Decentralised finance (DeFi) is all set to rock the global financial architecture in 2024. It uses distributed ledgers to effect peer-to-peer interaction between the financial transactors registered on the network. Even though it is still in the primary stages of development, the DeFi ecosystem, with its determining components such as cryptocurrencies, the blockchain technology and online presence, is making giant strides in the way the world has viewed financial transactions. The main plus points of DeFi are high scalability, low cost, high interest rates, environment friendliness, high security, transparency and increased accessibility.
In this article we will discuss the top 5 DeFi projects that are based on the Ethereum blockchain. As you all know, Ethereum is a DeFi friendly platform that offers all the benefits mentioned above. The top 5 Ethereum based DeFi projects discussed in this article are given below.
1️⃣Uniswap
Uniswap is a major decentralised exchange (DEX) built on the Ethereum blockchain network. Founded in 2018, Uniswap continues to steer a major share of the crypto market even now. Investors can invest in this liquidity pool using any ERC-20 compliant token. They can also use UNI, Uniswap’s native token, to voice their interest in the various governance updates of the platform.
The major advantages of Uniswap is safety, global presence, lack of need of permissions, ease of use and potential anonymity of the user. Unlike other traditional financial ecosystems, Uniswap does not lead the investor to counterparty risks as both parties involved are trading in real time. The platform does not ask for the personal details of the investors; it encourages the users to remain anonymous. As it is built on the online space, Uniswap is accessible to everyone irrespective of their geographical locations.
2️⃣Lido (LDO)
Lido is a decentralised autonomous organisation (DAO). investors can use this platform to stake liquidity on the Ethereum network. It was founded in 2020 by Konstantin Lomashuk, Vasiliy Shapovalov and Jordan Fish. This DAO is governed and secured by decentralised governance, audited code and smart contracts. The audited smart contracts of Lido ensures that any potential risk factors are mitigated.
The platform makes ETH staking more accessible to everyone by pooling ETH from different users. Investors can exchange ETH in return of sETH (staked ETH). The platform has a native token LDO, which the holders can use to manipulate the platform by voting for major governance updates.
3️⃣Aave (AAVE)
Aave is yet another leading DeFi ecosystem built on the Ethereum blockchain network. It is a decentralised, open source liquidity protocol. This platform enables its investors to earn a passive income from the rewards that they get for contributing to the liquidity pool. It was first built on the Ethereum blockchain in January 2020, and Ethereum is still the largest contributor to the platform’s liquidity.
Aave protocol is highly secure; its safety is ensured by incentivising the AAVE token holders for locking the smart contracts in a safety module. These locked coins are used when there is a liquidity shortage on the platform. Aave protocol is a promising blockchain network that is expected to make a mark in 2024.
4️⃣Eigenlayer
Eigenlayer is a restaking platform built on the Ethereum network. Investors can stake the already staked ETH coins or Liquid Staking Tokens (LSTs) for enhancing security. Restaking provides crypto economic security where economic incentives and cryptography are used to keep up the security of the platform.
ETH token holders can contribute to the security of the Ethereum protocol by staking their tokens and can earn rewards for the same. Eigenlayer solves security issues, inefficiencies in staking, complexities and technical barriers and centralisation risks.
5️⃣MakerDAO
Founded in 2014, MakerDAO is a decentralised autonomous organisation on Ethereum that works as an open source project. On this platform, users can generate their own Dai stablecoin, which is a stablecoin pegged to the US dollar. The decisions on the platform are made by the holders of MKR, the platform’s governance token.
The Bottom Line
These are the top 5 DeFi ecosystems of 2024. They are set to revolutionise the decentralised financial ecosystem through the innovations that they are built on. DeFi is set to make great changes in the global financial environment.
