In less than two years, the total value locked (TVL) across various DeFi protocols expanded over 220X, rising from $1 billion in early March 2020 to over $228 billion by Q1 2022.
During this period of unprecedented growth, the true power of smart contracts and decentralized, immutable, and global ledgers were laid bare.
DeFi is Revolutionary
DeFi is an umbrella term for various financial solutions and tools that rely on smart contracts to function, enabling more efficient, inclusive, and cheaper operations.
DeFi is proving revolutionary, availing end users with numerous investment opportunities previously walled off by gatekeepers who demanded accreditation and licenses as prerequisite tickets before engagement.
As blockchain and DeFi find adoption, these automated financial tools riding on the security of decentralized public chains—and thus the community, are being warmly received.
The Top 8 DeFi Projects for 2022
DeFi is no longer a fringe or a niche technology. More people are educated on crypto wallets and the general modus operandi of blockchain. We have created a list of the top-8 DeFi projects in 2022 for users to explore:
Bancor was founded by Galia Benartzi in 2016 and is among the first Ethereum-based DEXes. The platform is open-source, allowing for the permissionless exchange of tokens using audited smart contracts.
At the center of Bancor is the automated market maker (AMM) model allowing users to supply liquidity to a pool and earn a share of trading fees.
In Bancor, token swaps are first converted to BNT, the native token of Bancor, as an intermediate step before completion.
Bancor has a presence in both EOS and Ethereum. In 2022, the protocol was improved to introduce impermanent loss protection which also saw the integration of oracles.
Uniswap is the world’s largest decentralized exchange and the first protocol to advance the use of automated market maker (AMM), a model currently underpinning most DEX and swapping platforms across Ethereum and other account-based blockchains.
UNI is the ERC-20 native token of Uniswap. The first version of the DEX was first launched in November 2018 by Hayden Adams.
Because of its use of AMM, the DEX consistently draws high levels of liquidity, enabling swapping with low slippages.
Safuu is a BNB Chain-based auto staking and compounding protocol offering the highest APY in crypto of up to 383,025.80 percent, complete with an insurance fund (SIF).
SAFUU is the native token complaint with the BEP-20 standard in the BNB Chain, whose supply will gradually decrease in a token burning mechanism executed in the Fire Pit.
Holders are automatically rewarded with 0.02355 percent interest every 15 minutes. At the center of Safuu is the unique SAP protocol, which allows for sustainable, fixed compound interest that’s paid out every 15 minutes via a simple buy-hold-earn system.
MakerDAO, a creation of Rune Christensen, is among the first DeFi platforms in Ethereum, launching a smart-contracts-driven lending and over-collateralized borrowing facility for ERC-20 token holders.
The DAO is also the minter of the DAI algorithmic stable coin. The protocol’s governance token, MKR, manages DAI issuance and is used as a last resort lender.
Holders of MKR can vote on development proposals for MakerDAO, influencing the trajectory taken by the project.
- Terra (LUNA)
Terra is the most valuable DeFi project whose native token, LUNA, has a market cap of over $37.5 billion by Q1 2022. A creation of Do Kwon and Terraform Labs, the protocol is built using the Cosmos SDK.
It is inherently interoperable, applying the delegated Proof-of-Stake (dPos) for consensus. The Terra network promotes the use of stablecoins as a means of payment, considering their advantages over fiat currencies. Accordingly, through Terra, users can mint stable coins pegged to fiat currencies.
UNA serves several roles, including paying fees, managing the stablecoins ecosystem’s fluctuation, and governance.
- Avalanche (AVAX)
Avalanche is a modern, triple-ledger blockchain focused on speed, efficiency, interoperability, and scalability, translating to low network fees and the ability to host intensive dApps without impacting user experience.
Avalanche is capable of sub-second transaction processing speeds and can scale using sub-networks. It uses AVAX as its utility coin, whose holders can also participate in governance.
- Chainlink (LINK)
Chainlink is a blockchain-agnostic decentralized oracle linking verified and trusted external data with smart contracts in various blockchains.
For its critical role, Chainlink is often referred to as middleware, playing a crucial role in DeFi by allowing trusted data to flow between blockchains and external, Offchain sources, and vice-versa.
Smart contracts-dependent solutions are more useful, serving more uses, if they can be activated by verified, tamper-proof external data—a role Chainlink satisfactorily plays. INK is the native token of Chainlink.
- Genius Yield (GENS)
Genius Yield is an order-book decentralized exchange on Cardano. It uses concentrated liquidity like in Uniswap v3, allowing users to automate trading strategies via the Yield Optimizer built on top of the DEX.
GENS is the native token of Genius Yield, and holders can stake it to access Genius Lab’s automated strategies and receive discounts on fees when swapping on the DEX.
DeFi Is Evolving, Finding Adoption
This is not an exhaustive list. DeFi is growing by depth and breadth with every passing day. As the ecosystem grows and matures, becoming more robust, end-users will be the primary beneficiaries.
They have a chance to interact with superior autonomous financial solutions and receive above-rate yields for their participation.