Tag: UniSwap

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Top 5 DeFi Projects to Look Out for in 2021

The DeFi industry is still in its infancy stage but has already registered some impressive growth over the years. The industry’s total value is currently locked at $14.92 billion and is expected to grow in the coming year. 

The DeFi industry is still in its infancy stage but has already registered some impressive growth over the years. The industry’s total value is currently locked at $14.92 billion and is expected to grow in the coming year. 

The DeFi industry is still in its infancy stage but has already registered some impressive growth over the years. The industry’s total value is currently locked at $14.92 billion and is expected to grow in the coming year. 

There’s no doubt that DeFi brings about some unique solutions that are quite lucrative for investors of all kinds. If you’ve had your eye on the crypto industry for a while, there are chances that you’ve thought of putting your money in this exciting venture. But if you don’t know how to get started, you may feel stuck when choosing the best projects.

If you’re in this position, this article is just what you need. Buckle up, and let’s dive into the five best DeFi projects you should consider investing in the coming year. 

Uniswap

Anyone who has been in the crypto industry for quite a while will agree that decentralized exchanges were primarily associated with thin order books and poor UX. These issues, coupled with exorbitant fees, centralized gateways, and too many transactions was the reason dex enthusiasts demanded a simple yet effective decentralized exchange. 

Uniswap was launched in 2018 as an automated liquidity protocol for ETH and ERC-20 tokens. The platform has its own token, UNI, which is instrumental in governing protocol changes. 

One of the things that make Uniswap unique is that it doesn’t use order books but instead has an automated market maker. Users only need to select the assets they want to trade, and the platform automatically completes the transaction. 

Uniswap presents several advantages, which is why you should hop onto it already. It has no listing fees for new tokens, and users don’t have to complete the KYC checks. Besides, you get full custody of your funds and an excellent way to earn some extra tokens through the platform’s liquidity pools. 

If you choose to invest in the platform, you could either be a casual user, an arbitrageur, or a liquidity provider, all of whom play essential roles in the ecosystem. 

Yearn Finance

Yearn.Finance should be your go-to project if you’re looking to maximize the annual percentage yields on the cryptocurrencies you’ve deposited in DeFi. The unique project is an array of DeFi protocols built on Ethereum and designed for high-yield returns through liquidity pools and community governed lending protocols. Like Uniswap, Yearn Finance uses an automated market marker to allow users to convert tokens and earn from both lending and trading fees.

Yearn Finance is still relatively new in the industry, having been launched in February 2020. The platform had a rapid ascent in August, which saw its value rise to $650 million, accounting for a significant percentage of the entire industry’s value.

According to Jesse Walden, CEO of Variant Fund, “The unifying goal of all Yearn products is to create a simple, intuitive interface to all of DeFi.”

Yearn’s intuitive interface makes trading easier for all users. The platform is a portal for other DeFi products and has the YFI as its governance token. Yearn is considered entirely decentralized because the YFI tokens cannot be pre-mined, and the platform didn’t hold an ICO.

Although YFI was initially designed to be entirely community-governed, it can now be traded on other platforms such as Uniswap.

Curve Finance

You’ve probably heard of stablecoins, and if you know a thing or two about cryptocurrencies, they must have piqued your interest as an investor. Well, Curve Finance is an excellent DeFi platform if you’d like to trade-in stablecoins efficiently. It provides a solution to one of the most considerable problems in the DeFi sector; price slippage.

Like any other ideal marketplace, demand and supply forces determine the lending rates in DeFi. Now, suppose you want to trade between USDC and DAI. If the lending yield for USDC becomes higher than that of DAI, lenders will want to migrate to USDC. Curve Finance allows you to effectively do this and still earn better than you would with a regular DEX.

Switching between stablecoins effectively helps correct any anomalies in the interest rates that may result from mismatches in the demand and supply. Users can keep their profits once the interest rates are back to normal. 

Curve Finance provides one of the best ways to earn as a liquidity provider with returns of over 300% per year for BUSD. This is made possible by providing liquidity to other DeFi protocols using the deposited funds. This move generates interest for the other protocols, and Yearn, in turn, assigns the interest to liquidity providers. Additionally, they receive some CRV tokens and a cut of the trading fees from the platform.

DAI 

Speaking of stablecoins, DAI is one you should definitely watch out for in the coming year. The coin has its price pegged to the US dollar, which helps maintain its value. Whenever users on MakerDAO, the protocol behind DAI, take out a loan, the stablecoin is created. The decentralized nature of the protocol, together with the lack of volatility, ensures that DAI remains stable and transparent. 

Initially, you’d only be able to use ETH as collateral for DAI. However, the stablecoin now supports different cryptocurrencies as collateral for a DAI loan. You can place your cryptos and get them back for the same price, despite changes in the coins’ values. 

There are plenty of stablecoins available, so what makes DAI any different? Well, if you are really against censorship by governments and other regulatory bodies, you’re going to love using DAI. It is backed by smart contracts, which makes it resistant to censorship. It also provides privacy when transacting since users don’t need to complete KYC checks or create any accounts. 

Kava

Kava developers used various technologies to create a system that would allow users of significant crypto assets to access collateralized loans and stablecoins. The network uses USDX as its stablecoin, and users get to collateralize their crypto assets in exchange for the stablecoin. 

To help you gain a leveraged position in the market, you could take out several collateralized loans. For each of these loans, you’ll receive an equivalent amount of USDX to create synthetic leverage. You can then earn a passive income from the platform by staking and bonding your USDX coins. 

Kava uses a dual token system that ensures usability and flexibility. The native token for the blockchain is Kava tokens, which double up as the governance and voting tokens. Kava tokens help to ensure the platform’s security through staking, which also earns users block rewards. 

Kava has already made a name for itself in the business world by gaining some major entities’ attention. For example, Arrington Capital, Ripple, and Cosmos are behind this DeFi project, which provides some assurance in its profitability and sustainability. 

Parting Shot

There’s no denying that the DeFi industry has taken giant leaps over recent months and will continue to do so in 2021. Like most investors, you’ll undoubtedly want to add long-term value projects to your portfolio, and DeFi is an excellent way to go about it. 

Sure, it’s totally okay to be skeptical about new ventures such as this. However, the DeFi industry has proven to provide solutions to problems poised in centralized finance. 

Just as you would with any other investment, it’s best to do your due diligence and learn as much as possible before placing your money in a DeFi project. These five projects should give you an excellent head start for your 2021 investments. 

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Crypto Videos

Uniswap Monthly Volume Surpasses Coinbase!

https://youtu.be/FsGTiBku_-c

https://youtu.be/FsGTiBku_-c

Uniswap Monthly Volume Surpasses Coinbase; The DeFi Craze Continues


Data coming from Dune Analytics shows that Uniswap DEX has processed over $15.3 billion in volume in September only. In the same period, reports show that the centralized exchange giant Coinbase processed only $13.6 billion.

The significant spike in volume Uniswap had can be attributed to two major factors:
First, the explosive growth of the decentralized finance sector and yield farming of various governance tokens caused decentralized exchanges to thrive. Second, the launch of Uniswap’s own governance token has led to a frenzy on the platform.

The month of June marked the start of a DeFi governance token frenzy, with Compound’s COMP token being at the forefront of it. The process is relatively simple: DeFi users stake various cryptocurrencies and “farm” new governance tokens by doing that. The DeFi protocols that release the underlying governance tokens in a decentralized manner distribute them to the users who are staking funds. Once users successfully obtain the new tokens, they typically hold them until they are listed on a centralized exchange, where it could be easily sold.

Top cryptocurrency exchanges have to take various factors into consideration before listing tokens. The criteria for listing coins can include liquidity, developer activity, and track record. For new governance tokens and DeFi-related cryptocurrencies, it has proven to be a nearly impossible feat to meet those requirements.
Uniswap has, mostly for the aforementioned reasons, eventually evolved into the go-to platform when it comes to trading DeFi tokens, and the surge in total value locked in DeFi translated into intensified growth of Uniswap’s volume as well.

DEX Volume VS. Yield Farming

Uniswap’s volume has first surpassed Coinbase Pro in daily volume on August 30. Ever since then, it has continuously remained very competitive with the top US exchange. Uniswap creator Hayden Adams said in late August:
Wow, Uniswap’s daily trading volume is higher than Coinbase for the first time ever. Uniswap: $426M, Coinbase: $348M. It’s hard to express how crazy this is.” The consistently high performance coming from Uniswap occurred despite a very considerable slowdown in the yield farming craze. This suggests that, while the yield farming craze has been tamed, the uptrend of decentralized exchanges is sustainable over the long term.

The last couple of weeks brought a slight price drop of DeFi tokens, which also caused a drop in user activity in the yield farming space. The researchers at Dune Analytics are, however, not interpreting this as a bearish signal. Instead, they said:

“Despite the yield farming craze calming down, decentralized exchange volumes crushed old records in September, with $24 billion traded, up 100% from August. While the last few weeks were down when compared to the beginning of the month, all weeks in September were well-above the peak week from August.”

Ethereum analysts Anthony Sassano said that it also reflects the overwhelmingly positive sentiment that investors have for Ethereum. He said: “They told you that the decentralized exchanges on Ethereum were a fad – but they were so incredibly wrong. DEXs did $23.5 billion in volume in September alone! Betting against Ethereum has, is, and always will be a bad move.”

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Crypto Videos

UNI Token Explained! Uniswap In Depth Analysis Part 4

https://youtu.be/b5vMpMxGAUM

https://youtu.be/b5vMpMxGAUM

 

UNI Token Explained: Uniswap In-Depth Analysis (Part 4/4)


Uniswap has finally introduced its native token, after months of anticipation. The token is meant to enable shared community ownership by implementing an on-chain governance system. This governance system will facilitate protocol development, as well as the development of the broader Uniswap ecosystem.

Who received UNI tokens?

Uniswap has a total supply of 1,000,000,000 tokens, split between community members, team members, investors, and advisers. Sixty percent of the UNI supply will belong to the Uniswap community members. At launch, Uniswap released 15 % of UNI tokens — 150,000,000 UNI – to be immediately claimable by historical users totaling 400 per unique address, as well as liquidity providers and SOCKS redeemers and holders.


Less than 24 hours of its launch, and the UNI token has already become the second-most widely distributed DeFi token, counting over 67,000 unique token holder addresses. That’s more than triple the size when compared to its community fork SushiSwap, while only Aave’s LEND token is more widely distributed at the moment.
With so many users claiming their UNI tokens at the same time, Ethereum’s gas prices spiked substantially and rendered the Ethereum blockchain practically unusable at the time.

Total supply and distribution

One billion UNI tokens have been minted at genesis, and they will become accessible over the course of four years. The four-year token allocation looks like this:

 60% to Uniswap community members – totaling 600,000,000 UNI
 21.5% to team members as well as future employees with 4-year vesting – totaling 215,101,000
UNI
 17.8% to investors with 4-year vesting – totaling 178,000,000 UNI
 0.07% to advisors with 4-year vesting – totaling 6,899,000 UNI
Initial Liquidity Mining
Mining UNI token will initially be available through four liquidity pools to incentivize and bootstrap liquidity provision. UNI holders will be able to vote to add more liquidity pools starting October 18.
The initial liquidity mining program has started on September 18 at 12:00 am UTC, and will last run until November 17 at 12:00 am UTC.

Inflation

After the 4-year vesting schedule, UNI token will have a perpetual inflation rate of 2% per year. This measure is put in to ensure continued participation in the Uniswap operations from the community, but at the expense of passive UNI holders.

The UNI token’s future
Uniswap does not directly take any part of the trades fees for itself. However, the governance proposals for trading fees will likely be implemented by the community in the future, all to benefit from the extremely high trading volume.

Conclusion

Uniswap is certainly one of DeFi’s strongest and most innovative players at the moment, and it is undeniable that it has a future in the crypto sector. However, investors have to beware of how they trade and use the platform just as much as with any other platform, as unforeseen events might influence the potential gains they make.

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Crypto Videos

How To Use Uniswap In Depth Analysis part 3 of 4

https://youtu.be/Pu4vrxjsNZY

https://youtu.be/Pu4vrxjsNZY

How To Use Uniswap: In-Depth Analysis (part 3/4)

While the previous parts of the guide talked more about the premises of the platform and what it’s used for, this part of the guide will be a bit more practical, as it will explain how to actually use the Uniswap exchange.
How to use Uniswap
Uniswap is an open-source protocol, which means that anyone could create their own application for it. However, most people just use the already created ones, with https://app.uniswap.org and https://uniswap.exchange being the most popular.

While stepping into the DeFi sector might sound daunting, using Uniswap is quite straightforward. First off, you will need to go to the Uniswap interface and connect your Ethereum wallet, such as MetaMask or Trust Wallet. After you’ve done that, you will have the option to select the token you would like to exchange from and to. By clicking swap, the transaction pop-in window will show up.

After confirming this transaction request in the wallet, the transaction will start on the Ethereum blockchain and can be trackable via https://etherscan.io/.
As we mentioned in our previous articles, if you want to earn income from Uniswap, you would need to deposit two tokens of equivalent value to the pool.

Uniswap’s market position

Before using Uniswap, we need to know how does it compare to other decentralized exchanges. Uniswap is by far the leading decentralized exchange in terms of both volume and liquidity, and rivaling even centralized exchanges in that regard. It stands on the cusp of topping $10 billion in monthly traded volume. The traded volume in September only stands at over $9.9 billion, accounting for around 66% of all DEX trading volumes.

Uniswap’s success can mostly be attributed to the ease of liquidity provision. The protocol’s liquidity has steadily increased since the start of 2020, while it has recently seen several enormous spikes due to liquidity mining events from competing forks such as SushiSwap.
Uniswap’s user base has grown in sync with the DeFi boom of 2020, which makes sense as this protocol is a foundational component of the overall DeFi infrastructure due to it having integrations across hundreds of applications.
Despite extremely strong competition from its recently launched fork SushiSwap, Uniswap outperforms SushiSwap from both a volume and liquidity perspective.

Summary

Uniswap is an innovative decentralized exchange protocol built on the Ethereum network. It allows anyone that has an Ethereum wallet to exchange tokens without any involvement of any central party.
While it certainly does have its limitations, this new technology may have some exciting implications for the future of decentralized, trustless token swapping.

For information on Uniswap’s UNI token, check out our next part of the Uniswap in-depth guide series.

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Crypto Videos

Uniswap In Depth Analysis Part 2 of 4

https://youtu.be/708OW4vsDNI

https://youtu.be/708OW4vsDNI

Uniswap: In-Depth Analysis (Part 2/4)

Our previous article on Uniswap touched upon how the protocol works and what it is exactly. This part of our guide will talk about the impermanent loss effect as well as about how Uniswap can make money.

What is impermanent loss?

As we’ve discussed in our previous part of the Uniswap guide, liquidity providers earn fees for providing liquidity to traders that swap between various tokens. However, there is another thing that liquidity providers should be aware of, and that is the impermanent loss.

Impermanent loss is basically an opportunity cost pooling a token that is gaining value. This effect is best illustrated by an example.

Suppose Bob deposits 1 Ether and 100 USDT in the Uniswap pool. As the token pair needs to be of equivalent value, this would put the price of Ether at 100 USDT. At the same time, the pool has a total of 10 Ether and 1,000 USDT. This means that Bob has a 10% share of the pool, which has total liquidity of 10,000.
1 Ether = 100 USDT + 100 USDT = 200 USDT
If the price of Ether increases to 400 USDT, the ratio of Ether and USDT is disrupted. As the total liquidity in the pool has to remain constant, that means that there is now 5 Ether and 2,000 USDT in the pool. Arbitrage traders will add USDT while removing ETH from the pool until the ratio reflects the price.

0.5 Ether = 200 USDT + 200 USDT = 400 USDT
If Bob decides to withdraw his funds at the current ratio, he will get the promised 10% of the pool, which is 0.5 Ether and 200 USDT, totaling 400 USDT. While it seems like he made a nice profit, if he held on to his funds instead of pooling them, he’d have 1 Ether and 100 USDT, which would come out to 500 USDT.
1 Ether = 400 USDT + 100 USDT = 500 USDT
In this case, the impermanent loss is the opportunity cost of pooling a token that suddenly appreciates in price. By depositing funds into Uniswap for the purpose of earning fees, Bob may lose out on other opportunities. This effect works regardless of the price change direction from the time of the deposit.

All that is left to explain now is why this effect is impermanent. If the price of the pooled tokens manages to return to the initial price, the effect is nullified, and since liquidity providers earn fees, the losses from this occurrence should get balanced out over time.
Now that we know how we can earn or lose money, we should know how Uniswap makes a profit. The answer to this is: it doesn’t. Uniswap is a decentralized protocol, where all fees go to liquidity providers.

Founders do not get a cut from the trades through the protocol. However, Uniswap’s UNI token has recently gone live, presenting an opportunity for the founders to earn some money.
At the moment, the transaction fee paid out to liquidity providers is flat 0.3% per trade. These funds are added to the liquidity pool by default, but liquidity providers can redeem them at any point in time. The fees are distributed according to the liquidity providers’ share of the pool.
For more information on Uniswap, its token, and how to use it to earn income, check out the next part of our in-depth guide.

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Crypto Videos

What Is Uniswap? In Depth Analysis part 1!

https://youtu.be/K6bYRrSROi4

https://youtu.be/K6bYRrSROi4

 

What Is Uniswap: In-Depth Analysis (part 1/4)

Centralized exchanges have been the foundation of the crypto market for years. They offer extremely fast settlement times, high trading volume, as well as continually improving liquidity. However, it is clear that they defeat cryptocurrencies’ purpose, as they are centralized and hold your keys. Over time, developers have come up with a solution in terms of decentralized exchanges. These exchanges require no custodians or middlemen to facilitate trading.

Due to blockchain technology’s current limitations, building DEXes that can actually compete with their centralized counterparts is extremely difficult. One of the pioneers in the decentralized exchange sector is Uniswap. As a result of the innovation they brought to the sector, Uniswap has become one of the most successful DEX projects.

Uniswap – Explained

Uniswap is a decentralized exchange built on the Ethereum blockchain. To be even more precise, Uniswap is an automated liquidity protocol. What’s important to know is that no order book or centralized party is required to make trades. Uniswap allows its users to trade without intermediaries and provides a high degree of decentralization as well as censorship-resistance. It is also open-source, which is one of the pillars of the decentralized finance space.
Uniswap users can seamlessly swap between many ERC-20 tokens without any need for an order book.
Unlike centralized exchanges, Uniswap protocol doesn’t list certain tokens on the exchange, while denying it for others. Any ERC-20 token can be listed on it as long as there is a liquidity pool available. As a result, Uniswap doesn’t charge listing fees.

So how does it all work?

Uniswap completely leaves behind the traditional architecture of digital exchanges in that it has no order book. Instead, it implemented a Constant Product Market Maker design, an iteration of an Automated Market Maker model.

An automated market maker is a smart contract that holds liquidity reserves that traders can trade against. They are being funded by liquidity providers. Liquidity providers are users who deposit an equivalent value of two tokens in the pool. When trading, traders pay a fee to the pool distributed to liquidity providers, all according to their share of the pool.
If you want to learn more about Uniswap and its token, how it all works, and how the platform makes money, check out the next part of our guide.

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A Brief Introduction To SushiSwap – An Evolution DeFi Project of UniSwap

Introduction

Introduction

Introduction

SushiSwap copied the mechanics of the most popular DeFi protocol known as “Uniswap” and challenged it, openly with new cryptocurrency trading features. We can consider SushiSwap as a Uniswap rivalry. The SUSHI token holders are provided with a share of the SushiSwap trading commission, and incentives are given to the liquidity providers.

It’s a community governed crypto trading platform as the SUSHI holders have the power to make governance decisions. SushiSwap made a strong strategy to give tough competition to Uniswap by paying temporarily extra-large SUSHI rewards to the first two-week liquidity providers. 

What is SushiSwap, and how does it work?

Before you start understanding SushiSwap, you must know about Uniswap. Uniswap is an exchange protocol of DeFi which executes operations without any order book. It follows a model known as automated market-making (AMM), where funds are released by liquidity providers in the pools. 

SushiSwap is a similar copy of Uniswap with few differences mainly – the SUSHI token. These tokens majorly have two functions at the time of launch: authorize the holder with administration rights, and a share of fees is paid to them from the protocol commission. In simple words, SUSHI token holders have “ownership” of the protocol. The community accepted SushiSwap at a large scale because tokens distributed by this provide liquidity incentives that grant the holders with governance rights. In addition, the SUSHI holders are also rewarded with a share of fees paid by traders in the protocol. 

With these governance rights, the token holders can vote for any suggested SushiSwap Improvement Proposal (PIP). Therefore, they play a great role in bringing any minor or major changes in the protocol. So, the whole development and execution process of SushiSwap depends on SUSHI holders, and for any successful token projects, a strong community is always a true asset. 

How are SUSHI rewards distributed?

‘Liquidity mining’ is the mode through which Sushi is distributed. SUSHI is given to those liquidity providers who specifically invest in 13 Uniswap pools. Later on, the Uniswap LP tokens can be deposited by such liquidity providers to SushiSwap staking contracts for earning SUSHI. 

Initially, the 13 Uniswap pools were as follows:

USDT-ETH, USDC-ETH, DAI-ETH, USD-ETH, COMP-ETH, LEND-ETH, SNX-ETH, UMA-ETH, 
LINK-ETH, BAND-ETH, AMPL-ETH, YFI-ETH, SUSHI-ETH
The SUSHI-ETH pool provides the investors with double rewards in return. According to the protocol, a new token will be punched each time a block is extracted on Ethereum’s network, and the distribution is initialized with Ethereum block 10,750,000. The target is to stamp out 100 new SUSHI tokens for each block, but for the starting 100000 blocks, 1000 SUSHI tokens will be created per block, and after that, the rewards will be reduced. This procedure is adopted to provide incentives to early investors in the protocol in order to encourage them for Liquidity Migration. 

Once 100000 Ethereum blocks are extracted and the tokens generated will be migrated for liquidity into the SushiSwap contract. In the process, all the Uniswap tokens staked on will be reclaimed to initialize a new pool of tokens. Once the liquidity migration is over to fuel the first SushiSwap pools, then immediate operations will be activated in the protocol. The investors, without any extra effort, will receive SUSHI token share for providing liquidity for further processing. 

Conclusion

SushiSwap challenged the current most successful DeFi protocol called Uniswap. This company is providing high returns to token holders and governance rights to its community. Irrespective of the SushiSwap’s success, it has proved that no protocol in DeFi is accurate.