Top 4 DeFi Protocols to Watch For in 2024

Decentralized finance, or DeFi, has been revolutionizing traditional financial systems in recent years, providing us with secure, transparent, and decentralized alternatives to your usual way of handling our finances. As we slowly move towards the end of 2024, keeping an eye on the top DeFi protocols may help you stay ahead of the competition, capitalize on promising financial opportunities, and make sure you have a good head start in the next year.

In this article, we will discuss the top 4 DeFi protocols to watch for in 2024. These platforms are paving the way for a more accessible and inclusive financial system, offering users various solutions from lending and borrowing to decentralized exchanges and tokenized real-world assets. By exploring these platforms, you can better understand the evolving landscape of decentralized finance, learn what other competitors are engaging in, and make better-informed decisions in regard to your finance management.

What is DeFi?

In a DeFi ecosystem, smart contracts also automate a number of transactions and other processes, making the system more efficient and secure while increasing workflow and traffic to boot. This is achievable by replacing centralized intermediaries and installing decentralized applications (dApps) instead. Since dApps enable you to interact with different DeFi platforms directly, you can minimize fees, increase the speed of transactions, and open up new possibilities for financial services.

There are four main concepts that usually contribute to the overall decentralization of a DeFi platform:

• Decentralized exchanges (DEXes): These applications allow the user to trade cryptocurrencies directly with other users, that is, peer-to-peer (P2P), eliminating the need for a traditional centralized exchange and giving the involved parties more control over their assets;

• DeFi lending and borrowing platforms: On these platforms, you can lend or borrow assets such as crypto without the need for intermediaries. This results in more competitive interest rates and flexible terms;

• Stablecoins: Stablecoins are a type of cryptocurrency pegged to traditional assets, for example, fiat currencies, to minimize price volatility and provide a stable means of exchange. In simpler terms, stablecoins are a type of crypto designed to maintain a stable price at all times;

• Yield farming: Yield farming is a broad term. Technically, it refers to all methods used by investors to earn passive income by lending out their digital assets. By engaging in yield farming, they can receive interest, that is, a portion of fees the platform they are lending their tokens to imposes, or they can receive new tokens issued by said platforms. In other words, yield farming is a way to earn passive income by contributing to the liquidity of a DeFi platform.

Why do you need DeFi?

As mentioned, DeFi is revolutionizing finance by providing us with alternative solutions to finance management. In 2024, the DeFi market is expected to reach $16.96 million, that is, $34.7 million by 2027, thanks to several new protocols emerging. Here are a few reasons why you should consider exploring DeFi yourself:

• Accessibility: DeFi platforms are accessible to anyone with an internet connection, regardless of their location, financial status, and walk of life. This democratizes financial services, enabling people from all over the world to benefit from a wide range of investments and transactions without restrictions. Naturally, this has the potential to increase your client base;

• Transparency: Thanks to the decentralized nature of DeFi, all transactions are publicly visible on the blockchain at all times. This provides a higher level of transparency for all parties involved, which is not something we see with centralized financing solutions. Moreover, this open approach ensures that you have all the necessary information to make well-informed decisions and stay clear of hidden costs, manipulative practices, etc.;

• Cost efficiency: DeFi protocols typically result in lower fees compared to their centralized counterparts. This is hardly surprising if we keep in mind that DeFi serves to remove any intermediaries, all of which incur additional fees. Moreover, the use of smart contracts and blockchain technology allows for more affordable and efficient transactions, allowing you to maximize your returns and foster a more welcoming business atmosphere;

• Security: While no system is impervious to security threats, decentralized networks and cryptographic encryption provide more protection for your assets and transactions compared to some more traditional solutions. For example, by storing your funds in decentralized wallets, you retain full control of your financial assets;

• Innovation: DeFi, fintech, and online banking landscapes are highly dynamic. This fosters innovation, with new protocols and features continuously being developed and introduced to the market, each bringing something new to the table. Consequently, you will have a wide array of opportunities to diversify your portfolio and take part in cutting-edge financial solutions.

Top 4 DeFi protocols to watch for 2024

As the DeFi sphere is constantly and quickly evolving, it’s essential that you keep an eye on some of the most promising protocols out there. Our recommendations for the top 4 DeFi protocols you should watch out for in 2024 include:

1. Radix;
2. AllianceBlock;
3. Giddy;
4. ALEX: Bitcoin DEX.

1. Radix

Radix is a layer-1 decentralized DeFi protocol designed specifically for high-performance, cost-effective scalability. Its primary objective boils down to surpassing Ethereum as the preferred platform for decentralized application (dApp) developers. To achieve their goal, the Radix team introduced their own Ethereum Virtual Machine (EVM) alternative called the Radix Engine. 

Additionally, they introduced a programming language called Scrypto, inspired by Rust, which aims to compete with Ethereum’s Solidity. Furthermore, Radix opted for delegated proof of stake (dPoS) as its chosen consensus mechanism.

The Radix DeFi protocol consists of three integral components:

• Radix Engine: The Radix Engine can be likened to Ethereum’s Virtual Machine as well as host and execute smart contracts. Essentially, it functions as a global computing system for running self-executing smart contracts deployed on the blockchain;

• Cerberus Consensus Layer: With Cerberus, Radix can implement “shards” to facilitate seamless scalability within the blockchain. In essence, we are talking about partitioning a single blockchain network into multiple parallel segments or shards. Transactions are then processed atomically within the shards based on predefined rules for transaction sequencing;

• Delegated Proof of Stake (dPoS): The third chief component of the Radix DeFi Protocol is the consensus mechanism known as dPoS (Delegated Proof of Stake). With a dPoS network, users can participate in transaction validation by delegating their responsibilities to node operators, who share their rewards from transaction validation with the delegates.

The future of Radix

Radix is switching to a new mainnet in September 2024 called Radix Babylon, and the company hopes the switch has the potential to introduce a lot of positive changes to Web3 and DeFi communities, both for developers and users:

• Enhanced user experience: With the mainnet upgrade, the Radix Wallet will be accessible on both the iOS and Android App Stores. This will improve user experience and introduce the Radix protocol to a broader audience;

• Enhanced developer experience: Smart contracts will be deployed on the operational Radix Network. This upgrade is set to streamline the creation of Web3 and DeFi dApps, ensuring heightened speed and security. 

2. AllianceBlock

AllianceBlock aims to connect traditional and decentralized finance. While traditional finance (TradFi) focuses on loans, lending, and capital growth, DeFi aims for a more autonomous approach to financing, one that excludes intermediaries. AllianceBlock leverages emerging blockchain technology to provide financial tools such as yield farming, saving and lending, liquidity provision, and token swaps without relying on centralized entities.

While DeFi, by definition, offers numerous advantages, for example, global capital access and cost-efficiency, it has one drawback. Namely, it lacks proper regulation that traditional financing entities adhere to, which prevents them from having more stake in the DeFi realm.

AllianceBlock aims to tackle issues arising from this lack of regulation by acting as a bridge between traditional and decentralized financing. That is, it facilitates interaction between centralized institutions and retail investors in the TradFi ecosystem with DeFi applications, all within a regulated framework. Likewise, AllianceBlock DeFi users can seamlessly move their capital to and from TradFi entities.

3. Giddy

Giddy is a relatively new DeFi protocol (founded in 2021) striving to offer users innovative lending and borrowing solutions. That is, it is a self-custodial crypto wallet and DeFi investment platform with a goal to simplify and streamline crypto investing. 

Giddy’s objective is to tackle standard DeFi challenges by means of a user-friendly mobile application that combines various DeFi components into a unified interface, simplifying the process significantly. The two key components are:

• A self-custodial cryptocurrency wallet: This wallet seeks to solve the onboarding and initial interaction problems of most DeFi protocols by providing a secure method for purchasing and holding crypto and other digital assets;

• A yield farming platform: The yield farming platform allows users to easily swap, bridge, connect to other decentralized applications (dApps), and stake in liquidity pools. It automates most of the processes, and the user only has to identify a pool for investment. Moreover, after staking, investors can manage their portfolios in the same app. 

4. ALEX: Bitcoin DeFi

ALEX is a DeFi platform built on Bitcoin that seamlessly integrates Bitcoin and Layer 2 (Stacks), allowing users to swap, trade, and generate passive income (yield).

ALEX’s aim is to facilitate DeFi and Web3 products using Bitcoin’s highly secure blockchain infrastructure.

It offers a range of detailed features, such as: 

• Swap: Swap Stacks-based tokens (SIP-10) and Bitcoin Ordinals (BRC-20) tokens; 
• Liquidity pool: Provide liquidity to Bitcoin-supported pairs; 
• Liquidity farming: Earn yield by providing liquidity to supported pairs on ALEX; 
• Staking: Stake $ALEX to earn $atALEX, which is the shared profit earned by the platform fees; 
• Launchpad: Launch or participate in upcoming exciting projects building on top of either Stacks or Bitcoin ecosystems; 
• BRC-20 orderbook: Place a buy or sell order confirmed instantaneously on the Bitcoin network—the first orderbook enabled on Bitcoin in the world; 
• Lottery: Win big by testing your luck by purchasing raffle tickets—verified by the Pyth Network oracles for fairness and randomness;
• Cross-chain bridge: Switch between ETH-based USDT to Stacks-based USDT—easiest on and off ramp between EVM and non-EVM chains.

Honorable mentions

In addition to the top 4 DeFi Protocols mentioned above, we have an additional list with some honorable mentions:

• Aave, a decentralized, non-custodial liquidity market protocol that allows users to earn interest on deposits and borrow assets. The platform also offers features like flash loans, credit delegation, and collateral swapping without closing debt positions;
• Uniswap is a decentralized exchange built on the Ethereum blockchain that enables users to seamlessly trade ERC20 tokens without a centralized intermediary. With its automated market maker (AMM) system, the platform has become a major player in the DeFi space;
• Curve Finance is a decentralized exchange aiming mostly for low-fee trades between stablecoins and wrapped assets. With its bonding curve model, it seeks to minimize price impact for users while allowing liquidity providers to earn substantial rewards.

Final Thoughts

In summary, embracing the world of DeFi protocols in 2024 can be rewarding, as there are a number of highly competitive platforms out there battling it out for supremacy, each bringing something new to the table. Consequently, though, you will have to approach the DeFi space not only with confidence but also with knowledge of how each protocol works if you want to make the most out of the opportunities they present.

Firstly, to make sure you’re making as well-informed a decision as possible, always consider the security and reliability of the protocols you have set your sights on. Evaluate their track record, the credibility of the teams behind them, and all the innovative solutions they are working on. After all, your assets and funds are at stake, so safety should always be a priority, and it is essential that you remain vigilant and keep an eye out for potential threats or vulnerabilities in each DeFi protocol.

Moreover, pay close attention to broader trends in the DeFi sphere. They can greatly influence the performance and adoption of each solution under your scrutiny. For example, you can look at advancements in cross-chain compatibility and mainnet upgrades. By staying in the know with these types of developments, you can predict which projects have the potential to remain competitive in the long run.

Lastly, try not to underestimate the importance of community support. Projects with a strong and engaged user base, as well as those with a large number of positive reviews, usually drive innovation the most and, thus, have greater potential for growth. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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