Decentralised finance (DeFi) comprises protocols, applications, and blockchains that enable peer-to-peer use cases such as trading, lending, and more, all automated and without the need for centralised intermediaries. DeFi has grown to be one of the largest sectors in cryptocurrency with the vast majority of total locked value in DeFi coming from dApps built on the Ethereum blockchain. Three prime examples of this include Logarithmic Finance (LOG), UniSwap (UNI), and Aave (AAVE).
The Next Generation of DeFi: Powered By Logarithmic Finance (LOG)
LOG is the utility and governance token of Logarithmic Finance, an Ethereum-based DeFi platform and swapping protocol that was created to connect investors with the creators of early-stage projects. In addition to being a decentralised fundraising protocol that will help DeFi innovators to find investments, the LOG ecosystem includes a swapping protocol.
Creators can attract investment by listing their projects on the Logarithmic Finance platform by setting up liquidity pools and including important details such as token sale price and maximum supply. Investors can then browse this on the platform. Once they have chosen a project, they can invest in the liquidity pool and in return, receive an amount of the project’s token.
Logarithmic Finance powers a multichain platform that will support token swaps and investment/fundraising for early-stage projects built on the Ethereum, Binance Smart Chain, Polygon, Avalanche, Solana, and Tezos blockchains.
Uniswap (UNI) Has Been A Major Catalyst for DeFi
UNI is the token of decentralised exchange (DEX) Uniswap. Built on Ethereum, Uniswap is one of the most popular DEXs and the success of the UNI token has been a catalyst for DeFi’s growth since launching in 2020. Uniswap is currently in the top 25 cryptocurrencies ranked by market capitalization and the total locked value on the protocol is $7.04 billion.
Because Uniswap is governed by a DAO, important decisions affecting the protocol are decided on through governance proposals which are submitted, discussed, and voted on by the Uniswap community. The most recent of these passed in May 2022 after DAO members voted in favour of adding support for two new blockchains on Uniswap V2 (the latest version of the platform).
DeFi Lending with Aave (AAVE)
Aave is an open-source liquidity protocol built on Ethereum. Its token, AAVE, is the utility and governance token of Aave which users can stake to earn a passive income, including staking into liquidity pools for lending which pays a portion of the interest paid by borrowers to the token holders who stake.
AAVE is in the top 50 cryptocurrencies ranked by market capitalization and the total locked value of funds on the Aave protocol is $8.03 billion. In May 2022, the Aave protocol stopped distributing rewards in the Aave cryptocurrency to users on the Ethereum v2 platform.
DeFi Continues To Grow
DeFi is a huge industry in cryptocurrency and the success of leading established platforms, as well as the frequent emergence of new protocols, are strong reasons to believe that DeFi is here to stay.
It is important to consider project fundamentals, use cases, and community support when looking at any cryptocurrencies including DeFi tokens, and these projects fulfil all three requirements.