The Decentralized Finance Industry has seen significant progress throughout 2020.
Investors have gained faith in DeFi tokens and the industry is projected to be one of the fastest-growing in 2021. It will lay a strong foundation for financial services, and in a few years, we will be wondering how we ever managed without it. DeFi assets have generated impressive results of late. It is the establishment of autonomous enterprises that will prove crucial to the future of global economies.
The future of financial institutions will be free of the multiple layers of problems, costs, and waste that have a considerable impact on financial services and their efficiency.
But this is only the beginning.
DeFi is coming to life, a system where there is no restriction on who can benefit. The process can work for any business and is the core of various growing financial enterprises today.
Let us take a look at the top DeFi projects to keep a watch on in 2021.
LINK token is at the top in terms of the market cap today and is an oracle service that supplies values to other projects at a cost. The decentralized platform allows the holders to get access to payments, data, and additional events without worrying about security. LINK is different from the others in the industry because it has an oracle that takes data from the outside and executes smart contracts. One of the most reliable DeFi projects, it has enormous potential and offers a 4.35% rate of interest.
AAVE is an open-source, non-custodial liquidity protocol. It allows earning of interest for the liquidity provided by the user and also includes borrowing against deposits, which can be used as collateral. AAVE has a safety module for which AAVE tokens are staked. The token holders have the power to make decisions with regard to the token and its framework. Out of a total of 16 million AAVE tokens, 3 million are set aside, and the remaining 13 million are available for lending and trading.
EQIFI is a global DeFi alternative to traditional financial products and is the first DeFi protocol in partnership with a digital bank (EQIBank), which is what makes this project really stand out. It gives a seamless platform for transactions for the mass market and has a guaranteed fiat gateway. EQX will democratize the financial products that were restricted to the privileged few in the past. EQIFI is ideal for pooled lending, borrowing, and investing for ETH, ERC tokens which include Stablecoins, wBTC, and other fiat currencies.
YFI is a governance token that aims to create a gateway for the decentralized finance ecosystem. The token owners can vote to make decisions with regard to Yearn. YFI works in a unique manner where the holder's deposit is directly invested in the highest yielding assets. It is carried out through the yearning Vaults in the ecosystem. The interest rate will change, so there is no fixed rate of interest on the tokens.
1inch is a token by the 1inch cryptocurrency exchange in association with Mooniswap exchange. It is developed for Decentralized exchange aggregate and is a governance token and utility token. The exchange offered a total of 90 million 1 inch tokens to those who used the exchange at least once in the past or traded at least an asset worth $250 in a maximum of four transactions. The Ethereum based token has rewards for liquidity providers.
These are my five DeFi projects to watch in 2021, but they are just the tip of the iceberg when it comes to this exciting new space. There are many projects out there, and new ones are popping up every day. The future of DeFi looks bright, and the industry will undoubtedly be a considerable part of the financial conversation in the coming years.