Let’s analyze some of the most interesting projects in the DeFi sector and focus on some trends that are emerging in the cryptocurrency horizon. The Ethereum ecosystem, which just turned 5 years old, has flourished in different directions, making possible projects that were unthinkable in the world of cryptocurrencies until a few years ago. Think of Stable Coins, Tokens, and DeFi: in half a decade the platform for the development of Smart Contract has expanded the concept of Blockchain and has given developers the possibility to create increasingly performing applications. We are only at the beginning of a path that wants to revolutionize the foundations of finance as we know it. Let’s find out the most promising projects in this ecosystem, analyzing the 10 most interesting platforms and protocols:
renBTC is a platform to tokenize Bitcoins on top of Ethereum by creating fungible ERC20 tokens. These tokens can then be used in DeFi projects, using for example a DEX for liquidity such as UniSwap. Through the renVM (Virtual Machine) users can create renBTC which are 1: 1 based on the actual bitcoin: the user sends his BTC to a specific address and receives in exchange a newly minted token with the same face value. In this way, the token can be used within the Ethereum ecosystem and once finished, just redeem to receive your bitcoins in exchange (depending on the current exchange rate). This platform is proposed as an alternative to more centralized projects such as WBTC and is emerging as one of the most interesting sectors of DeFi. Other supported coins are Bitcoin Cash and ZCash, making this project a bridge between different Blockchains.
Match a decentralized Exchange that makes simplicity and design its strong point. The liquidity of the Exchange derives from multiple sources, such as 0x Mesh, Kyber Network, and Uniswap: aggregating liquidity from exchange platform Matcha has one of the best prices per trade. While DEX, as we have known, is already an integral part of DeFi, Matcha and the simplicity of its platform have the potential for a great future.
Loopring Pay is a layer-2 platform on Ethereum for solving cryptocurrency scalability problems. While we’re not talking directly about DeFi, this platform positions itself in the payment systems where we find, for example, the Lightning Network (Bitcoin). Loopring Pay allows you to send ETH and ERC20 tokens instantly and free of charge, saving the data on-chain but leaving the computation of the transaction off-chain using the ZeroProof-Knowledge algorithm for confirmation. This project is undoubtedly one of the best solutions for Ethereum’s scalability problems.
Its strengths are safety and performance. The protocol can regulate up to 2,025 exchanges per second ensuring the same level of security as the underlying Ethereum blockchain. This is made possible by using a construction called zkRollup and a feature called On-Chain Data Availability or OCDA. If OCDA is disabled, Loopring throughput goes up to 16,400 exchanges per second, but the security is reduced to that of the consortium holding that data.
Lition is a layer 2 blockchain infrastructure on top of Ethereum that enables commercial usage of dApps. The Lition protocol complements the Ethereum mainchain by adding features such as privacy, scalability and deletability for GDPR compliance. The major use cases for this platform are: P2P energy trading platform, Blockchain Certificates and Syndicated Loans. Here too, as with Loopring Pay, we are not directly talking about DeFi but, to be precise, about DeEn, that is Decentralized Energy. The platform has its own Energy Exchange for the peer-to-peer exchange of energy, therefore without intermediaries. In this way the sale of green energy is at a low cost, the producers of the same earn much more and annoying intermediaries are eliminated. This project is still in its early stages but undoubtedly has enormous potential.
mStable is a protocol focused on stablecoins and designed to improve the fragmentation of the various coins in circulation. The first product created is called mUSD and is a meta-stablecoin that is backed by DAI, USDC, USDT and TUSD. In this way, through mUSD, you can redeem in a 1: 1 ratio with any of the underlying stables. The same mUSD can also be used with Aave or Compound to generate returns via commissions and loans. Then there is the option to save mUSD in the mStable savings contract and the option to trade stablecoins in USD with zero slippage.
The Force Protocol
The force protocol is a protocol that provides secure, inclusive, innovative, and transparent cryptographic financial services for users around the DeFi world. The project is therefore an extra package for decentralized finance that aims to offer solutions for cross-platform transactions, stable coin issues and on-chain payments. In short terms is a decentralized finance service protocol built on blockchain systems, is comprised of a set of DeFi technical components and tokenized protocols.
Balance is one of the most promising liquidity protocols in DeFi. While Uniswap is an AMM (Automatic Market Maker) with the ability to support liquidity pools of just two tokens, Balancer goes up to eight with arbitrary weights. It is still a young project but already in the top 10 for values anchored within it. On Balancer the pools are controlled by smart contracts and can implement any arbitrary trading strategy or logic. Swaps and fees are arbitrary and adjusted for underlying volatility. You can participate in multi token pools even with a single asset and manage your portfolio as you see fit.
NFTfi is a marketplace to receive loans using NFTs as collateral. This project is halfway between the world of DeFi and NFT, allowing anyone who owns inactive or unused digital assets to use them as collateral for a loan. As every lending platform there are lenders and borrowers. Borrowers can put any ERC-721 token for collateralization. Other users can now offer you a loan and if its accepted, the ETH is paid from the lender’s account and the NFT is locked into the NFTfi smart contract. Once the loan is repaid, the asset will be returned to the first owner. For the lenders, instead, they can browse their favourite NFTs like Gods Unchained, Decentraland, Cryptovoxels, Cryptokitties or any other NFT and offer loans on assets they’re happy to back.
UMA’s Synths is a protocol to create a global and decentralized financial market using synthetic assets. The first product of this protocol is a token that tracks the price of ETH / BTC relying on an index rather than an oracle. The platform allows users to create their own synthetic assets, to be able to deposit or withdraw, redeem tokens and easily track information on already distributed synths.
InfiNFT is a minting platform for NFT tokens whose data are saved on-chain, thus being more secure, verifiable, and transparent. Also, this solution, not directly linked to DeFi, seeks to make the use of non-fungible tokens more mainstream and to simplify their operation and maintenance.
What do you think are the best projects in the Ethereum and DeFi landscape?
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DeFi & Future: 10 promising projects in the DeFi world was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.