Top DeFi Projects to Watch in 2020

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Aug 5 . 6 min read

Originally published in the NOWNodes blog.

The market cap of Ethereum has hit a high that hasn’t been seen since August 2019. The current market cap of Ethereum has crossed $40 billion. So, what is propelling Ethereum to such highs again? It’s the DeFi market. Today, the DeFi market cap has crossed $8 billion with $4 billion locked up in the smart contracts. The value locked in the smart contracts has increased by 400% in the last one month alone.

DeFi protocols have been seeing unprecedented fame among the crypto community members. It is riding the wave of growth on the back of yield farming. The Yield farming offers the users with incentives to deposit their crypto assets with them. Now, you must be wondering how Ethereum is benefiting from the growth of DeFi. It is because most of the DeFi projects are based on the Ethereum blockchain. Thus, Ethereum is seeing such a boom again.

The impact of DeFi has been felt by the entire cryptocurrency market cap. If you haven’t noticed, the cryptocurrency market cap currently stands at $340 billion. It is almost three times the value of the cryptocurrency market cap in mid-March this year. Following the spread of pandemic globally, the cryptocurrency market cap crashed to $122 billion. Thus, the DeFi boom has again catapulted the crypto market cap.

Let’s dive into the top DeFi projects to watch in 2020.

Compound is one of the leading DeFi companies today. It is riding the ‘Yield Farming’ wave. Comp, the native token of Compound, was the first crypto token that sowed the seeds of today’s Yield Farming frenzy this year.

Its COMP token saw massive price gains soon after it was offered to the users of Compound. But there was price correction later on, and thus, it came down to current levels. Compound allows its users to earn interest on their crypto assets and also borrow assets by collateralizing their crypto holdings.

A user can immediately start earning interest in their crypto assets by contributing to the Compound’s liquidity pool. The interest rates fluctuate depending upon the supply and demand of respective cryptocurrencies. As of August 2nd, 2020, the crypto assets worth $782.3M are locked-in under Compound protocol. It is a substantial rise as on June 1st, 2020, this figure stood at $100 million.

MakerDAO currents hold the largest market share in the DeFi sector. In terms of assets, Maker holds huge sway over the DeFi space as it holds a 31.4% market dominance. Maker currently has over $1 billion in assets. MakerDAO is the most recognized player in the DeFi market. A user that knows about DeFi would have heard about MakerDAO too. It is a credit platform that is fully decentralized.

DAI is the native token of the MakerDAO platform. It is a stablecoin and currently ranks among the most used stablecoins in the market. DAI’s value is pegged to USD. Any user can open a vault with MakerDAO. Once a user locks in crypto collateral with MakerDAO, the user receives an equal value of DAI against the collateral.

Uniswap is one of the pioneers of the DeFi space. Currently, it is pretty popular among the DeFi proponents. It is a fully decentralized exchange. However, it is different from the other decentralized exchanges as Uniswap leverages liquidity pools. Hayden Adams is the man behind the Uniswap exchange. He created Uniswap because he got inspired to create a protocol after reading a post by Vitalik Buterin, the founder of Ethereum.

The Uniswap users receive rewards for providing liquidity to the Uniswap protocol. They are rewarded with a share of the fees that Uniswap earns after each transaction. So far, the Uniswap users have locked in over $100 million in the Uniswap liquidity pools. It also sees hundreds of new listings every week.

Bancor is a non-custodial DeFi platform. It offers its users a way of swapping the crypto coins without the need for a centralized trading service. All the crypto assets of Bancor are held in Ethereum smart contracts. They have made this arrangement to bring more transparency to their process.

The DeFi platform also offers smart tokens to its users. Bancor is offering smart tokens as it wants to increase the liquidity in the protocol. It is because an increase in liquidity benefits the traders. Bancor has so far accrued more than $11 million in crypto.

Aave is a UK-based company that started operations in September 2018. Its name has Finnish origins as Aave means “ghost” in the Finnish language. Aave saw a successful ICO as its ETHLend token raised $16.2 million. Soon after the ICO, ETHLend’s executive team joined Aave as ETHlend became a subsidiary of Aave. However, ETHLend is no longer active since January this year. It is currently active only to facilitate the closure of the existing loans offered by ETHLend in the past.

The Aave team wants Aave to fill the market needs that the large Fintech players such as PayPal, Coinbase, and its likes weren’t able to fill. Their Aave protocol operates on the Ethereum blockchain. It is a protocol which is both non-custodial and open source. Assets worth $482.1M are locked in under the smart contracts of Aave currently.

Curve Finance started its operations in the beginning months of 2020. It is a DeFi platform that allows its users to trade stablecoins. The Curve Finance algorithm charges only a minimal fee to trade stablecoins. Its users also find the low slippage while trading stablecoins on Curve Finance very attractive. The Curve is among the first few DeFi players offering yield farming to its users.

Currently, Curve Finance offers seven pools to its user community. A user can earn rewards by staking their stablecoins in one of these pools. One of the most attractive rewards offered by Curve is new cryptocurrencies. As of now, the Curve smart contracts hold assets worth $255 million. In comparison, the total worth of the Curve smart contracts stood at a mere $15 million on June 1, 2020. It means that the locked-in value under Curve Finance saw a growth of 1700% within two months.

InstaDapp is one of the new kids in the DeFi world. Yet, it has made its impact felt. InstaDapp team currently positions their platform as a trustless smart wallet specifically made for the DeFi space. The InstaDapp allows its users to manage their holdings, make positions, and move their crypto assets to different protocols. Thus, a user can get the best possible gains through InstaDapp.

The platform which InstaDapp offers to its community is a user-centric platform. It aims to offer multiple DeFi protocols such as Maker, Uniswap, Compound, Aave, and many others. Hence, a DeFi user would be able to access top DeFi protocols in one place. Currently, it is still adding many DeFi protocols to the InstaDapp platform. The current total value of assets locked in the InstaDapp protocol is $323 million.

There’s no doubt about the DeFi segment achieving tremendous success. A bright future is almost assured of the DeFi market. The decentralized finance market is brimming with many interesting projects currently. It surely includes the ones that are listed above. But the ones listed aren’t the only ones that have the most potential.

Many DeFi protocols haven’t got due attention yet. It is because the DeFi market is still in the nascent stage and many new players are waiting to enter the market this year. A long list of promising DeFi projects are vying for prominence in the DeFi space. Therefore, we believe that the crypto community will be the true winner of this DeFi race.

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