Decentralized Finance (DeFi) is a structured financial system that seeks to directly connect borrowers and lenders, as well as buyers and sellers of shares, bypassing banks, brokers and other intermediaries.
But this also raises the question that since there is no bank involved now, how do we establish trust between the two parties?
Well, that’s where Blockchain comes in. Blockchain technology, which is essentially a network of distributed ledgers, is the foundation of decentralized finance because it prevents data from being changed by hacking or manipulating a single system.
So here is a list of the top 5 decentralized finance projects by market cap
Dai (DAI): Dai is a decentralized stablecoin based on Ethereum (ETH) that aims to keep its value constant at $1. The purpose of this DeFi initiative is to bring stability to the extremely volatile crypto market. MakerDAO’s first official white paper was published in December 2017, which introduced Sai and 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 using any Ethereum-based token as collateral in the form of smart contracts, or you can buy Dai tokens directly from any crypto exchange. The market cap of Dai was $6.8 billion as of 14:20 on September 10, 2022, and the current price of one Dai is $0.99.
Avalanche (AVAX): Avalanche is a decentralized proof-of-stake blockchain based on smart contracts. Smart contracts are the rules upon which a Blockchain is built, and these rules can only be changed by community consensus and not by a single person.
Avax is the original 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 decentralized applications (Dapps) run on it. These Dapps work according to the prescribed rules, and thus no single individual can change them. The market cap of Avalanche (AVAX) was $6.1B as of 14:20 on September 10, 2022, and the current price of one 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’s not Bitcoin, but rather an ERC-20 token that aims to track the value of Bitcoin. WBTC was intended to allow Bitcoin holders to engage in Ethereum’s popular decentralized finance (“DeFi”) applications.
Its purpose is to serve as a link between the Bitcoin and Ethereum Blockchains. This allows Bitcoin owners to seamlessly interact with the Ethereum Blockchain. The market cap of WBTC was $5.3 billion as of 14:20 on September 10, 2022, and the current price of one WBTC is $21,344.
Uniswap (UNI): Uniswap, the largest decentralized cryptocurrency exchange, was founded in November 2018. Instead of matching supply and requiring a centralized exchange to set the price, algorithms set the market price based on supply and demand. This enables users to trade the cryptocurrency without the help of an intermediary, making it completely decentralized.
Both buyer and seller exchange directly from their wallets, so no third party is involved. There are no documents required to trade on the stock exchange, making it permissionless and limitless. Uniswap’s market cap was $4.9 billion as of 14:20 on September 10, 2022, and the current price of one UNI is $6.53.
Chain link (LINK): Chainlink is a decentralized Blockchain network built on the Ethereum Blockchain. It aims to connect Blockchain data with real-world data that exists outside the Blockchain. Its native token is known as LINK, which is used as a currency on the Blockchain and also to reward shareholders.
Its purpose is to provide off-chain data on the Blockchain in the form of smart contracts, making it decentralized and secure. It was launched by Sergey Nazarov and Steve Ellis in 2017. Chainlink’s market cap was $3.8 billion as of 14:20 on September 10th, 2022, and the current price of one LINK is $3.8.