The rapidly progressing world of Decentralized Finance (DeFi) hit a new milestone as the Total Value Locked (TVL) figure appears to be fast approaching the psychological $6.5B mark. At the time of this writing, the TVL stands at $6.37B. The Maker dominance has fallen to 23.19%, as other prominent DeFi protocols eat up its market share, a sign of healthy competition.
The rest of the leaderboard looks as usual with some notable promotions. The Compound protocol has lost its #2 spot to Aave, which now has an 18.05% share of the DeFi market. It is followed by Curve Finance which recently released its CRV token and commands 16.16% market share.
A relatively new entrant is the recently released and already creating waves project of yearn.finance (YFI) which focuses on yield farming / liquidity mining. Also, the Bitcoin on Ethereum tokenizer WBTC is gaining further ground.
Top 5 Emerging DeFi Projects
The DeFi world is filled with interesting projects, based on novel concepts and experimental design. Below are top 5 projects that are emerging in this rapidly developing space.
Yearn.Finance (YFI) – TVL $625.7M
Introduced on July 17 by Andre Cronje as an experiment in yield farming and liquidity mining, the platform allows users to provide funds to vaults, which automatically rotate them between DeFi apps such as dYdX, Aave and Compound lending protocols, in search of the best yield. The entire process is managed by a smart contract and is fully automated.
The yield providers earn profits as well as acquire YFI tokens (capped at 30,000 tokens), which can be sold for extra profits. The first YFIs were traded at an initial price of $4-30. At current price of $10,000, the same ROI has crossed over 25000%!
Wrapped Bitcoin (WBTC) – TVL $346.6M
Wrapped Bitcoin (wBTC) is a layer 2 solution and Bitcoin equivalent ERC-20 based Ethereum token, which is backed 1:1 by real Bitcoin. It allows Bitcoin to be used on the Ethereum blockchain especially for DeFi protocols.
The users supply BTC and the system mints an equivalent amounts of WBTC. This WBTC can then be used on the Ethereum chain. When the user chooses to have their BTC back, the WBTC is burned, and the BTC is redeemed. Over 28,000 WBTC have been minted by now, worth over $345M!
Thorchain (RUNE) – TVL N/A
Thorchain (RUNE) aims to enable decentralized and wrapped token-less exchange of digital assets across different blockchains. The nodes staking RUNE tokens run the network, facilitating the cross chain transfers. This will allows users to skip the centralized exchanges, which currently process nearly all of these transfers. The AMMs like Uniswap and Bancor also deal with multiple assets, but can only handle either a single or two blockchains.
Uniswap – TVL $177M
Uniswap is an “automated liquidity provider” on the Ethereum blockchain. It can automatically swap or exchange tokens, without the need for traditional counter-parties. Announced in March 2020, the Uniswap v2 is the second iteration of the popular Decentralized Finance (DeFi) protocol.
It introduces direct ERC20/ERC20 pairs (previously limited to ERC20/ETH pairs), hardened price oracles (resilient against manipulation), flash swaps / instant loans, new improved minimalist and modular smart contract, other technical improvements, inactivated provision for protocol charge mechanism and progress towards the later introduction of a decentralized governance process. Uniswap doesn’t have a native token yet, but it has recorded daily trade volumes in excess of $150M in the last month!
REN (REN) – TVL $178.8M
REN describes itself as a trustless and decentralized virtual machine (VM). It enables cross-chain interoperability for DApps, allowing transfer of value and enhanced liquidity. Using the REN system, any token can be transferred to any blockchain. It is 100x faster than the atomic swaps, secure, integrates into existing infrastructure and DeFi supported.
For a common user, it means that they can now use BTC, BCH, and ZEC in any DeFi app, especially on the Ethereum blockchain. The most popular and widely used asset is renBTC, with 1:1 peg with Bitcoin.