DeFi has appeared as people are looking for ways to explore their possibilities in finance. As such, decentralization enters a new trustless and transparent financial services domain. Compared to the centralized banks we are currently well-versed with, an anticipated decentralization of blockchain technology would turn the financial world upside down.
DeFi is a relatively new kind of financial technology that’s based on the blockchain. It was established to create a decentralized monetary system where you can borrow and trade crypto without a financial institution running things behind the scenes. DeFi platforms use smart contracts to make these things happen instead of banks and brokerages. Such a system is open to anybody, anywhere.
One of the significant pros of DeFi is removing intermediaries and brokers. It can also be a better finance tool in countries with underdeveloped financial systems, and anyone can create DeFi and use dApps for seamless operation with money.
Despite its many advantages, DeFi is yet to go mainstream. The conventional financial system, including companies and monetary authorities, is still reluctant to integrate new tech, while users are likely to prefer something that looks more familiar to them. Still, any project that plans to be part of the future must adapt to a multichain future. Otherwise, it risks being irrelevant.
Top DeFi Projects on NEAR
If you want to get into DeFi on NEAR, you have many projects to choose from. So here’s an overview of the most popular ones to give you the lay of the land.
The NEAR ecosystem's Total Value Locked (TVL) exploded last year. At its peak, it was approximately $481M. After the $USN winddown, it took some hit, but the developments in the ecosystem continued. Currently, TVL on NEAR is roughly $73M, of which Ref Finance, Burrow Cash, and MetaPool account for the most part.
The NEAR ecosystem has Ref Finance as its core Automated Market Makers (AMM) Dex. Ref is a community project maintained by a DAO with two roles – the council and the community board. Ref Finance recently introduced Discretized Liquidity AMM (DLAMM), similar to Uniswap enables us to do limit orders with almost zero slippage. Ref’s AMM DEX allows permissionless and automated trading between any native NEAR or bridged token. Liquidity providers can earn $REF or NEP-141 tokens by staking tokens. Users can stake $REF tokens to make more $REF over time.
We selected other helpful projects by the number of unique active wallets interacting with DeFi dApp's smart contracts (UAW). Out of them, Spin, Burrow, HERE Wallet, Meta Pool, and Tonic DEX have the most daily users.
Spin is a DeFi derivatives infrastructure built on NEAR Protocol, a reliable and scalable Layer 1 solution. The on-chain order book solution offered by Spin provides a CEX-competitive experience to DeFi users. Founded in June 2021, Spin was the first product to offer an on-chain order book solution on NEAR Protocol.
The advantages of the order book model include better user experience compared to AMM:
-
Flexible liquidity;
-
Easy access for institutional traders;
-
Secure and transparent on-chain verification;
-
The opportunity to price different types of instruments;
-
Trading robots' interoperability.
The order book-based infrastructure unlocks the opportunity to build various types of derivatives with different levels of complexity in the DeFi space, including but not limited to perpetual and quarterly futures, power perpetual, floor perpetual, options, exotic options, options vaults, basis trading, fixed yield, structured products, and RFQ.
The next project is Burrow, a non-custodial, decentralized, pool-based interest rates platform. It allows users to supply assets, earn interest, and then borrow against them to unlock liquidity. Burrow runs natively on the NEAR blockchain, with the protocol’s smart contracts written in Rust. The protocol opens liquidity for interest-bearing assets, particularly Layer-1 staking derivatives like stNEAR (staked NEAR) and stETH (staked ETH). For example, Burrow users can deposit stNEAR as collateral and then borrow NEAR, creating a leveraged staking position. Users can also create a self-repaying position by borrowing a stablecoin.
Burrow enables users to utilize interest-bearing assets at the core of the project’s value proposition. In crypto, interest-bearing assets are staked derivatives such as stNEAR, stETH, etc. Burrow uses interest-bearing assets of base layers, unlocking yields from the base layer. Staking directly on the base layer provides the extra security of the main chain while also having the highest returns and the most risk-free rates.
Tonic DEX brings the speed and convenience of centralized exchanges to the NEAR Protocol while being entirely decentralized. They build a high-performance, fully decentralized trading platform. Users can buy and sell any NEAR token with low fees, deep liquidity, and precise pricing secured by the NEAR Protocol.
Meta Pool is a liquid staking protocol built on the NEAR Protocol. Individuals can easily stake their NEAR tokens using Meta Pool and its automatic staking strategies. In return, they receive stNEAR tokens that they can utilize in the DeFi. The tokens can also be swapped back to the original NEAR tokens at any time.
Meta Pool has become an essential part of NEAR’s DeFi ecosystem as it introduces NEAR’s first liquid staking token, the stNEAR. The stNEAR token can accrue staking rewards and represent staking positions on NEAR. Meta Pool offers a platform that is easy to use and generates yields while creating a decentralized network.
The other project is PembRock Finance, NEAR's first leveraged yield farming project. Lenders get to receive stable returns by depositing funds into our vaults. Yield farmers utilize those funds to leverage their crypto holdings by up to 3x, gaining maximum rewards from their farming positions.
PembRock Finance, founded by NEAR Guild masters and having secured a grant from the NEAR Foundation, continues to incorporate new features and further involve the community, attracting more investment and expanding the NEAR ecosystem through increased liquidity and new integrations.
Proximity’s Role in the DeFi on NEAR Ecosystem
Proximity aims to help talented builders establish a healthy and robust ecosystem of open-source DeFi protocols, teams, and infrastructure on the NEAR blockchain. Proximity aims to provide a full-stack financial, technical, and advisory support service to the NEAR DeFi ecosystem to achieve this goal.
Proximity initially received a grant of 40 million NEAR tokens from the NEAR Foundation to further this mission. Proximity has allocated approximately 8 million NEAR via investments, grants, and other initiatives. In addition to the remaining treasury of the NEAR tokens, which will be utilized and allocated over several years, Proximity also has stable assets.
Proximity’s operations have evolved over the last year as they have adapted to provide different services based on the ecosystem’s most pressing needs.
Essential Proximity’s initiatives include:
-
Researching and developing open-source projects;
-
Providing critical resources in the form of grants, investments, and advisory support to over 40 talented teams and builders;
-
Launching a $10M Orderbook Fund in collaboration with Orderly, Tonic, and Spin;
-
Publishing original research, such as an analysis of NEAR’s tech and its potential for DeFi;
-
Supporting key infrastructure projects such as bridges, on/off-ramps, wallets, analytics, etc.
Proximity continues to support and grow the number of talented teams and projects in our ecosystem and ensure that NEAR continues to lead in terms of user and developer experience.
Wrap-Up
Decentralized finance applications allow users to control and own their crypto assets fully. These apps also allow users to interact with the financial system on a peer-to-peer level. Since DeFi projects are run on top of blockchain networks, they have become increasingly popular.
As we look upon the future of the DeFi space, it still stands to overcome scammers and swindlers. DeFi platforms are yet to evolve into a secure network fully. They are still facing the same problems the crypto space was experiencing in its early stages. They develop and improve daily, so DeFi will likely gain the trust of many users.
