Decentralized finance, also known as DeFi, has been a growing sector of crypto, with some $71.35 billion in total value locked across all networks (at the time of writing). And this is despite the current downturn in the overall crypto market.
The DeFi space is seeing a number of successful projects blowing up, leveraging the best out of blockchain technology to replace traditional market makers and remove the need for intermediaries to power decentralized ecosystems, opening up finance to a wider group of users. Whether you’re looking for a loan or you’re an entrepreneur seeking backing for your next big project, DeFi could be the answer.
Don’t know where to start? We’ve put together a list of the top 10 DeFi projects (and DeFi tokens) you ought to know in 2022.
What Is Decentralized Finance (DeFi)?
Decentralized finance covers a great number of financial activities that take place without the intervention of any intermediaries and centralized authorities, like a bank or the government.
Some of the transactions you’ll see with DeFi resemble traditional finance, like loans, transfers, exchanges and insurance. But whereas a third party is required to validate typical fiat transactions, with DeFi smart contracts can be used across the entire system to enable a true decentralized ecosystem.
In fact, this principle of decentralization can be applied well beyond just payments, lending and borrowing to all services that use cryptocurrencies and blockchain-based protocols.
All of this can help not only tackle bureaucracy issues but also speed up transactions and enable a financial system that can be more transparent and accessible to people who would otherwise be shut off from the traditional financial system.
Top DeFi Projects In 2022
Polygon
Polygon (MATIC) is one of the most recognizable DeFi projects in the crypto space, leveraging its unique potentialities to enable scalability and blockchain interoperability. Let’s take a closer look.
Polygon is a Ethereum Layer 2 scaling solution and a decentralized application ecosystem. The platform uses the Ethereum blockchain to enable smart contracts to be scaled to a speed of 72000 transactions per second, which is far superior to what other blockchains can offer. To achieve this, Polygon has several scaling tools, including sharding.
Another great feature is the platform’s ability to connect Ethereum-based projects, maximizing the structural benefits that blockchain has to offer. In total, Polygon already hosts over 19,000 decentralized applications (DApps). This top DeFi project started off as an easy, fast and low cost way of entering the decentralized finance arena, but has since expanded to a wide range of use cases like blockchain gaming and NFTs.
MATIC, its ERC-20 native token, is used to pay fees, reward users who stake the currency and secure the proof-of-stake network. Fees charged by the network range between $0.0005 and $0.2.
Aave
Aave is an open-source DeFi protocol for borrowing and lending crypto. Since being released in 2017, Aave has been key in powering decentralized apps and supporting a DeFi ecosystem where, in exchange for a variable interest rate, users provide liquidity to the market and borrow cryptocurrencies. In other words, Aave can be described as an open-source liquidity pool.
For those staking their assets through the platform, users can earn a yield that is adjusted automatically to the total supply and demand in the protocol. If you’re interested in earning passive income with DeFi - a topic we delved into in our last post - with Aave you’ll be able to use the AAVE DeFi coins in yield farming, liquidity pools and staking.
Aave is built on the Ethereum blockchain and offers a wide variety of cryptocurrencies. And while the crypto lending and borrowing segment is becoming increasingly competitive, this top DeFi project has managed to stay ahead of the pack.
Another noteworthy feature, this protocol is decentralized and managed through Aave governance, letting AAVE token holders submit proposals and vote on key decisions.
Polkadot
Blockchain interoperability has been one of the leading challenges facing the technology. This also affects DeFi projects, limiting developers and users to a single ecosystem and restricting access to the wider industry. In this context, Polkadot has emerged as a promising platform that aims to tackle some of these issues.
As a next-generation blockchain, Polkadot is an open-source network that promotes interconnectivity and interoperability while attempting to promote a heterogeneous multi-chain framework by enabling independent chains to exchange messages and perform transactions in a hyper secure environment. Besides joining different blockchains together, another major benefit of Polkadot is that this platform handles security and transaction validation.
The native cryptocurrency of this DeFi project is the DOT token, which can be used for governance and to validate transactions across the network.
As the technology evolves, we can only expect Polkadot to continue providing even more solutions that can be leveraged in DeFi.
Maker DAO
Launched in 2017, MakerDAO is one of the most reputed Decentralized Exchanges (DEX) based on the Ethereum network. This particular decentralized autonomous organization is a peer-to-peer lending and borrowing platform for cryptocurrency, with all transactions being controlled by smart contracts. The total value of the smart contracts developed on this protocol have topped US$600 million at the height of the crypto market.
MakerDAO is powered by its DAI, a ERC-20 token that is soft pegged with the US dollar. The DAI stablecoin can be used for a wide range of financial services, including borrowing, lending, payments, and much more.
In addition to these features, MakerDAO's Multi-Collateral Dai (MCD) System creates even more opportunities for DeFi projects, supporting emerging financial tools and providing new infrastructure layers for other protocols in this segment of crypto.
Uniswap
When it comes to listing the best DeFi projects in 2022, Uniswap is a name you won’t want to forget.
This open-source protocol has managed to become one of the leading decentralized crypto exchanges running on Ethereum blockchain by using an innovative trading model called an automated liquidity protocol. Unlike other exchanges like Coinbase, FTX or Binance, Uniswap is entirely decentralized and enables users to perform transactions in a peer-to-peer format. It even allows users to list DeFi tokens on the exchange for free. Without intermediaries, the low fees charged and how easy it is to swap tokens, the appeal of a DeFi project like Uniswap becomes quite clear.
The platform is also well regarded thanks to its non-custodial nature and security. On top of all of this, its native digital token UNI is one of the largest cryptocurrencies in the world, with a market cap of $5.6 billion at the time of writing.
Compound
Compound is a decentralized, blockchain-based protocol that allows you to lend and borrow crypto based on an algorithmic, autonomous interest rate. The platform's total value locked (TVL) is about $2.3 billion as of the time of writing. So how does this DeFi project work?
First off, Compound Finance’s algorithm lets users earn interest on their tokens when they’re lent to provide liquidity to a DeFi market. On the other hand, borrowers can access funds without having to go through an intermediary or centralized authority.
Through the cToken contracts, accounts on the blockchain supply capital or borrow assets from the protocol (holding other assets as collateral). With Compound, these smart contracts are responsible for tracking balances and algorithmically set interest rates.
This DeFi platform supports a wide variety of crypto assets as well as powering its native COMP token. With Compound, developers can also build innovative DeFi products.
Curve
Curve Finance is one of the most popular DeFi platforms and a leading decentralized exchange due to its reputation for composability and stability. This top DeFi project is also a popular automated market maker (AMM) platform, enabling high efficiency when it comes to token exchange while charging minimal fees and keeping slippage low. These features have caught the attention of investors, in particular during the crypto meltdown we’re currently experiencing.
Similar to other DeFi protocols, Curve is built on the Ethereum network and allows users to exchange stablecoins and other ERC-20 tokens. Cryptocurrency users can also earn extra fees from their tokens by letting other traders exchange them for better prices.
What makes Curve one of the best DeFi projects is the project’s focus on supporting liquidity pools with similarly priced assets. The platform encourages the integration of external DeFi protocols to drive a healthier ecosystem and deliver more rewards to Curve users.
On top of all of this, the CRV DeFi coin has become quite popular among many crypto investors.
Ardana
Ardana is an on-chain asset backed stablecoin protocol and decentralized exchange stable asset liquidity pool built on Cardano. This DeFi project allows for highly efficient trading between stablecoins and identical assets with low risk income from fees for liquidity providers. The platform focuses on a stablecoin called dUSD and a decentralized exchange (DEX), Danaswap. The aim of dUSD is to help cryptocurrency users take loans against the Cardano tokens like ADA, while the decentralized exchange lets users engage in transactions such as trading tokens, earning interest from their deposits and earn other rewards in return for providing liquidity to the platform.
Ardana makes the lending and borrowing process much easier when compared to some competitors by eliminating the need to convert the native currency ADA into stablecoins as users can choose to deposit ADA directly into Ardana and review rewards in proportion to the total value back as a dUSD loan.
Centrifuge
Billing itself as the “first protocol to connect DeFi to the real-world”, Centrifuge aims to bring an untapped multi-trillion dollar market of real-world assets (RWA) into decentralized finance. As such, it has become one of the best DeFi projects in 2022.
This platform multi-chain DeFi protocol allows users to tokenize real-world assets such as invoices, real estate, and royalties to help borrowers get financing without the need for banks or other financial intermediaries. Once tokenized, this crypto can be used as collateral to access funds through Centrifuge’s lending Dapp - Tinlake. This can be particularly useful for entrepreneurs and small businesses who’re looking for funding, while investors can access stable yields thanks to the platform’s pooled liquidity.
Centrifuge is a well regarded platform in the blockchain community, having received the backing of the likes of Moonwhale and Fenbushi as well as partnerships with Polkadot, Ava Labs and Kusama.
Synthetix
Synthetix is an open-source, decentralized finance protocol based on the Ethereum blockchain and is powered by its own coin, the Synthetix Network Token (SNX). More specifically, Synthetix brings off-chain financial assets on-chain while also being the protocol behind the issuance of synthetic assets known as Synths. This is a pretty popular feature as it lets users get exposure to finance vehicles beyond crypto assets.
Synths are designed to mimic the value of real-life assets, so you’re able to find a Synth based on the value of the U.S. dollar, sUSD, for example. The platform also tracks the value of a wide range of assets using special data feeds, called oracles, letting users gain exposure to gains or losses in various markets. The network is secured through a proof-of-stake method, making it a more energy efficient option when compared to other platforms.
As one of the biggest and most popular DeFi projects currently available, Synthetix has a staggering $518.08 million locked in its contracts.
