The history of decentralized finance is part of Ethereum history. The DeFi term was born in a Telegram chat dating from mid-2018 between some of the earliest figures in the industry when they were discussing what to call the soon-to-be revolution. Fast forward to 2021, and we are at the dawn of DeFi 2.0.
Indeed, until this day, most DeFi projects and platforms are still concentrated in the Ethereum network. However, a recent wave of new projects proved that DeFi and Ethereum are not synonyms, as the concept of decentralized finance is an ever-expanding universe.
In this article, you will find out projects that demonstrate the countless profitable opportunities across different networks and ecosystems.
Is Yield Farming Dead?
In essence, yield farming is the designation for strategies created to maximize the rate of return on an invested capital by leveraging various DeFi protocols. This way, yield farmers are always switching strategies to chase the highest yield across different platforms.
It is safe to affirm that the pinnacle of yield farming was mid to late 2020, especially with the rise of food coins, liquidity pools, and lending/borrowing capital for further leveraging strategies.
Up until this moment (mid-2021), yield farming is not dead yet, even though all the frenzy around the concept is long gone. However, many opportunities are left for investors who know how to play the game with precision and timing.
During medieval times, alchemists created several occult theories based on the supposed transformation of matter. Nowadays, they are mostly remembered for trying to convert base metals into gold.
DeFi is not medieval magic, but Alchemix promises to be the gateway for golden yield opportunities. This unique project is a decentralized protocol that allows for the creation of synthetic tokens.
These synthetic tokens represent the future yield of a deposit, which permits users to access near-instant tokenized value against temporary deposits of stablecoins.
The protocol’s current version has a synthetic derivative called alUSD, which can be minted using DAI (other stablecoins will be added eventually). Hence, users deposit DAI into the platform’s smart contracts to mint alUSD tokens.
Once deposited, all the users’ DAI is committed to yearn vaults to generate yield, eventually paying back user debt automatically.
Plus, there are several other options that users can choose to manage their loans, such as leaving the funds deposited to keep earning yield, repay the loan early using alUSD or DAI, or liquidate the loan using part of the collateral to repay the loan.
Alchemix also has a unique feature in which users can send their alUSD tokens to the transmuter to queue them for conversion back to DAI, and eventually, other stablecoins.
Nonetheless, the transmutation process takes a bit of time to materialize, as it depends on other dynamics of the ecosystem to determine its processing pace.
Start with Alchemix here!
Following a more mature approach to yield farming, Yield Protocol is an open-source protocol that permits users to create and execute yield farming strategies on the Ethereum ecosystem.
Designed to minimize smart contract risk, the protocol simplifies the abilities of each contract, allowing virtually anyone to design financial strategies that other users can leverage without necessarily granting access to their funds.
The platform has a modular design, meaning users have access to various purposes and use cases. For instance, a user can design and deploy a unique yield farming strategy that includes lending, trading, and everything else in the middle.
To tie all products together, the protocol issues the native token YIELD. Hence, all products built on top of the Yield protocol must integrate YIELD into their system. Plus, a percentage fee of all the yield resulting from all products is converted to YIELD as well.
So far, the protocol’s first product is the Yield Shield, an automated yield farming aggregator focused on personalized risk classification and pre-determined stop-loss functions.
As it is plain to see, the product upgrades the yield farming experiencing while mitigating excessive risk. Overall, this protocol paves the way for DeFi 2.0 with its approach to yield farming.
Start with Yield Protocol here!
Initially, cryptocurrencies were meant to be used in everyday transactions. However, Bitcoin, Ether, or other popular cryptocurrencies are rarely used as intended at their inception, as there are few opportunities to spend them in real-world situations.
To find a solution for this issue, Cash Tech is a platform that wants to facilitate the use of digital currencies in people’s daily lives. This function is what makes it an ideal pioneer for DeFi 2.0.
The idea is simple and straightforward – crypto merchants and holders can download the Cash Tech app to negotiate using digital currencies. This way, the project reunites both sides, allowing merchants to receive cryptocurrencies and holders to use them as means of payment.
The platform’s app connects merchants and buyers through instant settlement transactions, easily made via mobile, with no need for bank accounts or debit cards.
Cash Tech also has an exclusive rewards program where both merchants and consumers can obtain lucrative incentives. Hence, merchants can receive bonuses when they get paid, and consumers can receive bonuses when they pay for products/services.
Another great feature is the platform’s unique exchange mechanism, in which users can send digital currency anywhere and exchange it into a fiat currency of their choice. Hence, it is possible to exchange bilaterally between fiat and crypto with no charge of fees.
Cash Tech offers multi-blockchain integration, bridging assets and functionalities from distinct ecosystems such as Ethereum, Polkadot, Binance Smart Chain, Near, Solana, and Celo.
Learn more about Cash Tech here!
AntiMatter is an on-chain decentralized derivatives protocol where users can profit with perpetual call and put options while not being exposed to liquidation risk and not funding fees.
So far, the protocol has an initial perpetual ETH option that includes both call and put options into one product. No funding fees are charged from users, as the protocol employs a token equilibrium mechanism through market-making and arbitrage.
The current version (V1) also has a docking container for collateral, which means users can deposit various types of stablecoins as collateral for minting the underlying option asset simultaneously.
The protocol has a native token called MATTER, which is the utility token of the ecosystem. Users can obtain MATTER through staking, governance staking, voting rewards, option creation/redemption, and liquidity provision.
Also, there is the exclusive LP farming mechanism, in which liquidity providers are eligible to purchase MATTER tokens at discounted prices. Users can also use their tokens to pay protocol fees, such as option generation/redemption fees and transaction fees.
The native token also functions as the engine behind the self-sustainable approach of the platform, as fees obtained by the protocol as used to buy back MATTER.
AntiMatter is a cross-chain compatible endeavor, offering a bridge between different ecosystems such as Ethereum, Polkadot, Binance Smart Chain, and the Huobi Eco Chain. It’s yet another interesting pioneer DeFi 2.0 project.
Learn more about AntiMatter here!
Decentralized Solutions for Everyday Issues
Roughly 11 years after Bitcoin’s inception, even the most skeptical critics cannot deny the success of cryptocurrencies. Recently, ETH has passed the $4,000 mark, and BTC is still going strong with the growing institutional adoption.
As a result, now a list of selected digital assets even has its own index on Nasdaq (Hashdex 20 Nasdaq Crypto Index FIC FIM), which demonstrates cryptocurrencies are not simply another hypetrain.
Further Reading: Are derivatives the future of decentralized finance?
However, most people still see crypto assets more as a speculative thing than as an everyday currency, which is one of the factors that preclude blockchain and DeFi mass adoption.
Consequently, the development of decentralized solutions that permit people to solve everyday issues are crucial, providing a gateway by which the masses can access the benefits of decentralized finance. This, in turn, leads us to more promising DeFi 2.0 projects.
Anchor Protocol is a non-custodial and decentralized platform that offers convenient and straightforward products focused on savings. Instead of relying on household saving accounts, Anchor allows users to access many crypto-powered saving products.
Build on the Terra blockchain, the protocol has saving products for Terra stablecoins that aim to deliver a fixed rate of 20% API on deposits. Powered by a diversified set of staking rewards from PoS blockchains, it offers much more stability than money-market interest rates.
The protocol can also be an excellent solution for unbanked or underbanked populations, as there is no need to provide documentation whatsoever. All users need to do is to onboard the platform using a Terra wallet and deposit their funds.
Within Anchor, there are three main categories of users:
- savers (people depositing their funds into the platform)
- protocol shareholders (the users who own ANC tokens and participate in the protocol’s governance/dividends)
The ANC token is the protocol’s governance token used to create new governance polls for voting purposes and to incentivize borrow demand and initial deposit rate stability. Thanks to its innovative savings model, it is yet another promising DeFi 2.0 protocol.
Learn more about Anchor Protocol here!
There was a time in the crypto industry when ICO’s were the biggest trend. However, over time the tendency became almost obsolete, and nowadays, projects walk new ways when trying to reunite capital to materialize their ideas.
In this context, Poolz is an innovative project that aims to link project owners and early-stage investors through a unique mechanism. They envision a trustless crypto market in which prospective startups can have unbiased access to a willing and liquid market, being capable to get their projects off the ground.
Consequently, the project removes the necessity for ICOs, eliminating all the expensive costs and regulatory requirements associated with it.
Poolz is built as a DAO protocol on Ethereum, allowing users to engage in cross-chain token pools and auctions. In this sense, project creators can:
- Create a pool for their tokens where investors will access them immediately
- Specify and customize lock-in periods after which investors will receive the tokens for the swapped amount
- Expand the demand for NFTs to DeFi by creating profitable auctions.
Currently, the project has integrated several ecosystems, including Moonbeam, Binance Smart Chain, TomoChain, and the Huobi Eco Chain. The platform is in the course of a full migration to Polkadot.
Learn more about Poolz here!
Next-Level Interactions with Cross-Chain Platforms
Several Defi 2.0 projects in the crypto community are putting a lot of effort into finding solutions to persistent issues such as scalability, interoperability, and inter-chain communication.
While most decentralized projects are still concentrated on Ethereum, there is a tendency to expand to other ecosystems.
With the rise of Polkadot, Cosmos, Kava, and many other chains focused on cross-chain functionalities, the Ethereum space is just part of a whole galaxy of new possibilities. It’s time for a new era in decentralized finance, the DeFi 2.0.
Polkadex is a decentralized peer-to-peer (P2P) order book-based crypto exchange built on Substrate. Offering support for Ethereum and Polkadot ecosystems, the platform’s order book is a non-custodial layer 2-based exchange running on the Polkadot network.
This way, users have access to trustless cross-chain bridges by which they can bring any token to the Polkadex network. The idea is to build a platform for the future in which it is possible to integrate other liquidity providers through forkless upgrades.
Polkadex is non-custodial, which means they neither have access to user funds nor smart contract keys. Users can onboard the platform via wallets (e.g., browser wallets, mobile wallets, iPad) and add on-chain trading bots to optimize cross-chain trading.
In April 2021, the platform held both an IDO (Initial DEX Offering) and an IEO (Initial Exchange Offering) to start distributing its native token PDEX, which has a total supply of 20 million tokens.
Learn more about Polkadex here!
Even though decentralized autonomous organizations (DAOs) are much better than any centralized governance system, they also have their faults.
For example, whales can accumulate unfair voting advantages by accumulating large amounts of governance tokens. The situation can be even worse when the utility of voting rights is tied exclusively to a governance token.
Also, there are “dark DAOs”, which are entities that utilize smart contracts to undermine trust in voting systems. In this sense, Polkadot-based SpiderDAO innovates the DAO concept by introducing a dual-governance model that reunites hardware and software tools with on-chain elements to create a whale-resistant governance solution. Hence, it is a great introduction to the DeFi 2.0 world.
The platform issues the SPDR token, which is the core of SpiderDAO’s ecosystem. Instead of simply serving as a utility token, the SPDR token captures value creation in the network, enabling self-sustainability in its ecosystem.
Learn more about SpiderDAO here!
Even though blockchains are highly self-reliant, it is impossible to use them for prediction markets, insurance, litigation, governance, or any other issue currently depending on real-world cases without accessing real-world data.
Indeed, there are multiple options in terms of oracle tools in the DeFi landscape, but most of them do not offer a multi-chain spectrum. Paralink aims to solve it permanently by providing a multi-chain oracle platform with exclusive features.
To achieve it, the project developed the Paralink node, which is an open-sourced piece of software whose mission is accessing real-world data and relaying it back to the blockchain through smart contract technology.
Built on Polkadot, the project aims to be the optimal oracle platform in terms of cross-chain interoperability and scalability. The goal is to bridge multiple ecosystems (Ethereum, Polkadot, Kusama, EOS, and Tezos) so users can utilize oracles for whatever purposes they please, such as price speculation, derivatives, insurance, governance, news/events, etc. Basically, it’s all that DeFi 2.0 stands for!
Paralink has already launched a developer testnet with oracles for EVM and WASM. The project is expected to be fully launched and deployed as a parachain on Polkadot by the end of 2021.
Learn more about Paralink here!
Demodyfi is a cross-chain AMM decentralized exchange (DEX). The protocol is built on both Ethereum and Moonbeam’s EVM-compatible Polkadot Parachain, utilizing the interoperability of Moonbeam’s smart contracts while using the Substrate framework as its fundamental layer.
The platform’s mission is to accelerate the mass adoption of digital assets by bridging TradFi and DeFi to reunite the best of both worlds. This way, Demodyfi connects the cryptocurrency space through Polkadot’s advanced substrate technology, which is a crucial factor for its interoperability.
To build a next-level DEX, Demodyfi believes in an infrastructure in which users have control of their assets and optimized user experience while interacting on a cross-chain platform with unique features.
Demodyfi’s automated market-making mechanism deployed on Moonbeam attracts liquidity from different parachains, creating a bridge by which assets can pass in a multi-currency market.
Another concern of the platform is to mitigate the risk of impermanent loss by developing a protocol that can autonomously solve the liquidity issue and implement a dynamic AMM mechanism.
Currently, Demodyfi is supported by various ecosystems such as Polkadot, Moonbeam, Binance, Smart Chain, Substrate, Uniswap, and Polygon.
Indeed, most DeFi platforms are still too dependent on Ethereum, but the current landscape is slowly evolving into something new.
Anyone who thinks DeFi is only a facet of the Ethereum Network is utterly wrong. Instead, the concept of decentralized finance encompasses a whole universe of distinct blockchains, networks, and ecosystems.
Eventually, alternative ecosystems more focused on interoperability (e.g., Polkadot, Kusama, Cosmos, EOS, Tezos) will follow the ever-growing popularity of cryptocurrencies to reach the masses.
The new wave of DeFi projects (DeFi 2.0) promises to revolutionize the way people interact with decentralized platforms, allowing users to engage in next-level cross-chain trading, lending/borrowing, staking, and a wide array of possibilities.