One of the hottest topics in the cryptocurrency and blockchain world is decentralized finance (DeFi). The rise in the number of people interested in learning more about their financial options, particularly long-term investments, has led to the development of DeFi projects.
In contrast to traditional banks, DeFi projects strive to provide normal financial services including loans, savings accounts, and asset exchanges without the employment of a third-party middleman.
Learn more about DeFi and its potential impact on long-term investments regardless of whether you’re an experienced blockchain enthusiast or a total novice.
There are five (5) major DeFi projects that will have an enormous impact on traditional and global financial perspectives, and we’ll take you through them one by one.
Table of Contents
Best DeFi Projects For Long Term Investment
There are many ways to lend and borrow cryptocurrency on Aave, which is one of the most popular DeFi platforms. Crypto pools enable smart contracts, which are then used to fuel the platform’s peer-to-peer lending feature. A widespread activity among cryptocurrency users is lending or borrowing money in exchange for interest.
Aave is built on the Ethereum blockchain. To transact with smart contracts and associated assets, users must rely on a network of devices running Aave. Traditional banks and financial organizations aren’t the only places where you can keep your money safe.
Features Of Aave
You don’t have to worry about banks, brokers, or other intermediaries when using Aave to lend and borrow money. So you’re making a financial investment while also having a say in the direction that technology is headed.
To earn interest, you can invest in 26 different cryptocurrencies, and you can also borrow up to 25 of those cryptocurrencies to use on the platform. Cryptocurrencies like ETH, LINK, and LEND can all be used to hold value or borrow money. However, it is reassuring to know that most cryptocurrencies, including USDC, have stablecoin status.
On the Aave website, you may check out the borrowing and lending rates for each cryptocurrency. To assess current charges, Aave uses an algorithm that takes into account the current consumption rate. Because there aren’t enough coins in the pool when interest rates are high, more crypto can be deposited. It is easy for people to borrow money because the interest rate is low because there hasn’t been much use of crypto.
In Aave’s possession, there are two DeFi tokens. The native governance token of the Aave protocol is AAVE. Similar to buying stock in a company, acquiring AAVE tokens is like doing the same. Your vote on protocol changes has a significant impact since you are allowed to do so.
A popular sort of loan on Aave is a flash loan, which may be used to leverage arbitrage possibilities in the crypto market. No collateral is required for a flash loan. Payment of the loan must be made simultaneously, and this typically just takes a few seconds. If the payment is not made as part of the same transaction, it will be refunded.
In total, there are only 16 million Aave tokens in use at any given time. The DeFi ecosystem has set aside three million of these tokens for use in the development of new programs.
PancakeSwap, a new decentralized financial system, is gaining momentum. A year ago, the DeFi project was introduced as a way to automate the crypto market maker. The Binance Smart Chain is used to build it. Like Aave, PancakeSwap provides liquidity to the market.
A total of approximately $5 billion was pledged by PancakeSwap decentralized exchange customers in October 2021. With a market valuation of around $2 billion, PancakeSwap is a great deal.
Features Of PancakeSwap
PancakeSwap may prove useful to coin collectors for many different reasons. Binary Chain BEP-2 is used by PancakeSwap. Binance is the most popular of all cryptocurrency exchanges in the world, with daily trade values exceeding $27 billion.
Tokens or cryptocurrencies can be exchanged on PancakeSwap without having to go through an intermediary. PancakeSwap, despite being made available on Binance’s platform, is not a subsidiary of the exchange. An analogy to Uniswap or Ethereum’s DEX is appropriate.
To accommodate the Binance Smart Chain’s BEP-20 tokens, PancakeSwap was developed exclusively with them in mind. Instead, you can use Binance Bridge to move your tokens across different exchanges. As a result, you can utilize them on the PancakeSwap DEX as BEP-20 tokens.
PancakeSwap offers an automated moneymaking (AMM) system that relies on user-enabled liquidity pools to facilitate crypto trading. Users are given tokens in return for their money by the liquidity provider/LP. With these tokens, you can recover a portion of your trading costs or earn rewards in exchange for locking them in the liquidity pool. Tokens can be exchanged for any coins you like.
You’ll get CAKE as your first reward after depositing your LP tokens into the liquidity providers pool. Token staking for SYRUP is now possible using CAKE tokens as collateral Additional features, such as lottery tickets and governance tokens, can be gained by using SYRUP tokens
In addition to providing game-like experiences, PancakeSwap’s other advantage is that it is free. For instance, you might wager on whether the price of a Binance Coin (BNB) would rise or fall within a given time frame.
3. Colony Lab
The colony is a community-driven investment fund with a long-term investment. Due to the Avalanche Foundation’s involvement, it is effectively an Avalanche-funded project at this point.
The Colony ecosystem, which is made up of smart contracts, largely supports the essential functions of an organization.
To begin using Colony, you must first buy the necessary tokens and then transfer them to a wallet that is compatible with the Colony protocol. Payments between locations will be made using tokens.
Finding a network with the lowest fees is important if you’re moving money. Choosing the right network is also important. Therefore, it is best to do some homework ahead of time to avoid becoming a victim of a scam.
Features Of Colony Lab
The Avalanche ecosystem accelerator constructed by the Colony community is powered by the CLY token from Colony. This initiative will fund avalanche-related projects. This will also help Avalanche DeFi Protocols. The colony acquires and stakes Avalanche and future network tokens (AVAX). Purchasing avalanche projects is another option for compiling an index.
Colony and Avalanche are expected to trade deal flow to facilitate project development on the platform. The most crucial part of this project is that it is led by the community.
Meanwhile, it is important to remember that Avalanche’s ecology revolves around DeFi’s progress. By working with Avalanche, the Colony project aims to bring about decentralized exchanges and a more democratic financial system.
There are currently two pillars supporting the colony. There was previously no method for institutions and their shareholders to get engaged in projects at the earliest stages. The colony has recruited a team of experts in the crypto business to ensure that the project’s investing process is thorough. Equities experts examine and analyze prospective investment possibilities with the use of in-depth research notes.
The second pillar is DAO (Decentralized Autonomous Organization). An important objective is to improve the overall health and security of the Avalanche ecosystem by increasing liquidity and utilizing staking. An indicator designed to track Avalanche’s growth in DeFi assets is also included in this section of the framework.
4. The Graph
The Graph (GRT) makes it possible to search and index data from blockchains without the need for a central server. As Google indexes web content to make it simpler to locate, so does this app. The Graph indexes a variety of blockchains, including Ethereum and Filecoin, so this is an analogous situation.
In the past, the Graph was only able to index the Ethereum blockchain. The NEAR blockchain, on the other hand, has been able to test on blockchains that are not compatible with the Ethereum blockchain, therefore it is now working.
Features Of The Graph
Subgraphs, or open APIs, arrange the data in the Graph. With the Graph QI API, developers can easily do queries using this approach. Because it is so easy to access, it provides the data required for DeFi apps like DEXs to function properly.
Projects that use the Graph Foundation as a foundation will continue to receive money from the foundation. Grants will continue to be given out for the extension of the Graph to other blockchains besides Ethereum. Subgraphs can be merged to create a global graph that comprises all publicly available information. It is possible to edit, arrange, and share this data among apps to make it as widely available as feasible.
Developers no longer have to choose between efficiency and decentralization because of the Graph. With GRT, applications and blockchains can now communicate in real-time. It is an outstanding milestone that GRT has handled more than a billion queries since it was created in 2020. There will need to be a simple mechanism to query the data needed to build these new entities, as stated by the network if DeFi takes over central finance.
The Graph has been able to provide smart contract blockchains with additional degrees of screening thanks to the Ethereum token’s strength. Besides IPFS and POA, data from Ethereum and POA can be indexed as well. More than 1,700 subgraphs have been launched by Aragon, Gnosis, Synthetix, and other decentralized apps (dApps).
A trading volume of $161,242,246 occurred in the previous 24 hours for GRT, which is currently trading at $0.5121. The Graph predicts a revenue increase of +212.52 percent by 2026.
Smart contracts were first created on the Ethereum blockchain. Despite this, traffic congestion and high transaction costs have plagued the area since then. It has spawned a slew of options that provide faster transaction processing at lower costs.
The open-source smart contract platform Fantom is one of the solutions for dApps and digital assets. This platform has made it easier than ever to borrow, lend, and trade synthetic assets. To begin earning money, simply log into your digital wallet, make a deposit, and voila.
Features Of Fantom
Fantom’s rise is being enabled by a blockchain trilemma-solving network design. Centralization and decentralization must be balanced while security must be maintained. The platform’s consensus process, called Lachesis, is the reason for its lightning-fast speed. Because of this, transactions are nearly instantaneous.
Decentralized applications can be built on the blockchain since it is smart contract-enabled (dApps).
When a transaction is completed in a matter of seconds, Fantom’s transaction processing takes care of it. It can process tens of thousands of transactions per second for a fraction of the cost of traditional methods. A milestone of three million transactions was accomplished in May 2021 on the Fantom platform.
A pioneer in the burgeoning field of decentralized finance (DeFi), Fantom is a company that doesn’t answer to any single authority. Consensus is achieved via aBFT (Asynchronous Byzantine Fault Tolerant) POS (Point-of-Sale). Consequently, the network’s operational efficiency can be maintained.
Fantom is a good coin to use for staking. In this location, you can earn a minimum APR of 3.79 percent and a maximum APR of 11.59 percent.
One benefit of DeFi is that it eliminates the need for middlemen and brokers. Anyone can use dApps to build DeFi, making it a superior financial tool in countries with a less developed banking system.
Despite this, it has yet to gain widespread acceptance. Due to a lack of regular access, people may not be using these sites as much as they used to. It’s still a big leap for traditional financial institutions to embrace new technology. Multi-chain thinking is essential if you want to be part of the future.