Lets start with the basics before we dive into the top DeFi Projects… what is DeFi?
And why are very successful billionaire’s like Mark Cuban super invested in the early stages of this booming world?
In fact, Cuban recommends people use his tactic and take time to learn about “crypto and DeFi”. Let’s find out why…
DeFi is short for “decentralized finance,” an umbrella term for a variety of financial applications in the crypto/blockcahin world targeting the disruption of archaic financial systems.
DeFi projects draw inspiration from blockchain, the technology behind Bitcoin, Ethereum, Ripple, etc., which allows infinite entities to hold a copy of a history of transactions – called a public ledger, meaning it isn’t controlled by a single, central source. An example of a central source would be a world government or centralized bank.
Why is a decentralized ecosystem important? Because centralized systems and entities are like gatekeepers that can limit the freedom, speed and sophistication of transactions while offering users less direct control over their money. Did you know that in the fine print of your bank contract it states that once you deposit you cash, it is no longer yours? Yes, this is true.
Go ask your bank after you’re done reading this article.
But back to DeFi. Decentralized Finance projects are taking over the complex financial use case world. They are more than just a simple transfer of value like BTC. Even though the inner workings of BTC are much more complicated than that.
Cutting out middlemen from all kinds of transactions is one of the primary advantages of DeFi. These types of transaction include: loans, insurance, crowdfunding, derivatives, betting and more.
Most applications that call themselves “DeFi” are built on top of Ethereum, although now they are also built on top of Chainlink, Avalanche, Thorchain, and more.
ETH is the world’s second-largest blockchain platform, which sets itself apart from BTC in that it’s easier to use to build other types of decentralized applications beyond simple value transactions.
These more complex financial use cases were even highlighted by Ethereum founder Vitalik back in 2013 in the original Ethereum white paper. If you want to take a peak at that you can read about it here. Although it is quite complicated.
These more complex financial use cases are made possible on ETH because of Ethereum’s smart contracts – which automatically execute transactions if certain conditions are met. This offers a lot of flexibility.
For example, say a user wants his or her money to be sent to a friend next Tuesday, but only if the Boston Red Socks beat the New York Yankees according to MLB.com. Such rules can be written in a smart contract. The applicability is endless.
So now lets dive into the juicy part… the team at TTNN is invested in a lot of these projects because we have conviction in them. We do recommend you do your own research and that this is not financial advice.
The TOP DEFI PROJECTS include but are not limited to:
1 – Decentralized exchanges (DEXs): Online exchanges help users exchange currencies for other currencies, whether U.S. dollars for bitcoin or ether for DAI. DEXs are a hot type of exchange, which connects users directly so they can trade cryptocurrencies with one another without trusting an intermediary with their money.
$THORChain
THORChain is an independent blockchain built using the Cosmos chain that will serve as a cross-chain decentralized exchange (DEX). Not sure if you have experience using DEX’s like Uniswap or Pancakeswap, but if you do you realize how f*cking needed THORChain is.
It uses an automated market maker (AMM) model that resembles the first versions of Uniswap where THORChain’s native token (RUNE) will be the base swap pair. Meaning you have to trade RUNE for other cryptos.
This model allows traders to move between different asset pools, AKA BTC, ETH, DOGE, etc. using RUNE as a somewhat hidden intermediary.
And as a bonus it also rewards liquidity providers (LPs), those that deposit or “stake” assets on either side of a liquidity pool, with a portion of trading fees. So it’s a double win.
Another super interesting part of this project is that its team is 100% anonymous. Which makes it truly decentralized. The only other truly decentralized crypto we know about is Bitcoin. Oh and there are no trading fees 🙂
Traded on Binance and many other exchanges.
2 – Stablecoins: A cryptocurrency that’s tied to an asset outside of cryptocurrency (the dollar or euro, for example) to stabilize the price.
$LUNA
Terra is an algorithmically governed blockchain platform that makes use of fiat-pegged stablecoins to enable price-stable borderless payments. The network prides itself on combining the global aspect of cryptocurrencies with the stable nature of fiat currencies. Terra uses an algorithm to automatically adjust the supply of stablecoins based on their demands.
This project will come in and takeover currencies that are victim of mass inflation and no longer worth anything. Like Venezuela and some African nations. This is massive! Truly banking the unbanked.
Traded on Binance and many other exchanges.
3 – Lending platforms: These platforms use smart contracts to replace intermediaries such as banks that manage lending in the middle.
$AAVE
AAVE is another of the DeFi crypto projects built on ETH and one of our favourites because of the potential it carries. The AAVE token is one of the largest DeFi coins by market cap. With great adoption numbers already. This is one of Mark Cuban’s favourites.
It is a decentralized lending platform that offers peer-to-peer loans using smart contracts. Ethereum investors can easily borrow and lend their cryptocurrencies in a decentralized manner through AAVE.
Why is this amazing? It massively simplifies the loan process. No collateral needed! Try getting a loan from your bank today… it is nearly impossible unless you are a golden student. What does increased lending do? It spurs economic activity and gives a chance to anyone and everyone to be economically sound and create their dreams.
Traded on Binance and many other exchanges.
In closing, Mark Cuban says explosive growth in DeFi is ‘like the early days of the internet’… will you listen to one of the most business savvy men in the world?
“Cuban is a believer in DeFi’s power and potential” – entrepreneur.com
Some other examples are prediction markets, yield farming, and liquidity mining but these are more complex applications so we will save them for our next post. For now, you can read up on the description below and do some research on your own.
Prediction markets: Markets for betting on the outcome of future events, such as elections. The goal of DeFi versions of prediction markets is to offer the same functionality but without intermediaries.
Yield farming: For knowledgeable traders who are willing to take on risk, there’s yield farming, where users scan through various DeFi tokens in search of opportunities for larger returns.
Liquidity mining: When DeFi applications entice users to their platform by giving them free tokens. This has been the buzziest form of yield farming yet.
