For the past few months, Decentralized Finance (DeFi) is one of the hot topics in the blockchain space.
Everyone is focused on the growth of decentralized finance applications, which will finally make our economic model transparent.
DeFi is using blockchain technology to ensure that our financial system is fully decentralized, distributed, and secured, unlike traditional means. In reality, it’s one of the fast-growing sectors in the crypto space.
Feeling intrigued? Let’s check out some of the popular decentralized finance applications on the market that you can try out today. So, let’s start!
What Are Decentralized Finance Applications?
Before we start looking into DeFi applications, I’ll briefly explain the concept behind Decentralized Finance.
Decentralized finance is the peer-to-peer finance system or network that is powered by decentralized technologies. In simple terms, it’s actually the shift from a centralized and traditional financial system to a more decentralized and peer-to-peer network.
Decentralized finance companies are bringing an entire ecosystem full of applications starting from borrowing and lending platforms to tokenizing assets. So, in this case, decentralized finance applications are nothing more than blockchain or distributed applications developed specifically for the financial industries.
Also, most of these applications are using Ethereum as the underlying technology. In reality, our traditional financial system mainly runs on centralized infrastructure, which is highly flawed. On the other hand, decentralized finance applications get rid of the issues that come from the centralized infrastructure.
So, it’s a great approach to digitizing this sector without any issues with the legacy systems. Therefore, if you only have an internet connection, you can access all these Defi apps built to streamline all your financial needs.
The breakthrough of DeFi is really changing the scenario of our financial systems. Now we can use crypto assets in so many ways that were never possible with real-world currencies. The paradigm shift in the economic infrastructure presents us with a lot of opportunities and gets rid of risks and trust issues.
What Are Best Decentralized Finance Applications in The Market?
From synthetic assets to DAOs, decentralized finance companies are unlocking opportunities for a completely new economic model around the world. More so, the vast amount of use cases of this sector is proof that this is more than just a bunch of DeFi projects.
It’s an integrated effort to develop a complete ecosystem of finance that shifts from traditional centralized services. Therefore, let’s look at the best-decentralized finance applications to understand what benefits you can expect from these.
So, let’s start!
1. Asset Management
Decentralized finance applications will help you be the sole custodian of your information. Therefore, it includes managing your crypto asset as well. There are many crypto wallets that will help you securely and efficiently interact with applications for selling, buying, transferring, and earning interest on your assets.
So, in the DeFi projects space, you will own your data, not any third parties or any government agencies.
- MetaMask: MetaMask offers the security and usability needed for a getaway to blockchain applications. However, it’s also a wallet, and it can handle account management along with connecting any individual to the blockchain. More so, it even offers hardware wallets, which is totally isolated from the site.
- Gnosis Safe: Using this application, you can fully customize and manage all your crypto assets. It even allows you to store them on multiple devices. For example, it offers EOA-based wallets, hardware wallets, paper wallets, or even a combination of these three.
2. Compliance and KYT
Basically, in the traditional finance companies, know-your-customer guidelines help counter-the-financing-of-terrorism (CFT) and promote anti-money laundering (AML). However, as the system is fragile, hackers can hack through the system and easily bypass all the security protocols.
Therefore, DeFi takes this system to a new height. Without focusing on customer identities, they are focusing on customer addresses. So, instead of knowing your customer, the applications focus on know-your-transactions (KYT). This helps to prevent risk in real-time and gets rid of any options for financial crimes.
- Codefi Compliance: This application offers KYT processes that help businesses to assess any risky behaviors from the very start. Therefore, it can offer CFT and AML checks to identify any fraudulent activities or even terrorisms.
- KYC-Chain: KYC-Chain is another application that offers you an array of features. You will get KYC and AML checks, identity and verification, crypto wallet AML, scalable and secure network, and access to the Selfkey network.
DAO is actually a decentralized autonomous organization that focuses on decentralized and transparent business models. Basically, these types of organizations are based on blockchain technology and are incredibly different from traditional organizations.
Anyhow, there are applications that focus on managing financial operations, fundraising, and maintaining decentralized governance in DAOs.
- Maker: MKR holders actually governs the MakerDAO protocols. And this will include adjusting policy for Dai, improving governance, selecting different collateral types, offering security and transparency.
- Compound: Compound is also another application for DAO, where the decentralized community is the COMP token holders. More so, they can propose or even vote on upgrades related to the primary protocol.
4. Data and Analytics
Decentralized finance applications come with unprecedented transparency for network activity and transactional data. That’s why using DeFi protocols can help you in data analysis, discovery, and profound decision-making opportunities. The explosive popularity of these applications is leading to the development of various dashboards and tools. In reality, some of them can even help you assess any platform risks, track the value of your assets, and compare them for the liquidity process.
- Codefi Data: Codefi Data is a suite for data management and analytics. You can use this solution in the investment ecosystem, such as public blockchain tokens, digital assets, decentralized finance protocols, and so on. Other than this, it also offers performance metrics and security.
- DeFi Pulse: It’s a DeFi live tracker. Here, you can find all the latest rankings of DeFi protocols and their analytics. Typically, they track the total value that is locked into the smart contacts of these applications.
Using Ethereum based smart contracts, DeFi is now introducing a new type of tokenized derivatives. Usually, these derivatives are directly linked to an underlying asset, and the performance shifts based on that asset.
More so, you can use DeFi derivatives to represent any real-world bonds, currencies, commodities, and even cryptocurrencies.
- bZx: It’s a margin lending protocol based on Ethereum blockchain. Furthermore, you can use this application to build other platforms that offer borrowing, lending, and trading facilities. So, even if you are a borrower or lender, you will be the one in control of the keys.
- dYdX: dYdX is a great application that will let you trade, borrow, lend, and even manage your assets directly. More so, you can use your crypto holdings as collateral for borrowing other assets. Tracking your performance and your assets is quite easy as well.
6. Infrastructure Development
Applications of decentralized finance offer composability. In reality, it means that it allows different components within a system to easily communicate, connect, and interoperate. Using this technique, communities are building upon what other developers have already built, making it one of the most prominent and powerful networks at this moment.
You can think of building DeFi applications like building with Legos. There are lots of tools dedicates specifically to the infrastructure development of blockchain platforms. More so, these are definitely some of the best tools that developers tend to love for their blockchain solutions.
- Truffle Suite: Truffle Suite is a combination of development tools that will let you create a new infrastructure from scratch. It contains three tools for compiling, testing, debugging, and deploying — Truffle, Ganache, and Drizzle.
- Infura: Using Infura, you can immediately connect your application to their APIs and use their support for interfaces to run your app. The best part is that you can do it with only 1 single URL. More so, they offer management services so that you can focus on project development.
7. Decentralized Exchange
Another popular use case of DeFi is the well-known decentralized exchange applications. Mainly these are cryptocurrency exchanges that don’t need any central authority. More so, it allows users to transact directly with other peers and ensure that the control remains only to the users. Thus, it helps to reduce any price manipulation, any kind of theft, or hacks.
Furthermore, these decentralized exchanges offer liquidity for certain projects, mainly when it comes to rival centralized exchanges.
More so, some exchanges may use decentralization to a certain extent without fully getting rid of the centralized servers.
- AirSwap: AirSwap is a great peer-to-peer trading decentralized finance application. In reality, it uses Ethereum as the underlying technology. More so, you won’t need any fees, deposits, or sign-ups to trade. It also offers a secure and easy to use interface that promotes liquidity of the assets.
- Uniswap Exchange: This is also based on Ethereum and offers an automated liquidity protocol. The formula they use is quite unique, and they use non-upgradeable smart contracts for that. Therefore, you can access trusted intermediaries, great security, censor resistance, and prioritize decentralization using this.
Decentralized finance applications are in the gaming world as well. More so, using these applications, gamers can now unlock the opportunity to handle their in-app purchases without any risks of credit card hacks. More so, these applications now offer unique incentive models, which are hard to come across in a typical gaming experience.
This will surely enhance your gaming experience without worrying too much about your finances.
- PoolTogether: It’s an audited savings game where there is no-loss for you. Additionally, it uses Ethereum to make it completely decentralized. All you have to do is use Dai to get tickets from the pool. Every single Dai in the pool will get interest, so it’s a win-win situation for everyone.
9. Borrowing and Lending
Borrowing and lending use some of the most prominent use cases for the applications of decentralized finance. In reality, users can lend their cryptocurrencies to a lending pool and earn interests based on that. Based on their criteria, many applications match the borrower and lender, getting rid of any trust issues along the way.
- Aave: It’s an open-source protocol that creates different kinds of money markets. Here, you can earn interest based on your borrowing and depositing assets. More so, depositors are responsible for increasing liquidity, and borrowers can borrow any asset in an undercollateralized or overcollateralized fashion.
- Dharma: Dharma offers a suite of developer tools and smart contracts that helps in lending and borrowing crypto-assets. More so, the application offers access to 2000+ tokens, where you will need no Gas fees for trading. You can even withdraw anytime you want.
10. Identity Management
You can pair applications of decentralized finance with blockchain-based identity systems to give users access to a global economic platform. More so, this will help users get access to their own identity and use it as portable identification whenever they need it.
On top of this, you can expect high security for your financial information and your personal documentations because no third party can get access to it. You can even choose to share partial information with your clients without disclosing your personal data.
- Civic: Civic is a decentralized identity ecosystem. Here, you will have to verify your identity once, and then you can use it as much as you want. Furthermore, you can choose which company you trust to share your information. So, you don’t have to overshare anything else.
- uPort: At uPort, you will be getting a self-sovereign identity with just a few clicks. In reality, this tool will offer any individual to share their data in a secure, simple, and private way. It comes in two variations — the public and private sectors.
DeFi Applications Are Changing the Future of Our Economy
DeFi apps are slowly but surely changing the economic model of the world. Even a decade ago, imagining a completely decentralized finance system was impossible. However, blockchain technology is slowly paving the way for offering us the next technological revolution.
Although these applications aren’t perfect, they are still managing to replace the error-prone legacy systems.
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