2021 Successful DeFi Based Startups and its Unique Features
Blockchain-based DeFi projects have been leading the way in recent months. With the creation of stablecoin, the decentralization of the financial market has become irreversible. Since We are providing all types of DeFi token Development in and safe and secure manner. As there is no potential to limit, according to MarketsendMarket’s research:
“Blockchain market size is expected to grow from USD 3.0 billion in 2020 to USD 39.7 billion of 2025, at a Compound Annual Growth Rate (CAGR) of 67.3% during 2020–2025”
Such a promoting market gathers more and more attention from the investors, so we want to underline the most successful of them.
THE BEST DEFI STARTUPS TO FOCUS:
MAKERDAO
Launched in 2014, MakerDao is a DeFi sector. It is an open-source platform based on the Ethereum blockchain. Decentralized autonomous organization at the same time. A specially developed mathematical system manages all aspects where the management rights are distributed throughout the maker's MKR token holders.
DAO (Data Accessing Objects) governance layer ensures the efficiency and transparency of the system. The number of votes is proportional to the number of MKR tokens (Maker governance token) that the user sent to the voting contract address, chief. In other words, the more MKR tokens a user contributes, the more he influences the final decision.
Maker Protocol also allows the creation of digital currency and has its own stablecoin Dai, which is pegged to ETH as the only accepted crypto-collateral and is equal to 1 US dollar.
The system is regulated by unique smart contracts called CDP (Collateralized Debt Positions) where any user is allowed to generate Dai. Broadly, Maker protocol includes the following elements: Dai stablecoins, collateralized Maker vaults, oracles, and voting.
As the early DeFi protocol Maker has a very strong position on the market while DAI is one of the most wanted cryptocurrencies. Maker is ranked as the second among all existing DeFi platforms according to DeFi Pulse.
COMPOUND
Compound is another Ethereum based open-source protocol that creates the money markets for crypto holders. In other words, Compound is a lending platform.
Protocol algorithms automatically secure the interest rate based on the supply and demand and thus allows users to benefit from floating asset rates. This way such a system helps suppliers or borrowers to avoid unnecessary negotiations about payment terms, interest rates, or collateral.
The ability to act without additional intervention of counterparties (and pay their services) is one of the biggest advantages of DeFi in general. Each money market on Compound contains the full transaction record and is accessible for verification.
Generally speaking, Compound’s job is very similar to the traditional banking system, where you can deposit your fiat currency. As follows you earn a monthly or yearly rate while letting the others borrow your money through the bank as an intermediary party. With such protocols as Compound, you can do the same action 24/7 and benefit from additional features of cryptocurrencies.
In comparison to the traditional financial system, where the return rate is around 0%, with the Compound mechanism users could earn 5-10% annually on average, which makes it definitely one of the top DeFi projects on the market.
AAVE
AAVE is a decentralized, non-custodial lending protocol that enables its users to lend and borrow digital assets and gain on the rate fluctuations.
AAVE also provides lending pools similar to Compound markets. Yet, the distinctive feature of AAVE was the introduction of flash loans (as the first protocol on the market). Flash loans make the user experience more convenient and let you earn even more.
The flash loans give the possibility of taking an immediate loan from one of the pools without any collateral. In order to guarantee the safeness of such transactions, the loan has to be returned in one block. Otherwise, all actions made with it will be banned and invalid.
Another greatness of AAVE is the ability to provide users with decentralized and secure crypto price data thanks to its integration with Chain Link oracle. This collaboration enables users to get accurate and on-time data from various on-chain and off-chain services. Thus, helps to ensure the reliability of the AAVE platform.
Thanks to its convenience and variability of useful features, AAVE has become favorable instantly and surely is one of the best DeFi startups of this year. Since its recent launch in January 2020, the amount of assets held on this protocol has been growing by about 12 mils US dollars monthly.
UNISWAP
Uniswap is a big daddy of today’s DeFi. It stands for decentralized Ethereum based protocol which allows users to secure and safely exchange ERC-20 tokens based on the AMM mechanism.
The distinctive feature of Uniswap is the lack of a traditional order book mechanism that has to determine the asset value. The whole workflow is maintained by smart contracts and AMM algorithms.
AMM is an automated market maker that counts the exchange rate automatically using the “constant product market model”. This allows to eliminate traditional order books and considerably faster the exchange process.
HAVEN’T REALLY UNDERSTOOD WHAT THE AMM IS? DON’T WORRY, FIND THIS COMPREHENSIVE GUIDE ON HOW THE AMM TECHNOLOGY WORKS?
It basically works as an exchange for cryptos, yet in order to take any action, you have to provide your own liquidity to the protocol first. Uniswap gathers tokens into pools where users can carry out a needed transaction. Additionally, in Uniswap users are able to earn from providing liquidity to the pools.
Uniswap works commonly to stock markets and uses contracts that combine Ether and certain tokens into a pool. While exchanging Ether for a token, the Ether goes to a contracting pool, and the token returns to a user. Such a mechanism allows providing security and faster exchanges due to lack of counterparty involvement and the necessity to wait for matching with anyone for price specifications.
CURVE.FI
The curve is a decentralized Ethereum based exchange. The mechanism here is similar to Uniswap, yet the idea is to change stablecoins only instead of Ether and tokens.
FIND OUT MORE ABOUT WHAT is STABLECOIN IN THIS ARTICLE
The same as Uniswap, Curve uses an AMM algorithm that does not require a sell order to be matched by other orders which makes the curve fully automated. Yet, unlike Uniswap, Curve uses a slightly different type of “curve”. This helps to make autonomous exchanges 1:1 close rate with the approximate exclusion of slippage and minimal fees.
Furthermore, the creators of Curve provided its users with the ability to earn on the liquidity put in the pools. The cooperation with other DeFis enabled getting the most profitable interest rate among certain chosen tokens. It is possible due to rebalancing the basic token while at the same time, keeping the main stablecoin for its owner.
The curve was the first protocol to provide a decentralized exchange for stablecoins which helped it to gather a lot of liquidity within a couple of months. Additionally, its unique pool balancing mechanism considerably decreases the slippage between the exchange rate which makes it resistant to such a big inconvenience as an impermanent loss.
BALANCER
Balancer protocol was launched in March 2020 and is a representative of a young DeFis. The balancer is a crypto exchange protocol that works according to previously discussed automated market maker algorithms. Yet, it uses an alternative type of AMM named “constant mean market maker”.
The balancer is called among the best DeFi startups due to the number of distinctive advantages. In contracts to Uniswap, it allows trading against existing tokens, not only ETH. The other thing is the ability to provide an unequal amount of tokens to the pool (like 60/40 or even 95/5) while keeping the mechanism balanced.
There is the ability to create three types of pools within Balancer protocol. The first type is a private pool that belongs to one specified user. The owner is the only one who can provide liquidity to the pool, and further manage the pool parameters.
The second type is a shared pool where every user can join and become a liquidity provider. The pool parameters such as fees, tokens, weights are set in advance so the pool creators cannot really influence them. To track the pool ownership balancer protocol introduced BPT token.
The next type stands for smart pool and is similar to the private one, but is managed by the smart contract. It allows users to adjust the pool features and accept liquidity from any protocol user.
Balancer’s main contribution is the introduction of flexible token swaps due to a unique market maker mechanism. Moreover, users do not use the trading option only. They are able to earn profit and take part in protocol governing.
DY/DX
dYdX is a margin trading platform, which provides the ability to spot trading, lending and borrowing of crypto assets. Tho, this is not just another decentralized exchange.
The problem before dYdX creation was that the margin trading was limited only to CEXs like Binance or Kraken. Therefore, the dYdX launch brought trading tools to another level.
dYdX does not use an AMM algorithm to enable trading options like previously discussed Balancer, Uniswap, and Curve. It is based on the traditional supply-demand model, yet the trading process is carried out by the smart contract. This allows for faster and non-custodial transactions between users.
dYdX stands on the best DeFi startups list because it currently shows one of the highest volume and liquidity flows within DEXs. Additionally, it offers very attractive lending options, like an automatic and immediate interest-earning out of each produced block on Ethereum.
SYNTHETIX
Synthetix opens derivatives for crypto. Synthetix is a decentralized protocol for synthetic token emission built on the Ethereum blockchain. Currently, there are more than 30 synthetic assets representing commodities like gold (etc.), fiats, and cryptocurrencies.
Those synthetic assets (Synths) can be created while providing ETH and Synthetix’s token SNX as collateral. Users can freely exchange Synths for other tokens as long as they are pure ERC-20 tokens.
All Synths have to be backed by an SNX token with a Collateralization ratio equal to 750%. Holders are able to manage the ratio by burning or releasing Synths to achieve this. If users meet the required collateralization ratio they receive a weekly reward.
Synthetix also has its own DEX called Synthetix.exchange where users can trade synthetic cryptocurrencies, commodities, indexes, and Forex.
The fees collected from Synths trading on the Synthetix exchange are distributed between SNX and synths holders. This works as an incentivization mechanism to emit (create) more Synths within the network.
Synthetix allows real-world assets to be traded on crypto markets. While started as a stablecoin, with the development of DeFi it became one of the biggest platforms for derivatives in crypto.
KYBER
Kyber is a decentralized exchange for cryptos. Unlike other exchanges where your exchange possibilities are limited to certain trading pairs against ETH, with Kyber you are able to buy and sell any ERC-20 token directly.
It also has its own token KNC (Kyber Network Crystal) in order to manage governance processes and incentivize protocol users.
Kyber exchange uses neither order books nor AMM models to establish the token price. There are currently more than 70 liquidity pools (called reserves) where customers provide their assets in order to make a change.
Reserves are initially smart contracts that hold the money. In order to make a change, the protocol “checks” all the existing reserves to propose the best price of a certain token.
A distinctive advantage of Kyber is that the user is able to establish the price he wants to trade his asset. The network introduces a limit order, so you do not have to trade at the “current” exchange rate if you do not want to. You are able to wait until the desired price appears.
Kyber introduces a fast and considerably low-fees exchange for cryptos. While introducing the limit orders for trades Kyber helps to achieve the desired amount in return instead of admitting the current market price. Additionally, with the help of this feature, the user will not lose custody of his crypto asset.
DHARMA
Dharma creates a marketplace for lending and borrowing cryptos. As the first, it introduced Automated Clearing House (ACH) purchases in chosen US states.
Dharma is integrated with Uniswap V2 and allows lending and borrowing of all assets available there. Yet, Dharma does not only open the crypto to new users. It can be very beneficial for the old DeFi traders as long as it provides a variety of advantages like gas fees coverage for all users.
Moreover, thanks to ACH support, the Dharma app allows DeFi trading directly from your bank account. At the moment of purchase, the bank will charge a 1.5% commission for each transaction. The maximum size of purchases is established for $25000 per week.
“Making an investment in DeFi has, up until now, been a bifurcated and highly technical process. Now, it’s as easy as downloading an app and connecting your bank account”.
To summarizing, Dharma is a portal to a fast and easy DeFi for everyone. By installing an app, every one can simply access crypto investment opportunities, which definitely makes this startup one of the best DeFi crypto projects ever.
CONCLUSION
We are extremely glad that blockchain technology has entered the financial market and brought such great initiatives as Dharma to life. It is worth noting that Uniswap has considerable superiority over other protocols. Its pioneer position on the DeFi market might be considered as one of the preconditions to such.
Yet, Uniswap’s competitors have found a big place for growth and development in its partial inconveniences and loops. The detection and willingness to eliminate those have contributed to the invention of a list of other protocols.
Along with market augmentation, the number of projects concentrating on DeFi will also grow. We hope this list of the top DeFi startups will give you a basic understanding of the sector or would trigger the creation of your own DeFi!
Brugu Software Solution is a prominent player in offering DeFi based startups. Get in touch with them, If you have a plan to enter the DeFi zone.
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