DeFi tokens and altcoins, Whether you’re just beginning your crypto adventure or have been trading Bitcoin for years, there’s a good chance you’ve attempted to explore the world of cryptocurrencies beyond Bitcoin and Ethereum, only to be overwhelmed by the sheer number of coins available.
In the decade since Bitcoin started to gain popularity, dozens more alternatives have developed, with Coinbase offering an ever-growing range. In recent years, tokens that help power decentralised finance (or DeFi) protocols have grown in popularity; thus, a lot of the cryptocurrencies on this list are derived from this realm.
If you’re looking to determine the distinction between XTZ and XLM, you’re at the proper spot. Here is critical information about some of the largest and most significant cryptocurrencies that are not Bitcoin or Ethereum (in alphabetical order). Each of these “altcoins” (short for “alternative coins”) is available on Coinbase and other major exchanges, and each has own characteristics, objectives, and use cases.
Released in November 2017
DeFi tokens and altcoins, Aave is a decentralised lending protocol (part of the larger collection of protocols known as DeFi) that enables users to deposit crypto assets to receive APY incentives and to borrow crypto assets against that collateral. It enables users to borrow, lend, and earn interest on their cryptocurrency using smart contracts rather than middlemen such as banks.
AAVE is a “governance token” that allows its holders a voice in the protocol’s destiny. It may also be staked, earning its holders prizes.
The Aave protocol simplifies lending pool formation. If you want to lend a portion of your cryptocurrency, you may put it in a pool. Anyone who wishes to borrow deposited assets may use Aave pools by providing enough security. (Fun fact: “Aave” is the Finnish word for ghost.)
How it works:
The protocol issues two sorts of tokens: the native AAVE token and aTokens.
In addition to giving holders a voice in the protocol’s administration, AAVE tokens provide reductions on fees or even free usage of certain of the protocol’s services.
aLenders that deposit funds into the lending pools get tokens that allow them to earn interest payments. (If you deposit, say, ETH, you will be rewarded with aETH. When you withdraw ETH from Aave, aETH is instantly converted back to ETH.)
Aave also offers flash loans to enable customers take advantage of arbitrage possibilities (where a cryptocurrency’s price may be greater on one exchange than another) and maximise earnings in the DeFi ecosystems. These loans have no collateral requirements and are paid immediately. The borrowed amount must be repaid in the same transaction, together with a 0.09 percent charge, or the whole operation will be terminated and no cash will be borrowed.
Remember that standard loans on Aave require the borrower to supply collateral (such as ETH). Because crypto may be volatile, it is crucial to carefully choose collateral while borrowing crypto via Aave. If the value of your collateral falls below a particular level, it may be liquidated (meaning you will not receive your money back) and you may incur additional costs. Stablecoins are thus a common collateral choice. Be sure to read Aave’s terms and conditions thoroughly.
Released: June 2019
Algorand aims to improve scalability, security, and the time it takes for transactions on the network to be deemed “final” compared to rival projects like Ethereum.
Using Algorand, developers may design decentralised apps — for loans, decentralised trading, and many other purposes — that can take advantage of quick, low-cost transaction processing while scaling to accommodate a large number of users.
Algorand nodes gain agreement on what should be included in the blockchain using a technique called PPoS (or “Pure Proof of Stake”), which employs a staking mechanism (rather than a Proof of Work mining scheme like Bitcoin) to validate new transactions and issue new crypto tokens.
Algorand network users (or nodes) may wager a portion of their ALGO for the opportunity to be randomly picked to propose a new block of confirmed transactions. The winner receives a new ALGO.
Keep in mind that PPoS systems, such as Algorand’s, are more energy-efficient than Proof of Work blockchains, such as Bitcoin, since they do not depend on thousands of miners expending energy to solve cryptographic puzzles in order to win a block reward and collect transaction fees.
Bitcoin Cash (BCH)
Released: August 2017
DeFi tokens and altcoins, Bitcoin was originally conceived as a sort of digital currency that could be used for online transactions. Over time, it has transformed into a “wealth store” more akin to digital gold. Bitcoin Currency was intended to perpetuate the original concept of peer-to-peer cash through a high-volume, low-fee network available to anybody with an internet connection.
The Bitcoin Cash blockchain is built on the original Bitcoin blockchain, although there are fundamental variations between the two. The maximum block size has been raised to 32MB from merely 1MB in Bitcoin. The higher block size enables Bitcoin Cash to execute transactions more quickly than Bitcoin, with cheaper fees and a greater transaction volume per second.
Remember that Bitcoin Cash is accessible on almost all exchanges and is supported by PayPal. But keep in mind that just because it was built to be quicker and cheaper than Bitcoin does not indicate that Bitcoin users have abandoned the original for the newer version.
Released: September 2017
Cardano is intended to be the next generation of Ethereum. It is meant to be a versatile, durable, and scalable platform for running smart contracts, enabling the creation of a vast array of decentralised financial applications, new crypto currencies, games, and more.
Cardano’s native cryptocurrency is ADA, which may be used to store value, transmit and receive payments, stake on the Cardano network, and pay transaction fees.
How it works:
Cardano aims to be the blockchain platform with the lowest environmental impact. It employs a proof-of-stake consensus process dubbed Ouroboros, as opposed to Bitcoin and Ethereum’s energy-intensive proof-of-work approach. (With the ETH2 update, Ethereum is also switching to a proof-of-stake method). Proof of work and proof of stake blockchains are discussed in detail.
In addition, the Cardano blockchain consists of two distinct layers: the Cardano Settlement Layer (CSL) and the Cardano Computing Layer (CCL). The CSL holds the accounts and balances ledger (and is where the transactions are validated by the Ouroboros consensus mechanism). Using the operations of smart contracts, all calculations for applications operating on the blockchain are conducted at the CCL layer.
By dividing the blockchain into two levels, the Cardano network can handle up to one million transactions per second.
Keep in mind that as of May 2021, Cardano has not yet implemented smart contact capability. According to developers, it will occur this year.
Released: November 2017
DeFi tokens and altcoins, Chainlink is a decentralised oracle network powered by the Ethereum-based LINK currency.
Oracles play a significant role in the decentralised finance (or “DeFi”) ecosystem: in the absence of a centralised authority, they’re the primary means through which DeFi applications get correct external data (especially prices). Prior to the development of Chainlink, there was no dependable way for smart contracts and DeFi applications to obtain external market values.
Chainlink was created to encourage a worldwide network of computers (or “nodes”) to supply reliable data to Chainlink’s oracles. There are several oracles in operation at now, including ones that supply pricing data for a vast array of assets, weather data, and location data.
The LINK token is intended to pay for network services and motivate nodes to conduct verifiably honest labour and deliver correct data.
To become a node and begin giving data to Chainlink oracles, holders must stake LINK tokens into a smart contract as a deterrent against misbehaving or sending fake data to the network.
Released: September 2018
Compound is a decentralised lending system that enables users to deposit crypto assets to receive APY rewards and to borrow more crypto assets against that collateral. It is a component of the expanding suite of DeFi applications that operate largely on the Ethereum blockchain.
How it works:
When you deposit an asset with Compound, you begin getting interest on that deposit immediately. Then, a borrowing limit is established depending on the value of the collateral you’ve provided.
When you deposit cash into Compound, you are rewarded with a unique cToken. For instance, if you deposit USD Coin into Compound, you will get cUSDC in your wallet; when you withdraw USD Coin, the cUSDC will be removed. (cUSDC may be kept, transferred, and sold in the same manner as any other token.)
Currently, the return on the cryptocurrency you deposit in Compound comes in two forms: interest in the form of cTokens and rewards in the native COMP coin. Each Compound market’s interest rate fluctuates depending only on supply and demand.
COMP token holders may also vote on the future of the system, allowing Compound to function in a truly decentralised manner.
In conventional finance, the practise of providing one asset in exchange for another is known as “over-collateralized lending.” It may help investors obtain exposure to different markets and facilitate complex trading tactics, such as using crypto borrowed from others to invest in other assets (but keep in mind that there are risks associated with collateralized lending, including potentially losing your collateral).
Released: March 2019
DeFi tokens and altcoins, Cosmos intends to be the “Internet of blockchains” by enabling developers to create their own linked blockchains. ATOM is the native coin, which is utilised for staking and protecting the “Global Hub” that links all of these blockchains.
How it operates: Cosmos’s primary objective is to enable speedier and less expensive decentralised applications, such as nft-what-is-a-non-fungible-token-nft/">NFT markets and decentralised exchanges, to operate on their own dedicated blockchains.
Inter-Blockchain Communication, or IBC, is the protocol that connects all of these autonomous blockchains (called “zones”).
In addition, Cosmos offers developers with pre-built modules that let them to rapidly design totally configurable blockchains for their particular use case.
The Cosmos consensus engine, IBC protocol, and software development kit are meant to facilitate interoperability across chains while preserving the security, transaction cost, and transaction speed that developers anticipate from other prominent blockchain platforms.
Remember that you may receive rewards by staking ATOM using Coinbase.
Released: January, 2014
When Dash, whose name combines Digital and Cash, was originally introduced, its creators prioritised complete user privacy and anonymity. (For a while, it was even known as Darkcoin.) In recent years, however, the goal has shifted to promoting the currency as a practical means of payment for everyday transactions, despite its continued encryption and privacy characteristics.
Dash utilises a consensus process that is distinct from both Bitcoin’s proof of work and Cardano’s proof of stake (even though it is based on staking).
Instead of requesting transaction confirmation from all of the network’s nodes, “Masternodes” may validate a transaction quickly.
Each Masternode is motivated to be trustworthy since they must stake at least 1,000 DASH. If the Masternode approves an invalid transaction, this staked DASH might be “slashed.”
In return for verifying transactions, Masternodes get compensation.
Dash is also meant to be self-governing and self-funding, which positions DASH as a sustainable and usable cryptocurrency for sending and receiving payments.
Released: December 2013
DeFi tokens and altcoins, Throughout the majority of its history, Dogecoin (pronounced “dohj coin”) was regarded as a humorous “memecoin” treasured by its community, but with little value. This changed in 2021, when DOGE became one of the largest cryptocurrencies by market capitalization, with a total value exceeding $50 billion, despite the fact that each coin is worth pennies.
A crucial component of the concept is abundance; Dogecoin was designed as a low-stakes, entertaining alternative to Bitcoin. As soon as it was released in late 2013, it started to draw a fervent online community that once utilised DOGE to assist send the Jamaican bobsled team to the 2014 Winter Olympics in Sochi.
Keep in mind that, unlike Bitcoin, which is intended to be rare and inflation-resistant, Dogecoin was built to be plentiful. There are around 130 billion DOGE in circulation, and miners create 10,000 each minute.
Enjin Coin (ENJ)
Released: July 2018
Enjin is an ecosystem that facilitates the production and maintenance of NFTs, often known as virtual products. It offers tools for the creation and sale of unique digital products. Enjin is a platform that intends to provide users access to the genuine ownership of their digital artefacts and facilitate trade.
How it works: The ENJ token is the native money of the platform. When a new NFT is created on the network, a predetermined number of ENJ are added to the token. The locked funds offer freshly constructed things real-world worth, since any item may be remelted at any time into the underlying ENJ backing.
The Enjin platform also offers software development kits (SDKs) that allow developers with the means to create their own NFTs on the Ethereum blockchain and enable their integration with gaming ecosystems or applications of their choosing.
Additionally, the platform retains its own native NFT marketplace and an NFT-supporting wallet.
Note that Enjin-created NFTs employ the ERC-1155 standard, which was designed by Enjin’s team and is separate from the ERC-721 standard popularised by the NFT art project Cryptopunks.
Released: July, 2017
DeFi tokens and altcoins, EOSIO intends to compete with Ethereum. As a blockchain computer, it offers blockchain infrastructure for decentralised applications and enables developers to construct, install, and host their own smart contracts and decentralised applications (or dapps).
Using innovations like as parallel processing, EOSIO promises to be able to host thousands of decentralised applications (dapps) without encountering negative network effects such as excessive fees or sluggish confirmation times. This may be attractive to business developers and financial organisations seeking to use blockchain technology for large-scale applications.
The network’s native currency, EOS, is used to power blockchain transactions and apps, and it may be staked for a reward using the Delegated Proof of Stake consensus methodology (DPoS.)
Keep in mind that EOSIO was designed to be simple for developers and end-users to embrace, with a special emphasis on the pain areas addressed by blockchain application developers today, including speed, scalability, and programme design flexibility.
Released: October 2020
Filecoin (FIL) is a cryptocurrency that supports the Filecoin network, a decentralised, peer-to-peer alternative to cloud storage services such as Dropbox and Amazon Web Services. In contrast to typical centralised server storage, Filecoin data storage is dispersed throughout the whole network.
FIL tokens are used both as payment for using and providing storage services and as an economic incentive to guarantee data are saved reliably over time.
Filecoin seeks to deliver a quicker, less expensive, and more dependable distributed infrastructure for data storage and retrieval. Similar to regular cloud storage, it serves as a marketplace where developers may lease storage space. However, rather than entrusting a single provider with your data, they are spread and provided by a worldwide distributed network of computers.
The Filecoin network employs two distinct kinds of miners: storage miners, who store the data, and retrieval miners, who provide the bandwidth required to retrieve the files.
There are two sorts of “deals” involved in the communication between clients and the network: storage and retrieval transactions.
In a storage transaction, the client selects a miner to store their data and locks away the appropriate cash to pay for storage. After the agreement has been approved, the miner transfers and stores the file. In order to obtain rewards from a client’s locked-away cash, the miner delivers constant evidence of storage to the blockchain. The miner is fined if they fail to submit evidence (or if proof is delayed).
In a retrieval transaction, the client pays a retrieval miner to extract data from a network. (Retrieval miners may also be storage miners, however this is not required.) These transactions are conducted “off-chain,” via micropayment channels to compensate miners for data retrieval.
Remember that anybody with a capable computer may mine FIL by becoming a storage provider and making their hard drive space accessible to the network in exchange for incentives. Configurations for mining might vary from a single desktop computer to a server farm.
The Graph (GRT)
Released: January 2019
DeFi tokens and altcoins, The Graph is a decentralised and open-source indexing and querying platform for blockchain data. GRT is the Ethereum cryptocurrency that powers the ecosystem of The Graph. It is used to compensate network members who participate by providing or validating data.
Similar to how search engines index the web, The Graph intends to index blockchain data inside networks such as Ethereum and Filecoin. This data is organised into subgraphs, which are open APIs that make it simple for developers to query the data using the GraphQL API. The Graph offers decentralised finance (or DeFi) apps such as DEXs with the data they need to function properly by making data available.
Indexers stake GRT tokens for the privilege to process queries, choose subgraphs to be indexed, and receive APY tokens for their efforts.
Curators contribute by assessing the quality of network subgraphs.
Remember that indexing involves a substantial amount of GRT and technical expertise, but anybody may outsource some GRT to an Indexer in exchange for a portion of their query and indexing rewards.
Internet Computer (ICP)
Released: May 2021
Internet Computer’s fundamental concept is to create a new type of decentralised internet and global computing system — with independent data centres from around the world collaborating to create an alternative to the cloud services (provided by companies such as Amazon Web Services and Google Cloud) that power the majority of the current internet. The ICP token serves as a governance token (enabling holders to “lock” some of their ICP into the network in return for having a voice in the future development of the ICP protocol), rewards participating data centres for excellent performance, and is used to pay network transaction fees.
ICP may be seen as as a method for translating crypto into processor power. The network will create a price depending on the amount of processing power a developer’s project requires. The website will operate directly on the public internet as long as the charge is paid.
Consider: In a genuinely decentralised network, who is responsible for hosting offensive content? Corporations that control the Internet now exercise some kind of moderation, but they may also unilaterally de-platform anybody at any moment. Idealistically, Internet Computer may employ decentralised governance to find answers to these complex problems.
Released: October, 2011
DeFi tokens and altcoins, Litecoin is among the most established cryptocurrencies. It was launched in 2011 as a fork of Bitcoin and provides quicker transaction speeds and reduced transaction fees.
As a Bitcoin fork, Litecoin does not attempt to modify the underlying logic or architecture; it is largely similar to Bitcoin in terms of usage and design, but with a shorter transaction confirmation time and substantially cheaper transaction fees (as much as 50 times lower, depending on market conditions).
Keep in mind that Litecoin’s speed and very cheap fees make it attractive as a payment option and method of moving wealth, but the network has substantially fewer miners than Bitcoin, which has a detrimental impact on network security as a whole.
MakerDAO (MKR, DAI)
Released: December, 2017
MakerDAO is a decentralised organisation established on the Ethereum blockchain that operates a DeFi platform that enables crypto lending and borrowing. DAI, its native token, is a stablecoin. As an ERC-20 token, DAI operates on the Ethereum network. It is supposed to keep the value of one US dollar steady. The MKR token is a governance token distributed to MakerDAO DeFi service customers. It provides holders a voice in the organization’s development.
How it operates: MakerDAO operates using a method known as “overcollateralization,” in which user-provided assets are locked up in smart contracts as collateral in return for freshly minted DAI tokens.
Using a series of smart contracts, the MakerDAO DeFi lending platform enables users to give and borrow cryptocurrency without a central loan provider.
Users generate DAI by putting a portion of their cryptocurrency into the platform’s smart contract. Once DAI is produced, it operates as a token on the Ethereum blockchain that may be moved between wallets to allow the transfer of value, much like other cryptocurrencies. DAI is helpful as a transfer medium since each token strives to be worth one U.S. dollar at all times, meaning its value will not fluctuate drastically throughout the period of a transaction. The term for this form of stable cryptocurrency is stablecoin.
The funds placed to produce DAI may be reclaimed promptly by repaying the DAI loan plus any applicable costs.
Remember that MakerDAO was the first DeFi protocol to attain a locked-in total value of $1 billion in 2020.
Released: December, 2019
DeFi tokens and altcoins, How does OXT VPN services (“Virtual Private Network”) have become a popular tool for discreetly and securely accessing the internet and connecting with online services as global concerns about digital privacy and censorship develop.
Orchid is a VPN service driven by cryptography that seeks to enhance the functionality of conventional VPN services with the security and anonymity advantages of blockchain technology. OXT is an Ethereum token that can be used to pay for Orchid’s VPN service in a safe manner.
How it operates: There are two types of Orchid network users:
Customers that use a VPN are bandwidth consumers. It is compatible with Android, iOS, and Mac.
Orchid Nodes that have staked OXT tokens in order to give their excess internet bandwidth to customers constitute bandwidth providers. In return, they get OXT tokens as payment. The more OXT wagered, the higher the likelihood of receiving a payout.
Bandwidth providers are obliged to stake OXT as an incentive for responsible behaviour.
To gain from staking OXT, however, you need not be a complete bandwidth supplier. Any OXT holder may stake a portion of their tokens in a bandwidth provider’s pool.
Instead than depending on a centralised VPN service, Orchid intends to establish a dispersed network of trustworthy, high-quality bandwidth providers that enable users to browse the internet discreetly.
OMG Network (OMG)
Released: July, 2017
OMG was created to be used by companies and DeFi applications to develop systems that leverage a blockchain to move value between multiple digital and fiat currencies, as well as to provide quick, inexpensive, and secure financial tools and services.
Built atop the Ethereum blockchain, OMG seeks to interact with other blockchain networks and conventional payment providers to enable businesses to move value from one blockchain to another or monies between blockchains and traditional payment settlement firms such as Visa and Swift.
OMG, formerly known as OmiseGo, is a layer-2 scaling solution for Ethereum that is aimed to be incorporated into conventional wallets. It operates on top of the Ethereum blockchain and enables users to transfer Ethereum tokens more quickly and inexpensively than on the Ethereum network alone.
OMG holders may also stake a portion of their tokens, which contributes to the network’s security. When you stake OMG, you gain a proportion of the total fees generated by the OMG Network from end users.
Remember that OMG asserts to be “currency neutral.” No matter which currencies and blockchains are involved in a particular transaction, the fees stay the same. This capability might be valuable for payment processors and financial institutions in particular.
Released: May 2020
DeFi tokens and altcoins, Polkadot is a protocol that links blockchains, enabling the transfer of wealth and data between once incompatible networks (Bitcoin and Ethereum, for example). It is also optimised for speed and scalability. The DOT token is used for staking and governance and is tradable on Coinbase and other exchanges.
Among the creators of Polkadot is Ethereum co-creator Gavin Wood. It went live on May 26, 2020. The Web3 Foundation is the principal research group responsible for maintaining the open-source code of Polkadot.
How does Polkadot work? The Polkadot network consists of a primary blockchain known as the “relay chain” and several parallel chains (or “parachains”) constructed by users. It also contains a connecting layer or “bridge” that enables the movement of money and data across the majority of blockchains and can even be used to link to non-blockchain databases.
Polkadot is able to analyse so much data because the many parachains undertake most of the hard work for the main relay chain. As a consequence, the Polkadot network can execute more than one thousand transactions per second, compared to around seven for Bitcoin and thirty for Ethereum. As the network expands and other parachains are added, Polkadot’s transaction speeds might reach one million per second.
Keep in mind… The Polkadot token (DOT) has two primary tasks inside the Polkadot network: it is a governance token that gives holders a voice in the protocol’s development, and it is used for staking, which is how the Polkadot network validates transactions and issues fresh DOT. DOT may be traded on platforms such as Coinbase.
Released: October 2017
Polygon is a “layer two” or “sidechain” scaling solution that operates concurrently with the Ethereum blockchain, enabling fast transactions with cheap costs. MATIC is the native cryptocurrency of the network and is used for fees, staking, and more. MATIC may be purchased or sold on exchanges like as Coinbase. The origin of the moniker MATIC dates back to an early phase of Polygon’s development. After starting as Matic Network in October 2017, the company changed its name to Polygon in early 2021.
How does Polygon work? Imagine Polygon as a subway express train; it follows the same path as the ordinary train, but makes fewer stops and hence goes significantly quicker. (In this instance, the primary Ethereum blockchain is the neighbourhood train.)
Polygon has a proof-of-stake consensus technique to generate new MATIC and protect the network. This implies that staking is one of the ways you may earn MATIC.
Validators perform the laborious tasks of verifying and adding new transactions to the blockchain. In return, they might earn a portion of fees and the newly developed MATIC. In order to become a validator, you must operate a full-time node (or computer) and stake your own MATIC. You might lose a portion of your staked MATIC if you commit a mistake or behave maliciously (or even if your internet connection has technical difficulties).
Delegators indirectly stake their MATIC through a trustworthy validator. This is a far less-committal variation of staking. However, investigation is still required; if the validator you choose behaves deliberately or makes mistakes, you might lose part or all of your staked MATIC.
Keep in mind that the Polygon network enables you to do many of the same actions as the main Ethereum network, but with much lower transaction costs. You may experiment with decentralised exchanges such as QuikSwap or SushiSwap, yield-generating loan and savings protocols such as Aave, NFT marketplaces such as OpenSea, and even “no-loss reward games” such as Pooltogether.
To test the Polygon network, you must transfer cryptocurrency to a suitable wallet, such as Coinbase Wallet. Then, you may “bridge” a portion of your cryptocurrency — stablecoins are a common option — to the Polygon network. To conduct trades, you’ll also need to transfer some MATIC, although merely a dollar’s worth will suffice since transaction costs are so minimal.
Released: February, 2018
DeFi tokens and altcoins, Solana is one of the newest cryptocurrencies created to compete with Ethereum. Solana, like Ethereum, is both a cryptocurrency and a platform for operating crypto applications, including anything from NFT projects like Degenerate Apes to the Serum decentralised exchange (or DEX).
Its primary novelty is its speed. Solana can perform around 50,000 transactions per second, compared to Ethereum’s 15 or less. (The ongoing ETH2 update is intended to make Ethereum far quicker than it is presently).
SOL is Solana’s native cryptocurrency. It is used for transaction fees and staking. It also functions as a “governance token,” allowing holders to vote on future upgrades and governance ideas proposed by the Solana community. SOL is accessible for purchase and sale on platforms like as Coinbase.
How it operates:
Combining the proof-of-stake consensus mechanism plus a novel technique termed “proof of history” is one method by which Solana achieves fast transaction speeds. Proof of history is aimed to maintain time across computers on a decentralised network without requiring all computers to connect and reach a consensus.
Keep in mind… Similar to Ethereum, Solana is a platform for computing that can interact with smart contracts. Smart contracts provide a vast array of applications, including NFT marketplaces, DeFi, games, and decentralised lotteries.
A consumer may prefer an application that operates on Solana over, example, Ethereum because to the fact that speeds are fast and congestion is minimal, resulting in very cheap costs. (But always keep in mind that there are dangers connected with new crypto applications and technology, including volatility and the possibility of exploiting unforeseen smart-contract vulnerabilities.)
Stellar Lumens (XLM)
Released: July, 2014
Stellar is an open-source blockchain network specialised for digital asset issuance and payment processing. Stellar, which was launched in 2014 and is backed by the non-profit Stellar Development Foundation, promises to link the world’s financial system by allowing companies and developers to take use of the network’s high speeds, cheap transaction fees, and interoperability.
On the Stellar network, anybody may issue an asset — whether it is fiat currency, precious metals, or any other form of value — as a digital token. Stellar then permits transactions with these tokens from any location in the world considerably more rapidly, cheaply, and sustainably than current options in the conventional banking system. This whole network activity is supported by Stellar lights (or XLM).
Stellar, unlike Proof-of-Work or Proof-of-Stake blockchains, employs the Stellar Consensus Protocol (SCP) to choose which transactions are included to its blockchain via a series of voting procedures by trustworthy and well-known participants known as validator nodes. When a sufficient number of participants in trustworthy overlapping groups (known as a quorum) agree that a transaction set is acceptable, it will be added permanently to the blockchain — a process that takes around 5 seconds.
Stellar may be used as a quick and inexpensive alternative to financial services such as cross-border payments and remittances, enabling users to make and receive payments in their chosen currency. There are currently payment corridors spanning many regions that employ Stellar USDC as a bridge asset to provide money transfer services to companies and individuals in locations that have historically lacked access to financial services.
Released: August 2020
DeFi tokens and altcoins, SushiSwap is an Ethereum network-based decentralised exchange (DEX). SushiSwap, originally a fork of Uniswap, employs smart contracts to establish liquidity pools that enable users to exchange crypto assets directly – without a middleman. Users may also become liquidity pool providers by offering a pair of cryptocurrencies of equal value in exchange for incentives whenever the pool is used. It is a protocol for decentralised finance (or DeFi).
How it operates:
Sushiswap can only be used to exchange one cryptocurrency for another; it cannot be used to exchange fiat dollars for cryptocurrencies or vice versa. Uniswap’s Automated Market Maker concept is implemented.
To increase liquidity, customers transmit SushiSwap identical amounts of two cryptocurrencies. In return, users acquire LP tokens and begin collecting benefits.
The freshly produced LP tokens may be deposited into yield farms to gain further APY incentives. This provides customers with an additional incentive to remain a member of the liquidity pool over time.
Users of Ethereum-based applications such as SushiSwap are required to pay transaction fees (also known as gas), which may fluctuate greatly in price and make it costly to utilise the network. There are a variety of hazards associated with DEXs; thus, you should do study. Pairing a more volatile coin with a less volatile one in a liquidity pool might result in “permanent loss.” Smart contract vulnerabilities may be exploited. Additionally, anybody may generate a token, so be wary of “rug pulls.”
Released: February 2018
Synthetix is a crypto protocol that enables users to build crypto assets called Synths that follow the price of other assets, including stocks, commodities, “index fund”-style asset baskets, and other cryptocurrencies.
Synthetix also enables investors to purchase and sell Synths, so removing the requirement for a conventional brokerage account, bank, or fund manager.
The platform enables users to build Synths, which are synthetic assets, on the Ethereum blockchain. Synths are ERC-20 tokens that monitor the value of their underlying assets. The pricing information is obtained from Chainlink oracles (see the Chainlink entry in this guide).
Users give collateral in the form of SNX, the platform’s native coin, while creating new Synths. Through staking, SNX holders are also incentivized to actively engage in ensuring the system’s health.
Keep in mind that Synths may give exposure to the price of the underlying asset, but investing in a Synth is not the same as owning the asset itself – for example, you do not acquire any of the voting rights that shareholders may obtain.
Released: June, 2018
DeFi tokens and altcoins, Similar to Ethereum, Tezos is a blockchain network and smart contract platform. Developers may design decentralised applications using Tezos (lending apps, decentralised exchange apps, and much more).
The objective of Tezos is to construct a “self-correcting blockchain.” In this paradigm, all protocol updates and modifications are controlled on-chain through decentralised governance.
This governance is totally handled by the community. XTZ is the governance token that offers holders a vote in how Tezos evolves in the future.
Voting on proposed protocol improvements and upgrades is accomplished via a process called “baking,” in which users lock up XTZ tokens to obtain governance privileges. This procedure constitutes Proof of Stake.
Bakers might also get compensation for effectively executed suggestions.
Keep in mind that Tezos was one of the first projects to become “completely decentralised,” enabling token-holders to vote on protocol modifications that would be instantly merged via smart contract, so dramatically minimising the likelihood of conflicts and hard forks. It started in 2017 after a record-breaking $232 million token sale.
USD Coin (USDC)
Released: September, 2018
Currently, cryptocurrencies are used for payments, engagement with decentralised services and tools, and value storage. Volatility, however, tends to restrict their day-to-day use. Even Bitcoin, which has seen reduced volatility compared to its early years, fluctuates too much relative to fiat currencies for most people to utilise it as a daily money.
Stablecoins are a new kind of cryptocurrency whose price is pegged to a reserve asset (typically the US dollar) at a 1:1 ratio. As its name suggests, USDC is one of these dollar-pegged cryptocurrencies. Coinbase and Circle worked together to co-found the CENTRE Consortium, which facilitated the introduction of USDC.
USDC may be exchanged for a dollar on a one-to-one basis and is backed by dollar-denominated assets kept in segregated accounts with US-regulated financial institutions. It aims to make blockchain-based crypto payments more dependable by eliminating price swings.
USDC is an Ethereum cryptocurrency that may support blockchain payments and value transfers within the framework of Ethereum smart contracts. This enables users to store cryptocurrencies in a wallet, ready to transmit to a friend or engage with decentralised financial tools and services, while minimising the danger of their holdings losing value before they may use them.
By guaranteeing that token holders may redeem one USDC for precisely one US dollar at any moment, the possibility for price speculation is drastically limited, resulting in a crypto asset with a stable value.
Released: November 2018
DeFi tokens and altcoins, Uniswap was one of the first decentralised finance (or DeFi) apps on Ethereum to gain momentum. Since then, other additional decentralised exchanges (such as Curve, Sushiswap, and Balancer) have opened, but Uniswap remains one of the most popular. As of April 2021, Uniswap has handled weekly trade volume exceeding $10 billion. Uniswap enables users from anywhere in the globe to exchange cryptocurrencies directly (but not crypto-to-fiat or vice versa). Users may also become liquidity pool providers by offering a pair of cryptocurrencies in exchange for incentives anytime the pool is used.
UNI is a governance token that enables its holders to vote on significant protocol modifications.
How it operates:
Uniswap pioneered the Automated Market Maker approach, in which users provide Ethereum tokens to Uniswap “liquidity pools” and algorithms establish market prices (unlike order books, which match bids and requests on controlled exchanges such as Coinbase).
Users may earn incentives while allowing peer-to-peer trading by contributing tokens to Uniswap liquidity pools.
Using Ethereum’s ERC-20 protocol, anybody, anywhere may supply tokens to liquidity pools, trade tokens, or even generate and list their own tokens.
There are presently hundreds of tokens accessible on Uniswap, with stablecoins such as USDC and Wrapped Bitcoin constituting some of the most popular trading pairings (WBTC).
Users of Ethereum-based applications such as Uniswap must be aware that transaction fees (also known as gas) may fluctuate substantially in price and make it costly to utilise the network. The long-planned transfer to the ETH2 blockchain (due for sometime in 2022) and the nearer-term distribution of Optimism, a “Layer 2” scaling solution, are both in the works to address this problem. Developers of Uniswap are optimistic that Optimism will greatly reduce the cost of Uniswap transactions.
Uniswap v3 was released in early May 2021 with the intention of making transactions quicker and cheaper.
There are a variety of hazards associated with DEXs; thus, you should do study. Pairing a more volatile coin with a less volatile one in a liquidity pool might result in “permanent loss.” Smart contract vulnerabilities may be exploited. Additionally, anybody may generate a token, so be wary of “rug pulls.”
Released: July 2020
YFI is an Ethereum-based token that enables Yearn.finance, a platform aimed to streamline the process of putting money into DeFi initiatives. DeFi often demands a high level of technological expertise. Yearn.finance (or yEarn) intends to address this issue by developing a simple, simplified gateway via which people with less technical skills may use DeFi systems. Think of it as a kind of “robo-advisor.”
How it operates yEarn intends to be a smart automation solution for “yield farming” with a simplified user interface. It automatically transfers investor-supplied cash across the liquidity pools of several DeFi projects through smart contract in order to maximise investors’ returns.
It also allows investors to utilise automation to choose which projects to invest in in order to optimise their earnings and get the best bargain possible.
Keep in mind that YFI is a governance token, which allows holders to vote on changes to the structure or operating model of the protocol. Existing YFI may be purchased and traded like with any other cryptocurrency. It has been released to users seldom.
Released: October 2016
DeFi tokens and altcoins, ZEC is referred to as a “privacy currency” owing to its emphasis on user and transaction anonymity on the ZCash network. It was designed by cryptography professionals to solve what they saw to be Bitcoin’s privacy vulnerabilities.
ZCash facilitates a variety of public and private transaction types. Public addresses are able to transmit “shielded” transactions to private addresses, and transactions may be either completely public or totally private. Whenever a “shielded” ZEC transaction is conducted, ZCash employs Zero-Knowledge proofs (or “zk-SNARKS”) to maintain the confidentiality of the sender, recipient, and transaction amount. Whenever a user makes a payment, an optional “Memo” field may additionally be populated. This information can only be viewed by the intended recipient, which might be handy for a variety of FinTech and DeFi use cases.
Keep in mind that the Zcash protocol was built to adapt to the evolving demands of the community. In accordance with the Zcash Improvement Proposal procedure, ZCash coin holders may vote on proposed protocol improvements and upgrades.