If you watch the financial markets, you might have heard the words “decentralized finance,” or “DeFi,” pop up frequently.
The thriving peer-to-peer crypto network is becoming a standard part of a diverse crypto portfolio, grabbing the attention of consumers and billionaire investors alike. It sounds exciting — and it is — but what is it exactly? And what makes DeFi different from every other sector of crypto that you know?
What is DeFi?
In a financial world that is becoming increasingly digital, DeFi focuses on bringing the convenience of peer-to-peer transactions to investors. By harnessing the efficiency and power of smart contracts — digital contracts that live on the blockchain — DeFi platforms create a space for lending, borrowing, trading, saving and earning interest that doesn't require all of the usual bureaucracy and minutiae.
The goals of the DeFi network are simple:
Ditch the paperwork
Smart contracts are processed digitally on blockchain technology, so no paperwork and no wait time through the bank for transactions to clear.
Cut out the middleman
Automating the contract process on the blockchain takes away the need for human intermediaries, eliminating the need to engage outside mediators, like lawyers, to process agreements between parties.
Pick up the pace
With no reliance on different parties or deal with wait times to complete a transaction, DeFi makes doing business a more seamless and fast experience from start to finish.
Equalize the opportunity
Many of the financial opportunities offered through DeFi platforms are usually reserved for major financial institutions like hedge funds and banks. DeFi is closing the gap between the individual and the financial oligarchy.
The Top 10 DeFi Picks for 2022
The world of DeFi is getting bigger every day, but there are a few projects we have our eyes on for 2022.
Aave (AAVE), initiated in 2017 under the name ETHLend, is one of the original DeFi platforms on the market. Aave is a decentralized liquidity platform that allows for borrowing assets and earning rewards on deposits. It brings together lenders and borrowers in a decentralized space to allow for an equal opportunity lending system. You can also earn rewards and discounts by staking the AAVE coin on the Aave DeFi platform.
Avalanche (AVAX) markets themselves as “the fastest smart contracts platform in the blockchain industry,” while also solidifying their place in the booming NFT space and building connectivity with other blockchain projects such as SushiSwap (SUSHI), Chainlink (LINK), and the Graph (GRT). The project positions itself as a direct rival to Ethereum due to its ability to provide cheaper transactions in a fraction of the time. Avalanche recently completed $230 million in funding to support …