The DeFi (decentralized finance) revolution is in full effect. DeFi removes the bank from the equation and replaces its processes with smart contracts. By automating the processes of financial services, regular users gain the ability to earn profits in the form of rewards.
Today, the DeFi sector is worth more than $100 billion and analysts expect this market to grow. There are more services and features available as well. All of this growth has come at a cost in terms of investor confusion. There are so many DeFi projects and networks that finding the right one can really become a choir, especially if you’re new to cryptocurrencies.
Finding the Right DeFi Platform
There are some recommendations that you should follow when exploring the DeFi space. Primarily, it’s important to always DYOR (do your own research). This phrase means dig deeper than the project’s website. See if you can find your potential investment recommended by reputable third-parties. All of these projects have earned a reputation as secure and reliable platforms. Here are the top DeFi platforms to drive ROIs in 2021.
At the top of the list is META 1. The META 1 DeFi ecosystem is all inclusive. The platform combines an interest-bearing savings account, with a VISA debit card, an easy-to-use DEX, and a multi-asset-backed stablecoin. Users can easily leverage these services via the network’s dashboard.
The DEBIT card and interest bearing savings account is a powerful combination. Notably, the savings account pays you nearly 10x the interest paid at your local branch. You can also spend your crypto anywhere that accepts VISA. This strategy enables users to enjoy a seamless crypto investment experience.
META 1 introduces a new type of stablecoin to the market. Uniquely, this coin is secured by a reserve of gold, above-ground and in-ground mining assets, and Surety Bonds. This multi-asset-backed self appreciating stablecoin includes a no-loss smart contract in its core protocols. This system prevents token holders from selling their coin for under market value.
Maker DAO is one of the top-performing Ethereum Dapps in the world. This network was a pioneer in the market when it entered service in December 2015. Maker DAO operates as a decentralized peer-to-peer lending platform. The network enables anyone to lend and borrow cryptocurrencies in a seamless manner.
One of the most unique features of the Maker DAO is that it allows borrowers to use volatile cryptocurrency as collateral for loans that are paid out in stablecoins. To make this strategy work, the network employs a multi token approach. The DAI stablecoin is used to pay fees, lending, and rewards. Users can store DAI in savings account and earn interest as well.
The MKR governance token is what users hold to gain voting rights. MakerDAO is community-governed via a voting system that enables users to put forth proposals on everything from fees to technical upgrades. You can hold more MKR to gain more voting power. Notably, MakerDAO made Forbes 50 2020 list.
Another peer-to-peer lending platform that has a reputation for security and high ROIs is COMPOUND. Notably, this platform was the first to introduce yield farming. Yield farming is similar to staking in many ways. You agree to lock your crypto in a smart contract in exchange for rewards. Unlike staking, there are no lock-up periods and no early withdrawal penalties.
COMPOUND support peer-to-peer lending and borrowing crypto as well. DeFi lending features provide an easy way for new users to secure profits and long-term HODLers to secure ROIs without losing exposure to their original assets. As such, this feature can be found on more platforms than ever.
Anyone can borrow from the COMPOUND lending pools with interest and a deposit. Specifically, users can lend Dai, ETH, USDC, Ox, USDT, wBTC, BAT, REP, and Sai. The process is fast and impersonal. Smart contracts and oracles evaluate your collateral and give you the maximum amount you can borrow. You can also stake the platform’s native utility token COMP on Uniswap or Balancer and earn a percentage of transaction fees.
Yearn Finance launched in February 2020 and has proven to be a game-changer for the DeFi sector. The platform helps to solve one of the biggest annoyances of Yield Farming. Yield Farming is like staking but because it doesn’t have set lock-up periods, the APY is changing. For users to really secure the highest ROIs, they need to monitor Yield Farming pools and swap their assets to the highest paying ones.
Yearn Finance automates this process for investors. This advanced liquidity aggregator creates an automated yield farming strategy that automatically alters your funds between DeFi lending protocols like Compound, Aave, and dYdX based on the current interest rates. Now you can secure the best ROIs available without constantly monitoring the market.
The platform also features an open-source DeFi lending protocol. This system leverages purpose-built smart contracts called vaults to enable users to use any asset as collateral. Users borrow stablecoins. These coins can then be reinvested or lent out to other users to further your earning opportunities.
SYNthetix combines a decentralized, synthetic-asset exchange and specially built stablecoins to enable users to create synthetic tokens of any asset. The system uses ERC-20 tokens that are pegged to real-world assets via SNX backed smart contracts.
The main advantage of this approach is that it provides a complete on-chain verification history. Additionally, it lets users perform conversions between Synths without involving any third-party intermediaries. You also can stake your SNX tokens and secure a passive income.
The staking periods vary but the longer you stake your tokens and the higher your rewards. These fees come from a portion of the transaction fees. Notably, you can also stake your SNX and create fiat pegged stablecoins. There are Synths for oil, commodities, fiat currencies, and more. In this way, SYNthetix provides the ability to earn on these market movements without owning the assets directly.
Stick with the Best
The DeFi market is set to see rapid expansion as more users become aware of the valuable benefits it provides the industry. Now that you have a firm list of DeFi platforms to explore, you are ready to get familiar with the market. The DeFi market is still in its infantile stages so it’s vital to stick to reputable platforms to avoid unnecessary risk.