Top 3 Best Yields on the DeFi Space for Saving and Lending
Sophia Cruz • 3 min read
For most of the investors, it is all about earning investment income. Yield farming has been the hottest trend in the DeFi space at the moment. Investors began leveraging various protocols and products to get a substantial return on assets. DeFi users are given certain incentives to deposit more into the protocol to gain higher yields. Thus, this has become popular with investors. In this article, I am sharing with you the 3 best yield farming that you may explore this July.
Aave is one of the first DeFi projects on the market long before DeFi became widespread. It was first launched as ETHlend solution in 2017, a marketplace that authorized borrowers and lenders to transact without any third-party protocol or credit check. In January 2019, Ethlend changed its name to Aave delivering more impressive and creative features to its users. It facilitates p2p lending and borrowing of crypto and stablecoins. AAVE, the native token of the Aave crypto lending platform.
There is a noteworthy number of digital assets for lending and borrowing on the Aave platform. Some of the more famous choices include DAI, Tether, BAT, Ethereum, Augur, and ZRX. However, do remember that Aave uses overcollateralized loans where it requires the amount locked into place than what is being withdrawn.
Aave made news after revealing plans on a governance proposal to launch its own stablecoin called GHO. This will be a decentralized algorithmic stablecoin and would not work the same as from DAI. This collateral-backed and pegged to the US dollar will attract more users to Aave. The proposal will soon be voted to be decided if the Aave community will move forward with GHO’s development. If successful, GHO will only be available on Ethereum.
A promising platform, Aave boasts a broad range of features for its investors who are looking to earn a profit on their digital assets.
Compound is a money market protocol that operates within the Ethereum platform. It allows users to put up their Ethereum-based assets to liquidity pools that allow for short-term lending and borrowing which instantly earn them compounding interest. It is more volatile though as the interest is being determined by an algorithm that computes current liquidity and market utilization. Yet it accumulates much more quickly thanks to its higher interest rate.
The platform is very easy to use as you can monitor the top-earning assets of the day and transfer your assets as you want to. You can invest your digital funds on Compound in the asset that’s presently earning the most interest, or you can borrow against asset holdings.
Liquidity providers who deposit funds in Compound’s pools are incentivized with COMP tokens aside from the earned interest. As an outcome, DeFi users are rewarded to deposit more into the protocol to gain higher yields. For Compound, liquidity rules.
The Compound team has implemented a centralized administrator key should the platform gets compromised. This maintains a single point of failure and adds a layer of security to the unregulated DeFi space.
A decentralized derivatives trading platform that is backed by most of the major names in the crypto space, dYdX allows users to earn a profit on their deposited funds in the Ethereum-based applications smart contract. The earning interest will depend on the supply and demand from borrowers and depositors on the platform.
Recently, dYdX has come under pressure when Three Arrows Capitals (TAC), one of its investors, filed for insolvency. The developers from dYdX stated that it will not have any impact on their platform. In addition to the recent news, the company selected Cosmos as its preferred smart contract where it will launch its 4th version. The developers will dump Ethereum for the dYdX chain and take advantage of Cosmos’ existing template and link itself under the Cosmos Hub. The 4th version will include a fully decentralized, orderbook, off-chain, and matching engine that can handle more transactions.
dYdX is a solid business that possesses room to thrive in the DeFi space. Its future developments will boost its platform more and one thing to watch in the years ahead.