« Learn about Decentralized Finance
Leading DeFi Platforms and Projects
by Kayode Adeoti · · 3 minute read
Since the advent of blockchain technology and smart contracts, the world of decentralized finance has been growing, with more platforms being set up for consumers to venture into DeFi every day. The total value of assets in DeFi platforms and projects is now over $100 billion.
Most current decentralized exchange (DEX) platforms use an automated market maker (AMM) protocol. In simple words, automated market makers are self-regulating trading systems that do away with the necessity for centralized exchanges. Here are some of the world's largest decentralized exchange platforms.
MakerDAO is an Ethereum-based platform founded in 2014. It is credited for creating Dai, the first decentralized application to gain widespread popularity. Dai is an algorithmic stablecoin tied to the United States dollar and aims to keep its value as close to one United States dollar as possible. It is the oldest DeFi platform, and it is also the biggest in terms of total assets, with over 18% of money spent on DeFi platforms at the moment.
MakerDAO is a lending platform where users can deposit Ethereum and borrow against the value of their deposits to obtain freshly created Dai as collateral at a set percentage of 150%. If the collateral value falls below this set percentage, the smart contracts may immediately liquidate the loan. However, if the value of Dai grows, further Dai may be borrowed.
At the moment, only Ethereum may be used as collateral, while the project's developers want to include more cryptocurrencies in the future.
Aave is another Ethereum based DeFi platform. Launched in 2017 as ETHLend, Aave is an open-source, non-custodial liquidity protocol that enables depositors and borrowers to earn interest on their deposits and borrowing assets without going through centralized intermediaries. The platform operates like that of a peer-to-peer network.
Additionally, users may get incentives and discounts by staking the AAVE token on the Aave DeFi network.
Established in 2015 by Charles Hoskinson, co-founder of Ethereum, Cardano is a decentralized blockchain platform open to the public which enables peer-to-peer transactions with its native coin called Ada. It is one of the largest DeFi platforms in the world.
Cardano is sometimes referred to as the "Green Blockchain" due to its remarkable energy consumption data and proof of stake protocol. The proof-of-stake protocol is an "Ouroboros" consensus technique for identifying new blocks and adding transaction data to Cardano's blockchain.
Uniswap is another DeFi platform based on the Ethereum blockchain. Uniswap is a decentralized exchange platform that enables individuals to automatically and securely trade various tokens based on the Ethereum blockchain through smart contracts without relying on a centralized exchange.
Uniswap's exchange uses a native token called Uniswap (UNI). UNI holders have partial ownership of the Uniswap platform and control the Uniswap exchange's token list.
Founded in 2018, Instadapp is a DeFi middleware program that enables users and developers to seamlessly manage various DeFi apps by connecting different decentralized finance protocols. It combines with other decentralized applications and offers a centralized platform for users to handle all of their money.
This platform established the DeFi Smart Layer (DSL), which is the basic architecture for aggregating DeFi protocols across several platforms.
Avalanche is an open, programmable smart contract platform for decentralized applications. Avalanche claims that it is the quickest smart contract platform among blockchain networks in terms of transaction rate. Although the Avalanche blockchain is an Ethereum-compatible blockchain platform, it has a transaction rate of 4,500 per second, compared to Ethereum's less than 15 transactions per second.
Solana is one of the most widely known competitors of Ethereum. Just like Ethereum, Solana can interact with smart contracts. Solana is known for its fast transaction speed which it achieves through a combination of the widely known proof of stake and a new mechanism dubbed proof of history or PoH. PoH guarantees that a blockchain is very fast while maintaining its decentralized security.
Rather than using mining or staking to authenticate transactions on Solana, all transactions are validated by a time stamp on the blockchain, and humans do not need to be involved during validation.
PancakeSwap is a decentralized cryptocurrency exchange platform powered by Binance Smart Chain. PancakeSwap allows users to exchange crypto assets through liquidity pools created by users.
PancakeSwap enables its users to acquire early-stage crypto tokens before they become available to the public.