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What are DEFI coins?
DeFi is the abbreviation for Decentralized Finance. It is an emerging technology, particularly to finance, which is based on a secure distributed ledger. Yes, much similar to what crypto assets use. The system is set in place to negate the involvement of any third parties like banks and financial institutions in any financial transactions.
The total value of the DeFi market is around $50 billion with over a thousand coins being traded within the DeFi sector! This guide is to take a quick dive into the top DeFi coins available in the market.
| Name | Uniswap | Chainlink | Tezos | Aave | MakerDAO |
| Launch Date | 2018 | 2017 | 2018 | 2017 | 2017 |
| Founder | Hayden Adams | Sergey Nazarov | Arthur and Kathleen Breitman | Stani Kulechov | Rune Christensen |
| Blockchain Protocol | Ethereum | Ethereum | Tezos | Ethereum | Ethereum |
| Native Token | UNI | LINK | XTZ | AAVE | MKR |
| Token Type | Governance Token | ERC 677 | Governance Token | Utility | Governance |
| Market Cap | $4.2 billion | $3.3 billion | $920 million | $820 million | $650 million |
| Circulating Supply | 762 million UNI | 507 million LINK | 917 million XTZ | 14 million AAVE | 977,631 MKR |
| Max Supply | 1 billion | 1 billion | NA | 16 million AAVE | 1.005 million MKR |
| Consensus Method | Proof of Stake | Proof of Stake | Proof of Stake | Proof of Stake | Proof of Stake |
UNISWAP
Founded in 2018, Uniswap (UNI) is one of the most popular decentralized trading protocols that have become popular within the crypto space for facilitating the automated trading of DeFi tokens. It is also an automated market maker, also known as AMM, and has gained considerable attention since its inception. It gained a lot of traction, especially in the year 2021, when the crypto space saw a boom in the DeFi category.
The Uniswap ecosystem aims to keep the trading of tokens automated and completely open to anyone who is holding the tokens. They are also dedicated to improving the efficiency of trading versus that of traditional exchanges. UNI creates more efficiency in trading by solving liquidity issues with automated solutions. This helps in avoiding the problems which plagued the first decentralized exchanges.
While the UNI asset has seen a market correction of its value, from $43 to $7, the Uniswap community has a strong backing for their asset that provides easy liquidity to facilitate the P2P transactions in a completely decentralized manner.
Read more: Uniswap Price Prediction
CHAINLINK
Chainlink was founded in the year 2017 and served as an abstraction layer for enabling smart contracts connected universally. Chainlink is an oracle network that is decentralized in nature and provides the required stream of data to the smart contracts running on various blockchain platforms. The primary goal of the blockchain system is to make smart contracts even more powerful by helping them draw data inputs gathered from other sources.
The type of data varies from supply chain management to price feeds, smart sensor temperature data inputs, scores in a cricket match, etc to various decentralized applications (dApps). Everything and anything relevant to the purpose of blockchain. There is no native blockchain for Chainlink. Rather it integrates along with various blockchains providing relevant information. It also acts as an oracle aggregator apart from behaving as an oracle. The data from several data providers are purchased by Chainlink which is then streamed to various blockchains accordingly.
Read more: Chainlink Price Prediction
AAVE
Aave is a very popular decentralized finance (DeFi) protocol that enables people access to truly decentralized financial services in the form of lending and borrowing cryptos and real world assets (RWAs). It does so by removing the need for a centralized intermediary to enable the process and even have systems in place to recover funds from borrowers including interest payments while paying that interest to lenders.
According to Defillama, it is the third largest DeFi protocol by total-value-locked (TVL) and is very popular amongst enthusiasts in the community. It was initially built on top of the Ethereum network, and catering to only ERC-20 tokens but as it grew more and more popular, it began to expand into other chains like Avalanche, Fanton and Harmony.
Read more: Top Smart Contract Platforms
TEZOS
Tezos is a blockchain project that defines itself as a self-amending decentralized platform for building dApps. It is quite similar in its functioning to Ethereum in a way that both blockchains support dApps built using smart contracts. Tezos however functions in a slightly different way that makes it unique. The most notable feature of Tezos is its ‘self-amending’ feature that provides a solution to run the on-chain governance in a way that is designed to avoid splitting of the community (which usually results in hard forks and value depreciation). The sel-amending nature of Tezos’ protocol makes the blockchain network much easier to upgrade and always open to adding new features and innovations to the network.
MAKERDAO
MakerDAO is a peer-to-peer decentralized autonomous organization built on the Ethereum blockchain network that allows people to lend and borrow using cryptos. Similar to other DeFi protocols, the process of borrowing and lending on this platform is controlled by smart contracts.
Because cryptos are highly volatile, MakerDAO uses a stablecoin known as Dai (as elaborated above) to determine lending rates and repayable amounts of loans taken on the platform.
MakerDAO objective is to create a crypto lending credit facility that disburses loans at predetermined interest rates. If a MakerDAO user wants to borrow a certain crypto, they would first need to deposit a determined value of ETH into the Maker smart contract. Now this smart contract creates what is called as a Collateralised Debt Position (CDP) and disburses the loan.
Additional Read: Top DAO Projects
SO, HOW CAN YOU INVEST IN THESE PROJECTS?
Today investing in these Ethereum based project tokens is extremely simple with the CoinDCX App! Just download the CoinDCX crypto investing app, enter the details required and wait for your profile to get verified. Once done, fund your wallet and buy any of the coin of your choice.
Values as on 23 November, 2022.
