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Successful DeFi Based Startups of 2021 and their Unique Features

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Decentralized Finance (DeFi) has the ability to change the way banks operate in the future – and may shift the layout of the whole financial system at a macroeconomic level. In DeFi, a user can borrow or lend money on a large scale without any intermediaries where the interest rates are automatically adjusted in accordance with supply and demand.

What are DeFi and its impacts on the functions of the traditional financial system? 

Decentralized Finance (DeFi) is a system that utilizes a public blockchain network for its operations powered by smart contracts and not regulated by a central bank or intermediary.

Stablecoins are functioning as a base for a decentralized financial system, where participants can engage with each other without the risk of price volatility. The stability of cryptocurrencies prices can be reached in the following ways: by issuing stablecoins using other cryptocurrencies as collateral or by pegging a currency to other assets to reach a higher degree of price stability of stablecoins.

Aave, one of the popular DeFi companies, is working to provide uncollateralized loans just like traditional finance. Also, with the rise of decentralized exchanges (DEX), cryptocurrencies holders are no longer required to leave the crypto space to swap their tokens. Uniswap is a notable example of a DEX. DEX is made up of smart contracts that enable it to function according to prescribed pricing mechanisms. Progress of an independent decentralized ecosystem without any CeFi intermediaries can be achieved by automated liquidity protocols.

Maker DAO, a central protocol for the Defi ecosystem, provides the cryptocurrency DAI, backed by other cryptocurrencies and makes sure that the value of 1 DAI is almost equal to the value of 1 US Dollar with its algorithm.DeFi with its ability such as speed of growth, room for growth, new market segments can outperform the traditional finance system in the years to come.

DeFi has already managed to attract billions of capital by providing real, working applications. Along with market augmentation, the number of projects concentrating on DeFi will also grow.

According to research, Blockchain market size is expected to grow from USD 3.0 billion in 2020 to USD 39.7 billion in 2025, at a Compound Annual Growth Rate (CAGR) of 67.3% during 2020–2025

Such a promoting market gathers more and more attention from the investors, so we want to underline the most successful of them.

Some popular DeFi Startups to focus on are:

  • MakerDao
  • Compound 
  • AAVE
  • Uniswap
  • Curve. Fi
  • dY/dX
  • Kyber
  • Dharma 
MAKERDAO:

MakerDao is ranked as the second among all existing DeFi platforms according to DeFi Pulse while DAI is one of the most popular cryptocurrencies. It is an open-source platform based on the Ethereum blockchain and decentralized autonomous organization. A mathematical system manages all aspects where the management rights are distributed throughout the maker’s MKR token holders. 

DAO (Data Accessing Objects) governance layer ensures the efficiency and transparency of the system. The more MKR tokens a user contributes, the more he influences the final decision.

Maker Protocol has its own stablecoin Dai, which is pegged to ETH as the only accepted crypto-collateral and is equal to 1 US dollar. The system is regulated by unique smart contracts called CDP (Collateralized Debt Positions).

COMPOUND: 

The compound is Ethereum based open-source protocol which creates the money markets for crypto holders. In other words, Compound is a lending platform without the intervention of intermediaries.

Protocol algorithms automatically secure the interest rates based on the supply and demand and unnecessary negotiations about payment terms, interest rates, or collateral are avoided. A compound contains the full transaction record and is accessible for verification.

The compound mechanism allows users to earn a return rate of 5-10% annually on average, which makes it definitely one of the top DeFi projects on the market.

AAVE:

AAVE is a decentralized, non-custodial lending protocol that enables its users to lend and borrow digital assets and gain on the rate fluctuations. 

The distinctive feature of AAVE was the introduction of flash loans which give the possibility of taking an immediate loan from one of the pools without any collateral. In order to guarantee the safeness of such transactions, the loan has to be returned in one block.

Another greatness of AAVE is the ability to provide users with decentralized and secure crypto price data thanks to its integration with Chain Link oracle. This collaboration enables users to get accurate and on-time data from various on-chain and off-chain services. Thus, helps to ensure the reliability of the AAVE platform. 

Thanks to its convenience and variability, the amount of assets held on this protocol has been growing by about 12 mils US dollars monthly.

UNISWAP:

Uniswap is a big daddy of today’s DeFi. It stands for decentralized Ethereum based protocol which allows users to secure and safely exchange ERC-20 tokens based on the AMM mechanism. 

The distinctive feature of Uniswap is that the whole workflow is maintained by smart contracts and AMM algorithms. AMM is an automated market maker that counts the exchange rate automatically using the “constant product market model”. This eliminates traditional order books and considerably faster the exchange process. 

Uniswap gathers tokens into pools where users can carry out a needed transaction. Additionally, in Uniswap users are able to earn from providing liquidity to the pools.  

Uniswap works using contracts that combine Ether and certain tokens into a pool. While exchanging Ether for a token, the Ether goes to a contracting pool, and the token returns to a user providing security and faster exchanges.

CURVE.FI:

The curve is a decentralized Ethereum based exchange. The mechanism here is similar to Uniswap, yet the idea is to change stablecoins only instead of Ether and tokens. 

The same as Uniswap, Curve uses an AMM algorithm that makes the curve fully automated. Yet, unlike Uniswap, Curve uses a slightly different type of “curve”. This helps to make autonomous exchanges a 1:1 close rate with the approximate exclusion of slippage and minimal fees. 

The curve makes its users earn on the liquidity put in the pools. The cooperation with other DeFis enabled getting the most profitable interest rate among certain chosen tokens.

The curve was the first protocol to provide a decentralized exchange for stablecoins which helped it to gather a lot of liquidity within a couple of months. Additionally, its unique pool balancing mechanism considerably decreases the slippage between the exchange rate which makes it resistant to such a big inconvenience as an impermanent loss.

DY/DX:

DYDX is a margin trading platform, which provides the ability to spot trading, lending, and borrowing crypto assets.

The problem before dYdX creation was that the margin trading was limited only to CEXs like Binance or Kraken. Therefore, the dYdX launch brought trading tools to another level. 

dYdX does not use an AMM algorithm to enable trading options. It is based on the traditional supply-demand model, yet the trading process is carried out by the smart contract. This allows for faster and non-custodial transactions between users. 

dYdX stands on the best DeFi startups list because it currently shows one of the highest volume and liquidity flows within DEXs.

KYBER:

Kyber is a decentralized exchange for cryptos. Unlike other exchanges where your exchange possibilities are limited to certain trading pairs against ETH, with Kyber you are able to buy and sell any ERC-20 token directly. 

It also has its own token KNC (Kyber Network Crystal) to manage governance processes and incentivize protocol users. 

Kyber exchange uses neither order books nor AMM models to establish the token price. There are currently more than 70 liquidity pools (called reserves) where customers provide their assets in order to make a change. 

A distinctive advantage of Kyber is that the user is able to establish the price he wants to trade his asset. 

Kyber introduces a fast and considerably low-fees exchange for cryptos. While introducing the limit orders for trades Kyber helps to achieve the desired amount in return and the user will not lose custody of his crypto asset.

DHARMA:

Dharma creates a marketplace for lending and borrowing cryptos. It introduced Automated Clearing House (ACH) purchases in chosen US states. 

Dharma is integrated with Uniswap V2 and allows lending and borrowing of all assets available there. Yet, Dharma does not only open the crypto to new users. It can be very beneficial for the old DeFi traders as long as it provides a variety of advantages like gas fees coverage for all users. 

Moreover, thanks to ACH support, the Dharma app allows DeFi trading directly from your bank account. At the moment of purchase, the bank will charge a 1.5% commission for each transaction. The maximum size of purchases is established for $25000 per week. 

To summarize, Dharma is a portal to a fast and easy DeFi for everyone. By installing an app, everyone can simply start their crypto investment, which definitely makes this startup one of the best DeFi crypto projects ever.

CONCLUSION:

We are extremely glad that blockchain technology has entered the financial market and brought such great initiatives as Dharma to life.

It is worth noting that Uniswap has considerable superiority over other protocols. 

Yet, Uniswap’s competitors have found a big place for growth and development in its partial inconveniences and loops. The detection and willingness to eliminate those have contributed to the invention of a list of other protocols. 

We hope this list of the top DeFi startups will give you a basic understanding of the sector or would trigger the creation of your own DeFi! Brugu Software Solutions is a prominent player in offering services to DeFi based startups. We are providing all types of DeFi token Development in a safe and secure manner. Connect with Brugu to launch Defi based startup with all the above and current trending features with flexibility to cope up with the changing market.

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