The cryptocurrency space has been evolving, and it has become quite different than ever before. While the first-gen of cryptocurrencies introduces the concept of transferring value across the border, the second-gen brings the concept of virtual machines and smart contracts. Due to the utilization of smart contracts, Ethereum has been able to bring DApps (decentralization applications) to the masses.
These Dapps act like normal traditional apps, but all interactions are done directly on the blockchain, and every interaction is recorded and verified by the blockchain. It’s very powerful because the records are basically immutable once they are verified.
But many people are still skeptical with DApps’ future, especially due to the fact that they are currently being used for mainly speculation by crypto daytraders. So, among all these DApps on the market, which are the ones that can be considered very important to set up the crypto future?
MakerDAO is perhaps one of the most important pioneers in the DApp market. It is basically a decentralized credit platform built on top of Ethereum. Its credit mechanism is able to support its stablecoin, DAI, to maintain its peg without any centralized fiat on/off-ramp. On Maker, every user can access the Vault and lock crypto collaterals like ETH or USDC and create DAI for their debt against these collaterals.
Due to its rules that the collaterals must be way higher than the generated DAI value, it has been able to keep DAI price stable 1-to-1 to the USD without any bank accounts nor token redeem function. MakerDAO and its DAI stablecoin have become very popular recently, with the rise of DeFi protocols this year. And despite the fact that many people think that the yield-farming craze will come to an end sooner or later, the concept of having a decentralized stablecoin like DAI is very important for the crypto future.
Yep, you read it right. YFI or yearn.finance is basically one of the most important DApps that has been launched so far. While many people thought it was mostly a very speculative asset (and rightfully so), it’s also one of the pioneers in introducing the concept of 100% community-owned DeFi protocols. Unlike COMP and several other yield farming tokens that came before YFI, yearn finance creator (Andre Cronje) believed that a DeFi token should be earned by either those who buy the token or those who farm the token by providing liquidity or other means. It should not have any private sale participant that could get the token at one-tenth of the public sale price.
After YFI blew up in popularity, many newer yield farming protocols also started to copy the same concept. 100% no premine, 100% governance by token owners. The concept of DAO suddenly became very viral, and it fulfilled the vision of decentralized projects. Hopefully, the popularity of YFI and other 100% no premine tokens can inspire upcoming and promising projects that also believe in the same DAO mechanism.
Uniswap is undoubtedly the hottest project in the crypto space this year. It has been able to steal a lot of crypto trading activities from centralized exchanges like Binance or OKEx. It’s definitely not the first DEX (decentralized exchange) that has been launched based on Ethereum, but it’s the first platform that popularized the concept of AMM (automated market maker).
With Uniswap, you basically have to provide liquidity to a pool. You (instead of the exchange) will be rewarded by Uniswap’s trading fees if someone trade inside that same pool. For example, if you provide liquidity in the ETH/USDT pool, you will be rewarded by Uniswap’s trading fees every time another user buy or sell ETH in the ETH/USDT pool. This concept of AMM is basically allowing crypto traders to be free from the traditional order book mechanism as well as from centralized platforms that often dictate the market with market makers.
While YFI, Maker, and Uniswap might not remain relevant in the years to come, but at least they have popularized some of the very important aspects that can help DeFi and cryptocurrencies to go mainstream. The idea of having a fully DAO mechanism or the idea of having an AMM to replace the traditional order book will always remain appealing despite the fact that these platforms might eventually be replaced by something that’s more popular. One thing for sure. The future of cryptocurrency space has never been this exciting.