Top 10 DeFi Use Cases

DeFi is the abbreviation for Decentralized Finance and it is one of the use cases that is becoming more popular in the crypto ecosystem. The decentralized financial services range from digital assets to financial smart contracts.

Here we give you the top 10 DeFi use cases:

1. Payments:

DeFi applications are financial applications and so monetary banking services are an obvious use case for them. These can include the issuance of insurance, mortgages, and stablecoins.

DeFi payments provide secure transactions that are powered by programable smart contracts. The logic behind DeFi payment systems is to make an open finance ecosystem to provide facilities to unbanked, underbanked populations, and institutions.  

Two of the leading payment applications are Celer Network and Matic.

2. Lending and Borrowing:

Open lending protocols are one of the most popular types of applications in the DeFi ecosystem. Taking and granting loans in an open and decentralized way has many advantages over the traditional credit system.

To date, the most popular product is loans, available to both lenders and borrowers. It would be the Crypto version of what we already know as Crowdlending, but removing intermediaries and with full autonomy.

This type of loan is made through the use of stable coins using cryptocurrencies as collateral. Since the entire DeFi theme is born in Ethereum, we would use our ETH (Ether) as a guarantee although it is also possible to do it with Bitcoin through different token conversion systems.

Two of the leading protocols are Compound and Maker which are available at Kucoin

3. Staking:

Staking is a well-known avenue for passive income in the cryptocurrency space. This system is set to gain more attention as Ether is the second-largest crypto by market cap that shifts to a proof-of-stake protocol later this year.

With DeFi, it is one of the easiest ways to leverage your tokens and coins for passive income.

4. Analytics:

DeFi analytics brings affordable big company strategic and analytics insight to lenders of all sizes through DeFi solutions.

Also, using analytics, you can track the value locked in DeFi protocols, supply and borrow APRs, exchange volumes, and more with the customizable and comprehensive data platform.

An example of DeFi analytics is DeFi Pulse.

5. Decentralized Exchanges:

Arguably some of the most crucial DeFi apps are decentralized exchanges (DEX). These platforms allow users to trade digital assets without the need for a trusted intermediary (the exchange) to hold your funds. Exchanges are made directly between users’ wallets with the help of smart contracts.

Because they require much less maintenance work, decentralized exchanges tend to have lower trading fees than centralized exchanges.

Some of the leading exchanges are Bancor, KyberSwap and Uniswap

6. Insurance:

Insurance on the blockchain could eliminate the need for intermediaries and allow the supply of risk between many participants. It could result in lower premiums with the same service quality.

Also, DeFi insurance protocol allows its users to take out insurance policies on the digital asset, funds, or contracts through pooling individual funds to cover any claims.

Two of the decentralized insurance protocols are Etherisc and Nexus Mutual

7. Prediction Markets:

Prediction Markets can be thought of as belonging to the more general concepts of crowdsourcing that are designed specially to aggregate information on specific topics of interest.

A decentralized peer-to-peer and oracle protocol for prediction markets on Ether that lets anyone create a market around the outcome of any real-world event.

8. Tokenization of Assets:

Tokenization of assets enables organizations to fractionalize their assets digitally which means, assets can be divided digitally with the ownership into different parts.

Tokens issued on a blockchain can perform various roles including representing a part of an asset and can be used as trading units in DeFi peer-to-peer platforms.

9. Asset Management Tools:

While synthetics have traditionally been available to sophisticated and large investors, permission-less smart contract platforms like Ether allow smaller investors to access their benefits. It would also allow more traditional investment managers to enter the space by increasing their risk management toolset.

An example of a Management dashboard is DeFi Saver

10. Stablecoins:

Stablecoins are not only a trend that has become popular due to COVID19 pandemic but rather a giant evolutionary juncture which is standing on part with the mainstream CBDCs initiatives.

By combining the best of both fiat and crypto, DeFi Stablecoins are likely to contribute to crypto adoption by decreasing transaction risks and also disintermediating and democratizing the world’s financial system.

Two of the DeFi stablecoins are USD Coin and Dai which are available at Coinbase


DeFi is still in its most absolute childhood, but its possibilities are enormous. We must think that as the “tokenization” of assets advances, the possibilities of DeFi also increase. 

Adding up the growing popularity of DeFi, along with the upcoming Ethereum 2.0 release, it could make 2020 a very important year for the Ethereum network. Check out our article about the top 10 DeFi coins.

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