We are back with round 2 of our Top Altcoins To Watch series — this time, we have our gaze firmly planted on DeFi, who has many exciting projects to keep an eye on. With Alt Season looming, what better time to shift your focus from Bitcoin and see that tasty gains can be found in the exhilarating Defi Altcoins forest.
What is DeFi
DeFi or decentralised finance is being tipped as the next big thing! The term describes various financial applications in cryptocurrency or blockchain geared toward upsetting the apple cart of financial intermediaries. It refers to financial services using smart contracts, which are automated enforceable agreements that circumvent intermediaries such as banks or lawyers and instead use online blockchain technology.
A competitor to the now well-established ChainLink (LINK), the Band Protocol (BAND) is an agnostic decentralised data oracle platform. This cross-chain platform accumulates and connects real-world data and APIs to smart contracts to facilitate the exchange of information. Band Protocol unlocks many new use cases to explore by supplying reputable, verifiable real-world data to blockchains.
It initially launched as an ERC-20 project on the Ethereum blockchain in September 2019 but has since pivoted to the Cosmos network to release Band Protocol 2.0 in June 2020. Built on BandChain using the Cosmos SDK, the new protocol uses oracle nodes on BandChain to relay data and participate in block production and validation, giving them dual purpose.
BAND is the native token of their ecosystem and is used as collateral by validators who fulfil data requests. It is also the primary medium of exchange on BandChain, where it’s used to pay for private data.
SushiSwap (SUSHI) is a decentralized exchange (DEX) that uses an automated market maker (AMM) — a tool with fast-growing popularity among cryptocurrency users. AMMs are decentralised exchanges that utilise smart contracts and automate trading liquidity between any two cryptocurrency assets.
The delicious Japanese food inspired protocol launched in September 2020 as a fork of Uniswap, the DEX which has become synonymous with the DeFi movement and the associated trading boom in DeFi tokens. SushiSwap claims to be a cheaper evolution of Uniswap and aims to diversify the DEX landscape.
It certainly better aligns incentives for network participants with its introduction of revenue-sharing as a reward via its in-house token, SUSHI. It takes a community-oriented approach to add features to improve the design of its protocol.
Compound (COMP) is a decentralized and algorithmic interest rate protocol where users can borrow or lend tokens — against interest — by leveraging one of the several platform-supported liquidity pools.
Compound looks to add value to their holders through an open lending platform, which allows anybody who deposits Ethereum supported tokens (ERC20) to easily earn interest on their balance or take out a secured loan — all in complete autonomy.
Much like Switzerland, Compound promotes community governance. This sets it apart from other similar protocols as holders of the platform’s native governance token, COMP, have a measure of control. They can propose changes to the protocol, debate and vote whether to implement changes suggested by others without any Compound team involvement.
Compound launched its mainnet in September 2018 and never looked back. Skyrocketing in popularity — they recently passed a $2 billion market cap.
Yearn.finance (YFI) is an aggregator service for DeFi investors. Using automation it targets the broader investor sector and allows them to maximise profits from yield farming.
It aims to simplify the ever-growing DeFi space for users who do not wish to get into the technical aspects, or who wish to interact in a less committal manner, than serious traders.
Launched in February 2020, the service, formerly known as iEarn, has seen a huge uptake in recent months as new products debuted and developers released in-house token YFI.
New features keep rolling out on Yearn.fincance, most with the intention of helping preserve the long-term value of the platform.
The platform saw impressive growth in the second half of 2020 with the launch of a decentralised autonomous organisation (DAO), and their native token, CRV. The DAO uses the Ethereum-based creation tool, Aragon, to connect numerous smart contracts applied by users for their deposited liquidity.
The launch of the DAO and CRV token saw profitability boom. CRV is used for governance, and by virtue, is awarded to users based on liquidity commitment and length of ownership. An explosion in DeFi trading has solidified Curve’s longevity, with AMMs turning over huge amounts of liquidity and associated user profits. The future looks bright for CRV!
Decentralised finance is in for one massive year, and if you can ride the treacherous waves of volatility that come with it, you could see gains far exceeding those of the market leader, Bitcoin. If you are looking to diversify our portfolio, the DeFi space is where you need to be!
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