We have evaluated and screened the DeFi space to provide you with the top 5 projects building on Defi 2.0. We believe these projects show immense potential and set a new standard in the coming mega bull run.
The next mega-trend in the crypto space is going to start with DeFi. The entire market cap for Defi is well over 150 billion dollars, and we could just be scratching the surface. A lot of that value grew this past year as more users understood how decentralized applications could provide the perfect balance between yield and efficiency. The amount of liquidity flowing into these Defi applications is staggering, but it justifies the power of new supply-side innovation.
The market demand is always rising in crypto. People are looking for economic models that give them digital equity and better alternatives to traditional financial systems. While we see many projects addressing the core problems, we still have a shift in liquidity, scalability, and capital efficiency. The next bull run led by Defi 2.0 projects depends on their ability to take crypto mainstream. It is paramount for protocols and platforms to provide optimum solutions to interact with a network like Ethereum without paying high gas fees and succumb to long waiting times.
To tackle such limitations, we need projects that focus on optimizing TVL and creating a healthy cash flow. Capital efficiency is going to be key in the next mega-trend in crypto. Reducing impermanent losses, boosting the lending markets, and operating through direct governance — will be key features of new-gen projects in Defi 2.0.
We have evaluated and screened the DeFi space to provide you with the top 5 projects building on Defi 2.0. We believe these projects show immense potential and set a new standard in the coming mega bull run. Let’s get started!
#1 Abracadabra Money (SPELL)
- Market Cap: $1.79B
- Price: 0.025$
- Exchanges: FTX, Uniswap
We talked about how important capital efficiency is going to be for the DeFi 2.0. And Abracadabra Money does just that and more. It is an isolated lending protocol that leverages interest-bearing tokens like yvWETH or yvUSDC to Magic Internet Money (MIM), which is pegged to the dollar. The SPELL token serves the governance role of the ecosystem and brings in great returns via staking.
The lending platform allows users to adjust their collateral ratio freely, increasing capital efficiency and earning yields. Not only that, the MIM token can act as a decentralized stablecoin that is better than its peers in terms of utility and multi-chain compatibility.
The concept of yield farming while using leverage puts users in a perfect position to explore rewarding opportunities. They can take out a loan using the interest-bearing tokens at a lower interest rate and extract close to 90% of their deposited value. This, however, comes with a risk of liquidation. But as the co-founder of Abracadabra said, “it is a completely new way of market-making in the decentralized world”.
The roadmap of this project looks promising and impactful. The team aims to introduce an automatic liquidity pool that enables depositors with more profits and adds more utility to MIM and SPELL tokens. If implemented well, this could be a major catalyst driving the next bull run in DeFi, filling gaps between market-making and stablecoins.
#2 Popsicle Finance (ICE)
- Market Cap: $383M
- Price: 33.3$
- Exchanges: Bitfinex, Uniswap, Pancakeswap
The next on our list is a platform that manages liquidity cross-chain. Popsicle Finance recognizes that the current ecosystem is not chain-agnostic. Users are not unable to interoperate their funds on different chains. To solve this problem, Popsicle Finance created multiple products — Sorbetto, Gelateria, and Frapped.io. The three of them complement to create an ecosystem based on capital efficiency.
Sorbettto refers to two products. One is Fragola, and the other is Limone. Using Uniswap V3, Sorbetto Fragola puts users’ funds in the most traded utilization zone, giving them a higher earning potential. The custom price range provided by Popsicle Finance considers the impermanent loss of users and optimizes their yield after considering the historical volatility of that particular asset. It is a perfect match for liquidity providers because the pools are not saturated, and they no longer have to figure out how to spread the capital efficiently.
Another feature yet to be deployed is Gelateria. It is a lending protocol that allows LPs to leverage up and earn increased yields on different assets. The team is also planning to launch Frapped.io, the first and only non-custodial official wrapper of USDT. It increases blockchain compatibility for standard stablecoins. As of now, the wrapped tokens are available on BSC and Fantom Opera.
#3 Gelato Network
- Market Cap: $18.6M
- Price: 1.91$
- Exchanges: Gate, Uniswap
For DeFi 2.0 to start a megatrend in crypto, we need to see projects that add functionality to existing ones. One such network that aims to solve issues surrounding decentralized apps is Gelato. It is a web three automation protocol that automates smart contracts and enables new operations. The innovation here lies in its network of reliable bots. Developers can use the underlying infrastructure to integrate new operations into the protocol and automate it on behalf of their users.
Gelato Network being among the very projects with this purpose, has already partnered with many protocols in the Crypto space and executes thousands of automation sequences every month. Instadapp, an asset management platform, uses Gelato’s smart contract automation feature to secure under collateralized debt positions. As a result, users no longer have to wait to send funds from one lending protocol to another.
Gelato is also providing a fix to a long-standing problem associated with Uniswap v3. The liquidity management system of Uniswap, G-UNI, uses the Gelato network to incentivize their community to provide deep liquidity. The list of possible use-cases for this project is endless. It can help yield farming projects in automating the process of harvesting and reinvesting rewards. It can simplify tasks for NFTs and gaming in terms of updating leaderboards and distributing rewards. The Gelato network will be the go-to place for all Ethereum-based developers and applications based on layer two networks if implemented well.
#4 Strips Finance [STRP]
- Market Cap: $15.1M
- Price: 7.05$
- Exchanges: Gate, Uniswap
Strips Finance is tackling one of the most unacknowledged risks involved in dealing with yield generating projects in DeFi. And that is fluctuating interest and borrowing rates. We often see that projects fail to provide a fixed or stable range with respect to interest rates. Strips Finance is here to change that for the greater good of mainstream adoption.
The first exchange on Arbitrum charges a fixed cost for borrowing and gives higher yield farm returns. Also, one can supercharge their yields by pleading only 10% collateral. As a result, users can seamlessly trade on interest rates with almost 10x leverage. Another way of making money with Strips Finance is stake liquidity. Users not only earn trading fees and rewards, but they are also given a stake in insurance.
Liquidity is not a big concern to the platform, as the native token, STRP, adds an extra layer to power all network operations. In the coming year, we are expecting to see fixed term and bonds products along with interest rate options.
#5 Planet Finance [AQUA]
- Market Cap: $143M
- Price: 1663$
- Exchanges: PancakeSwap
A protocol that is superior in providing high yields with low risk by using different applications is Planet Finance. The native token, AQUA, sits at the centre of Planet Finance and facilitates operations such as lending, borrowing, swapping, and auto compounding. Another utility token of the protocol is GAMMA. It helps users benefit from staking GAMMA, as they get increased yields and fees are reduced.
The Blue and Red planets focus on generating higher yields for stablecoins and other cryptocurrencies, respectively. They also have an auto-compound feature that converts the yield into a cryptocurrency. On top of that, users will receive token rewards.
The green planet is for lending and borrowing assets. Its uniqueness lies in its ability to offer discount levels using the GAMMA token. The permissionless lending protocol allows users to diversify risk while creating higher yield through farming across the planets.
Another interesting thing that differentiates this type of lending protocol is real-time interest deposits. With Planet Finance, lenders don’t have to wait to receive payments. The rolling interest will be reflected in real-time, enhancing user experience. With so many offerings that solve major problems in the current Defi landscape, we can expect great things to come from Planet Finance in the next mega trend of DeFi 2.0.
The state of DeFi right now is not where we want to be moving forward. The lack of liquidity and scalability of projects won’t enable mainstream adoption. We need new age products that solve these problems and provide an advanced version with no entry barriers. So DeFi 2.0 is going to be the next mega trend to introduce such projects to the masses.
Altcoins listed in this article are based on the author’s research. The author is not holding any of these altcoins. Always do your own research before investing in any cryptocurrency.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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