Nowadays, when you ask experts in the blockchain space what they are most excited the answer is often DeFi, which are blockchain projects that are one of the fastest-growing areas in the crypto space. With recent Q3 2019 Dapp Market Report findings that DeFis is experiencing tremendous growth and DeFi projects “contributed over 58% of the volume of Ethereum dapps in Q3” (find out more at Dapp.com), there is no doubt that DeFi is the next buzz in the industry.
If you don’t exactly know what DeFi means, then we can tell you it stands for Decentralised Finance. And it is an area within the blockchain that covers projects that are building to create new financial systems on public blockchains.
That could include anything from peer-to-peer payments systems to decentralized lending, trading, insurance, invoicing, etc. The possibilities are endless for this new and exciting industry. You can learn more about DeFi in the video below:
So let us have a closer look at some of the more exciting DeFi projects that are leading the way.
Top DeFi blockchain projects
In this category, we have the framework and protocols supporting many new decentralized finance applications. These projects are building the foundation for the next generation of DeFi solutions.
DeFi – Infrastructures
Chainlinks are working hard to create a way to connect data and dApps that exists on the blockchains with data and applications that currently exist outside of the blockchains. This connection of smart contracts data with real-world data is believed by many to be a crucial part in making blockchains truly mass adopted.
0x is building a protocol that allows anyone to easily exchange assets on the Ethereum network. The 0x protocol can be used for a range of use cases, from order books at decentralized cryptocurrency exchanges to marketplaces of gaming assets, prediction markets, loans and much more.
They are building the foundation and want to attract other users and developers to easily get started building out from the 0x protocol.
DeFi – Payments
In the payments section of DeFi projects, we have a couple of very interesting projects that hopefully can continue to grow and become widely used around the world.
First out on the list is OmiseGO from Thailand. They want to enable ‘instant, peer-to-peer transactions in real-time, facilitating financial services across geographies, asset classes, and applications’. And they have created a range of products to support this vision. with the OmiseGO network being at the core. A 4,000 TPS blockchain that is made for fast and cheap transactions.
During the heights of 2017 and 2018, this new decentralized ecosystem of payments gained a lot of attention and attraction. As for many other projects they experienced a hard drop from the heights. And both investors of the REQ token and supporters of the DeFi vision were losing faith.
Fast forward to 2019 and the team is still working on the vision to ‘allow anyone to create, store and access invoices and receipts in a universal, decentralized network’.
DeFi – Stablecoins
If you haven’t heard about stable coins yet, then you probably haven’t been that closely involved in the blockchain and crypto space. Stablecoins are essentially coins that are pegged to a Fiat currency, like the USD, GBP, EUR or commodities. The assets are meant to be stable in price and attract users that want to avoid volatility. For example, Facebook’s Libra coin is a stable coin.
DAI is a stable coin that is asset-backed, which means it is backed by digital assets, in this case, Ether the cryptocurrency. The DAI stable coin is launched by the MakerDao team and it is pegged to the US dollar. Each DAI is backed by Ether through a collateralized debt position, where users deposit their Ethers to generate DAOs.
Using a stable coin like the DAI is perfect for both payments where consumers and merchants can accept a coin that stays stable in the price for purchases and if wanting to convert to a Fiat currency. It also attracts investors that want to place some or all of their trading cryptocurrencies in safe and stable assets to avoid volatility.
Digix has brought traditional gold on the blockchain and created a new cryptocurrency that is pegged to it. So physical bars of gold are now represented on the blockchain by the DGX tokens. Where 1 DGX represents 1 gram of gold. This is making digital gold divisible and easily transactable on the blockchain.
So for investors who are looking to diversify some of their holdings to gold can do this via the DGC cryptocurrency.
DeFi – Lending
Decentralized lending is becoming very popular. It allows businesses to get loans to much more competitive loan rates, but also a very useful option for investors to use their cryptocurrencies to support the loans and in return receive interest on their funds.
BlockFi is one of the more well-known companies that provide the possibility to get decentralized loans. It works like any other traditional lending platform, but the assets in question that are used are cryptocurrencies. And if you were just holding your cryptocurrencies on an exchange otherwise then it might interest you to know that BlockFi is offering up to 8.6% in annual interest rates for your cryptocurrencies.
Another lending option is ETHLend and they provide a similar service like BlockFi. It is a decentralized peer-to-peer lending marketplace, where anyone can join to get a loan with just a few clicks. ETHLend offers users very competitive rates and investors the chance to earn minimum interest rates of at least 3%.
If you want to learn more about DeFi we recommend you visiting the website DeFI Prime. And if you are new to cryptocurrencies and want to learn more, we recommend reading this guide about how to get started.
There is no question that much of the predicted success of blockchain will come from decentralized finance and it is easy to see the use cases and value it brings. Removing unnecessary middlemen will enable better rates and cheaper fees amongst many other benefits.
This article was written by Per Englund, founder of crypto site Go CryptoWise