TOP 10 DeFi projects to watch in 2022

Get to know which decentralized finance projects are likely to change the market.

Let’s start our piece with a quick recap: everyone remembers 2020 when the market turned bullish and DeFi entered the scene. After a huge rise, some analysts predicted that interest in this phenomenon would wane, but even in 2021, the decentralized finance market has continued to kick goals. The reason is the breadth of DeFi use cases, new ideas, and, of course, money moving around the ecosystem. According to DeFi Pulse analytics, on September 7 2021, the amount of locked money in all DeFi projects exceeded US$98 billion.

Clearly, the hype is not going away, and dozens, if not hundreds, of new projects with good tokenomics, breakthrough ideas, and meaningful promises are appearing day by day — but which ones are the best?

Of course, lists of promising projects will always have an element of subjectivity; some look heavily into projects’ technology; others form their lists based on investment perspectives. Marketing is often involved, and in other cases, the project is included because of the author’s preferences. We decided to do something different and tried to make the first objective list of projects that really deserve your attention.

Why is DeFi retaining popularity?

Decentralized Finance or DeFi is an area of the crypto industry that focuses on creating an open financial system without intermediaries like banks and brokers. DeFi is a set of tools that offers an improved version of traditional financial services, with lending, insurance, trading, exchange, and more. Why are these decentralized platforms better than traditional ones? Well, usually, DeFi fans highlight two clear advantages:

  • Due to decentralization, control of any service is evenly distributed among all actors. Transactions are transparent and free of intermediaries; thus, they are more profitable from the user’s point of view. At the same time, most DeFi services use open source development. You can check the code by yourself as well as use it to improve or design your own service.
  • DeFi is transparent due to smart contracts and governance voting. It allows projects to create clear rules that can’t be manipulated by powerful interests, encourage widespread participation, and prevent interference with any of the technology by third-parties, or those that don’t have the best interests of the project at heart.

Currently, the majority of DeFi protocols are built on Ethereum, but with innovative multichain projects being developed, Ethereum’s dominance is likely to be weakened.

Top DeFi projects to watch

Working in the blockchain field, our team comes across many different projects. While these are ones that we believe have strong credentials, if you are looking to engage with a DeFi project, we encourage you to do some further research, looking at the tech that is used, whether the protocol has had a smart contract audit, and the level of risk that is involved if you are looking to stake cryptocurrency in the project.

Algorand

Algorand or simply ALGO is known as the first blockchain platform that uses a pure Proof of Stake (PoS) protocol. It offers features such as standard tokenization, atomic transfers, and on-chain/off-chain smart contracts. At the beginning of September 2021, the Algorand team announced the launch of a US$300 million fund (approximately 150 million ALGO at today’s valuation) to support DeFi development within the Algorand network.

Along with the growth in the number of projects on this platform, traders expect an increase in the price of the token itself. Given the fact that the ALGO holders receive rewards for token staking, the project has every chance to gain explosive audience growth.

Synthetix

As the project describes itself, Synthetix is “the backbone for derivatives trading in DeFi, allowing anyone, anywhere to gain on-chain exposure to a vast range of assets.” Basically, it is another decentralized exchange, but with one unique advantage. Synthetix infrastructure allows users to create ERC20 tokens for any real-world asset and then trade them. Users can also use Synthetix to stake crypto assets and earn income from them.

Uniswap

Uniswap is the second largest decentralized exchange after Curve Finance. Based on Ethereum, Uniswap is an Automated Market Maker, doing away with the traditional order book; here, ERC20 token pairs are traded according to smart contract algorithms. First of all, the user does not need to register to make transactions here, as the exchange takes place directly from their wallet. Secondly, you can create your own trading pairs. Thirdly, if you have enough resources, you can earn extra income as a user who provides liquidity of different assets.

Yearn Finance

Yearn Finance is a whole ecosystem of different protocols covering loans, credit, insurance, and decentralized exchanges. The most popular service is Yearn.Finance, a lending platform that autonomously moves users’ funds to the most profitable liquidity pools, which maximizes their earnings. In other words, Yearn.Finance takes your funds, tracks the most profitable offers from the crypto market for deposits, and deposits them where the interest is higher.

PancakeSwap

Pancake Swap is a decentralized exchange based on Binance Smart Chain that is used for swapping BEP-20 tokens. The project is very similar to Uniswap, but comes with advantages and unique features that provide a great trading experience to end-users. For instance, there are low transaction fees, rapid confirmation times, lottery tickets for users, and very soon, an NFT marketplace that will go live.

Aave

Aave is an open-source landing protocol allowing users to borrow cryptocurrency and deposit their assets to earn interest. It uses a combination of fixed and variable interest rates. Moreover, Aave has additional features, including unsecured loans, interest rate switching, and unique collateral types. Being completely open-source, any user can interact with the interface client, API, or smart contracts to build third-party services or applications implemented in the Aave ecosystem.

Fantom

Fantom is an Ethereum-based project that offers smart contract and DeFi services to blockchain developers through its protocol. The value of this project is primarily its technological component. According to the developers, due to its high-speed consensus mechanism called Lachesis, Fantom allows digital assets to operate at unprecedented speed and delivers dramatic improvements over the current systems on offer.

1Inch

1Inch is a DEX aggregator solution that searches deals across multiple liquidity sources, offering users better rates than you could get on any individual exchange. In other words, it scrapes decentralized exchanges for the cheapest prices and reroutes its customers’ trades between them to try and ensure that they’re getting the best prices. This protocol incorporates the Pathfinder algorithm, which finds the best paths among different markets over 50+ liquidity sources on Ethereum, 20+ liquidity sources on Binance Smart Chain and 7+ liquidity sources on Polygon. In less than two years, the 1inch DEX aggregator has surpassed $40b in overall volume.

Compound

Compound is an algorithmic, autonomous interest rate protocol that provides a whole bunch of DeFi solutions. It helped kick off the rapid rise of DeFi as a project where users could get great returns through their crypto holdings. From the start, the Compound native token has gained 222 per cent in 2021.

Avalanche

The ambitious goal of this project is to build the Internet of finance, solving scalability issues that older blockchains face. Focusing on speed and low transaction costs, the Avalanche Foundation recently completed a $230 million private sale of AVAX tokens to some well-known crypto funds. It is currently the 14th highest cryptocurrency in terms of market cap, with a value of about $13.3 billion. Avalanche launched in September 2020 and has already seen more than 225 projects building on its platform.

Want more DeFi info?

This list is only the tip of the huge DeFi iceberg. Every month dozens of new names appear on the market, offering solutions that are faster, cheaper, more flexible, functional, and with greater security. If you’re looking to invest, you should follow DeFi new sources, trusted individuals, and projects that interest you. If you are looking to build, you should get in touch with the INC4 team, who can show you why our blockchain development services are so highly regarded in the blockchain space.

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Founder and CEO of INC4, I help fintech firms create blockchain and cryptocurrency solutions.

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Igor Stadnyk

Founder and CEO of INC4, I help fintech firms create blockchain and cryptocurrency solutions.