DeFi (decentralized finance) is a true revolution in the world of finance. But with so many projects, it's easy to get lost. We've compiled the top-3 DeFi projects you should know if you want to stay updated on the most interesting and promising developments. 🌐💡

1. Uniswap

  • What is it?: Uniswap is a decentralized exchange (DEX) where you can swap tokens without intermediaries.

  • How does it work?: Instead of a traditional order book, Uniswap uses automated market makers (AMM). You simply choose a pair of tokens, and the swap happens automatically.

  • Why is it important?: Uniswap has become a symbol of DeFi, demonstrating that cryptocurrency trading can occur without centralized exchanges.

  • Token: UNI — a governance token that allows voting on changes to the protocol.

2. Aave

  • What is it?: Aave is a lending and borrowing platform where you can take loans against cryptocurrency collateral or earn interest on your assets.

  • How does it work?: You collateralize your tokens (e.g., Ethereum) and receive stablecoins (e.g., DAI). If you do not repay the loan, the collateral automatically goes to the lender.

  • Why is it important?: Aave offers unique features, such as 'flash loans' — instant loans that can be taken and repaid in a single transaction.

  • Token: AAVE — a governance token that is also used for staking and receiving fee discounts.

3. Compound

  • What is it?: Compound is another lending and borrowing platform that allows you to earn interest on your crypto assets.

  • How does it work?: You provide your tokens to a liquidity pool, and other users borrow them. In return, you earn interest.

  • Why is it important?: Compound was one of the first projects to popularize the concept of 'yield farming'.

  • Token: COMP — a governance token that allows voting on changes to the protocol.

Why is it the future of finance?

  1. Accessibility: DeFi is open to anyone with an internet connection and a crypto wallet.

  2. Transparency: All transactions are recorded on the blockchain and visible to everyone.

  3. Control: You have complete control over your money. No banks can freeze your account.

DeFi Risks

  1. Volatility: Cryptocurrency prices can change rapidly, affecting collateral and yields.

  2. Technical risks: Smart contracts may contain vulnerabilities that hackers can exploit.

  3. Regulation: DeFi is still in a gray area in terms of legislation.

Fun fact: In 2013, a programmer named James Howells accidentally threw away a hard drive with bitcoins he mined in the early 2000s. This drive contained 7,500 bitcoins, which are worth millions of dollars today. He is now desperately searching for it in a landfill in Wales. 😅

Discussion question: Which DeFi project do you think is the most promising? And why? Share your thoughts in the comments! 💬