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Maker, Compound with YFI, look back at the head DeFi project development path

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An analysis of the leading DeFi service on the market reveals the difficulties novice users may face and the true implementability of decentralized finance.

Text Title: DeFi | A Review of the Header DeFi Project - Maker, Compound & AMP; YFI

Source: Encryption Valley

In 2020, the world financial system is facing increasing problems due to the economic crisis caused by the spread of COVID-19. The monetary policy of quantitative easing carried out by the authorities of big countries leads to the decline of currency value and the loss of public confidence in the currency. At the same time, profit margins on bank deposits have fallen to their lowest levels.

At the same time, alternatives to traditional Banks are becoming increasingly popular. These include decentralised financial products: cryptocurrency exchanges, wallets and lending, trading and deposit services. Their most obvious advantages are high interest rates on deposits, huge profits for holders in just a few months, and instant loans that can be borrowed without documentation or customer verification.

Although the demand for DeFi products is growing dramatically, inexperienced users may find it difficult to master the emerging decentralized solutions on the fly. An analysis of the leading DeFi service on the market reveals the difficulties novice users may face and the true implementability of decentralized finance.

MakerDAO: Trade, borrow, and save

MakerDAO is the earliest DeFi protocol on the market. It allows users to borrow, trade and earn savings using its original DAI stabiliser, which is pegged to the DOLLAR on a one-to-one basis. MakerDAO tends to be associated with Banks because it makes loans backed by cryptocurrency, but it doesn't require documentation, checks or a good credit history. Users can use ETH or any of the 10 cryptocurrencies accepted by the platform as collateral and receive a certain amount of DAI.

After a loan, DAI can be used for any purpose, but mainly for investment. If you want to repay the loan, you need to return the same amount of DAI you received before, plus a little interest. If the ETH price rises during this period, the user gains, because the amount of collateral committed to the ETH increases in dollar terms.

How easy is it to get a mortgage in MakerDAO? To borrow assets, users only need to have an active encrypted wallet from MetaMask, Ledger, Coinbase, Trezor, WalletConnect or D 'Cent, with a balance of at least $40. But total loans are always subject to a 150% mortgage ratio. In other words, the amount borrowed cannot exceed 66% of the collateral. Simply put, the borrower gets 66 cents for every dollar he deposits.

In general, the platform is easy to use, although searching for the right tool can be a bit difficult because of the cluttered user interface and constant redirects to mirrored pages. For example, the platform service is located on the Oasis decentralized application, and the deposit rate is only displayed after the wallet is connected and the transaction is registered.

Since only two currencies are available for deposit, DAI and ETH, this makes it less available. In addition, MakerDAO is clear to any user who has previously interacted with encrypted exchanges.

Aave: Instant loans without collateral

Aave allows users to secure loans as cryptocurrency and provide encryption for interest. The interface design is more reasonable and clear, the website is unified and simple, and more than 10 wallets are supported.

Aave, available in 19 currencies, offers lightning loans without any collateral but requires repayment and interest on the same block. Such an operation would be accessible only to experienced carry traders who know how to make money in the short term from currency differences.

Secured loans seem less attractive than flash loans because they have a relatively low guarantee ratio of 50%-75%, which is two to four times lower than other DeFi lending software.

Aave borrowers, however, are free to choose stable or floating rates. The stable interest rate will not change in the short term, but can be adjusted in the long term according to market dynamics. The floating rate is based on supply and demand within the Aave platform. The first option is best suited to planning interest payments, while the second option is best suited to flexible income management, as changes in the floating rate can significantly affect the condition of the loan over time. Switching between interest rates is an effective financial planning method.

Loans do not have a fixed repayment period, but late repayment can lead to higher interest rates and eventually liquidation of the collateral. Therefore, it is important to monitor the clearing threshold. Funds deposited may also be withdrawn or transferred to loan collateral as needed.

Aave offers a way to make money on deposits. Support for 20 COINS and high interest rates make the platform attractive to a wide audience. BAT, for example, earns 40% a year, compared with 1% for BANK deposits in America.

Aave is committed to providing choice, not only in terms of product but also in terms of working with different audiences. The Aave channel provides support for 11 different languages.

Compound: The project is exactly as its name suggests

The Compound platform rewards its users for offering and accepting loans. In order to get the most revenue, users often deposit and borrow money on the platform and put it back as a deposit.

Compound gained a second life after starting rewarding lenders and borrowers with Gensen COMP tokens, which popularized yield Farming on the platform and made borrowing profitable, since COMP tokens completely cover interest in certain market situations, which is itself provided by token increments accumulated by all platform users. In short, borrowers get paid to borrow some assets.

Although the project only supports seven currencies, the interface is fairly intuitive, with the lending and deposit panels on the same page. When the user chooses the deposit rate, he or she can borrow against all the supported mortgage COINS except Tether(USDT).

What sets Compound apart from its competitors is that it houses a large number of collaborative projects from third-party developers, such as Instadapp and TokenSets, which provide more mobility. But low deposit rates, at 12.42 per cent a year, have reduced the value of the platform. Some restrictions may also apply to the amount of money that can be booked -- for example, a Bitcoin (BTC) loan cannot have more than 40 per cent of the money in the cryptocurrency.

Unlike Aave, the lack of support for the platform has made it easier for Compound users to get answers from community members or open sources.

Yearn. Finance: A solid lineup of products, some of which are still in beta

... and forever. Finance, the aggregator of credit and liquidity mining such as Aave, Compound, DyDx and Fulcrum, automatically creates an optimal balance to maximize profits. The platform has its own token, which is used to periodically rebalance a user's money to select the most profitable lending service.

An added bonus for users of Yearn Finance is the YFI Token reward, which guarantees access to the platform's services. YFI is the governance token of the platform, issued only to users who use yToken to provide liquidity. With YFI, the project strives to issue the most decentralized digital assets that are not presold, presold, and assigned to the team, and all modifications are done through online advice and YFItoken holder voting.

Despite being an aggregator, Forever has a strong product lineup, providing an integrated service for transactions, loans and even insurance work with cryptocurrency. Its Yinsure. Finance service provides deposit insurance in case of unexpected events such as violent currency fluctuations or a platform being hacked.

The bad news is that the product has been poorly described by Hastelow.Finance, and users have often been forced to turn to its Discord channel for answers, or to the Telegram community of 7, 000 people, whose administrators respond quickly. Most Yearn-ecosystem products are in beta and run in Testnet mode. This results in low service stability, page load times, and wallet authorization resets.