What are DeFi protocols?
Yield farmers often use a variety of different DeFi platforms to optimize the returns on their staked funds. These platforms offer different kind of incentivized lending and borrowing from liquidity pools. We will show you some of the most popular yield farming, DeFi protocols.
Most popular DeFi protocols:
It is an open source decentralized non-custodial lending protocol used to create a currency market where users can borrow assets and earn compound interest in the form of AAVE (formerly known as LEND) tokens. Aave has the highest total value locked (TVL) in all DeFi deals and as of August 2021, it was over $21 billion. Users can earn up to 15% annual interest rate through AAVE.
It is a currency market for borrowing and lending assets, which can adjust compound interest rates through algorithms and obtain COMP governance tokens. Compound is audited and reviewed to ensure the highest level of security standards. In August 2021, the total supply exceeded $16 billion and the annual percentage yield (APY) ranged from 0.21% to 3%.
This decentralized exchange (DEX) enables users and other decentralized protocols to use its unique market-making algorithm to trade stablecoins with low fees and low slippage. As far as the total value locked is concerned, Curve Finance is the largest DEX with a locked amount of more than $9.7 billion. The basic APY can reach up to 10% and the reward APY can exceed 40%.
Uniswap is a very popular decentralized exchange and automated market maker, which allows users to exchange almost any pair of ERC20 tokens without an intermediary. There are two real-time versions: Uniswap V2 and V3. The latest version (V3) is an evolving protocol ecosystem that includes more than 200 integrations. As of August 2021, the TVL of V2 is $5 billion, and the TVL of V3 is more than $2 billion.
One of the most advanced platforms in the world that can realize the potential of DeFi. Users can manage and build their DeFi product portfolio and developers can use their platform to build DeFi infrastructure. As of August 2021, more than $13 billion have been locked on Instadapp.
It is a branch of Uniswap, which caused huge waves in the community during its liquidity migration. SushiSwap is now a DeFi ecosystem with multi-chain automated market maker, leverage and loan markets, on-chain mini decentralized apps and launchpad. As of August 2021, the locked amount on this platform is $3.55 billion.
It is a DEX built on the Binance Smart Chain (BSC) network for exchanging BEP20 tokens. PancakeSwap uses an automated market maker (AMM) model in which users can trade liquidity funds. It has the highest TVL in the BSC deal, with over $4.9 billion locked until August 2021. Furthermore, PancakeSwap is primarily focused on gamification features, including lotteries, team battles, and NFT collectibles. The APY can go over 400%.
This algorithm-based money market system aims to introduce loans and credit systems into the Binance Smart Chain. Users provide collateral to the network and earn APY through loans, while borrowers pay interest. The difference of Venus lies in its ability to use the collateral provided to the market, not only to borrow other assets, but also to mint synthetic stablecoins with over-collateralized positions to protect the agreement. Moreover, these synthetic stablecoins are backed by a basket of cryptocurrencies. In August 2021, TVL exceeded $3.3 billion.
Balancer is an automated portfolio manager and trading platform. Its liquidity agreement is known for its flexible staking. Furthermore, It doesn’t require lenders to add liquidity equally to both pools. Instead, liquidity providers can create custom liquidity pools with different token ratios. As of August 2021, more than $1.8 billion have been locked in.
This automated decentralized aggregation protocol enables yield farmers to use various lending protocols, such as Aave and Compound, and obtain the highest yield. Moreover, Yearn.finance algorithmically finds the most profitable high-performance yield farming services and uses rebasing to maximize profits. Yearn.finance made waves in 2020, when the value of its YFI governance token surged to more than $40,000 in one stage. Users can earn up to 80% APY for the year and $3.4 billion are locked in.