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0 minsPublished on 12/13/2023

A snapshot of the DeFi ecosystem | DeFi projects and protocols

We explore the DeFi ecosystem and share some of the most interesting projects across major DeFi categories.

By Mrig P

A snapshot of the DeFi ecosystem article image

Decentralized finance or DeFi refers to financial services operating on a peer-to-peer blockchain network, with little to no reliance on any central entity. 

Unlike traditional financial services that are accessible to customers based on specific criteria, DeFi applications (dApps) are open to anyone with an internet connection.

As a result of its use cases and benefits, the DeFi ecosystem has grown rapidly and it has become hard to keep track of all the projects that are emerging. 

This article lists some useful DeFi solutions to help you easily navigate the ecosystem.

Infrastructure projects in DeFi

A picture depicting DeFi blocks
Photo credit: Hubert Lamela

Infrastructure projects encompass all the frameworks, protocols, and underlying technologies that go into making and launching decentralized applications (dApps). Infrastructure projects can be divided into multiple subcategories:

Layer-1 blockchains

Layer-1 blockchains are distributed ledgers that store records of transactions on a network of special computers, called nodes, instead of a centralized server. They use cryptography to secure these records and ensure their immutability. They are also the foundational infrastructure for the DeFi ecosystem.

Additional Layer-1 blockchains

This list is not exhaustive, but some other popular layer-1 blockchains include: 

Layer-2 blockchains and sidechains

Layer-2 solutions are blockchains that offer a more scalable layer for operating DeFi protocols while leveraging the security of the Ethereum network.

  • Polygon: Polygon is an Ethereum Virtual Machine (EVM)-compatible Ethereum sidechain that allows users to build scalable, user-friendly dApps with low transaction fees.

  • Optimism: Optimism is an “optimistic rollup” that helps build scalable DeFi solutions. It achieves this by processing transactions off the main chain and then packaging (rolling up) the data of all verified transactions to send it to the Ethereum mainnet. 

  • Arbitrum: Arbitrum is another layer-2 solution that uses optimistic rollup technology to increase the scalability of the Ethereum mainnet.

  • zkSync: zkSync is a zero-knowledge (ZK) rollup that uses a special type of zero-knowledge proof called zkSNARK to enable low gas and high-speed transactions on DeFi protocols. 

  • Starknet: Starknet is a ZK rollup built by Starkware that uses zkSTARK proofs to offer fast, cheap, and secure transactions.

Asset tokenization services

Asset tokenization services help create digital tokenized representatives of physical or digital items. These tokens are stored on the blockchain and thus have immutable and provable identity and scarcity. 

Please keep in mind that certain assets are heavily regulated and offering them on a blockchain does not change their regulatory status.

  • Tokeny: Tokeny enables you to tokenize debts, funds, private equity, and real estate easily. 

  • Polymath: Polymath is a platform that helps create and manage regulatory-compliant security tokens. 

  • CodeFi: CodeFi is an end-to-end digital asset tokenization, issuance, and lifecycle management platform for financial products like bonds and funds. 

  • Vertalo: Vertalo helps tokenize private assets like real estate and infrastructure so they can be publicly listed and traded on crypto exchanges.

  • OpenLaw Finance: OpenLaw Finance creates tokenized stock options which you can distribute to employees based on a vesting schedule.

  • Dibbs: Dibbs is a tokenization as a service (TaaS) platform that helps Web2 and Web3 companies tokenize their physical assets.

Data services

Data services are a crucial part of the DeFi infrastructure. To best understand data service platforms, we divide them into four subcategories.

Storage and computing

Decentralized storage works similarly to centralized storage — you upload files via the internet to a server and if you need to retrieve the file, you send a request to the server. 

Instead of relying on a centralized server, however, decentralized storage solutions, much like blockchains, rely on multiple computers to create a distributed server.

  • Areweave: Areweave is a decentralized storage system that works as a collectively owned hard drive. It makes information permanence sustainable through continuous backups. 

  • Filecoin: Filecoin uses cryptographic proofs to guarantee that your data remains available and unchanged over time. The network also creates strategies to suit your needs in redundancy, retrieval speeds, and cost. 

  • Storj: Storj allows you to securely store your data online on more than 13k nodes and easily retrieve them whenever you need. 

Indexing

Blockchains are ledgers that maintain a public record of all transactions. For DeFi applications to get this information in an organized manner, however, they need indexing services, which are computer scripts to search for information in a blockchain.

  • The Graph: The Graph is a decentralized indexing platform that allows you to process, index, display, and use data from blockchains using open APIs called Subgraphs

  • Aleph.im: Aleph.im is a blockchain-agnostic indexer that allows your dApp to access on-chain data with just a few lines of code.

Oracles

Blockchains are highly efficient systems but they cannot communicate or understand data from outside of their ecosystem. Oracles are software that help blockchains retrieve data from the outside world and make decisions based on that data. 

Communication protocols

Communication protocols help DeFi developers send push notifications to their dApp users, thus improving user experience and getting users to spend more time on their platform. 

  • Push Protocol: Push Protocol, previously known as Ethereum Push Notification Service (EPNS), was the first Web3 notification protocol that enabled DeFi protocols to send real-time push notifications to users for critical events such as loan liquidation, trade execution, airdrops, and more.

  • Alchemy Notify: Alchemy Notify enables DeFi protocols to send push notifications to their users on their smartphones.

Cross-chain bridges

Cross-chain bridges help users transfer assets across different blockchains easily. They improve the interoperability of the DeFi ecosystem and give users exposure to multiple blockchain environments with a single asset.

  • Celer Bridge (cBridge): cBridge supports the transfer of 110+ tokens across more than 30 blockchains. 

  • Synapse: Synapse allows you to move assets across multiple blockchains at high speeds and low costs. 

  • Li.Fi: LiFi is a cross-chain bridge aggregator that brings together multiple blockchain bridges into a single interface and creates a smooth bridging experience. 

Crypto on and off-ramps

Crypto ramps are services that allow you to convert fiat currencies into crypto or vice versa. The former is called an on-ramp service while the latter is called an off-ramp service. 

Both on-ramp and off-ramp crypto services are important as they connect legacy financial systems to the DeFi ecosystem and bring more users into Web3. 

  • MoonPay: MoonPay is a non-custodial crypto on-ramp and off-ramp service that allows you to buy and sell 100+ cryptocurrencies. You can buy cryptocurrencies through card and bank transfers or mobile payments like Google Pay and Apple Pay.

  • BVNK (formerly Coindirect): BVNK allows you to buy and sell more than 40 cryptocurrencies and partake in cross-border payments across a wide range of countries. 

  • Transak: Transak is a crypto on and off-ramp service that allows 100+ applications across 75+ blockchains onboard users from fiat to crypto. 

DeFi development tools

Protocol development platforms offer a wide range of development solutions, software development kits, and APIs to build robust DeFi applications

  • Alchemy: Alchemy is a reliable and scalable development platform with a wide range of SDKs and APIs to help build decentralized applications. 

  • thirdweb: thirdweb offers a complete Web3 development framework including highly reliable RPC APIs, SDKs, and ready-to-deploy smart contracts.

  • Moralis: Moralis is popular for its enterprise-grade APIs and offering real-time blockchain data to decentralized applications.

Stablecoins

Stablecoins are crypto assets whose values are pegged to the value of an asset like gold, fiat currency, or other cryptocurrencies. They offer users a way to stay in the cryptocurrency ecosystem by holding a cryptocurrency that has historically been less volatile than many other types of cryptocurrency. 

(But remember that all cryptocurrencies could be subject to volatility at times.)

Most popular stablecoins are currently pegged to the price of a U.S. dollar, thus trading at a 1:1 ratio with USD. 

Blockchain explorers

Blockchain explorers are platforms where users can explore a variety of data and insights related to all the transactions that happen on a blockchain. They’re a crucial part of the DeFi ecosystem as users can use these platforms to analyze smart contracts, check transaction status, and get other DeFi insights.

  • Blockchain.com: Blockchain.com allows users to check data on the Ethereum and Bitcoin networks.

  • Etherscan: Etherscan enables you to search for block information, smart contracts, and transactions on the Ethereum blockchain. 

  • Polygon Scan: Polygon Scan supports searches for Polygon transactions.

  • BscScan: BSC Scan lets users explore transaction activities on the BNB Chain. 

  • CoinMarketCap: Apart from offering an overview of the crypto ecosystem, CoinMarketCap also has a multi-chain blockchain explorer.

To learn more about the blockchain explorer Etherscan, see our article What is Etherscan and how do you use it?

Compliance and identity

Compliance and identity protocols help build a more secure DeFi ecosystem and let users and protocols adhere to regulatory compliances

  • Elliptic: Elliptic offers ​​blockchain analytics, training, and certification for crypto businesses, financial institutions, and regulators.

  • Civic: Civic is an online digital identity management platform that allows identity verification of users across dApps, DAOs, or DEXs

  • Chainalysis: Chainalysis is a compliance and security platform that helps DeFi protocols, enterprises, and governments keep users and their funds safer.

Investments, marketplaces, and liquidity platforms in DeFi

A picture depicting investment charts
Photo credit: Hubert Lamela

Cryptocurrency exchanges 

Crypto exchanges help you swap fiat currency for crypto or trade one crypto for another. There are primarily two types of exchanges: centralized exchanges and decentralized exchanges.

Centralized exchanges (CEX)

Centralized exchanges (CEXs) conduct trades on your behalf and manage your assets through a custodial wallet

  • Binance: Binance is the largest crypto exchange platform and enables you to trade more than 600 crypto assets. 

  • Coinbase: Coinbase ranks among the largest crypto exchanges in the U.S. and is also quite popular in other parts of the world. 

  • Kraken: Kraken allows you to exchange more than 185 cryptocurrencies through a user-friendly interface.

  • Gemini: Gemini is a CEX that allows you to exchange crypto, manage assets, and analyze your trades easily. 

  • Crypto.com: Crypto.com is a platform that supports the trading of almost all cryptocurrencies and derivatives like futures and perpetuals. 

Decentralized exchanges (DEX)

Decentralized exchanges (DEXs) are non-custodial platforms and they allow you to retain complete control over your assets and trades. 

  • Uniswap (V3): Uniswap (UNI) is a multi-chain DEX and the most popular option in the Ethereum DeFi ecosystem. 

  • 1Inch: 1inch is a DEX aggregator that instantly analyzes multiple DEXs to optimize trades and give the best conversion rates. 

  • Bancor: Bancor allows you to perform instant automated token trades and earn fees from liquidity pools

  • Balancer: Balancer is a DEX and portfolio management platform wrapped into one. It allows you to trade tokens and also automatically routes trades of less popular tokens through multiple pools to reduce your transaction costs. 

  • Curve: Curve only accommodates pools with similarly behaving assets like stablecoins so you can exchange tokens with low fees and low slippage. 

  • QuickSwap: Quickswap is a Polygon-based DEX that allows you to swap tokens for low gas fees.

Lending and borrowing

DeFi lending platforms allow borrowers to get loans in exchange for crypto collateral without going through the complex procedures associated with traditional loans. 

With lending, you can deposit your cryptocurrency into a lending pool and receive tokens representing your share in the total value of the pool. 

Thereafter, when someone takes a loan from your pool, you can earn interest from it. However, you will also be subject to certain risks associated with lending your cryptocurrencies and you should always do your own research before lending.

  • Aave: Aave is a decentralized lending and borrowing platform that allows users to participate as suppliers or borrowers. 

  • Compound: Compound is a borrower-friendly lending platform that claims to offer fair interest rates and gives users ownership over their collateral. 

  • Yield Protocol: Yield Protocol supports multiple collateral types and allows users to borrow assets against fixed interest rates for up to one year. 

  • Maple Finance: Maple Finance allows organizations to get undercollateralized loans to optimize their working capital. 

  • Liquity: Liquity collects a small one-time fee instead of interest to sanction a loan against ETH as collateral. 

Insurance

DeFi insurances might offer protection from potential losses due to accidents like smart contract exploits and hacks. Unlike centralized insurance providers who could take a long time to verify claims, decentralized insurance providers hold a vote or use third-party oracles to verify a claim in the shortest time possible.

  • InsurAce: InsurAce protects more than 130 protocols and has paid out $11.6 million in insurance claims so far. You can contribute to the application and earn rewards by verifying a claim, staking coins in it, or providing referrals. 

  • Nexus Mutual: Nexus Mutual helps protect against smart contract attacks and exchange hacks with its smart contract covers. The platform is community-driven and all claims are verified by members via votes. 

  • Opium Insurance: Opium Insurance offers protection against many types of risks including smart contract risks, credit default events, impermanence loss, etc. 

  • Solace: Solace offers insurance against common DeFi attacks like reentrancy attacks, math errors, and flash loan attacks for organizations. It also offers a portfolio insurance option to protect individuals against attacks. 

  • Nsure: Nsure is an open insurance platform that allows risk outsourcing and underwriting. 

  • Union Finance: Union Finance’s insurance premium helps users pay off a portion of their loan so a DeFi lending platform doesn’t liquidate their collaterals. 

Again, you should always do your own research before buying any insurance policy or product.

Asset management

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Asset management tools help with the secure management of crypto assets and allow users to monitor their assets’ performance through an easy interface.

Crypto wallets

A crypto wallet is a software application used to store, send, and receive crypto assets. In addition to custodial wallets, there are two main types of non-custodial crypto wallets: cold wallets and hot wallets

Cold wallets

Cold wallets are usually physical devices that store your private keys offline to prevent them from being hacked or controlled remotely. 

  • Ledger Nano: Ledger Nano wallets allow you to store over 5,000+ crypto assets and also swap, stake, and send them easily using the Ledger Live application.

  • Trezor: Trezor hardware wallets store your keys offline and come with a desktop app for managing assets.

  • NGRAVE: NGRAVE is a cold wallet that claims to offer the highest security-certified OS (EAL 7) in the world. It’s 100% offline and doesn’t support USB, WiFi, or Bluetooth connections.

Hot wallets

Unlike cold wallets that are disconnected from the internet, hot wallets store your private keys online and are connected to the internet. While they aren’t the most secure way to store your assets, they offer better connectivity to DeFi protocols. 

  • Metamask: Metamask is the most popular non-custodial wallet for EVM-compatible blockchains (i.e. Ethereum-compatible chains).

  • Coinbase Wallet: Coinbase Wallet, developed by Coinbase, is a non-custodial wallet that allows you to securely store and manage ERC-20 tokens and NFT collections

  • Exodus: Exodus is a multi-chain wallet that allows you to manage and exchange 240+ cryptocurrencies and NFTs on your desktop or mobile.

  • Phantom: Phantom allows you to store, send, receive, and swap crypto assets on the Solana blockchain for low transaction fees. 

  • Trust Wallet: Trust Wallet supports more than 65 blockchains and it’s available as a mobile app on Android and iOS.

  • Argent: Argent is a layer-2 wallet that enables you to buy, earn, trade, stake, and store tokens.

DeFi dashboards

DeFi dashboards are programs that help you track your crypto portfolio and monitor profit and loss.

  • Zapper: Zapper allows users to track their portfolio, analyze transactions, and discover trending DAOs, DeFi projects, and NFTs across EVM-compatible chains. 

  • Zerion: Zerion is a platform to track crypto portfolios across every wallet you own and sign transactions from one place. You can also follow other wallets and monitor trends.

  • Nansen Portfolio: Nansen Portfolio lets users connect their crypto wallets and get an in-depth view of DeFi holdings across 40+ chains and 470+ protocols.

DeFi analytics

DeFi analytics tools allow you to discover and interpret data from DeFi protocols to help make decisions. Here are some of the most common analytics tools. 

  • APY.vision: APY.vision is a platform to track gains and impermanent losses across liquidity pools. 

  • DeFiLllama: DeFiLlama gives you in-depth data on liquidity, yields, fees, and total value locked (TVL) across various DeFi protocols.

  • Dune Analytics: Dune Analytics is a community-driven platform that publishes data on different protocols across Ethereum, BNB Chain, Optimism, and other chains.

  • Revert Finance: Revert Finance allows Uniswap and Sushiswap users to track their positions and get data on the top positions in a pool. Users can also run a simulation to estimate the rewards they can earn. 

Begin your DeFi journey with MoonPay

DeFi can help you earn interest and grow your crypto portfolio. 

To get started, simply buy cryptocurrency via MoonPay using your credit card or any other preferred payment method.

MoonPay also makes it easy to sell crypto when you decide it's time to cash out, including some tokens mentioned in this article like ETH, AVAX, BCH, SOL, and BNB. Simply enter the amount of the token you'd like to sell and enter the details where you want to receive your funds.

Mrig P
Written byMrig P

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