In years to come, Decentralized Finance will be the brain behind most financial systems. It takes advantage of open source software and modifiable frameworks so that users worldwide can have something that is transparent. In summary, DeFi works without middle men so that financial transactions can be done with more participants from around the world.
Just like open source software dominated software products, it has been predicted that DeFi will soon be the solution for financial systems worldwide.
In the paragraphs that follow, we have tried to explain the major DeFi projects.
With DeFi, one can give a loan or be a beneficiary of it without a third party coming into play. Most of the lending products make use of the major cryptocurrencies including Ethereum to get loans with the method of over-collaterization. Should there be a time when the borrower is unable to pay back, the situation is automatically detected and what follows next is liquidation to get back the money.
There are varying interest rates for giving out cryptocurrencies and it depends on the asset and platform in question.
Up till now, DeFi has been used majorly for lending. Some of the projects that focus on lending will be discussed here. They include Aave, bZx, BlockFi, Compound, CoinList, Curve, dYdX, yEarn, Maker, mStable, and Nuo Network.
On decentralized exchanges, users can substitute the assets they have for another even if they don’t want to lose the ownership of the main collateral. One of the major offerings of DEXs is trustless transactions and trading that can be effected from one exchange to another with a variety of trading pairs. Few months ago, DeFi projects started to impress the crypto industry with its variety in forms of usage and a few of them gave liquidity incentives to those that made capital available on their platforms.
Some of the DEXs discussed here include: 0x Protocol, 1inch, Bancor, dYdX, Kyber Network, Oasis, OpenSea, Matcha, and UniSwap,
A conventional way to understand derivatives is to see them as a contract whose worth is determined from the accomplishments off the primary asset. Four types of derivatives exist and they include forwards, swaps, futures, and options.
When DeFi came into being, people took the opportunity to invest in contracts that were known for their transparency and automation. Some tokens from smart contracts are also derivatives that are often used to make the underlying asset more acceptable and valuable.
Some of the derivatives discussed here include: Augur, dY/dX, Erasure, Opium, UMA, Synthetix, and Opyn.
DeFi products are stored in wallets. That means we need wallets to carry out DeFi transactions. There are different kinds of wallets for the products DeFi support. The way wallets can be used have undergone several modifications to make things better.
Some of the wallets discussed here include the following: Argent, Authereum, Coinbase Wallet, Magic, Metamask, and Portis.
Since there is a good number of DeFi projects, there is need to have tools that can be used to manage them. Owing to DeFi’s character of providing freedom, users in the ecosystem can know how much they have left on their different tokens and also learn about their products and services.
Some of DeFi’s asset management tools include: Balancer, DeFi Saver, InstaDapp, Sablier, Set Protocol, Zerion, and Zapper
With insurance, investors take more opportunities they see in smart contracts, funds, and cryptocurrencies when funds are gathered together. The insurance sector is still growing but there are expectations that by the time it fully matures, it will contribute immensely to the growth of DeFi.
Some of the Insurance projects are as follows: Nexus Mutual and Opyn.
There aren’t many DeFi projects presently that give interest when people save their cryptocurrencies. This is the opposite of lending because there is nobody to receive any asset.
Some of the examples of DeFi projects under Savings include: Dai Saving Rate, Dharma, and PoolTogether.
The following will be discussed as Defi’s token flavours: Compound, Dharma, and Opyn, tBTC, and wBTC.
Before the benefits of DeFi can be gotten, interested participants need to have cryptocurrencies first. Here, we have listed some tested and trusted onramps which can help you kickstart your journey into the DeFi world when you buy Bitcoin, Ether and other relevant cryptocurrencies. Some of them include Binance, Coinbase, and Wyre.
If we find something that does not exactly fit into any of the sections listed above, we shall treat them here as miscellaneous.. However, we will be glad to know your responses as to where we should classify them. Some include Akropolis, RealT, Ren Protocol, and Roll.