Defi is short for decentralized finance. The ethereum blockchain houses code that powers dApps (decentralized applications). These dApps have various functionality based on their code. Users of dApps access decentralized services on the blockchain in a permissionless manner.
Types of dApps include:
MakerDAO is a lending and borrowing protocol.
By depositing ethereum, users are able to borrow $DAI. DAI is a stablecoin that is pegged to the US dollar. With borrowed DAI, users are able to use it the same way fiat currency would be used.
Users have to keep track of ethereum price as a level of collateral must be maintained. If the price of ethereum falls too far, part of the ethereum collateral will be liquidated unless the DAI loan is repaid.
deposit eth => borrow dai => maintain collateral
Users can also acquire the Maker token. The $MKR token gives holders governance rights allowing for votes on proposals involving the protocol.
Curve finance is a stable swap and liquidity pool dApp.
Users are able to swap between stable coins, bitcoin, ethereum, and some select cryptocurrencies. Users can also pool select tokens into liquidty pools to earn rewards. Rewards are given in curve tokens or pooled tokens. Users can use Curve tokens to vote on protocol proposals. Curve tokens are locked for a certain period of time increasing the amount of voting power.
Aave is a lending and borrowing protocol.
Similar to Maker, users are able to deposit and borrow. However, users are not limited to only depositing ethereum and only borrowing DAI. A larger variety of cryptocurrencies are available to be deposited and borrowed. Users must maintain a good "health factor" to avoid liquidation.
Uniswap is a decentralized exchange(DEX). Users can swap cryptocurrencies for other cryptocurrencies. Users can particpate in liquidity pools. By participating in liquidity pools, users are rewarded with fees based on the percentage of their supply in the pool. Users can also hold and stake the $UNI token which distributes rewards from transactions fees occuring on the Uniswap exchange.
swap a veriety of tokens
supply liquidity => earn fees from transactions
stake $UNI governance token => receive rewards from transactions on the exchange
Convex is a platform that builds ontop of Curve finance. Users are able to deposit CRV tokens and earn boosted rewards. Users also receive other tokens based on how voting plays out. $CVX tokens can be staked to receive extra rewards.
deposit crv => receive cvxCRV => stake cvxCRV => receive CRV rewards => earn crv trading fees
lock cvx => earn platform fees
Convex shows the true potential of defi. It was a protocol created to take advantage of a protocol that was already in place.
Compound is an algorithmic, autonomous interest rate protocol. The protocol was designed for developers to expand and build on top of Compound. Users are able to stake $COMP tokens and gain voting power to vote on proposals.
Like other lending and borrowing protocols, users are able to lend assets and gain apy. Users can also borrow assets and pay interest. The interest rates are contolled algorithmically based on the demand on the supply or borrow side of the asset.
Balancer is an Automated Market Maker. Users are able to place assets into liquidity pools that automatically rebalance. Users collect fees from trades occuring on the newtwork. Balancer provides superior customizability for developers through pools that aren't limited to the standard 50/50 liquidity pools.
Sushiswap is a fork of Uniswap. Sushiswap has an added lending and borrowing feature not found on Uniswap known as the Bento Box. Like Uniswap, Sushiswap has its native token, $SUSHI.
swap a veriety of tokens
supply liquidity => earn fees from transactions
lend and borrow crypto assests with Bento Box
stake $SUSHI governance token => receive rewards from transactions on the exchange
Frax is stable coin partially backed by collateral and partially stabilized algorithmically. With the vision to create highly scalable, decentralized money in place of fixed-supply digital assets like BTC. Frax finance has four different tokens that create its ecosystem. $FRAX,$FXS,$FPI, adn $FPIS.
$FRAX is a stablecoin targeting a tight band around $1/coin
$FXS is the governance token of the entire ecosystem
$FPI is the inflation resistant, CPI pegged stablecoin
$FPIS is the governance token of the Frax Price Index
Yearn finance is a yield aggregator. Giving individuals, DAOs and other protocols a way to deposit digital assets and receive yield. The governance token for the protocol is $YFI.
yearn Vaults are capital pools that automatically generate yield based on opportunities present in the market
Use assets as collateral to borrow Magic Internet Money, a leading decentralised and collateral-backed stablecoin.
Bancor is a decentralized network of on-chain automated market makers (AMMs) supporting instant, low-cost trading, as well as Single-Sided Liquidity Provision and Liquidity Protection for any listed token.
provide only the token you love
trading fees are automatically re-added to your deposit, compounding your gains
earn liquidity mining rewards that are auto-compounding
Tornado improves transaction privacy by breaking the on-chain link between the recipient and destination addresses. The native token is $TORN.
uses a smart contract that accepts ETH deposits that can be withdrawn by a different address
a new address withdraws ETH, there is no way to link the withdrawal to the deposit
makes the procedure completely private
Olympus is building OHM, a community-owned, decentralized and censorship-resistant reserve currency that is asset-backed, deeply liquid and used widely across Web3.
stakers deposit their OHM into the protocol, which contributes to OHM's long-term price stability
bonding allows you to trade various tokens for OHM at a discounted price
native token $OHM
Synthetix is a new financial primitive enabling the creation of synthetic assets, offering unique derivatives and exposure to real-world assets on the blockchain.
traders are guaranteed to have some of the best price execution around
futures contracts remove the risk of cascading liquidations due to forced selloffs
fully on-chain permissionless futures trading experience
native token $SNX
As the first and largest marketplace for Non-Fungible Tokens and Semi-Fungible Tokens, OpenSea provides a first-in-class developer platform consisting of an API, SDK, and developer tutorials.
open a beautiful, customizable marketplace on your own domain, fully integrated into your project
set your own fee on the secondary sales of your items on OpenSea
stats and insights to see how your collectibles are trending
Use DefiLlama to navigate to the documentation for each of these protocols.