Decentralized Finance or De-Fi as it is popularly called is a new and novel financial system built on the blockchain. Although it is a relatively new field, there have been a couple of eye-catching projects that any player in the crypto space should know. If you are a savvy crypto investor who is looking to get into De-Fi, we have prepared this short introductory guide to 5 of the projects you should be looking into.
Uniswap is a decentralized exchange or DEX which is different from centralized crypto marketplaces such as Bitcoin Prime App. As a DEX built on the Ethereum blockchain network, it allows users to swap any and all ERC-20 standard tokens easily and quickly. Unlike centralized exchanges it does not make use of centralized books as it uses automated market makers as the protocol that facilitates transactions. UNI has grown in size and usage since inception leading to it becoming the second largest De-Fi exchange.
Chainlink is a facilitator for smart contracts as its purpose is to patch the fundamental flaws that exist within smart contracts on the blockchain. It connects smart contracts with external data sources such as payment systems and APIs. The LINK token is the native token of the network and is used to pay for services in the Chainlink protocol. The tokens are built on the ERC-20 (Ethereum) standard and can be swapped for fiat or other tokens on the ERC-20 standard.
Terra provides fiat-backed stablecoins using De-Fi protocols and blockchain technology. It is an interesting project because stable coins have grown to become a big facilitator of the crypto market as it is the default trading pair for most exchanges. Another thing that makes LUNA unique is that unlike other popular De-Fi projects, it is not based on the ethereum standard (ERC-20). The project is built on the cosmos network which is an expansive blockchain technology for De-Fi projects. With a Three billion dollar market cap, Terra is poised to reshape the De-Fi landscape.
Wrapped Bitcoin (WBTC)
WBTC is a token that makes it possible for Bitcoin holders to access the ethereum network without relinquishing control of their Bitcoin. It is built on the ERC-20 standard and can be swapped with Bitcoin on a 1:1 basis. Wrapped bitcoin allows crypto investors to participate in the De-Fi ecosystem as they would have been excluded because of the difference in blockchains. Wrapped Bitcoin has a market cap of over $7 billion and as the De-Fi market continues to grow, so are the prospects and demand for WBTC. Bitcoin holders who wish to participate in the De-Fi ecosystem should watch this project closely.
Although the name sounds like a kitchen where you can exchange these sweet crepes, it is actually a DEX protocol similar to Uniswap. Unlike its UNI counterpart, it is built on the Binance Smart Chain although it runs on similar AMM (Automated Market Maker) principles. PancakeSwap offers its users a lottery to give out free CAKE coins and it has arguably the best yield farming tools in De-Fi. With a $3 billion dollar market cap and $9 billion in total locked value (TVL) it is easy to see that PancakeSwap is a project to watch.
These are five of the best De-Fi projects available today and we have given a short and comprehensive look at the use cases for each project. We encourage you to make more extensive research into each of these projects before you commit your capital or make any investments. You can also look up other interesting projects in the De-Fi space for more flexibility and options.