With more than $221 billion in total value locked (TVL), DeFi is among the fastest-growing sectors of the blockchain ecosystem. Unlike centralized financial systems, DeFi is open for anyone to participate. It is fully decentralized and highly inclusive, making it a preferred choice for retail investors and institutional players alike.
Between 2020 and 2021, we witnessed hundreds of incredibly successful DeFi projects like Aave, Compound, Uniswap, MakerDAO, PancakeSwap, SushiSwap, and many more. With the DeFi 2.0 movement gaining momentum, it is no hyperbole to claim that 2022 will witness a massive wave of promising DeFi projects designed to overcome the shortcomings of their forbearers.
Although the full flood of DeFi 2.0 projects is yet to happen, the initial trickle has already begun. That said, here are the top five upcoming DeFi projects of 2022 that you must keep an eye out for as the year unfolds.
Introducing The Concept Of Liquidity-As-A-Service
Ever since Uniswap, one of the leading DEXes, rolled out its V3 iteration, it has been facing issues with its liquidity pools due to the complexity of its NFT-based positions. To solve two critical problems most DeFi protocols and their users face, Izumi Finance recently launched its liquidity-as-a-service (LaaS) solution and a built-in multi-chain DEX on Uniswap V3.
Through LiquidBox, the liquidity mining scheme, Izumi offers a range of innovative liquidity mining protocols designed to attract more liquidity by distributing the incentives based on specific price ranges, enabling users to overcome the problems of low liquidity and high slippage. It also offers “programmable liquidity mining” to extend concentrated liquidity support across multichain protocols.
Other core offerings aim to solve the inefficiency in incentive distribution and management and the “Pool-2” dilemma. With a robust product roadmap and tons of promising features like financial NFTs, UniV3 liquidity mining, LP farming, staking NFTs to earn rewards, and evolvable tokenomics, among others, Izumi Finance is at the forefront of the DeFi 2.0 movement. The platform is backed by prominent industry leaders across the crypto and DeFi ecosystems and has raised upwards of $2.1 million through its recent fundraising round led by Mirana Ventures.
The Decentralized Money Market Protocol
Parallel Finance is another promising DeFi 2.0 project that aims to add liquidity and increase the scope of DeFi across the Polkadot blockchain. This decentralized money market protocol offers many products, including lending, staking, and borrowing within the Polkadot ecosystem.
The core products offered by Parallel Finance include an AMM (automated market maker), the first money market for Polkadot and Kusama ecosystems, insured staking, margin staking, leverage staking, and algorithmic staking. Parallel Finance’s unique lending design can disrupt the DeFi 1.0 narrative, adding higher yields and increased opportunities for participants. The platform also aims to expand into offering interoperable portfolio management services and expand its products into other chains like Ethereum in the future.
By combining three different decentralized Polkadot-powered protocols into a unified solution, Parallel Finance unlocks innovative yield opportunities and enables participants to lend and stake simultaneously. To date, Parallel Finance has the highest TVL in the Polkadot ecosystem after winning the fourth Kusama parachain slot by locking up more than $239 million worth of KSM tokens. Besides this, Parallel Finance is backed by industry leaders like Lightspeed, Polychain Capital, Alameda Research, and Blockchain Capital.
The DeFi And Stablecoin Hub For Cardano
Founded by tech veterans from leading global brands, Ardana is an all-in-one DeFi hub built on the Cardano blockchain. This asset-backed stablecoin protocol and DEX is among the frontrunners of the DeFi 2.0 race.
By merging existing DeFi solutions with a DEX-based stable asset liquidity pool and asset-backed stablecoin protocol, Ardana unlocks the doorway to enable free-flowing liquidity to enter the Cardano ecosystem. In addition to supporting Cardano-native assets, Ardana’s stablecoin dUSD is also overcollateralized with Cardano-native assets, thus facilitating secured borrowing.
At the same time, the built-in DEX enables capital-efficient exchange between stablecoins and identical assets while lowering risks for liquidity providers. The platform streamlines the process of lending and borrowing by eliminating the need to convert ADA into stablecoins. Instead, users can directly deposit ADA into Ardana’s vaults and receive a proportion of the total value back as a dUSD loan.
Backed by prominent investors like Ascensive Assets, Three Arrows Capital, Morningstar Ventures, and several others, Ardana recently closed a $10 million funding round. The platform has also partnered with NEAR Protocol to expand its asset-backed lending pools to other chains.
Unlocking The Liquidity Of Real-World Assets
Centrifuge is another interesting DeFi project that will play a critical role in shaping the DeFi 2.0 movement. Unlike most of the other projects we’ve discussed so far, Centrifuge aims to add liquidity to the DeFi ecosystem by bringing the untapped trillion-dollar economy of real-world assets to the blockchain.
Founded in 2017, Centrifuge offers an asset-backed lending protocol that allows users to tokenize their real-world assets like invoices, real estate, etc. Once tokenized, users can post these tokens as collateral to access funding from the platform’s lending dApp Tinlake. The platform is fully decentralized, connecting borrowers and lenders without any intermediaries.
The platform is backed by a consortium of venture firms like Fenbushi, Moonwhale, Fintech Collective, and investors like Stani Kulechov, Mariano Conti, and Julien Bouteloup. Aside from concluding several successful funding rounds, Centrifuge has also received enormous support from the wider crypto community, helping the platform claim parachain slots on Kusama and Polkadot.