- The advanced blockchain benefits of the Ethereum network has drawn projects to build on the network
- Ethereum has now launched over 3,000 blockchain-based projects
- The value of DeFi contracts now stands at $23.9 billion
In recent years, the Ethereum ecosystem has made steady but remarkable growth. Between September 2017 and the time of writing, the total value of DeFi contracts has exploded from $2.1 million to $23.9 billion.
The number of DeFi users have also skyrocketed. In January 2020, the DeFi ecosystem had approximately 100,000 users, however, today, the number stands at over 930,000.
Why Projects are Launching on the Ethereum Blockchain
While the goal of cryptocurrencies is to replace the traditional financial sector by making global payments easier, and more accessible, Ethereum-based projects or Decentralized finance combines the best of both crypto and finance.
DeFi operates with smart contracts which are automated enforceable agreements that do not require intermediaries like a bank or lawyer to be completed. This helps crypto projects to maximize their earning potential on the blockchain.
The advanced blockchain solution of Ethereum trumps every payment option in transaction speeds and scalability. As a result of the advanced blockchain possibilities Ethereum offers, dApp builders keep flocking to Ethereum to pitch their ideas.
As of the time of this writing, Ethereum has launched over 3,000 blockchain-based projects, the most popular being VeChain, Ethlance, Aragon, MakerDAO, Polkadot, Synthetix, and Chainlink. So, for 2021, which are the most promising DeFi projects?
Compound is an incentivized distributed network platform similar to the traditional money market. In simpler terms, the decentralized app allows users to deposit their digital assets into lending pools for access by borrowers. In turn, the lenders are rewarded with interest on the assets they deposit.
The app allows users to lend and borrow different cryptos. As a result, the interest rates paid and received is dependent on the supply and demand of each crypto asset. Interest rates are much better than the simple interest rates of other competitors.
Strategically, Compound is in a good position for growth this year. As mainstream interest in cryptos increases, apps like these which offer a similar, but better experience to real-world projects are bound to benefit.
DeversiFi has given itself an edge over many similar custodial service platforms with its layer 2.0 launch in Q3 of 2020. The platform is now much faster than its contemporaries and can facilitate above 9,000 Ethereum transactions per second.
DeversiFi now uses order-books that are off-chain. However, its settlement occurs on the Ethereum blockchain. Users can now enjoy fast-moving order books and instant execution, without having to trust the exchange.
Bahrain-based cryptocurrency exchange Rain has received regulatory approval from the Central Bank of Bahrain (CBB). The exchange launched after raising $2.5 million in a seed funding round led by BitMEX Ventures and Blockwater, a Kuwait-based cryptocurrency fund.
3. Orion Protocol
The strength of this DeFi project is not outside but within the DeFi ecosystem. Orion Protocol solves some fundamental problems of DeFi by creating a unified liquidity pool for the entire crypto market (CEXs, DEXs, swapping pools).
Orion Protocol is an open-sourced decentralized platform that drastically lowers the risk of holding cryptocurrencies on centralized and decentralized exchanges.
In August 2020, Orion Protocol became one of the first projects to launch with a Dynamic Coin Offering (DYCO). This new token sale framework offers utility tokens that are backed by the USD for up to 16 months and offer participants the option of an 80 percent refund.
On the Flipside
- China’s Blockchain-based Service Network (BSN) will test a central bank digital currency (CBDC) as early as the second half of 2021
- The BSN already looks like a blockchain of blockchains with a total of 30 public blockchain integrations slated for this year
Launched in 2020, Aleph.im seeks to revolutionize the cloud computing industry by being the first cloud-native blockchain. Aleph.im is a cross-chain network built over blockchains (layer-2) with a focus on decentralized applications (dApps).
The DeFi project offers serverless computing, file storage, and databases. Aleph.im is also in compliance with DDPR and has a trustless data management system. As the DeFi ecosystem expands, priority would be shifted to data management.
Ox is one of the most advanced DeFi payment protocols. It is designed to simplify the process of Swapping ERC20 tokens. Ox is built to scale-out things in the Ethereum blockchain, making the chain even more scalable, thus handling more transactions.
It provides increased speed, security, and immutability for both ERC 20 and ERC-723 tokens on the Ethereum blockchain. Ox is already ranked among the top 20 best performing DeFi platforms and is likely to grow further.
2020 was a particularly good year for DeFi, the best year in terms of growth and adoption of the blockchain solution. The Ethereum 2.0 launch began in December 2020 and would run through 2021, hinting at an even better year for DeFi projects. With that, there will likely be more promising projects to launch on the ethereum blockchain.