Decentralized finance (DeFi) manages financial transactions using cryptocurrencies and blockchain technology. DeFi intends to democratize finance by replacing old, centralized institutions with peer-to-peer connections capable of providing a wide range of financial services, ranging from ordinary banking, loans, and mortgages to complex contractual interactions and asset trading. DeFi allows many entities to keep a copy of transaction history, ensuring that it is not controlled by a single, central source. This is important because centralized systems and human gatekeepers can slow down and complicate transactions while giving users less direct control over their funds.
In this article, we explore the best 5 polygon DeFi project applications, and while we believe they are sound investments, we do not provide expert investment advice. If you choose to invest in them, you are solely responsible for your investments.
What is a Polygon?
Polygon is a layer two scaling solution that runs alongside the Ethereum blockchain to enable fast transactions and minimal costs. MATIC is the Polygon network’s native cryptocurrency, which is used to manage, secure, and pay network transaction fees. MATIC can be purchased or sold on exchanges like Coinbase.
Polygon bills itself as a layer-2 network, which means it is an Ethereum add-on layer that does not intend to alter the original blockchain layer. Polygon has various sizes, shapes, and applications, and it promises to be a simpler framework for creating interconnected networks. Polygon wants to see Ethereum grow in terms of size, security, efficiency, and usefulness, as well as encourage developers to create more appealing products.
Aave is the most popular protocol in the DeFi ecosystem, with over $10 billion in total value locked (TVL), according to DeFi Pulse. Aave was created in 2017 by Stani Kulechov. This decentralized service allows users to lend and borrow money without going via a broker or a central authority. They can also earn income from their digital assets.
The Aave platform’s lending services are mostly based on smart contracts. A distributed network of computers running the Aave software manages the smart contracts. One of the most important aspects of the program is the ability to create loan pools. One can lend and borrow money through the platform’s lending pools. To borrow money, one must first provide collateral, which must be in the form of DAI, a stable cryptocurrency.
Curve is an automated market maker (AMM) platform that provides a very efficient way to swap tokens with minimal fees and zero slippage by only accommodating liquidity pools made up of assets that behave similarly. While this approach leads to lower fees for the liquidity providers who supply the pools with tokens, Curve incentivizes their participation by integrating with external DeFi protocols and delivering rewards in the form of CRV tokens and interest.
The platform has a smart swap solution that allows users to trade stablecoins and other assets for a small fee of 0.04%, with half of the fee going to liquidity providers and the other half going to CRV token holders.
Curve launched on Ethereum in 2017, but it has now grown to incorporate a number of other significant blockchains, including Avalanche, Polygon, and Fantom, as well as other layer-2 solutions.
It is a DeFi Yield Optimizer project that allows users to generate more cryptocurrency with cryptocurrency. It also uses a set of investing approaches secured and enforced by smart contracts to maximize user gains from various liquidity pools (LPs), automated market making (AMM) initiatives, and other yield farming opportunities in the DeFi ecosystem.
Beefy.Finance’s main product is the ‘Vaults,’ where you may store your crypto tokens. The investment strategy associated with the particular vault will automatically grow your deposited token amount by compounding random yield farm reward tokens back into your first invested asset. On Beefy Finance, your money is never kept in a vault. You have the option to withdraw at any moment.
Beefy.Finance recently integrated polygon, which means you can utilize their vault system to invest in any yield farm beefy has for the polygon. They have pages of options, ranging from high-risk new coins to tokens with a low risk-to-reward ratio.
Automated Market Makers (AMMs), such as QuickSwap, are particularly popular in DeFi. QuickSwap has grown in popularity as a result of its speed and low rates. It’s also Ethereum-compatible, so you can trade ERC-20 tokens with it. However, there is always the risk of suffering a temporary loss.
One can buy QUICK, its cryptocurrency, on Binance. QuickSwap’s liquidity pools can also be used to exchange other tokens for QUICK. QuickSwap allows users to trade any pair by bridging ERC-20 tokens from Ethereum to Polygon, as long as a liquidity pool exists. Anyone possessing a token pair can create a new liquidity pool and profit from transaction fees collected from other users.
Users are able to trade their coins without having to register or go through any KYC (Know Your Customer) procedures. All you need to connect to the site is a wallet and MATIC to pay your transaction fees.
Polycat is a Polygon blockchain-based value-oriented, sustainable, and decentralized hybrid yield optimizer (AMM and yield aggregator). It stands out because it was one of the first Polygon platforms to give Initial Farm Offerings (IFOs). IFOs allow eager investors to get in on fresh farming opportunities at the ground level.
Another important aspect is PolyCat’s unique burning system, which ensures that the supply is continuously burned. The platform is called a “Burning Vault” because it stakes deposit fees from farms and pools and uses 100% of the yields to burn the platform’s native currency, FISH. The platform also has a token swapping service but this is currently restricted to SushiSwap, Dfyn, and QuickSwap.
Polygon now has integrations with a number of high-quality DeFi projects, giving it an appealing option for customers who want to utilize DeFi but don’t want to pay the relatively high transaction fees associated with Ethereum. The top 5 polygon blockchain DeFi projects you should consider investing in include Aave, Curve, Beefy.Finance, QuickSwap, and Polycat Finance.