DeFi Crypto: What Are The Top DeFi Protocols
by Joel
Disclaimer: This post is not intended to give out financial advice. All readers should do their own research and consult a financial professional.
Which Protocols are Used the Most for DeFi?
A “protocol” is defined as rules or standards that govern a specific task or activity. DeFi protocols are programs that sit on top of a blockchain (Ethereum, Cardano, Solana, etc.) that are standards that correct and fix the changes we face in centralized finance.
There are a variety of DeFi protocols that provide the building blocks that connect the lender to the lendee, from the buyer to the seller in a secure, permissionless way.
What Are the Top Protocols in DeFi?
Some of the more popular protocols are Maker, AAVE, yEarn, Compound, and Uniswap. Each of these protocols has an associated crypto-currency and offers incentives in the form of rewards or a certain level of governorship over the protocol to those who invest in them. Read on to find out more about them.
Maker (MKR)
Maker holds the distinction of being the first DeFi protocol and has remained very popular since its launch. One of its more attractive qualities is that it’s quite inexpensive to take out a loan using Maker, with interest rates that are considerably lower than what borrowers will find through centralized finance.
Like most other cryptocurrencies, Maker is based on the Ethereum token. According to its developers, it is “a utility token, governance token, and recapitalization resource of the Maker system.” Maker’s function is to create another Ethereum token, called Dai, that trades on exchanges at an exact value of $1.00 US.
Aave (AAVE)
Aave was first deployed in 2020 and has become one of the most popular DeFi protocols. Aave facilitates the lending and borrowing of cryptocurrencies without the roadblocks of a central intermediary or authority. A passive income is earned by depositors who provide liquidity to the market while cryptocurrencies can be acquired by borrowers who pay for them with variable rate interest loans. It’s run by its own DAO and governed by those who have Aave tokens.
Yearn Finance (YFI)
Rather than being a specific chain (i.e: Ethereum), Yearn Finance is multi-chain, meaning it allows users to connect to other blockchains (i.e: Fantom, and Arbitrum). The value of its associated crypto coin tends to be quite a bit higher than others because the supply of the coin is capped at a low number, thus increasing demand for it.
Compound(COMP)
Compound (COMP) is another Ethereum token whose protocol is governed by those who own the Compound cryptocurrency. The protocol consists of a number of interest rate markets that are, of course, decentralized. Users can borrow and lend Ethereum tokens at variable interest rates.
Compound also offers a governance token that can be delegated to other users or self-assigned to vote on protocol upgrades.
Uniswap (UNI)
The Ethereum blockchain’s largest decentralized exchange (DEX) is Uniswap. Like the other protocols in this list, users from anywhere on the globe can buy and sell crypto currencies directly to one another. It’s also governed by those who own the Uniswap token.
Uniswap distinguished itself when it launched its token in September 2020 by introducing the concept of “airdropping”. This is a means of distributing a token by depositing a certain amount of it to the addresses of previous users of the protocol. Uniswap “air-dropped” 400 tokens to each of its protocol’s users, about 250,000 of them. They set a trend that other protocols have adopted to reward their users.
Curve Finance
Curve is a Decentralized Exchange(DEX) or alternatively an Automanted Money Maker(AMM) that allows traders to swap their tokens for any tokens they like without the need of a traditional order book. This not only makes trading fast but also efficient because there is no need to manually pair a buyer and a seller together to fulfill their request. Outside of being a DEX, Curve is also a DAO which allows the token holders to vote on protocol changes and even vote on hiring more developers.
There are many more protocols beyond the ones listed here. You can find additional info and a thorough listing of the current, top DeFi protocols here.
About Tampa Bay DAO
The Tampa Bay DAO’s (TBD) mission is to create a community of members who are ‘Free Agents’ through the use of Web3 & Localist tools. We aim to conduct all our collaborations in a way that’s compounding, light-hearted, and collaborative.
If you’re interested in becoming a member or receiving our newsletter, click here to join the Tampa Bay DAO.
We have a lot more to share! If you’d like to read other posts by the DAO, visit our blog.
Share
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DeFi Crypto: What Are The Top DeFi Protocols
by Joel
Disclaimer: This post is not intended to give out financial advice. All readers should do their own research and consult a financial professional.
Which Protocols are Used the Most for DeFi?
A “protocol” is defined as rules or standards that govern a specific task or activity. DeFi protocols are programs that sit on top of a blockchain (Ethereum, Cardano, Solana, etc.) that are standards that correct and fix the changes we face in centralized finance.
There are a variety of DeFi protocols that provide the building blocks that connect the lender to the lendee, from the buyer to the seller in a secure, permissionless way.
What Are the Top Protocols in DeFi?
Some of the more popular protocols are Maker, AAVE, yEarn, Compound, and Uniswap. Each of these protocols has an associated crypto-currency and offers incentives in the form of rewards or a certain level of governorship over the protocol to those who invest in them. Read on to find out more about them.
Maker (MKR)
Maker holds the distinction of being the first DeFi protocol and has remained very popular since its launch. One of its more attractive qualities is that it’s quite inexpensive to take out a loan using Maker, with interest rates that are considerably lower than what borrowers will find through centralized finance.
Like most other cryptocurrencies, Maker is based on the Ethereum token. According to its developers, it is “a utility token, governance token, and recapitalization resource of the Maker system.” Maker’s function is to create another Ethereum token, called Dai, that trades on exchanges at an exact value of $1.00 US.
Aave (AAVE)
Aave was first deployed in 2020 and has become one of the most popular DeFi protocols. Aave facilitates the lending and borrowing of cryptocurrencies without the roadblocks of a central intermediary or authority. A passive income is earned by depositors who provide liquidity to the market while cryptocurrencies can be acquired by borrowers who pay for them with variable rate interest loans. It’s run by its own DAO and governed by those who have Aave tokens.
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Rather than being a specific chain (i.e: Ethereum), Yearn Finance is multi-chain, meaning it allows users to connect to other blockchains (i.e: Fantom, and Arbitrum). The value of its associated crypto coin tends to be quite a bit higher than others because the supply of the coin is capped at a low number, thus increasing demand for it.
Compound(COMP)
Compound (COMP) is another Ethereum token whose protocol is governed by those who own the Compound cryptocurrency. The protocol consists of a number of interest rate markets that are, of course, decentralized. Users can borrow and lend Ethereum tokens at variable interest rates.
Compound also offers a governance token that can be delegated to other users or self-assigned to vote on protocol upgrades.
Uniswap (UNI)
The Ethereum blockchain’s largest decentralized exchange (DEX) is Uniswap. Like the other protocols in this list, users from anywhere on the globe can buy and sell crypto currencies directly to one another. It’s also governed by those who own the Uniswap token.
Uniswap distinguished itself when it launched its token in September 2020 by introducing the concept of “airdropping”. This is a means of distributing a token by depositing a certain amount of it to the addresses of previous users of the protocol. Uniswap “air-dropped” 400 tokens to each of its protocol’s users, about 250,000 of them. They set a trend that other protocols have adopted to reward their users.
Curve Finance
Curve is a Decentralized Exchange(DEX) or alternatively an Automanted Money Maker(AMM) that allows traders to swap their tokens for any tokens they like without the need of a traditional order book. This not only makes trading fast but also efficient because there is no need to manually pair a buyer and a seller together to fulfill their request. Outside of being a DEX, Curve is also a DAO which allows the token holders to vote on protocol changes and even vote on hiring more developers.
There are many more protocols beyond the ones listed here. You can find additional info and a thorough listing of the current, top DeFi protocols here.
About Tampa Bay DAO
The Tampa Bay DAO’s (TBD) mission is to create a community of members who are ‘Free Agents’ through the use of Web3 & Localist tools. We aim to conduct all our collaborations in a way that’s compounding, light-hearted, and collaborative.
If you’re interested in becoming a member or receiving our newsletter, click here to join the Tampa Bay DAO.
We have a lot more to share! If you’d like to read other posts by the DAO, visit our blog.
Share
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