Decentralized finance, or DeFi, is a novel approach to banking and finance based on peer-to-peer payments and blockchain technology. DeFi uses blockchain to offer “trustless” banking, eliminating the need for traditional financial middlemen like banks. There are multiple decentralized finance protocols, and some perform different functions.
Top 5 Platforms by Total Value Locked (As of 06/05/2022)
Maker DAO (Lending)
Total Value Locked: USD 14.52 billion
The first DeFi platform, in terms of total value locked (TVL), is Maker DAO an Ethereum-based decentralized credit platform that supports “Dai”, a USD-pegged stablecoin. The main function of this platform is to give loans in “Dai” by depositing a collateral, e.g. ETH. The most used platform in the Maker DAO ecosystem is his “Oasis Portal”, a platform where you can use the stablecoin “Dai” for different purposes as saving, lending, etc.
Total Value Locked: USD10.84 billion
The Aave Protocol is an Ethereum-based open source, decentralized, non-custodial liquidity network that allows users to provide and borrow crypto assets while also earning a return on assets they offer to the protocol. The protocol offers various lending and borrowing products, offering competitive yields compared to other platforms, and also offers “flash loans”, i.e. loans with a very low interest rate that are repaid within the same block. Moreover, they launched also Aave Arc, a regulatory-compliant DeFi market for institutional-level investors, and Covario AG is now one of 30 firms licensed by Fireblocks to participate in the protocol.
Curve Finance (DEX)
Total Value Locked: USD 9.43 billion
Curve (CRV) is an Ethereum-based decentralized exchange liquidity pool designed for highly efficient stablecoin trading. Curve is one of the most convenient platforms from the stablecoins’ standpoint, as it offers large pools of liquidity, as well as low fees and slippage. Those who provide liquidity to the different pools that the platform offers, have as a reward quite advantageous yields.
Convex -Finance (Assets)
Total Value Locked: USD 9.27 billion
Curve.fi liquidity providers can earn trading fees and claim increased CRV by using Convex Finance (CVX). Convex functions as a guild, pooling the funds of individual investors and profiting from their combined liquidity. Convex allows even low-level investors to stake their Curve Finance LPs and obtain enhanced profits that would otherwise be unavailable.
Total Value Locked: USD 7.04 billion
Uniswap is an Ethereum- based decentralized exchange whose purpose is to improve efficiency over centralized exchanges. The exchange of tokens is fully automated, and the liquidity on the exchange is better than any other decentralized exchange on the market. Users of the platform have no identity requirements, and it is also possible for individual users to create their own liquidity pool from scratch. The price changes as trade diminishes one side of the pair’s liquidity relative to the other.
Top 5 Most Promising
Five of the most promising DeFi platforms based on criteria such as innovation, growth rate, development speed, team and reliability.
Total Value Locked: USD 1.01 Billion (Derivatives DEX)
dYdX is a prominent non-custodial decentralized exchange with the goal of creating open, safe, and strong financial products. The platform supports “margin trading” in a completely decentralized manner and allows traders to increase the exposure of their positions by leveraging up to 25x on certain assets. Moreover, the technology provides lenders with protection by ensuring that borrowers have sufficient collateral in their accounts at all times. Users of dYdX start earning interest as soon as they deposit funds into their account, because their assets are automatically included into the worldwide lending pool for each cryptocurrency.
Total Value Locked: USD 1.3 Billion (Lending platform)
Liquity is an Ethereum-based decentralized borrowing system that uses LQTY, a USD-pegged stablecoin. With algorithmically controlled redemption and loan issuance fees, Ether holders can take out loans in the form of LQTY. They have also their stablecoin, LUSD token, which is completely redeemable, and 1 LUSD can be exchanged for $1 worth of ETH at any moment with the system, subject to a redemption fee.
Total Value Locked: USD 477.6 million
C.R.E.A.M. Finance is a decentralized peer to peer lending platform. C.R.E.A.M. Finance uses automated market making (AMM) to assist provide liquidity to critical DeFi assets, allowing users to borrow and lend supported assets while also earning liquidity mining rewards in the form of its CREAM token by delivering any supported asset as collateral. Users are charged swap, lending, and borrowing fees in exchange.
Total Value Locked: USD 279.8 million
Loopring is a layer-2 (L2) scaling solution based on the Ethereum zkRollup protocol. Loopring’s stated purpose is to create a hybrid platform that combines centralized order matching with decentralized on-blockchain order settlement, combining the greatest features of both centralized and decentralized exchanges. It allows buy and sell orders link directly with one other and settle trades on a public blockchain, rather than keeping user funds in custody and executing deals internally. Current TVL is expected to grow quickly because of the crucial partnership with Game Stop (GME) for the creation of their crypto wallet and NFT marketplace.
Total Value Locked: USD 203.7 million
Based on the OHM token, Olympus is an algorithmic money protocol. The mechanism mints and sells new OHM when it trades over its 1 DAI price floor, and buys back and burns OHM when it trades below that. Moreover, users can also stake OHM, which reduces OHM supply on the open market and increases the protocol’s value. The purpose of Olympus is to create a policy-controlled currency system in which the Olympus DAO controls the behavior of the OHM token at a high level.
About Covario AG
Covario is an award-winning Swiss-based Crypto Prime Brokerage founded in 2019. Covario’s Prime Brokerage platform is a holistic solution for digital asset trading, algorithmic trading, clearing, financing and custody for institutional clients. Backed by a team of professionals with deep experience and understanding of institutional financial services, Covario’s offering combines asset protection and global reach with operational ease and efficiency. Visit: www.covar.io
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