Algorand DeFi

Last Reviewed: July 2023

The Algorand DeFi ecosystem is sustained and bolstered by the three DeFi Pillars of Algorand. Fundamentally, it's about assuring the sustainable growth of the ecosystem in the long-term, which is why the Algorand Foundation have invested heavily in supporting the main actors of each 'pillar'. In this article we cover the 3 most important DeFi projects on Algorand.

The 3 Algorand DeFi Pillars are defined by the the Algorand Foundations in Aeneas Program, which goal is to set the base for a flourishing Algorand DeFi ecosystem. The pillars and their main contributors are the following:

Robust Bridges for Newcomers - Algomint
Automated Market Maker DEXs for Traders & Merchants - Tinyman
Borrowing & Lending Platform for Capital & Commerce - Folks Finance

I have covered all of these three actors in depth in previous articles. You can access the articles by pressing on their respective name or by browsing the Algorand Guides section. If you're a beginner to Algorand I'd suggest you to check out the Algodaddy Guide For Beginners or just browse around on the site. You'd be surprised at how much there is to learn!

💡Pro Tip 💡
You'll need to have an Algorand Wallet installed on your phone in order to engage with the Algorand DeFi ecosystem (including Tinyman, Folks Finance and Algomint). Check out the AlgoDaddy Pera Algo Wallet Guide to read more about it and learn how to set it up.

1. Algomint
Website - Algomint

Algorands protocol offers swift transactions, high security, and low fees. This is something a lot more than most other blockchains can claim. Luckily, it turns out Algorand can offer other cryptocurrencies these same benefits. Thanks to Algomint other cryptocurrencies or blockchain assets can now be minted onto the Algorand blockchain. Thus, they'd be enjoying the same benefits of swiftness, high security and low fees just as Algorand or any other ASA would.

What this achieves is that it allows those invested in other cryptocurrencies to easily bridge into the Algorand ecosystem, with a smooth and fluid transaction. They get to test the ecosystem and technology out, without necessarily having to instantly invest in Algorand itself.

In addition, Algomint allows for great inflow of capital and equity into the Algorand network, which further potentiates the growth of the ecosystem (it's a a simplified but in many cases true equation where money => growth).

Moreover, imagen the possibility of environmentally friendly BTC! Bitcoin mining is in large unsustainable, especially with current electricity prices. But instead, imagen BTC having a transaction cost of mere $0.001 ALGO, a transaction speed of 4.5. seconds, and instant transaction finality - as well as being carbon-negative. That's exactly what goBTC does.

The Tinyman application on Algorand

2. Tinyman
Website - Tinyman

Tinyman is the first decentralized exchange (DEX) created for ASA tokens on Algorand. It launched on 7th of October 2021. They've excelled at what they do and delivered an all around great application (apart from a bit of a hiccup in beginning). The Tinyman launch definitely lead to a more accessible ecosystem and a more engaged Algorand community overall. You could even go as far as to say that prior to Tinyman, the Algorand DeFi was basically nothing.
Hence it's without a doubt that Tinyman is one of the most important tools in the Algorands ecosystem. It allows liquidity pools to be formed between Algorand and different ASAs, or even between the ASAs themselves. As a result you don't really need a token to be listed on an exchange in order to trade it.
Additionally, users and developers can set up their own liquidity pools for token pairs previously not existing. Not only that, but all of this is provided by Algorands underlying secure, cheap and fast protocol. Due to this, those using the Algorand blockchain were now able to freely trade the popular Algorand tokens (HDL, DEFLY, USDC and others) as well as bolstering the creations of community tokens, some which rose in popularity very quickly (for example the Akita Inu Token). Participating in liquidity can earn you rewards and especially so if the pool in question is connected to the Algorand Governance DeFi Program.
As far as DEX's go, there are now plentiful of options to chose from apart from Tinyman, such as Pact Finance and Humble DeFi.

3. Folks Finance
Website - Folks Finance

After shutdown of AlgoFi, Folks Finance has taken the throne as claimed the throne as the most important lending service on Algorand protocol. It have had a similar impact to what Tinyman have had on the Algorand ecosystem, but of course in it's own unique way. Lending is especially important for the Algorand ecosystem, as it allows leveraging of investment and accessibility of funds to key-players and everyday users alike. Thus you can potentiate your investments, or contribute to the TVL by lending your Algorand on Folks Finance.
Folks Finance launched in April of 2022, providing a cutting-edge non-custodial DeFi platform, empowering users with a comprehensive suite of tools to manage digital assets securely on the Algorand blockchain. As a non-custodial platform, users retain complete control over their funds by having access to the private keys associated with their ALGO or tokens. Before its launch, Folks Finance managed to amass an impressive $3 Million USD through seed funding. Recently, the platform unveiled V2.0, introducing a host of new features such as high efficiency loans, collateral swaps, multi-borrow, and flash loans, among others.
Folks Finance also allows you to participate in the Governance DeFi Program, resulting in extra rewards and the ability to keep participating in parts of the Algorand ecosystem by using gALGO.

💡 Algorand DeFi Utility💡
Learn more about the vast ecosystem of Algorand over in this article, where I have listed most of the available Algorand apps, networks, games and other utilities.

Algorand DeFi - Final Thoughts

Hopefully by now you understand why these 3 players are so important for Algorand DeFi. They're here to bootstrap the growth of the Algorand DeFi ecosystem and the Algorand Foundation have worked hard to support their development. As the ecosystem grows each 'pillar' will be filled with more contenders, which results in further possibilities for the end-users.

If you enjoy this article then please consider buying me a coffee to help support future articles with informative content about the Algorand and it's ecosystem.

Article Author: Martin
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