Defi projects aim to provide traditional financial services using decentralized blockchain technology; these services include loans, savings accounts, asset exchanges, and more.
This article will cover some of the most popular DeFi projects for 2022 that have solid fundamentals and are likely to perform well over the next few months.
The projects that will be covered are the following:
1. Polkadot
Polkadot was developed as a sharded multichain protocol with the scope of connecting and securing a network of specialized blockchains that can facilitate the cross-chain transfer of any data or asset. The project that was developed as an open-source, allowing others to develop their version of it, aimed to solve the interoperability issues between different chains.
Polkadot is a type of protocol known as layer-0 metaprotocol because it has an underlying format for a layer 1 blockchain known as parachain. As a meta protocol, DOT can’t be forked and can autonomously change its code via on-chain governance according to what its token holder community votes for.
Features of the Polkadot platform
Polkadot allows developers to create new applications and services to support the decentralized web. Its protocol can connect public and private blockchains, permissionless networks, oracles, and future technologies, allowing for a trustlessly way to share information and transact through the Polkadot Relay Chain.
Its token, DOT, is used for three different and defined purposes: facilitating network governance, staking for operations and security, and to bond, tokens to connect parachains.
Polkadot has four components:
Relay Chain: used to create consensus, interoperability, and shared security across the network of the different chains;
Parachains: independent (parallel) chains that are optimized for a specific use case and have their token;
Parathreads: a concept similar to the parachains but with flexible connectivity based on an economic pay-as-you-go model;
Bridges: the functionality that allows parachains and parathreads to connect and communicate with external blockchains like Ethereum.
Investors of the Polkadot project
Polkadot had its first initial coin offering (ICO) in 2017, where it raised $2.24 million by selling its coin for $0.29. A few years later, in July 2020, it went through a second ICO, raising around $43.7 million.
Throughout the years, Polkadot has had several venture capital funds and other companies, including Fundamental Labs, Kenzi Wangm, 8 Decimal Capital Logo, High Naut Capital Logo, and Kosmos Ventures. With an extensive list of investors and partners, DOT was able to guarantee funds and expertise to continue building its product.
It’s estimated that the company went through 14 rounds of investment, where it raised a total of $293.7M from over 30 different investors starting in 2015 and ending in early 2021.
Polkadot Market Capitalisation and Volumes
Polkadot is one of the top cryptocurrencies by market capitalization, ranking #12 by size. DOT has a market cap of around $6 billion with a diluted one of around $7 billion. Unfortunately, like many crypto projects over the last year, its token has lost a significant market cap, dropping from over $50 billion at its all-time highs in November 2021.
Similar to other projects that require liquidity for the use cases of its platform, DOT has a limited supply that is publicly traded on exchanges with volumes averaging around $300 million, or 5% of its market cap.
Polkadot remains one of the most reliable blockchain companies in the industry, continuing to have an extensive community of users and companies developing compatible applications. However, like many other projects, it has experienced a downfall, showing a substantial drop from a technical analysis perspective.
DOT has dropped around prices it had not experienced since its launch in 2020. However, it seems to have stabilized and bottomed out around its current price level. Nevertheless, given its solid fundamentals and current price level, it is likely to see the trend revert and DOT perform well towards the end of the year.
2. Decentraland – Invest in the MetaVerse via the MANA Token
Decentraland (MANA) is a virtual reality platform that runs on the Ethereum blockchain and allows users to create, experience, and monetize content In the Metaverse, or Web 3.0. The platform allows users to buy virtual land (LAND) and build real estate on it, where they can host events and other digital experiences that allow them to monetize their assets.
Once owned, a plot of LAND can be used to create various experiences ranging from interactive games, 3D worlds to explore, and other immersive adventures. These assets, together with a range of ensuite items, can be sold on the open marketplace of the platform.
Features of the Decentraland platform
What makes Decentraland unique is that it is a revolutionary new concept of the web where users have a fully immersive experience. Additionally, Decentraland is built for content creators focusing on art, business opportunity, and entertainment.
The Decentraland Metaverse is divided into 90,601 parts represented by a unique ERC-721 non-fungible token (NFT) that can be found at a specific coordinate. LAND can be developed in whatever the holder chooses to, and often when grouped, it creates a district. Districts usually have different sizes and themes, and the largest one, the cyberpunk-themed Aetheria, is made up of a total of 8,008 LAND. These were generated through crowdsales by users exchanging MANA for them, the native currency of this Metaverse.
For structure and governance decisions, Decentraland uses a decentralized autonomous organization (DAO), where MANA token holders are in charge of proposals and voting for policy changes, the details of upcoming LAND auctions, and the content allowed in the Metaverse.
Investors of the Decentraland project
Decentraland was launched with an initial coin offering (ICO) in 2017, raising around $24 million. During this sale, around 40% of the total supply of MANA was sold, 20% was kept for community rewards, 20% was given to the development team and early contributors, and the company held the remaining 20%.
During its ICO, several crypto funds invested in the project during its ICO, including Fundamental Labs, Genesis One Capital, Fabric Ventures, and Boost VC. These are venture capital or investment funds specializing in blockchain-based projects.
Additionally, in other rounds of investment that followed the ICO, other investors such as Animoca Brands, Digital Currency Group, and Broslyn Capital invested additional funds in the company. Including the ICO, the company raised around $25.5 million over five years from 10 investor groups in 4 rounds of investment.
Decentraland Market Capitalisation and Volumes
Decentraland currently ranks #34 by capitalization, with its total market cap being around $1.5 Billions for $0.80. Its market cap has experienced a decline, in line with the downtrend of the overall market, falling from a high of around $10 Billion in November 2021. Its price and market cap seemed to have stabilized around the current dip level and are looking to recover and make a bounce in the latter part of 2022.
Decentraland has a daily volume of around $130 Million, or 0.0879 of its market cap, not a large amount by trading metrics. This can be explained as the majority of MANA is used in the platform itself to pay for services or to purchase NFTs. For this reason, the circulating supply on exchanges is likely to be low and its liquidity limited.
This project remains one of the most interesting ones with the highest potential, as we still are at the early stages of the development of Web 3, with large tech companies such as Facebook trying to enter the market. Besides its creative side, this project still has several ways to monetise its assets, allowing leasing, advertisement, and paid experiences. For this reason, many investors are still really keen on it and see the potential growth aspect.
From a technical perspective, the token prices have declined over time and are at historical lows, reaching the previous support levels seen before its rise in late 2021. This means that there is still a lot of upside for the project, and its trend is likely to revert towards the end of the year. If the overall market stabilizes, we are likely to see MANA recover and go on a run.
3. Yanda - enhance the transparency of off-chain transactions
Yanda is a decentralized HyFi (Hybrid Finance) protocol compatible with Ethereum and its ERC-20 tokens via smart contracts that provides an infrastructure for transparency. It can do so by enabling the community to validate and monitor operations made by brokers of services operating centralized exchanges (CEXs). As all of the transactions on CEXs are logged on-chain, Yanda’s protocol verifies automation for end-user safety and rates brokers based on their performance.
Yanda combines DeFi and CeFi features to create its hybrid protocol. This allowed it to expand its services to include smart contracts, cross-chain swaps where tokens of two unique blockchains can be swapped between each other, network bridgers, and the ability to create and govern stable coins with minting features.
Features of the Yanda platform
A Decentralized Autonomous Organization (DAO) implements Yanda's governance system using ERC-20 smart contracts. Through its native cryptocurrency, Yanda Token (YND), holders can participate in the ecosystem’s governance and vote on changes. Users with more than 5,000,000 YND can propose changes to the protocol, and after a delay period, if approved, the changes can be voted on by the broader community of holders. If enough people vote in favour, the governor will execute the proposal through a smart-contract interaction.
Yanda protocol also acts as a validator through a smart contract that allows a specific broker to audit a service provided by another broker. A validator app needs to be downloaded to become a broker, and a specific audit level determined by the other validators has to be reached.
When an audit service is requested, the validators browse within the Service Log to confirm the legitimacy of the broker's activity toward executing a contract signed with the end-user. Once this has been established, they carry out the task and get rewards in the native token (YND) for their service.
Investors of the Yanda project
Unlike many other cryptocurrency projects from 2016, Yanda decided not to go through an initial coin offering (ICO) and instead followed a more traditional path, raising funds via conventional means. Yanda initially went through a pre-seed round and, after participating in an accelerator program by Startup Yard, raised $180k.
Over the following years, Yanda raised an additional $300k from several investors within the cryptocurrency community, including Flori Ventures and Outlier Ventures. In addition, this well-known fund has invested in several web3 projects.
Yanda Market Capitalisation and Volumes
Yanda does not currently have a publicly tradable token but is looking to launch its own $YND token by the end of 2022, for updates, you can join the $YND waitlist on the Yanda website.
With the fall of Terra and other stablecoins, many questions have been raised regarding the audit and transparency surrounding some of the most significant cryptocurrency projects.
With this in mind, a solution like Yanda’s is more useful than ever, providing transparency and clarity around some of these processes. Given its value proposition and placement in the market, Yanda is likely to grow and show potential over the next few years. With a token sale likely to occur soon, Yanda has the potential to be one of the best projects of 2022.
4. PancakeSwap: Most Popular Decentralized Platform
PancakeSwap (CAKE) is one of the most popular decentralized finance (DeFi) applications that enable traders to exchange tokens by acting as an automated market maker (AMM). The application provides liquidity via farming and allows users to earn fees in return. According to the AMM model, users trade against a liquidity pool filled with funds from lenders that receive liquidity provider (LP) tokens in return.
These tokens earn a percentage of the trading transaction fees and can be later exchanged to reclaim their pool share. As well as the LP tokens, PancakeSwap allows users to farm additional tokens such as CAKE and SYRUP.
Features of the PancakeSwap platform
Because PancakeSwap uses an automated market maker model, it does not generate order books; instead, it uses liquidity pools. Users can earn rewards by becoming a liquidity provider; they do so by adding their tokens to the pool and, in exchange, farm LP tokens and CAKE. Additionally, they can earn non-fungible tokens (NFTs) and try their luck with the lotteries.
CAKE is a BEP20 (Binance smart chain) token that was launched to incentivize liquidity provision to the PancakeSwap platform. Users can earn rewards by staking their tokens, which can be done by depositing Liquidity Provider tokens and locking them up in farming. During this process, users are rewarded with CAKE tokens and can unstake their tokens with zero holding time.
CAKE can be used to enter the lottery that occurs every 6 hours on PancakeSwap. With a cost of 10 CAKE, the ticket comes with a random combination of numbers between 1 and 14. If all four numbers on the ticket match the ones on the winning one, the ticket holder wins the jackpot, which usually equates to 50% of the entire lottery pool. Users can also use their cake to purchase NFTs that can be kept in their wallets or traded.
Investors of the PancakeSwap project
PancakeSwap was launched in 2020 and was part of the Binance launchpad, a project by Binance Labs, the venture capital arm of Binance that identifies and invests in blockchain projects with high potential. Since its launch, it has grown to become the most prominent dApp on BNB Chain, with daily active users of over 400,000.
Additionally, in early June 2022, Binance Labs made an additional strategic investment of an undisclosed amount in PancakeSwap’s utility and governance token $CAKE.
PancakeSwap Market Capitalisation and Volumes
CAKE ranks #77 among tradable tokens, with a total market cap of $400 Million and a diluted market cap of $2.2 Billion at the current real-time price of around $3. The token’s total capitalization has dropped significantly over the last few months, falling from over $3.3M to where it currently is.
Its traded volume has been quite solid over the last few months, averaging around $50 M, which equated to around 12% of its volume per market cap. Since it's the most popular decentralized exchange and most of its tokens are used on the platform, this level is solid for this metric type.
Given its current strategic investment from Binance and its features to set it aside from competitors, the DEX continues to grow in popularity and usage.
With many of the popular Ethereum decentralized exchanges (DEXs), such as Uniswap and Sushiswap, suffering from the congestion of the ETH blockchain and high transaction fees, Cake is likely to position itself even better and increase its market share against its rivals.
Additionally, from a technical perspective, similarly to the rest of the market, CAKE had dropped significantly, falling to historic lows. However, over the last few weeks, it seems to have bottomed out and is signalling it could potentially recover. With the market still showing uncertainty, CAKE will likely continue a lateral move, but further real-time price increases can’t be excluded.
5. Aave: Decentralized Finance Platform Showing Liquidity Protocol
Aave is an open-source, decentralized finance platform that was developed to make financial services, such as lending and borrowing, accessible without the need of an overseeing intermediate institution, such as a bank or broker.
The platform is built on the Ethereum blockchain and uses a non-custodial protocol, which allows for peer-to-peer lending by using smart contracts. These contracts enable assets to be managed by a crypto pool, a distributed network of computers running its software. The Aave protocol is decentralized and secure by running on a series of different algorithms. This removes the need for a centralized institution to be trusted with handling the transaction and the fee or cost that comes with it.
Features of the Aave platform
The main use case of the platform is to allow users to deposit 26 different cryptocurrencies in specifically created liquidity pools and earn interest from them. The interest will be earned as the fund will be lent to borrowers who have to pay interest. Borrowed use their assets as collateral to generate liquidity and take out flash loans.
On Aave’s website, users can see the specific borrowing and lending rate, which varies based on an algorithm. The algorithm calculated the rates based on utilization, meaning that the less crypto is left in the pool, the higher the interest rate earned for depositing.
The platform has two different DeFi tokens, AAVE, the native token used for governance, and aToken, which are interest-bearing tokens issued to lenders and used to collect interest on their deposits. These are pegged 1:1 to the underlying asset deposited and allow one to earn the interest directly in his wallet.
Investors of the Aave project
Aave was initially launched in 2017 through an Initial coin offering (ICO), raising around $16.2 million in funding and selling 1 Billion AAVE tokens at a real-time price of $0.0162 each. It’s estimated that around 23% of the tokens were assigned to founders and used to develop the project. Three years later, in 2020, Aave went through a token swap, where it swapped the 1.3 Billion tokens in circulation at a ratio of 1:100 with a newly minted AAVE coin, reducing the total supply to 16 Million.
Some of its investors made the Aave protocol stand out among many other projects in the crypto industry. In 2019 the company raised an undisclosed amount of funds from IBM and other investors in a seed round. Through its ICO, notable names of investors were DTC Capital and Framework Ventures, a venture capital fund that invests in crypto projects.
Additionally, in late 2020, the company went through an additional venture round of investment, raising funds from Blockchain Capital, Blockchain.com, and Standard Crypto, all notable names in the industry. With further funding received in 2021 and 2022 by undisclosed investors, the company raised $49Million over eight funding rounds.
Aave Market Capitalisation and Volumes
Currently, the Aave protocol is ranked #47 by market capitalization among top cryptocurrencies, with a price usually highly volatile and fluctuating around $70; its total market cap is around $ 1 billion. Over the last few months, due to the decline in its price, the market cap for the crypto has dropped significantly from around $5.5Billion in September 2021 to just a fraction of that in 2022.
Even though its price has declined throughout the year, Aave remains a vital project with a good upside, and this is reflected in its high daily traded volume of around $250k, or ¼ of its market cap. With most of its volume coming from Binance and Coinbase, the token is available to trade on other platforms such as Bitfinex, Kraken, and FTX.
Despite a few months of a downward trend and a drop in market cap, Aave remains a solid DeFi project with much potential. Even though it operated in a crowded market, its features and advantages of holding its token set it aside and made it unique in what it does. Having a substantial utility token at the project's base means that Aave is solid in the DeFi ecosystem and likely to continue to grow and improve over time.
As well as looking positive from a fundamental perspective, the project has started to recover from its technical outlook after falling to yearly lows, similar to most crypto projects. Aave has touched a historically low level that coincided with initial listing prices and has seemed to have bottomed out. It looks likely that the token will recover over the end of 2022 and move back towards the $100 price. However, as positive as the outlook of this top-rated coin is, a lot will be contingent on how well Bitcoin performs until the end of the year.
6. Celo
Celo is a crypto blockchain ecosystem developed to increase cryptocurrency adoption among smartphone users. As many people still lack banking access, Celo hopes to use smartphones to solve this problem, using phone numbers as keys and allowing users to transact with each other with just their number.
Celo network can also support the creation of smart contracts and decentralized applications (DApps) as part of its decentralized finance (DeFi) services launched in April 2020. Celo also has its desktop wallet and phone wallet that both support staking its token.
Features of the Celo platform
CELO is a proof-of-stake (PoS) blockchain token for transaction fees, governance participation, and other platform-related activities. Celo also has a range of stablecoins pegged to major fiat currencies, such as the Celo Dollar (CUSD), the Celo Euro (CEUR), and the Celo Brazilian Real (CREAL).
What makes Celo unique and different from other similar apps is its focus entirely on smartphones, arguing that adoption can only increase quickly if done via phones. In certain countries where most of the population is still without a bank account, Celo offers a simple solution that requires an internet connection.
Celo aims to harness the benefits of DeFi to bridge the gap between the two technologies by supporting the creation of DApps and smart contracts to enhance its ecosystem fully. With an application optimized for mobile devices, Celo automatically calculates transaction fees and allows users to pay gas fees in any currency.
Investors of the project
In 2020, Celo went through an Initial Coin Offering (ICO), where it raised around $10Millions. With the total supply capped at 1 Billion tokens, of which 600 Million were sold during the ICO, the remaining 40% will get released slowly over time via transaction fees and rewards and various vesting schedules. Around 120 million CELO was kept as reserves to guarantee the validity and price stability of CUSD.
Celo had raised funds before the ICO for a total of $36.5 Million from known industry investors, a16z crypto, and Polychain, a San Francisco-based crypto venture capital firm. Following the ICO, Celo raised additional undisclosed funds from DTCP, bringing the total to around $66.5 million over four years. Some of the notable investors included: Valor Capital Group Logo, Greenfield One, Andreessen Horowitz, and Electric Capital Logo
Celo Market Capitalisation and Volumes
Celo is ranking #82 by market cap among all tradable cryptocurrencies, with a total market cap of $370 million, and a diluted market cap of $800 million at the current price of $0.81. Its market capitalization has been shrinking over the last few months, dropping from an all-time high of around $2.3 billion, and has stabilized in its current range.
From a volume perspective, Celo has averaged around $18 million daily, which usually occurs on significant cryptocurrency exchanges such as Binance and Kucoin, but is also distributed among decentralized exchanges such as Sushiswap.
Celo remains an excellent project, with its ecosystem of apps that keep expanding and adding new functionalities. Celo keeps establishing new partnerships and receiving funding from investors, showing that the project is solid and looking to grow over the next few years. The company has also invested strategically in other crypto companies, such as Yanda, to expand its services.
Given the solid fundamentals and the recovering technicals of Celo, this is a project to keep an eye on that is likely to outperform many others towards the end of 2022.
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