33 types of DeFi Protocols (Part 2)
Learn about Bridges, Collateralized Debt Position, and DeFi Services.
In the first part of this series, you learned about Liquid Staking, Lending, and Decentralized Exchanges. In this part, you will learn about Bridges, Collateralized Debt Positions, and Services.
1. Bridges
A DeFi Bridge enables the seamless movement of assets between different blockchain networks.
Bridges act as intermediaries to facilitate cross-chain transactions.
Example: You have Ethereum-based assets and wish to use them on the Binance Smart Chain. A bridge would help convert or lock up the original assets and issue equivalent assets on the Binance Smart Chain.
Over the last few years, many new blockchains have emerged. Each of these has its unique features and capabilities. Bridges help connect these ecosystems, ensuring that assets and data can be transferred smoothly between them.
No. of protocols: 46
Combined TVL: $8.8 billion
The Top 3 protocols by TVL are:
WBTC ($4.4 billion)
JustCryptos ($3 billion)
Portal ($0.3 billion)
2. Collateralized Debt Positions (CDP)
A CDP allows users to lock up assets as collateral to borrow other assets against them.
Imagine you own a certain amount of ETH and need some liquidity, but you don't want to sell your ETH. Using a platform like MakerDAO, you can lock up your ETH and mint DAI (a stablecoin pegged to the US dollar) against it.
If the value of your collateral drops to a certain level, your position might get liquidated to ensure that the loan is covered.
CDPs provide a way for crypto asset holders to unlock liquidity without selling their holdings. This has major implications for the lending and borrowing sector in DeFi, as it allows users to leverage their assets to obtain loans.
No. of protocols: 105
Combined TVL: $8 billion
The Top 3 protocols by TVL are:
MakerDAO ($4.8 billion)
JustStables ($1.4 billion)
Liquity ($0.6 billion)
3. DeFi Services
Services are essentially DeFi platforms that offer specific functionalities to users e.g. insurance, yield farming, etc.
DeFi services extend the functionalities of traditional financial services in a decentralized setting. They remove intermediaries and reduce costs. They also give users more control over their financial transactions.
No. of protocols: 159
Combined TVL: $4.3 billion
The Top 3 protocols by TVL are:
Summer.fi ($2 billion)
Instadapp ($1.8 billion)
DefiSaver ($0.07 billion)