If you watch the financial markets, you might have heard the words “decentralized finance,” or “DeFi,” pop up frequently.
The thriving peer-to-peer crypto network is becoming a standard part of a diverse crypto portfolio, grabbing the attention of consumers and billionaire investors alike. It sounds exciting — and it is — but what is it exactly? And what makes DeFi different from every other sector of crypto that you know?
What is DeFi?
In a financial world that is becoming increasingly digital, DeFi focuses on bringing the convenience of peer-to-peer transactions to investors. By harnessing the efficiency and power of smart contracts — digital contracts that live on the blockchain — DeFi platforms create a space for lending, borrowing, trading, saving and earning interest that doesn’t require all of the usual bureaucracy and minutiae.
The goals of the DeFi network are simple:
Ditch the paperwork
Smart contracts are processed digitally on blockchain technology, so no paperwork and no wait time through the bank for transactions to clear.
Cut out the middleman
Automating the contract process on the blockchain takes away the need for human intermediaries, eliminating the need to engage outside mediators, like lawyers, to process agreements between parties.
Pick up the pace
With no reliance on different parties or deal with wait times to complete a transaction, DeFi makes doing business a more seamless and fast experience from start to finish.
Equalize the opportunity
Many of the financial opportunities offered through DeFi platforms are usually reserved for major financial institutions like hedge funds and banks. DeFi is closing the gap between the individual and the financial oligarchy.
The Top 10 DeFi Picks for 2022
The world of DeFi is getting bigger every day, but there are a few projects we have our eyes on for 2022.
Aave (AAVE), initiated in 2017 under the name ETHLend, is one of the original DeFi platforms on the market. Aave is a decentralized liquidity platform that allows for borrowing assets and earning rewards on deposits. It brings together lenders and borrowers in a decentralized space to allow for an equal opportunity lending system. You can also earn rewards and discounts by staking the AAVE coin on the Aave DeFi platform.
Avalanche (AVAX) markets themselves as “the fastest smart contracts platform in the blockchain industry,” while also solidifying their place in the booming NFT space and building connectivity with other blockchain projects such as SushiSwap (SUSHI), Chainlink (LINK), and the Graph (GRT). The project positions itself as a direct rival to Ethereum due to its ability to provide cheaper transactions in a fraction of the time. Avalanche recently completed $230 million in funding to support its DeFi initiatives, making it a compelling place for DeFi projects to set up shop.
Cardano (ADA), one of the world’s largest blockchain projects, is sometimes called the “Green Blockchain” because of its impressive energy use reports and proof of stake protocol. Cardano announced last month that it’s getting an ecosystem boost from its recent $100 million investment in decentralized finance, NFTs, and blockchain education.
Chainlink (LINK) is a decentralized oracle service that aims to connect smart contracts with data from the real world using oracle technology. Chainlink recently announced the launch of a Programmable Token Bridge that will allow for new communication between DeFi blockchains. This will help DeFi to properly scale and avoid the bottlenecks holding back the earlier generations of blockchain projects.
Polkadot (DOT) facilitates an internet where independent blockchains can exchange information and transactions in a trustless way via the Polkadot relay chain. This makes Polkadot, and projects who choose to build on Polkadot, much faster and scalable than Ethereum’s current offering. By acting as a foundation for DeFi projects to build upon, it’s aiding the growth and potential of the network as a whole.
6. Terra Luna
Terra Luna (LUNA) is a next-generation smart contract platform that combines decentralized finance with the concept of stablecoins. Its platform supports stablecoins that offer instant settlements, low fees, and seamless cross-border exchange. Luna functions as the volatile backbone that keeps Terra, its stablecoin sibling, balanced and grounded. Adding the emerging popularity of DeFi to the serious attention stablecoins are getting — from consumers and governments alike —makes LUNA one to watch.
Polygon (MATIC) is one of the most well-adopted and fastest-growing Ethereum Layer 2 scaling solutions and decentralized application ecosystems. It boasts features such as interoperability, scalability and security. Basically, Polygon adds a few traffic lanes to the heavily traveled Ethereum Layer 1 highway. The majority of DeFi projects are currently housed on the Ethereum blockchain. Therefore, less congestion on Ethereum means faster speeds and more benefits for the DeFi ecosystem.
Solana (SOL) is revolutionizing consensus mechanisms (how platforms verify transitions — ”yep, that trade happened.”) with its proof of history concept. This means that, instead of mining or staking on the platform to validate transactions, all transactions are proven true by a time stamp on the blockchain. Solana is known as Ethereum’s main competitor because it provides fast speeds while still being a Layer 1 platform, meaning it doesn’t need any help from another platform to perform these quick transactions.
Synthetix (SNX), a rapidly growing decentralized exchange, is enabling crypto to be traded for stocks, currencies, commodities, and other assets that are still dominated by the traditional financial institutions of Wall Street, London and Hong Kong. Its most unique feature is that it allows users to mint their own synthetic assets, called “synths,” allowing exposure to fiat, derivatives, cryptocurrencies and different asset classes. Examples include Bitcoin, euros, USD, Tesla stocks, gold, etc. This means that users can bet on the price of an asset without having to hold the actual asset, which has turned Synthetix into one of the hottest DeFi products available.
Uniswap (UNI) is a decentralized exchange that allows users to buy and provide liquidity directly from crypto wallets at minimal costs. Its AMM (automated market maker) provides ample liquidity for robust traffic and fast trading on its platform. Due to its popularity, Uniswap’s native token, UNI, can be found on investment platforms outside of the DeFi network, like Voyager.
The Future of DeFi
DeFi platforms are having a moment and getting some much-deserved recognition from both consumers and investors. DeFi funds are raising millions of dollars each day to push initiatives, improve and build platforms, and grow the already thriving network. These advancements are paving the way toward financial equality by increasing accessibility to important and otherwise unattainable financial tools. DeFi eliminates the gap, making the roadblocks that gatekept economic advancement for the very wealthy few a thing of the past. The future of DeFi is already here, and it’s for everyone.
How to Get Started
You could set up a wallet, deal with private keys and public keys, and go to Decentralized Exchanges (DEXs) and the various individual platforms to buy these coins, or you can access them all in one place on the Voyager app. Voyager makes it easy for you to engage the world of DeFi from the palm of your hand. Check out these and our other 60+ digital assets offered on the Voyager app.
Get $50 in Bitcoin when you sign up using code ZING on Voyager, deposit at least $100, and make your first trade. You can also earn up to 12% annual rewards when you maintain a minimum monthly average of any eligible asset in the app.
Find your financial equality through the world of DeFi on the Voyager app.
Voyager Digital Ltd. (CSE: VYGR; OTCQX: VYGVF; FRA: UCD2) and its subsidiaries (“Voyager”), is one of the fastest-growing, publicly-traded digital asset platforms in the United States. With over 60 digital assets, featuring a wide selection of altcoins, Voyager offers a secure way to trade using its easy-to-use mobile application. Voyager uniquely offers users the ability to earn annual rewards for maintaining a minimum balance in more than 30 different digital assets. Voyager was founded in 2018, to bring a more transparent and cost-efficient solution to trading in digital assets. Through its subsidiary Coinify ApS, Voyager provides digital asset payment solutions for both consumers and merchants around the globe. To learn more about the company, please visit https://www.investvoyager.com. Use code ZING during app sign-up and get $50 in BTC after depositing $100 and making your first trade.
Investment Advice Disclosure: This content is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for digital assets, sectors, or future price movement predictions.
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