Decentralised Finance (DeFi) is a structural financial system that seeks to connect loan recipients and lenders directly, as well as stock buyers and sellers by doing away with banks, brokers, and other middlemen.
But this also brings forth the question that since now there aren’t any banks involved, so, how do we establish confidence between the two parties?
Well, this is where Blockchain comes in. Blockchain technology, which is essentially a network of distributed ledgers, is the foundation of decentralised finance, because it prevents data from being altered by hacking, or the manipulation of a single system.
So, here’s a list of the top-5 decentralised finance projects by market cap
Dai (DAI): Dai is an Ethereum (ETH)-based decentralised Stablecoin that aims to keep its value constant at $1. The aim of this DeFi initiative is to bring stability to the wildly unstable crypto market. The first MakerDAO official white paper was released in December 2017, which introduced Sai, and it only accepted Ethereum as collateral.
The Dai Stablecoin System, commonly known as the Maker Protocol, accepts Ethereum-based assets as collateral from MKR holders. As a result, you can generate Dai by utilising any Ethereum-based token as collateral in the form of smart contracts, or you can purchase Dai tokens directly from any crypto exchange. Dai’s market cap was $6.8 billion as of 2:20 pm on September 10, 2022, and the current price of a Dai is $0.99.
Avalanche (AVAX): Avalanche is a decentralised proof-of-stake Blockchain based on smart contracts. Smart contracts are the rules on which a Blockchain is built, and these rules can only be altered by community consensus, and not by a single person.
Avax is the native token on the Avalanche Blockchain developed by Ava Labs. Emin Gun Sirer, the creator of Ava Labs, is also a professor of computer science at Cornell University.
The best use case of Avalanche Blockchain is that many decentralised applications (Dapps) operate on it. These Dapps run on pre-written rules, and thus no single individual can change them. Avalanche (AVAX) market cap was $6.1 billion as of 2:20 pm on September 10, 2022, and the current price of an AVAX is $20.45.
Wrapped Bitcoin (WBTC): Wrapped Bitcoin is an Ethereum token designed to act as a digital representation of Bitcoin (BTC) on the Ethereum Blockchain. It is not Bitcoin, but rather an ERC-20 token meant to follow the value of Bitcoin. WBTC was intended to allow Bitcoin holders to engage in Ethereum’s popular decentralised finance (“DeFi”) apps.
Its goal is to serve as a link between the Bitcoin and Ethereum Blockchains. This allows Bitcoin owners to seamlessly interact with the Ethereum Blockchain. WBTC’s market cap was $5.3 billion as of 2:20 pm on September 10, 2022, and the current price of a WBTC is $21,344.
Uniswap (UNI): Uniswap, the largest decentralised cryptocurrency exchange, was founded in November 2018. Instead of matching the bid and asking a centralised exchange to set the price, algorithms set the market price based on demand and supply. This enables users to trade cryptocurrency without the assistance of an intermediary, making it fully decentralised.
Both the buyer and the seller exchange straight from their wallets, thus no third party is involved. There is no paperwork required to trade on the exchange, making it permission-less and borderless. Uniswap’s market cap was $4.9 billion as of 2:20 pm on September 10, 2022, and the current price of an UNI is $6.53.
Chainlink (LINK): Chainlink is a decentralised Blockchain network built on the Ethereum Blockchain. It intends to connect Blockchain data with real-world data that exists outside of the Blockchain. Its native token is known as LINK, which is used as a currency on the Blockchain and also to reward stakers.
Its goal is to provide off-chain data on the Blockchain in the form of smart contracts, making it decentralised and safe. It was launched by Sergey Nazarov and Steve Ellis in 2017. Chainlink’s market cap was $3.8 billion as of 2:20 pm on September 10, 2022, and the current price of a LINK is $3.8.