Top 3 DeFi Projects With Robust Use Cases

The financial year 2021 saw some DeFi projects move mountains, showcasing successful spells and high yields for investors. Some of these include Aave, Compound, Uniswap, and PancakeSwap. Due to the increasing number of projects in the DeFi 2.0 ecosystem, it is believed that 2022 will also be a huge year for DeFi projects.

Although the full impact of DeFi projects is yet to be seen, the initial trickle has started. Here are three of the projects with the most promising yield earning mechanisms in 2022:

1. Alchemix

Alchemix is an innovative digital currency lending protocol. With Alchemix, your collateral will turn into an interest-bearing DeFi yield farm that will pay back the loan.

If you're not ready to commit to a traditional loan yet, Alchemix provides you with a crypto loan based on your collateral's future yield. It means that the interest you receive will be computed based on the value of your collateral.

Alchemix has vaults that provide users with smart contracts that allow them to manage their yield positions. Then, investors can earn yields that are deposited into the transmutator pool. Each time it is sent, it is allocated according to the amount of alUSD deposited in it. When users make their DAI claim in the pool, their stake will equal the amount of alUSD they have deposited.

In addition, the Alchemix platform features a variety of protocols that can generate a high yield using your collateralized assets. After you deposit in the vault, alUSD, a synthetic stablecoin, is issued, and then you can swap it for other cryptocurrencies or cash.

The Alchemix team is also currently working on releasing additional DApps that will utilize the alUSD and other future al-tokens. DApps will allow the DeFi network to increase the demand for their products and reduce the selling pressure on the “al tokens.”

2. Aave

Aave is an open-source liquidity protocol that lets people lend and borrow cryptocurrencies. Users get to lend, earn interest, and even borrow and later pay interest.

Instead of being matched to a specific lender, users can obtain loans through an algorithmic money market. The interest rate that's charged depends on the utilization rate of the assets in a pool.

In March 2022, Aave launched its third-generation protocol, which included a feature called Portal. This allows users to seamlessly operate across all blockchains. With this feature, you can now participate in the lending and borrowing of other chains such as Avalanche and Solana.

The Aave protocol's governance is a use case for the AAVE token. In order to implement improvements, holders can vote on the proposals. This includes managing the funds in the Aave ecosystem reserve and changing the money market's parameters. AAVE adds a vital component to the ecosystem by decentralizing the DeFi application. It allows users to manage their data and prevent black swan events.

As part of its services, Aave is also developing an NFT game called Aavegotchi.

3. Curve

In Curve Finance, users can swap stablecoins with no transaction fees and minimal slippage. Additionally, it serves as a liquidity aggregator for anyone with assets that they can add to its liquidity pools.

Users can easily access liquidity from its various pools through its market maker protocol. Curve liquidity pools also allow users to perform direct token trades on its various classified pairs. It also offers lower trading fees. Compared to other DeFi protocols, the Curve algorithm focuses more on minimizing the risk of slippage. It ensures that traders can save more money.

Why DeFi’s Future Is Bright

The rapid emergence and evolution of DeFi have been attributed to the various technological and macro trends impacting the financial services industry. Whether it is through the creation of new decentralized exchanges or the provision of insurance products, DeFi is constantly looking to expand its reach.

There are some upcoming projects with unique use cases, such as Pickle Finance, SyncBond, and DAOVentures. Pickle Finance allows users to lock up tokens and stablecoins in DeFi protocols and earn money. SyncBond, on the other hand, leverages the NFT (ERC-721) token standard to create DeFi bonds. DAOVentures allows users to deposit money into their pool, and then the money is added to protocols such as Pickle Finance.