The universe of decentralized finance is a space in constant expansion. This way, it is hard to stay updated with all the projects that arrive on the scene, especially with the continuous number of development companies focusing solely on DeFi endeavors nowadays. But, what are the best DeFi projects of 2021?
With the growing popularity of crypto assets within traditional markets and Ethereum’s recent bull run, DeFi protocols are booming. Nonetheless, the old folk wisdom provides that “all that glitters is not gold”, which means it is crucial to know what platforms are worth the attention before onboarding any project.
In this article, you will find some of the best DeFi projects for mid-2021.
Innovative Solutions for Traders and Investors
Powered by Solidity’s programming language and the ERC-20 standard for issuing new tokens, the Ethereum Network became the go-to smart contract platform where developers can build on.
Since 2015, several projects that define the concept of DeFi, such as MakerDAO, Uniswap, Aave Protocol, Synthetix, Ren, Kyber Network, and others, are growing both in terms of popularity and capital, following the urgency for decentralization amid the global economy.
Following the yield farming frenzy, in 2021, DeFi is headed towards a more mature approach, with projects focusing on solutions that reunite the exposure to exponential gains while preserving much of the necessary stability amid an extremely volatile market.
In the following section, here are some of the best DeFi projects in 2021 that show immense potential!
Clover is an innovative project that aims to provide a foundational layer for cross-chain compatibility to enable users to navigate and transact across different major networks with ease.
The platform has EVM (Ethereum Virtual Machine) Compatibility, enabling Ethereum developers to migrate their contracts onto Polkadot through the platform’s powerful smart contract.
Hence, Clover minimizes the changes required to run already existing Solidity-built smart contracts on a new network, meaning Ethereum-based projects can just replicate their DApps and deploy them to Clover via MetaMask or other developer tools.
Clover’s unique multi-chain wallet stands out from the competition, as users can connect with web3 and Polkadot-based DApps simultaneously and have a full overview of their digital assets across different chains. That makes Clover one of the best DeFi projects of 2021.
Hence, users can connect to several networks within a single interface, exploring different ecosystems such as Ethereum, Polkadot, Kusama, Avalanche, Binance Smart Chain, Fantom, and Edgeware.
The platform’s CLV token is a cross-chain compatible asset that users can use to:
- Pay the network’s fees
- Lock into the platform to elect a governance council
- Stake into the platform to validate its infrastructure or nominate a node validator
- Save it into the treasury to fund projects
- Use it to deploy smart contracts and DApps onto the platform Oxygen
Learn more about Clover here!
It is impossible to dissociate DeFi’s increasing volume of capital and cash flow from lending markets. Platforms such as MakerDAO, Aave Protocol, and Compound are still responsible for much of the volume of money that boosts DeFi’s $40+ billion in Total Value Locked (TVL).
Nonetheless, many things can be improved in terms of lending/borrowing experience, especially when compared to similar services in TradFi. In this sense, Oxygen brings a decentralized prime brokerage built on Solana to enable users to access a permissionless, inexpensive, and scalable protocol for lending, borrowing, and trading digital assets.
This way, users can make the most of their capital and leverage gains within a next-level environment with a superior user experience.
Currently, Oxygen offers three main advantages, which are Oxygen’s prime brokerage, Oxygen’s wallet, and the native OXY token.
Users can earn yield, borrow from other users, trade for profit, and get trading leverage against a select option of digital assets within the platform’s brokerage.
The native OXY token powers the Oxygen protocol, being used for governance and economic balancing purposes. Each OXY token represents one vote, meaning OXY holders can vote on
binding governance initiatives related to its protocol.
Learn more about Oxygen here!
Bitwise has a more Wall Street-like approach that reunites the profitable opportunities of digital assets with a TradFi professional structure in terms of financial reports and portfolio management.
In essence, Bitwise is an endeavor focused on building crypto index funds. Even though most “DeFi puritans” could judge the book by its cover, the platform reunites elements of both TradFi and DeFi to deliver a unique service.
Founded back in 2017, the company was a pioneer when it created the first crypto index fund. Over the years, Bitwise has established itself as the leading provider of rules-based exposure in the crypto industry.
Combining modern software expertise and seasoned experts in the fields of investments, management, and financial advisory, Bitwise reunites professionals coming from firms such as Goldman Sachs, JPMorgan, IndexIQ, PayPal, Coinbase, Royal Bank of Scotland, and more.
They focus their efforts on providing customers with the entire picture of the crypto landscape, including monitoring the ecosystem to identify all meaningful hard forks, airdrops, and other opportunities while ensuring complete customer security.
However, even though the platform offers world-class custody to secure customers’ assets, all funds are stored within an institutional third-party custodian, which may represent a problem for many DeFi enthusiasts.
Learn more about Bitwise here!
The frenzy around yield farming is long gone now, but there are still profitable opportunities for those willing to diversify their trading strategies.
In this sense, some platforms offer the benefits of yield farming without the insane exposure to impermanent loss and the annoying manual protocol-switching strategies.
DeFi Yield offers a straightforward and result-oriented dashboard for DeFi investors/traders who want to expose themselves to profitable opportunities in the decentralized ecosystems. Hence, this makes it one of the best DeFi projects to look out for in 2021!
The platform created the Yield Farming Optimizer, an automatic solution that users can rely on to have the best returns without constantly relocating between different protocols.
This unique technology allows for the automatic placement of user funds between a wide array of pools with higher returns, maximizing profit by moving the capital invested by users around different pools where the APY percentages are higher.
Hence, DeFi Yield leverages the power of smart-contract technology to bypass the manual research threshold and enable traders/investors to earn bigger yields through an autonomous mechanism.
DeFi Yield connects with a plethora of decentralized protocols, which includes Uniswap, SushiSwap, Harvest, Synthetix, Curve, Pancake Swap, LuaSwap, BarnBridge, Pickle Finance, and many others.
Learn more about DeFi Yield here!
Cross-Chain Endeavors for Endless Possibilities
Undoubtedly, the rise of Ethereum was crucial for the development of the concept of DeFi, especially when it comes to the possibilities brought by smart contract technology and the ERC-20 standard.
However, there is much more to DeFi than just Ethereum, especially when there is an ever-growing number of ecosystems almost popping out of nowhere every day. Several major networks are constantly expanding within the scene, such as Polkadot, Cosmos, and EOS.
The demand for interoperability and cross-chain functionalities grows further amid users in the DeFi landscape. Fortunately, there is a lot outside of Ethereum’s spectrum to explore and find feasible solutions for recurrent issues that still preclude DeFi mass adoption.
In the following section, learn more about the best DeFi projects that have the potential to rival Ethereum in 2021!
Sigmadex is a decentralized perpetual liquidity protocol build on Polkadot and powered by game theory essentials. The goal is to provide a cross-chain and multi-asset marketplace where users are free to trade and profit in a community-governed environment.
The project relies on complex mathematical models to uphold market stability amid an extremely volatile landscape. This way, the goal is to outperform already existing collateralized liquidity models by employing unique game theory mechanisms, such as:
- Penalty and reward systems
- Comparison and interpretation of proprietary data models
To achieve its vision, Sigmadex is built upon the Polkadot infrastructure to optimize cross-chain communication. Hence, it is possible to seamlessly connect with other blockchains and transfer data without further issues.
The platform has a liquidity-focused approach, proposing a number of staking incentives for end-users to provide liquidity in several pools. Sigmadex creates a liquidity framework for scalability by enabling multiple layers of rewards based on collective models.
Also, the unique Sigma Risk Index, an Algorithmic Collateralization Engine (ACE), allows for the creation of synthetic assets. This technology constantly ingests market data and relies on machine learning to assess collateralization levels at any time.
Learn more about Sigmadex here!
Natively built on the Polkadot network, Polkalokr is a highly customizable escrow solution for token economies. Despite the success of many digital assets, many problems affect token economies, such as human error, malicious behavior, and lack of trust.
Most people can neither read smart contracts nor understand most technical concepts utilized by many projects. As a result, there is an existing gap between the non-technical users and the issuance of tokens in the cryptocurrency space.
To provide a solution for this problem, Polkalokr is restoring trust and simplicity to complex token ecosystems by providing a multi-chain token escrow platform. This way, the token distribution is put back into the hands of network participants.
Polkalokr removes the weak link (human component) from the process, focusing solely on governance to control the escrow systems and locked token pools. Hence, this is what makes it one of the best DeFi projects in 2021!
Currently, Polkalokr offers two products – LOKR and SWAPR. LOKR is a versatile multi-chain token escrow that is fully customizable and packed with features that include:
- Event-based distributions via oracle feeds
- Optional insurance products
- Monetization of locked tokens
On the other hand, SWAPR is a unique cross-chain token swapping protocol that allows token swaps between multiple chains with full privacy and multi-sign options.
Learn more about Polkalokr here!
Unmarshal is a powerful decentralized network for multichain data that encompasses data from Ethereum, Binance Smart Chain, Polkadot, Solana, Elrond, Near, and Algorand.
The idea is to power decentralized applications and networks with unique blockchain data indexers and transforming cross-chain tools. In this sense, there are countless use cases for Unmarshal.
First, it is possible to utilize Unmarshal’s protocol engine to track protocol volumes, analytics, transactions, and user positions for lending/borrowing liquidity. Exchanges can utilize Unmarshal’s APIs to track token metrics, protocol metrics, and price trends.
Developers building wallet applications can employ Unmarshal’s APIs and notifications to track user token balances, transactions, and protocol positions, while investors can utilize exclusive insights and analytic dashboards for optimized decision-making.
Unmarshal has a rich ecosystem with benefits for both users and developers, including rich data for balances and transactions, protocol position data, real-time alerts for updates, profit-loss tracking, and price history tracking.
Plus, the platform aims to provide a unique DeFi taxing tool by which users can generate easy tax statements for any wallet. So far, Unmarshal is live but has plenty of yet-to-launch features.
Unmarshal is expected to be fully launched in late 2021. Learn more about it here.
Cellframe is an innovative and complex service-oriented blockchain platform by which developers can build and manage quantum-safe blockchain solutions with a unique SDK.
The project’s ultimate goal is to create and implement the most secure and scalable blockchain that ever was, a network always open to improvement and further perfection. Plus, Cellframe provides interoperability by using cell bridges to public blockchains.
Cellframe cells can act as second-layer solutions for existing public chains, which includes almost any layer one platform existing nowadays. Also, it may work as a sidechain for throughput outsourcing.
Hence, users can connect several blockchains into a single system. There are plenty of implementations to come, as Cellframe is still developing much of its blockchain framework products.
First, Cellframe is building a distributed VPN and a Content Delivery Network (CDN), empowered by torrent base logic of use/bandwidth sharing economy, quantum-safe encryption, DPI resistance, optimized throughput, and traffic management system.
Also, the platform’s blockchain framework is an open-source framework that allows for the launching of fully customizable and scalable sub-chains.
Note that all these sub-chains are interoperable by design in the Cellframe ecosystem.
Learn more about Cellframe here!
Optimized Derivatives Markets
TradFi derivatives market is one of the world’s biggest markets, but the trend has also expanded within the crypto industry.
Currently, the Total Value Locked (TVL) in decentralized derivatives protocols surpass the $3 billion mark, with endeavors such as Synthetix, BarnBridge, HEGIC, and FutureSwap leading the way.
This movement can be explained by the fact that derivatives are crucial to bring liquidity into the market by attracting investors exposed to the risk that most other individuals would not bear.
Amid a market that is volatile by nature, the crypto derivatives trend has kept on growing during the 2020 pandemic, boosted by crypto bull markets and the growing popularity of digital assets amid traditional investors.
Here are some more contenders for the best DeFi projects of 2021 below!
Premia is an advanced decentralized protocol focused on financial instruments. The platform offers a straightforward dashboard where users can find the best options to trade based on a chosen expiration date.
Also, traders can search options based on both categories (call and put) or search specifically for a single category. So far, the platform has already captured a total value of $1.7M, with a huge volume of negotiations and 17 options of tokens offered.
The platform also relies on the ERC-1155 multi-token standard, as it allows for many unique tokens (options) to be created from the same contract while allowing for each contract to hold its unique characteristics to distinct option contracts.
Premia is still in the Beta stage, meaning that users are still exposed to some economic risks.
Nonetheless, the platform’s smart contracts went through multiple audits, and it is expected to reach its definite form soon.
Learn more about Premia here!
Powered by HEGIC, Hetoro is a decentralized derivatives trading platform that is still in Beta. The project offers traders/investors a straightforward approach to the derivatives market by delivering a dashboard with multiples features that include options, staking, and liquidity. It’s certainly one of the best DeFi projects of 2021 when it comes to derivatives trading.
When trading options, users have access to a dashboard with live graph information and a huge list of tradable options, either those that are active, expired, or exercised.
Users can also stake HEGIC tokens in the platforms pool to earn fees generated by the HEGIC protocol, including an interesting performance fee (5% of the profit). It is possible to earn returns both in ETH and WBTC, which users can withdraw anytime if there is liquidity available.
It is also possible to add liquidity to HEGIC’s secondary market (H2M) on Hetoro, providing ETH (14-day lockup) to earn profits from it. The platform also has a leaderboard that displays a list of the best performing options traders, including each trader’s option count and success ratio.
Learn more about Hetoro here!
Unavoidably, the future of finance is decentralized. Innovation like smart-contract technology and multi-protocol interactions opened the gate for a new world of trustless, uncensored, transparent and efficient products and services that promise to change the world forever.
2020 was certainly a definite year in the history of decentralized finance, especially with all the frenzy around liquidity pools and yield farming, followed by a rapid market correction. However, it is safe to affirm that the best is yet to come, in the form of the best DeFi projects of 2021.
The resilience demonstrated by DeFi markets amid the COVID-19 pandemic and global economic upheaval was a real trial by fire.
Thus, every day is another step towards mass adoption of decentralized finance, especially with the increasing adoption of novelties such as interoperability, cross-chain transactions, multi-chain portfolios, superior data analytics, and next-level infrastructure.