Top 5 Best DeFi Projects Promising Strong Growth In 2023

Defi is said to be the bright future of the cryptocurrency industry as more and more people are aware of the benefits of decentralized finance. The DeFi space is growing at a fantastic rate, and many projects offer great investment opportunities. Today’s article will share the top 5 best DeFi projects you should not miss in 2023.

Before learning about projects, let’s get an overview of the concept to Defi.

What Is DeFi? 

DeFi, short for Decentralized Finance, refers to a crypto sector that works to bring most of traditional finance’s capabilities inside the cryptocurrency space. It does that by disassembling the various financial services and decentralizing them. 

Specifically, this sector brings the power of smart contracts to currency services such as lending, borrowing, earning interest, and trading assets. That’s why it is often stated that DeFi assets works like traditional banking to some extent.   

DeFi projects usually denominate dApps and infrastructures such as asset management tools, decentralized exchanges (DEX), DeFi infrastructure & Dev Tooling, and many others.   

Although they are risky to invest in and use, the more time passes, the more they optimize and come out with better tokenomics and more secure infrastructures.  

1. Aave (AAVE)

Aave is another decentralized finance platform where users can lend and borrow a variety of cryptocurrencies. The platform facilitates peer-to-peer lending through smart contracts enabled by a pool of cryptocurrencies. People seek to lend cryptocurrency for interest or borrow capital in exchange for interest payments.

Aave is built on the Ethereum blockchain. The smart contract manages all of its assets, so users rely on a series of algorithms and computer networks running Aave to process transactions. You no longer have to trust or just pay traditional banks or financial institutions to manage your money.

Aave’s goal is to make essential financial services more accessible, meaning you can lend and borrow without the oversight of banks, brokers and intermediaries. All in all, you’re investing in technology while also having a say in its future.

AAVE, is the native governance token of the Aave protocol. When you buy AAVE tokens, it’s like buying shares of a company. As such, you can vote on improvement proposals that could change the direction of the protocol. The AAVE token is based on the ERC20 standard and is designed in a deflationary manner as a core security element of the Aave Protocol.

2. FANTOM (FTM)

FANTOM is a smart contract platform that provides developers with DeFi services through a directed acyclic graph consensus algorithm. The go-to-market platform with tools simplifies the integration of existing dApps and provides a detailed staking reward system and built-in DeFi tools.

DeFi Smart Contracts and related services are supported on Layer 1 Blockchain, Lachesis. But the Fantom ecosystem also provides security for other layers, including Opera, Fantom’s EVM-compatible smart contract chain.

In essence, the project’s mission is “to provide compatibility between all trading authorities around the world.“

Fantom is instrumental in decentralized finance (De-Fi) and it doesn’t need a regulator. Its infrastructure is tied together through the POS consensus mechanism aBFT (Asynchronous Byzantine Fault Tolerant). As a result, it can effectively maintain the operation of the entire network.

Fantom is used for payments due to its high throughput and speed. It is also ideal for on-chain governance and governance operations. By the way, it means that if you own tokens on the FTM network, you will be able to vote on improvement proposals, recommend changes and make decisions using the governance on the FTM network. Your influence will depend on the amount of FTM you hold.

3. Uniswap (UNI)

Uniswap is primarily known as the current leader in the crypto DEX space. It is a decentralized exchange built on the Ethereum network, founded in 2017 by Hayden Adams.

The trading protocol is built to be an automated on-chain market maker (AMM) that can determine the price of a cryptocurrency based on the ratio of two cryptocurrencies in a pool.

Uniswap allows the exchange and trading of various DeFi tokens, as well as Liquidity Provider tokens. And even if you don’t find an ERC20 token in the list, you can still create a pair and exchange it for another cryptocurrency if you find the smart contract’s address.

And besides swaps, users can also provide liquidity in existing pools or create new pools for offering.

UNI tokens were staked prior to initialization as ERC20 tokens. Until 2024, UNI has an empowering term of 4 years for 40% allocated to the team, employees, investors and advisors. After that, UNI will operate with a perpetual inflation rate of 2%.

4. Chainlink (LINK)

Many dApps in the crypto space need oracles to interact with different kinds of data. And the current leader in oracles is Chainlink.

Chainlink offers a decentralized data set through a series of oracles and smart contracts, providing a middle ground between real-world data and blockchain applications.

Since 2019, Chainlink has grown exponentially, providing over 75 price feeds to 300 smart contracts and decentralized applications.

It’s important to notice that Chainlink as a project was developed and evolved to the point that it’s giving grants to crypto initiatives deemed helpful to the ecosystem.

In the DeFi space, Chainlink makes a significant impact by facilitating other projects with oracles to ensure their functionality. So, we consider that Chainlink deserves its place among our top DeFi crypto projects.

A few examples of notable projects using Chainlink oracles are Synthetic, AAVE, and KyberSwap.

LINK tokens are preminted. Therefore, the Max Supply is the same as the total supply.

5. Compound (COMP)

Compound is one of the most popular DeFi protocols that give investors earning opportunities by depositing their cryptocurrencies in a liquidity pool in order to earn interest.

In exchange for liquidity, the liquidity providers receive cTokens (for ETH – cETH) in return for redeeming later and collecting interest.

The protocol also allows for borrowing by depositing cryptocurrency collateral, giving out 50-75% loan-to-value loans.

The platform’s native token, COMP, is a governance token used to propose, debate, and vote changes to the protocol.

The COMP tokens are not mineable, yet the Compound Labs team issues 1273 new tokens daily, of which 50% go to borrowers and 50% to lenders. Furthermore, the 22.26% allocation for founders and team is subjected to a 4-year vesting period.

Conclusion

The DeFi space is growing at a fantastic rate, and many projects offer great investment opportunities. The DeFi projects mentioned above are the 5 best defi projects in the industry and undoubtedly suitable investments in 2023. To optimize investment, it is necessary to carefully evaluate projects and remember that the cryptocurrency market is very volatile. Any investment should be carefully considered before making.

Hope the above article is useful to you. If you have any suggestions, please leave them below in the comments section to make our article better.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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