Top 8 DeFi Projects to Look Out for in 2022

Decentralized finance ( DeFi) is a disruptive technology that bridges the gap between cryptocurrencies and traditional financial markets.

Decentralized finance came to prominence in early 2020 with the rise of yield farming exchanges like SushiSwap and Compound. The DeFi market has grown 10 times over since 2020, with a total value locked (TVL) of $112.07 billion in 2021 to $200 billion in early 2022.

Decentralized Finance is based on blockchain technology and removes centralized authorities or traditional banking intermediaries and makes finance more accessible to its users.

It has the potential to open doors to the “unbanked” population worldwide who do not have an active bank account. Any person with a smartphone, in even the most remote part of the world, can exchange cryptocurrencies with just a tap of the finger.

Top 8 DeFi projects to look out for in 2022

DeFi wants to revolutionize the global financial system by eliminating boundaries between crypto, DeFi, institutional investors, and centralized financial organizations like banks.

Institutional investors can now access the DeFi ecosystem through crypto wallets like MetaMask.

Moreover, the emergence of stablecoins is also responsible for the rapid growth and popularity of DeFi, which has made trading more convenient and less risky for traders.

DeFi is growing fast, and new projects are emerging every day.

Here are the top eight DeFi projects to look out for in 2022.

Uniswap (UNI)

Built on the Ethereum network, Uniswap is ranked as one of the largest and most popular decentralized exchanges in the blockchain network.

With a trading volume of more than $205 billion, the platform allows peer-to-peer token swaps, as well as buying and selling crypto tokens, and rewards developers for integrating their projects in liquidity through Uniswap.

The platform also uses the AMM (automated market maker) autonomous protocol model that removes intermediaries and pools liquidity through smart contracts.

UNI is the native token of Uniswap and is listed among the top 30 crypto tokens in the DeFi market. About 60% of the UNI supply goes to the community members.

Today, UNI token total market cap is $6.8 billion USD.

MakerDAO

MakerDAO is a decentralized lending platform that offers decentralized borrowing and lending of ERC20 tokens without the need for any third party, unlike traditional financial services.

The DAO (Decentralized Autonomous Organization) allows users to mint a stablecoin called DAI (soft-pegged to the USD) through the Maker protocol.

MKR is the governance token of MakerDAO and regulates the issuance of DAI tokens. MKR token holders can vote and also take part in the decision-making process of the platform.

Chainlink (LINK)

Chainlink is a decentralized oracle network built on Ethereum that facilitates tamper-proof off-chain data transfer by connecting smart contracts to real-world data without compromising security within the blockchain network.

The oracles act like a bridge between outside data sources and smart contracts.

Many leading DeFi protocols have leveraged the services of Chainlink such as Synthetix, AAVE, Celsius, ARBOL, Yearn.finance, etc. Chainlink launched its native coin LINK in 2017 and can be used for operations within the network.

Avalanche (AVAX)

Avalanche is a fast, open-source smart contract platform for DeFi applications. The platform focuses on high speed and interoperability, and deploys low-cost smart contracts on Ethereum.

Avalanche is gradually making its mark in various DeFi and NFT spaces, and has integrated with other noteworthy blockchain projects like Chainlink, SushiSwap, and Graph.

Avalanche has built-in Virtual Machines (VMs) to help create and launch new blockchains with a wide variety of features. AVAX is the utility token of the platform and allows its token holders to take part in the governance voting protocol. The current price of AVAX is $24.45 per AVAX/USD.

Band Protocol (BAND)

Just like Chainlink, Band Protocol is a decentralized off-chain oracle that collects real-world data and APIs and connects them with smart contracts.

Developers can use data related to real-world events, weather reports, sports, and price feeds, delivered safely within minutes. BAND is the native token of the decentralized oracle platform. Validators can stake BAND tokens and receive block rewards.

Aave (AAVE)

Aave is a DeFi lending protocol that helps users to borrow and lend assets and earn interests on those assets without the interference of any middlemen.

Aave runs on the Ethereum blockchain network and uses smart contracts for all its transactions. All borrowing and lending within the protocol are done against collateral. Users can borrow or lend based on the value of the collateral they post.

Aave supports more than 17 crypto coins including Mana, ETH, BAT (Brave Attention Token), etc.

AAVE is the native token of the platform. AAVE token holders can also take part in governance protocol and make important decisions.

Compound (COMP)

Compound is a DeFi algorithmic lending protocol that allows its users to lend and borrow assets against collaterals.

Users who supply assets to the liquidity pool will earn compounding interest based on their contribution. Once a deposit is done, Compound will convert it into cTokens (cETH, cDAI, etc.) and give it to the lender.

The process is automatic and lenders can withdraw their deposits at any time. Besides cToken, Compound uses another token called the COMP token, which is used to reward users for borrowing, lending, withdrawing, or performing any other transaction within the platform.

Polygon (MATIC)

Polygon is an Ethereum layer-2 solution that aims to provide scalability, low transaction costs, interoperability, and speed to blockchain transactions.

The DeFi project wants to reduce traffic by adding an extra layer to the Ethereum network and will help developers to create dApps without compromising network security.

Users can take part in staking or governance protocol as well as interact with other dApps of the Polygon network through its native token MATIC.

Final Words

The Decentralized Finance market has witnessed tremendous growth over the last few years. The Decentralized Finance ecosystem paves the way to an innovative and independent financial system that is transparent, secure, and permissionless.

These top DeFi projects are going to leave a mark in 2022, and each project is relevant in its own way.