Top 7 DeFi Projects to Watch In 2022
According to World Bank, the first baking system ever implemented emerged as early as 8000 BC. Back when ancient empires needed to keep records of trades made for foreign goods. More than 10,000 years later and the banking system, as we know it, might be counting down its final days, as decentralized finance may soon be replacing it.
While still in its infant stages, decentralized finance, or DeFi, is unquestionably shaking up the financial world. With roots tracing all the way back to Bitcoin’s development, this new independent way of engaging in finance is already attracting more and more interest.
Let’s get to know the leading DeFi projects in 2022 while taking a deeper look at what decentralized finance is, how it works, and what the future DeFi’s will look like.
What is DeFi?
To state it simply, DeFi is a financial system that eliminates the control that traditional institutions have over money and finance by using specific technology to make the systems operate on their own, without the need for intermediaries.
Even with this basic knowledge, to better understand decentralized finance, it is necessary to zoom out and take a look at its traditional predecessor, also known as centralized finance.
Centralized finance is a financial system where most, if not all, transactions go through banks and other institutions that have prevailing control over money and finance.
This system is meant to facilitate and register the capital movement between parties. For example, every time you make a purchase with a credit card, the charge goes from the store to the bank, then runs through the credit card network, and finally to you. However, such services are packed with fees for both the merchant and the buyer, they lack transparency, and completion of the transaction can take days.
On the other hand, decentralized finance ends the “middleman dynamic,” by using technology to allow peer-to-peer financial transactions. This means that anyone with an internet connection can use DeFi financial services and products without any previous authorization, high fees, or delay.
A quick comparison:
- Money is held and controlled by traditional institutions that also decide how to manage it.
- The individual needs to apply for services, and every transaction links to their identity.
- All the institutions’ procedures are private, and transactions can take days.
- The individual holds the money and decides how to manage it.
- There is no need to apply for DeFi services, and all the transactions are pseudonymous.
- Anyone can check how the system works, and transactions are complete immediately.
How does DeFi work?
DeFi is only possible through blockchain technology, which is a digital ledger that records information in a way that prevents any type of alteration. Users can create decentralized apps (dApps) on the Ethereum platform to manage transactions and run the blockchain.
Transactions are recorded in blocks on the blockchain and subsequently validated by other users. If all verifiers agree on a transaction, the block is closed and encrypted, creating a new block containing information from the preceding block.
There is no way to edit a blockchain, as editing would impact the subsequent blocks. Alongside other mechanisms, the inability to alter information is what guarantees a blockchain’s security.
Services that were once slow and vulnerable to human errors using centralized finance are now automated and safer on DeFi, thanks to code anybody can read and evaluate.
The Top 7 DeFi Picks for 2022
Now that you know the differences between centralized and decentralized finances, their particularities, and their benefits. Let’s dive deeper into the world of DeFi and become more acquainted with 2022’s leading DeFi projects. Take a look!
Bull Perks is a decentralized venture capital community and launchpad associated with multichain features, built on the Binance Smart Chain (BSC) Blockchain.
This project simplifies entrepreneurs’ access to potential investors and helps them handle liquidity after the deals. Also benefiting the traders, it gives users access to premier projects not yet available to the general public at low prices, offered at multiple investment tier options.
GamesPad is a decentralized, blockchain gaming-focused ecosystem that aims to support gaming initiatives raise funds, and facilitate liquidity injection.
The platform offers a tier-based dynamic that is community-focused. A particular NFT represents each tier and provides different investment options on the launchpad.
Colony Labs is a liquidity pool that applies traditional venture capital characteristics to the DeFi sector. Its goal is to grow and invest in the Avalanche ecosystem by offering financial assistance to existing and new initiatives on the grid.
These projects are either new or established, and it is up to the community to decide which initiatives will receive funds, making Colony Labs one of the top spaces to invest in DeFi cryptocurrency.
Aave is built on the Ethereum protocol and is a decentralized platform where users can lend, borrow and earn interest on crypto assets.
It is a system of smart contracts that allows a distributed network of computers to manage the assets instead of a centralized institution. This way, lenders can receive low-risk, passive revenue from loan interest without negotiating with third parties or intermediaries.
Fantom is a decentralized, open-source smart contract platform for dApps and digital assets. The platform’s goal is to balance scalability, security, and decentralization while offering a permissionless dynamic.
Fantom’s infrastructure links through an Asynchronous Byzantine Fault Tolerant (aBFT) Proof-of-Stake (PoS) consensus method that ensures the operating efficiency of the network. The aBFT network structure is optimized for speed while maintaining network security.
PancakeSwap is a decentralized exchange on Binance Smart Chain that is gaining popularity due to its liquidity, feature set, and user base, and it is a fierce Ethereum competitor.
All transactions are completed via smart contracts in this platform, eliminating counterparty risks. It allows users to trade Binance Coin and BEP-20 tokens safely without depending on centralized services.
According to their mission statement, “The Graph is an indexing protocol for querying networks like Ethereum and IPFS. Anyone can build and publish open APIs, called subgraphs, making data easily accessible.”
This tool makes indexing data on a blockchain less difficult and creates a pattern to store data, all this without the vulnerabilities of using centralized indexing servers. The Graph is paving the way for better dApp infrastructure.
The Future of DeFi
There is no question that the future of DeFi is also the future of finance as a whole. Even though the technology needed to enable this new financial system is somewhat recent (blockchain, cryptocurrency, smart contracts), we are observing how the tech’s evolution is picking up a faster pace each year. With this trajectory, we may very well be used to financial dynamics that were once impossible to conceive.
DeFi is already working, not only for simple selling and buying transactions but also for investing, getting loans, and basically, every other financial service that centralized finance can offer. The goal is still to organize finance activity but in a fairer, more practical, and better manner.
To stay ahead in this ever-changing environment, BullPerks invests heavily in developing a complete decentralized launchpad that meets the needs of investors and entrepreneurs that seek financing.