DeFi stands for decentralized finance that intends to recreate the conventional finance system, through DeFi projects lacking intermediaries. Traditional actions such as lending, borrowing, structuring derivatives products, and purchasing and selling securities can happen through a decentralized open-source network.
DeFi would not be here without stablecoins. Stablecoins get fixed to fiat currencies such as the US dollar. It is impractical to recreate lending contracts and other financial products in a volatile asset. Therefore, many of the DeFi contracts attach stablecoins at the core of their functionality. The popular types of stablecoins today are Paxos, TrueUSD, USDC, Dai, and USDT.
On 6 September 2020, the total value locked in DeFi was approximately $ 7.88 billion. DeFi users over August 2020 increased by 32%, from 293 475 to 388 011 as of 29 August 2020.
Below are three of the best DeFi projects one would consider investing in:
Yearn Finance DeFi Project
Yearn Finance is one of DeFi projects and a cryptocurrency token that operates on the ethereum platform. It recently established the latest yVault strategy known as YETH. yVault designs are a set of actions that permit users to deposit funds and have them automatically sent to liquidity pools. In liquidity pools, high yield interests and extra token rewards get earned.
On 6 September 2020, the yVault strategy had an interest rate of 90% and a 0.5 % withdrawal fee, which gets spread to YFI token holders. The yVault techniques found in Yearn Finance are bringing massing outcomes for their holders. YETH is bringing a bullish outlook for holders of MakerDAO’s MKR, Ether, and YFI. YETH is doing so because holders get rewards for holding YFI from the 0.5% withdrawal fees.
Yearn finance is one of the best DeFi projects where a person should invest in Yearn finance is easy to use because of the efficiency it gets for fees. This cryptocurrency token is also attractive, and it provides revenue for token holders without dilution.
Aave is a DeFi lending protocol that allows users to borrow different cryptocurrencies, using stable and variable interest rates. Furthermore, it offers uncollateralized loans such as flash loans. Aave leverages LEND, a native token to provide holders with discounted fees.
This DeFi project has a tool known as Aave Watch, used to track key metrics for borrows and fees collected. Another device known as Aave Burn comes in handy to calculate the protocol fees used to burn LEND off the open market.
Aave is one of the best DeFi projects where one can invest. It offers the broadest range of DeFi collateral of any lending protocol on the market.
Compound DeFi is an ethereum project that concentrates on permitting borrowers to take out loans and lenders to give loans by locking their assets into the protocol.
You should invest in this project because it permits the tokenization of assets locked in the system through tokens. Another great thing about investing in this project is that locking up tokens in the protocol generates other tokens, thus earning interest for you.