As I continue to explore and go down the rabbithole of DEFI it is now time to start exploring some of the DEFI projects and what they hope to achieve.

Ethereum based DEFI projects

Many of the DEFI projects are based on the Ethereum blockchain due to its smart contracts capabilities. However, as time has gone on the network has become congested and the GAS fees (network fees) have become astronomical. GAS fees are needed for transactions and so something to consider when using DEFI projects based on Ethereum.

AAVE

Aave is a promising DEFI project with a market cap of just over $2.6USD billion, making it the 50th most valuabel crypto by market cap according to coinmarketcap.com.

Aave works similar to a decentralized bank, where users can contribute to the ´liquidity pool´ by either borrowing or depositing crypto in return for passive income. The liquidity pool is just the summation of all the crypto the community has invested and sits at a healthy $23USD billion. Aave runs through the Ethereum blockchain, and operates through smart contracts.

Depending on the crypto being deposited, users can expect anywhere up to about 3% APY for their investment. These deposits can also be used as collateral for any future loans a user takes out.

Although like any DEFI there are risks, Aave is a solid project and one to explore if you have spare crypto around and want some extra returns.

Uniswap

Another popular DEFI project is Uniswap - with a marketcap of just over $9.4USD billion it is the 20th most valuable crypto by market cap according to coinmarketcap.com. Uniswap is a decentralized crypto exchange - a decentralized version of popular exchanges such as Binance and Coinbase. This means more anonymity as there is no KYC, just sign up and you can start trading P2P. By the use of smart contracts the users can trade cryptos at a prescribed rate.

Much like Aave the trading involved a liquidity pool for each coin pairing, however the liquidity pool is created from the users contributing their crypto in exchange for rewards.

Non Ethereum based DEFI

As time goes on in the blockchain space there are new blockchains emerging that also have smart contract capabilities, while also running faster and cheaper than Ethereum.

Avalanche

Avalanche is a fairly new blockchain, starting trading in late 2020. Avalanche has become one of the major new players in the crypto market with a market cap of over $20 billion USD, making it the 11th most valuable crypto by market cap. Avalanche is a new blockchain, which has similar capabilities to Ethereum, but with much lower fees (some say 1/10th of the price) and the ability to process thousands of transactions a second.Although Avalanche is new, it is growing fast with many DEFI projects running through Avalanche as opposed to Ethereum.

Some of the projects on Avalanche include Decentralized Exchanges, lending and borrowing and fundraising (similar to ICOs). Researching these projects is beyond the scope of this post as there are to many to even list here.

I could go on... but I wont

This post was just to give you all a taster about some of the DEFI projects out there and their applications in the crypto space.

In the coming days I am going to dive deep into one of the new DEFI projects and give it a go investing some of my crypto and create a how to guide.