There is over $13 billion locked in DeFi (decentralized finance) platforms and for good reason.
Even since late 2017, DeFi has been the next revolution of applicable crypto as it breaks the barrier of bank-run finance.
So, how to you know where to invest your time and money? It takes a lot of research to find not only trustworthy DeFi platforms but also ones that turn a decent profit.
Good news for you is that this review lists the top 5 DeFi lending projects that we have used personally.
So, let’s get started by going over the basics.
Table of Contents
What is DeFi?
If you are new to this whole DeFi thing then you might not even know how does DeFi lending works.
Basically, DeFi uses the Ethereum network to host lending, payments, gambling, and margin trading protocols. We will focus on lending in this article.
Lending on DeFi works similar to a bank other than it is anonymous and decentralized. Plus, the interest earned is usually must higher.
You use a cryptocurrency, stable coin, or ERC-20 token as collateral to earn interest on your lending amount. DeFi lending rates depend on the coin and platform.
Top DeFi Lending Platforms
Now that you know how DeFi works let’s review the top 5 platforms that you can get started with earning money today.
There is almost $2 billion in Aave, making it one of the most popular DeFi apps available. The more money invested in the platform, technically, the more secure it should be. Plus, Aave has been around since November of 2017.
Their decentralized platform consists of lending and borrowers. Lenders deposit coins to earn interest. Borrows deposit coins as collateral for a loan.
Then the DeFi mints ERC-20 aTokens to fund the assets on a 1:1 ration. The more money in the DeFi than the higher the interest rates for its users.
See below for more features and Aave’s safety rating.
Another DeFi lending platform with big numbers is Compound Finance. They have over $3.8 billion in assets used as collateral for borrowers or deposits used to earn interest for lenders.
The best part about Compound is its system of governance by its cToken holders who have a stake in the Defi platform.
There’re also other platforms that integrate the protocol, including CoinTracker (the crypto tax software), Binance, and Coinbase Custody.
Check out our review and rating of Compound below.
The Kava DeFi app is a cross-chain DeFi that uses the stable coin USDX for collateral lending and a Kava Token for voting and internal governance.
As a cross-chain DeFi, users can transverse between multiple networks. This means payments can transcend various blockchains, and cryptos can be swapped using the Switch feature.
It’s also built on Tendermint, which is a consensus engine using proof of stake to validate. This offers stability to the network as validators earn stability and transaction fees.
Read more about Kava’s features below.
A fairy new DeFi protocol, SushiSwap got off on a rocky start by two anonymous developers (0xMaki and Chef Nom) who found each other on Twitter. The name and the history may sound too flaky to be a financial investment option, however, the community is quite vocal and involved.
And after their initial launch, the founders conducted two audits of the DeFi, ensuring its functionality and safety. Then in the first week of launching, they accumulated $1 billion locked assets, proving its popularity.
Chef Nom eventually left the protocol and 9 DeFi-savvy individuals were voted in to lead the decentralized exchange.
As an evolved version of Uniswap (one of the largest DEX) as it claims, it rewards early adopter liquidity providers and uses an automated market maker (a smart contract) where the ratio of two assets in each pool determines the value.
See SushiSwap’s review and features below.
DeFi Lending Platforms Continuously Growing
This list contains the top DeFi Lending platforms, but new projects are always in the works. Check back for new reviews often as DeFi is still in its infancy.
In the meantime, visit our full list of top DeFi platforms to get even more investment options.