Best DeFi projects to get started
Important and potentially game-changing DeFi projects continue to fly under the radar — especially of the mainstream financial and business media.
Most of the coverage goes to big layer one protocols like Bitcoin and Ethereum. Or else, the little decent crypto coverage that exists focusses on a handful of name brand centralized exchanges.
Why is that?
One of the biggest reasons is that decentralized finance still feels inaccessible to many — including all of the pundits and mainstreamers.
After all, DeFi is a lot like where crypto was five or six years ago in terms of overall knowledge, awareness, and general acceptance. Before the massive crypto bull run of 2017, it felt like layer one crypto was still very much an underground thing.
After that massive market move, it felt like everyone was talking about it.
One of the factors hampering overall awareness about DeFi is that the protocols and products that make up the system address a lot of different issues — so coming up with a single explanation or use case is, well, complicated.
For more on what DeFi is, check out the what is decentralized finance post, or the how DeFi works post.
Overview of some of the best/most interesting/most popular DeFi projects
Just like crypto in general, there are by now hundreds of DeFi protocols and projects out there working to disrupt the current financial system.
And while having multiple options is good for things like competition and product market fit discovery, having so many options also makes it difficult to know where to get started.
In the spirit of getting off the ground here is a summary of the top ten DeFi assets as identified by Bitwise Asset Management. These assets are included in the Bitwise Decentralized Finance Crypto Index, a private fund designed for investors looking to gain exposure to a wide swath of DeFi.
- Uniswap (UNI): Uniswap is an automated market maker, which means it takes some of the friction out of trading crypto tokens by matching available liquidity with user’s trading activities to make moving back and forth between tokens and digital assets easy and more seamless.
- Aave (AAVE): Aave is a DeFi platform built around making it easier for users to quickly create crypto-collateralized loans. The AAVE token can be used on the platform and also gives token holders a say in future governance issues.
- Maker (MKR): Maker tokens provide a means to participate in the governance of the MakerDAO, one of the oldest (launched in 2017) and best established decentralized autonomous organizations. The MakerDAO exists to manage DAI, a decentralized stablecoin.
- Lido (LDO): Lido is a decentralized autonomous organization that allows users to stake Ethereum and participate in lending with no minimum deposits and without having to maintain any kind of staking infrastructure. LDO is the governance token for the platform.
- Curve (CRV) Curve is an automated market maker for buying and selling stablecoins. CRV is the governance token for the Curve DAO.
- Loopring (LRC) Loopring is a decentralized order book provider built on Ethereum. The goal of Loopring is to make it easy for others to spin up a decentralized exchange.
- Convex Finance (CVX) Convex Finance is a DeFi protocol that allows users to earn trading fees on the Curve exchange without having to stake assets on Curve.
- Compound (COMP) Compound is a lending and borrowing protocol that allows users to earn interest on the assets they lend in one of the number of liquidity pools tied to the platform or take collateralized loans from the staked pools.
- Balancer (BAL) Balancer is like an automated portfolio manager that lets users take advantage of movements in price, position, and liquidity based on pool selection.
- Yearn Finance (YFI) Yearn Finance tries to make accessing all yield farming activities (or maximizing profits from staking assets to various liquidity pools by making getting started in DeFi easier for all.
Remember this is just a very small sample size of the kinds of DeFi projects available — with more launching or gaining traction everyday. While this list might represent just a very small portion of the market, the projects above do represent a good range of what’s possible with DeFi — mainly lending, borrowing, staking, and accessing all kinds of liquidity.