February 20, 2021 | AtoZ Markets – Decentralized finance (Defi) is a financial service built on blockchain technology that offers users opened access to various financial services for cryptocurrency holders, including lending. In 2020, many DeFi platforms for P2P lending in digital assets appeared on the market. Borrowers got access to fast and profitable loans in cryptocurrency, and lenders got the opportunity to get passive income.
AtoZ Markets has compiled an overview of decentralized lending platforms to look out for in 2021, from established dominant companies to emerging projects that have yet to prove themselves.
Top 10 DeFi coins to watch in 2021
1# Polkadot (DOT)
Polkadot is working to deliver the most robust platform for security, scalability, and innovation and is up over 18.5% YTD. One of the reasons Polkadot is popular is because it is more scalable than Ethereum. It executes transactions using several parallel chains instead of standard blockchain nodes. Also, it's a cross-blockchain protocol that can transfer any kind of data between different blockchains. While Polkadot is a smart contract platform, thousands of developers are using it to build DeFi tools and projects, to take advantage of its speed and scalability, where Ethereum falls short.
2# Uniswap (UNI)
Uniswap Protocol serves as a trustless and highly decentralized financial infrastructure. Having proven product-market fit for highly decentralized financial infrastructure with a platform that has thrived independently, Uniswap is now particularly well-positioned for community-led-growth, development, and self-sustainability. UNI serves this purpose, enabling shared community ownership and a vibrant, diverse, and dedicated governance system, which will actively guide the protocol towards the future.
3# yearn.finance (YFI)
Yearn is a growing collection of DeFi services intended to act as a simple gateway for the broader DeFi ecosystem. YFI is purely and simply a governance token. Its holders are allowed to vote on decisions that affect Yearn. Its centerpiece is the ability to automatically invest user deposits in the highest-yielding place in the DeFi ecosystem, through Yearn Vaults. Yearn can also let people make stablecoin deposits straight to the highest-yielding lending platform available to earn competitive returns on stablecoins.
4# Compound
Compound is a lending protocol that has spawned several projects at once, including Curv, Cointracker and Bitgo. As of this writing, Compound has a market cap of over $740 million. According to the developers, Compound is "a stand-alone interest rate protocol for building financial applications."
5# Aave
Aave is an open-source protocol built to serve the DeFi sector. Users who place assets on the Aave platform receive interest on their deposits. Those looking to borrow coins can also do so through Aave. The project's article says that the size of the assets placed in the protocol reaches $2 billion. The platform supports DAI, REP, MKR, ETH, UNI and USDC, as well as some other digital assets.
6# bZx
bZx is the lending protocol that powers the Fulcrum and Torque decentralized lending platforms. Fulcrum offers users the opportunity to participate in margin lending, while Torque offers an indefinite loan at a fixed interest rate. bZx supports two types of instruments: ITokens and pToken.
In addition, in July 2020, the project launched its own token BZRX. All three assets play an important role in the functioning of the system.
7# yEarn
yEarn is a suite of DeFi products that are currently in beta testing. Lending is one of the services offered in the yEarn package. In particular, the yborrow.finance branch (in beta) is dedicated to crypto lending. yEarn invests liquidity provided by lenders into other DeFi lending protocols in an effort to provide liquidity providers with high returns.
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8# Maker
Maker is a major player in the DeFi space and one of the first in decentralized credit protocols. The Oasis Borrow lending platform is based on Maker. Here you can place your assets in a "vault" and earn interest by generating DAI, a stablecoin pegged to the US dollar. At the time of writing, Maker has a market cap of over $ 1.1 billion. Protocol users deposit one cryptocurrency, usually ETH, in exchange for a loan at DAI.
9# Dharma Protocol
Dharma protocol was launched in 2019 as a P2P lending platform. The uniqueness of the project is that liquidity providers receive a fixed profit and do not depend on the volatility of the cryptocurrency market. Dharma's fundamental lending model is “long term fixed loans with a fixed interest rate”. Users can also exchange, buy and sell cryptocurrencies using the Dharma protocol.
10# Kittie
Undoubtedly one of the most interesting decentralized lending projects in DeFi. KittieFight combines the massively multiplayer online CryptoKitties game with decentralized lending (yes, kittens and lending). KittieFight strives to go beyond traditional incentives through gamification of the process. Users spend money on the game and deposit funds in the hope of winning the ETH jackpot, these coins go to support the development of the KittiFight protocol.
Conclusion
It's probable that we are still very early on when it comes to the rate of DeFi adoption, and these top 10 DeFi coins for 2021 may gradually grab the spotlight they deserve. Freedom from the monetary control of centralized institutions is the ultimate vision of this movement.
The growth of DeFi has been the big cryptocurrency story of 2020, and with good reason. We're probably looking at the future of the Financial Services industry; however, there is still a long way to go.
At Experty our mission is to build a community full of contributors, experts, and users that will help us democratize worldwide DeFi knowledge and information exchange.
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