the platform, as well as easily stake your crypto for healthy returns. You can also connect a crypto wallet to Uniswap in a matter of minutes, allowing you to transfer funds to and from the exchange with ease.
If you want to stake on Uniswap, you can do so via its staking pools. This allows you to earn rewards without independently validating, which is great for those who want to make money passively.
Anyswap is a decentralized swap protocol founded in July 2020. This platform lets users swap any crypto token that uses the ECDSA or EdDSA signature algorithms for another that uses the same. In short, these are technologies that ensure crypto funds are only spent by their rightful owners. Cryptos that use these signature algorithms can be swapped, including Bitcoin, Ethereum, Ripple, and Litecoin.
On top of this, Anyswap allows users to mint wrapped tokens. Wrapped tokens have a value pegged to another decentralized or centralized asset. This can be another crypto, a traditional currency, or even gold. What’s more, you can seamlessly link your Ledger and MetaMask wallets to Anyswap (though there are plans underway to add more wallets to this list).
Like Badger DAO, Anyswap also has a native token, ANY, that can be used to vote for validators, the addition of supported chains, or a change in governance rules.
UMA is an Ethereum-based DeFi protocol that allows users to create synthetic crypto assets. Synthetic assets, also known as synths, are tokenized derivatives. In traditional terms, a derivative represents a stock or bond that a trader does not own but wants to buy or sell. If you don’t want to actually buy the stock, but want to make a buck from its fluctuations within the market, you can use a derivative.In crypto terms, a synthetic derivative is similar, also adding a record for the derivative on the blockchain. This basically makes a crypto token for the derivative (though these tokens are not the same as real cryptocurrencies).
The platform lets you use almost any crypto as collateral in these two processes, meaning you can create a synthetic token to track any asset, like gold, while using a less valuable token as collateral. Users can then trade these synths, effectively trading an asset without actually holding it. However, it’s important to note that the synth can only be created when sufficient collateral is deposited.
You may have heard of PancakeSwap before. This is a popular decentralized exchange and exists on the Binance Smart Chain. To learn all about the Binance Smart Chain, check out our article that compares it to the original Binance Chain.
Using PancakeSwap, you can trade crypto, yield farm, and even buy NFTs from a wide range of different collections using Binance Coin. The platform also hosts a lottery, wherein you can buy tickets to be in with a chance of winning big cash prizes. But if lotteries aren’t your thing, you can also participate in trading competitions, where you can compete against other teams to reach the highest trading volume to win huge rewards. There are also eight different crypto wallets that you can easily connect to yourPancakeSwapaccount, including MetaMask, Trust Wallet, and SafePal.
## DeFi Will Change Finance Forever
With hundreds of thousands of people already using DeFi services like those listed above, it’s looking like DeFi has a promising future within the crypto world. There’s no knowing what amazing services will be on offer in the coming years, given how useful its current range is proving to be. Here’s to an exciting decentralized future!