Ethereum is currently the second-largest cryptocurrency after Bitcoin, and it is more than just digital money. Ethereum has expanded on Bitcoin’s use cases by constructing a global network that secures an ecosystem of decentralized applications (DApps) ranging from decentralized finance (DeFi), NFTs, and other technologies.
Continue reading to learn more about the top important projects and tokens driving the Ethereum ecosystem.
What is Ethereum?
Ethereum is a decentralized blockchain-based software platform with smart contract capabilities. Ethereum is an open-source platform that is primarily used to support Ether, the world’s second-largest cryptocurrency. Its blockchain enables smart contracts and applications built on it to run smoothly without fraud, downtime, control, or third-party interference.
Ethereum’s design goals include being highly scalable, programmable, secure, and decentralized. It is the blockchain of choice for developers and enterprises, who are using it to create technology that will transform many industries and how we live our lives.
Let’s look at some major use cases of Ethereum.
Decentralized Finance:
Over the last few years, the decentralised finance (DeFi) space has exploded. DeFi disrupts the traditional financial world by using peer-to-peer (directly from one party to another) blockchain technology to offer a variety of financial products at significantly lower rates and terms than its conventional counterpart.
Lending, borrowing, investment opportunities, interest-earning APY offers, insurance, and payment services are all DeFi products that are available to users primarily through DeFi DApps on the Ethereum blockchain.
These services are completely free of charge from third parties, resulting in an accessible, democratic, and permissionless financial system. Aave and Uniswap are two popular DeFi platforms.
Art and collectibles:
NFTs are yet another addition to the Ethereum blockchain’s popularity over the last two years. Although NFTs were minted on Ethereum as early as 2017, they only recently entered the public consciousness. NFTs have transformed the art world by providing what has always been regarded as crucial – provenance. CryptoKitties, CryptoPunks, and the Bored Ape Yacht Club are among the most well-known NFT collections.
Although some NFT marketplaces have launched on other blockchains, Ethereum remains home to some of the world’s largest, including OpenSea and SuperRare.
Gaming:
The gaming industry is becoming one of the areas of the crypto space that is increasingly realizing the potential of blockchain technology, particularly on Ethereum. NFTs have enabled proof-of-ownership to support many areas of commerce, and NFTs are transforming ownership of in-game utilities, items, and rewards into assets within GameFi.
Axie Infinity and Sandbox are two games that have contributed to the advancement of NFT and crypto-powered gameplay by allowing players to earn digital assets that can be traded or sold. Digital land sales, in-game celebrity concerts, and limited edition NFT drops are all exciting developments in the play-to-earn space.
Technology:
Ethereum’s decentralized, smart contract-governed blockchain transformed cryptocurrency technology. The distributed code and tamper-proof smart contracts of Ethereum allow developers to set parameters and predefined rules for everything from value transfer to task execution. Unlike Bitcoin’s first-generation blockchain, which focuses on security and decentralized transaction verification, Ethereum’s code allows developers to create customized DApps for a variety of industries.
Ethereum is currently powered by the Proof-of-Work (PoW) algorithm. The introduction of ‘Gas Fees’ distinguishes Ethereum. Gas fees discourage users from processing non-essential transactions when the network is congested to avoid higher prices.
With a network merge from a Proof-of-Work (PoW) model on the horizon, the highly anticipated upgrade promises to reduce gas fees while increasing transaction processing speed.
Some Important Projects and Tokens on Ethereum Ecosystem
Ethereum ecosystem tokens serve a variety of functions in various types of DApps. The top 5 Ethereum ecosystem tokens available on Binance are listed below.
Uniswap:
Uniswap, an Ethereum-based decentralized crypto exchange, uses UNI as its native governance token. On Uniswap, users can trade Ethereum tokens without relying on an intermediary to hold their funds. The platform employs a novel trading model known as an automated liquidity protocol.
Using the ERC-20 protocol, anyone can supply tokens to liquidity pools, trade tokens, or even create and list their tokens. Users can earn rewards while enabling peer-to-peer trading by donating tokens to liquidity pools.
MakerDAO:
MakerDAO is a peer-to-peer Ethereum-based organization that allows people to lend and borrow cryptocurrency. Users can borrow by depositing Ethereum-based tokens such as UNI, YFI, or BTC into the protocol, which creates a collateralized debt position for the amount borrowed.
Stablecoins are an attempt to address one of cryptocurrency’s major drawbacks. Cryptocurrency prices fluctuate erratically, rendering them unsuitable as a means of payment and a dependable store of wealth. While most stablecoins are centralized, MakerDAO is unique in that it has laid out a detailed plan for decentralizing control of its stablecoin, dai.
Aave:
Aave is an Ethereum blockchain-based open-source lending protocol. Lenders can earn rewards by contributing various Ethereum-based assets to liquidity pools, while borrowers can place approved assets up for collateral to borrow against.
Furthermore, interest rates on the Aave platform are determined by the utilisation rate of the relevant liquidity pool. Furthermore, lenders have the opportunity to earn relatively low-risk, passive income from loan interest without having to engage with a third party. AAVE is the Aave ecosystem’s native governance token, and token holders can vote on the protocol’s direction.
1INCH:
The 1inch Network unites decentralized protocols whose synergy enables the most profitable, fastest, and secure DeFi operations. Its first protocol is a decentralized exchange (DEX) aggregator solution that searches deals across multiple liquidity sources and offers users better rates than any single exchange.
The 1inch Liquidity Protocol is a next-generation automated market maker (AMM) that protects users from front-running attacks while also providing appealing opportunities to liquidity providers.
Curve Finance:
Curve Finance is a DEX and automated market maker (AMM) platform that allows tokens to be exchanged efficiently while minimizing fees and slippage. Curve Finance, unlike other DEXs, is specifically designed for trading stable coins.
Users can participate in the network’s decision-making process by using its native CRV token as a governance token.
There are some important projects which we will cover in some other blogs.
Conclusion
The Ethereum network is important to the rise of innovative blockchain technology, particularly in ecosystems where DApps are prominent. The Ethereum ecosystem will expand as more projects and users join the industry.
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