2020 was the year of the rise of Decentralized Finance. We saw the rise and fall of many DeFi projects, and some emerging as unicorns of the new economy. For example, we saw the Yam platform accrue over $400 million in deposits and staking. Within minutes, the token’s value fell from roughly $60 million to zero when a bug was discovered in the code. This staggering experiment all took place in less than 24-hours.
Meanwhile, projects like Chainlink, yearn.finance, Uniswap, and Polkadot took the crypto world by storm and brought real-world applications with potential to the table.
What is DeFi?
Decentralized applications are projects that focus on disrupting financial intermediaries. DeFi projects are working to increase the speed and automation of tools similar to traditional centralized systems to make them more efficient. One of the trends in the DeFi space is "yield farming," a process that lets users of decentralized applications get rewarded with tokens and yield on top of liquidity supplied to dApps, resulting in unusually high return rates.
As DeFi projects continue to bring real-world applications to the forefront and look for ways to advance, we expect them to grow. Below are some of the DeFi projects we expect to see have major growth in 2021. This is not investment advice, and the crypto market is subject to volatility. These are simply just some exciting projects to look out for!
Top DeFi assets in 2021
Band protocol is a cross-chain data oracle network that aggregates and connects real-world data and APIs to smart contracts. Band Protocol enables smart contract applications such as DeFi, prediction markets, and games to be built on-chain without relying on a centralized oracle’s single point of failure. BAND had an excellent 2020 and is up over 3,200% YTD.
Chainlink is enhancing the capability of smart contracts by “enabling access to real-world data, events, payments, and more without sacrificing the security and reliability guarantees inherent to blockchain technology.” It is a decentralized oracle service and performed very well in 2020, up over 600% YTD. Since blockchains cannot access data outside their network, oracles are needed to function as data feeds in smart contracts. Oracles provide external data that trigger smart contract executions upon the fulfillment of predefined conditions. Chainlink has huge fanfare, and we expect an exciting 2021 for the project!
3. Kyber (KNC)
Kyber is an on-chain liquidity protocol that allows decentralized token swaps to be integrated into any application, enabling value exchange to be performed seamlessly between all parties in the ecosystem. Tapping on the protocol, developers can build payment flows and financial apps, including instant token swap services. ERC-20 payments and innovative financial Dapps - helping to create a world where any token is usable anywhere. It has risen close to 400% in the past year.
4. Maker (MKR)
MakerDAO is a decentralized autonomous organization on the Ethereum blockchain seeking to minimize the price volatility of its own stable token DAI against the IMF’s currency basket SDR. Maker earns a continuous fee on all outstanding DAI in return for governing the system and taking on the risk of bailouts. Maker’s income is funneled to MKR owners through a Buy Back program. Maker (MKR) performed well in 2020 & is up 208% YTD.
Polkadot is working to deliver the most robust platform for security, scalability, and innovation and is up over 18.5% YTD. One of the reasons Polkadot is popular is because it is more scalable than Ethereum. It executes transactions using several parallel chains instead of standard blockchain nodes. Also, it's a cross-blockchain protocol that can transfer any kind of data between different blockchains. While Polkadot is a smart contract platform, thousands of developers are using it to build DeFi tools and projects, to take advantage of its speed and scalability, where Ethereum falls short.
Click here to read more about Polkadot’s success in 2020
Uniswap Protocol serves as a trustless and highly decentralized financial infrastructure. Having proven product-market fit for highly decentralized financial infrastructure with a platform that has thrived independently, Uniswap is now particularly well-positioned for community-led-growth, development, and self-sustainability. UNI serves this purpose, enabling shared community ownership and a vibrant, diverse, and dedicated governance system, which will actively guide the protocol towards the future.
7. Serum (SRM)
Serum is a decentralized exchange (DEX) and ecosystem that brings unprecedented speed and low transaction costs to decentralized finance. It is built on Solana and is completely permissionless.
Compound, which is up 5.1% YTD, is an algorithmic money market protocol on Ethereum that lets users earn interest or borrow assets against collateral. Anyone can supply assets to Compound’s liquidity pool and immediately begin earning continuously-compounding interest. Rates adjust automatically based on supply and demand. Supplied asset balances are represented by cTokens: representations of the underlying asset that earn interest and serve as collateral.
Yearn is a growing collection of DeFi services intended to act as a simple gateway for the broader DeFi ecosystem. YFI is purely and simply a governance token. Its holders are allowed to vote on decisions that affect Yearn. Its centerpiece is the ability to automatically invest user deposits in the highest-yielding place in the DeFi ecosystem, through Yearn Vaults. Yearn can also let people make stablecoin deposits straight to the highest-yielding lending platform available to earn competitive returns on stablecoins.
10. UMA (UMA)
UMA describes itself as a protocol for building synthetic assets. It aims to allow users to write self-enforcing smart contracts with economic guarantees. UMA is designed to power the financial innovations made possible by permissionless, public blockchains, like Ethereum. Using concepts borrowed from fiat financial derivatives, UMA defines an open-source protocol that allows any two counterparties to design and create their own financial contracts. But unlike traditional derivatives, UMA contracts are secured with economic incentives alone, making them self-enforcing and universally accessible.
How to buy DeFi coins on Voyager
1. Get the Voyager app: Now available in the Apple App Store and Google Play Store, visit the store and search Voyager or click here to download now.
2. Open a Voyager trading account: Fill in your personal information to create a trading account. As a licensed financial institution, we're required to collect this information to protect our users, but know that your personal information is always safe with us.
3. Link your bank: Link your bank account by navigating to the User Icon on your Market Screen. On your account page, tap Bank Accounts and add your bank.
4. Fund your Voyager account: To deposit USD, go to your account page and tap Transfer Cash or Crypto, then Deposit to Voyager Account and select USD. Next, enter the amount of USD you'd like to transfer and slide the Slide to Deposit USD banner. Now you can trade instantly.
5. Buy: Navigate to the Market Screen and scroll until you reach the asset of your choice. Tap to access that asset’s page, then tap Buy XXX. Insert the amount of USD you'd like to spend and slide the Slide to Buy XXX purple banner to complete your purchase.
Trading on the Voyager app is currently available to all U.S. residents (excluding New York state). We are actively working to expand to New York and internationally in the future.
The views, thoughts, and opinions expressed in this article are not investment advice. Please do your own research and consult with an investment professional before making investment decisions.
All investments involve risk and the past performance of a digital asset or other financial product does not guarantee future results or returns. Cryptocurrencies are highly speculative in nature, involve a high degree of risk and can rapidly and significantly decrease in value. It is reasonably possible for the value of Cryptocurrencies to decrease to zero or near zero. While diversification may help spread risk, it does not assure a profit or protect against loss. Investors should consider their investment objectives and risks carefully before investing. Previous gains may not be representative of the experience of other customers and are not guarantees of future performance or success.