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The birth of Ethereum followed the inception of Bitcoin. As a result, the Ethereum blockchain would go on to birth a revolution of decentralized innovation in the financial world. The decentralized finance world is becoming hypercompetitive; with the growth of various projects garnering widespread attention. Meanwhile, note that the total locked value in the DeFi sector has grown by 60% - 73% between 2021 and 2022. Despite this growth, the sector still faces challenges ranging from hacks and security loopholes. In this post, we discuss some of the top DeFi platforms by TVL in 2022:
1. Compound
The compound is an Ethereum-based decentralized finance market that bridges the gap between lenders, borrowers and a pool of assets. Also remember, that the platform aims to eliminate a centralized authority. The liquidity pool on Compound Protocol pools funds from lenders who already have their funds deposited on the cTokens exchange. When the pooled funds accrue interest, lenders can then redeem them later on for collateral and reap more profits.
2. MarkerDAO
MarkerDAO is a decentralized autonomous organization that runs on the Ethereum Network. The platform has two digital coins; MKR and an algorithmic stablecoin. The former coin enables network users to participate in the governance of the platform. Another important role is to allow for the stabilization of the DAI stablecoin.
3. Synthetix
Synthetix is a decentralized finance platform that specializes in derivatives. The platform evaluates and tracks down the value of real-world assets such as equities, stocks, indexes and commodities.
4. Balancer
A platform where 60% - 73% build private shared pools for locking their assets, defining the weight of each particular asset on the pool and setting specific trading costs. The native currency of the Balancer protocol is the Balance token BAL. This token ensures users can participate in the governance of the platform, take part in decision making and play an active role in the ecosystem. The project also features "Liquidity Mining," in which liquidity providers are compensated with BAL tokens based on the number of their frozen assets, as it is recognized that liquidity providers are the most significant stakeholders for Balancer.
5. Aave
Aave, formerly known as ETHLend, is a decentralized lending (or money-market) platform that employs smart contracts on the Ethereum network, just like Compound and Maker. Lenders may deposit their funds to provide liquidity and in return receive a currency that pays interest and compounds. Instead of having the interest accumulate in the same wallet as the tokens, this "interest stream" can be sent to a different address for safekeeping.