2021 is just beginning while investors have high expectations about the opportunities to make profits this year. Without a doubt, Ethereum is one of the cryptocurrencies to watch during the next months while the bull market continues. In its DeFi sector, the opportunities for growth remain high, but the top projects could be SEC’s targets in 2021.
Top DeFi projects in 2021
According to analyst Alex Krüger the 2021 top protocols in Ethereums DeFi are Uniswap (UNI), Maker (MKR), Compound (COMP), Aave (AAVE), Synthetix (SNX) and Yearn Finance (YFI). The expert believes that these projects are building “high-caliber” products, but that they will be kept out of the mainstream and institutional investors.
In 2020, the high participation of institutions had a crucial effect in making Bitcoin hit its all-time high. Something similar is unlikely to happen in decentralized finance because of regulatory risk, said Krüger.
In the short term, new investors and institutions will prefer to invest in Litecoin, Bitcoin Cash, Ethereum and Bitcoin since they have a low risk of being classified as a security by the U.S. Securities and Exchange Commission (SEC), as was the case with XRP and the lawsuit filed with Ripple Labs.
In the last few weeks, the legal process that has been initiated against the payment solutions company and some of its executives has caused much controversy. A court decision is still pending, As a result, the implications for the crypto industry are uncertain. Krüger believes that other tokens may be classified as securities under U.S. law.
However, the economist remains optimistic and considers that this is a stage in crypto that will be overcome. In that sense, he said:
“Regulatory burdens and access limitations are tantamount to a lid on top of DeFi. This lid, these barriers of entry, are temporary. Once lifted, assets should outperform dramatically as new money pours in. The technology is revolutionary.”
In the near term, most of the users of the DeFi protocols will be people familiar with cryptocurrencies. Meanwhile, Krüger thinks that centralized finance “should” boom and reach more people in the mainstream. This is because people will be more confident allocating money to a regulated platform, without the risk of it being targeted by the authorities of a given country.
In his predictions for 2021 Ethereum developer, Eric Conner, agrees with Krüger. The developer believes that there will be a regulatory crackdown for at least one DeFi protocol. As experts have stated, the UNI and Uniswap token may be one of the SEC’s targets.
Partnerships and a new product for Yearn Finance
At the end of the year, Yearn Finance’s team has consolidated a series of partnerships to attract more inveators and increase the interoperability of the protocol. Together with SushiSwap, Keep3r, C.R.E.A.M. Finance, Cover and Pickle, users will have access to a variety of products and features that will keep Yearn Finance one of the strongest contenders in DeFi for 2021.
On the other hand, the coin’s founder, Andre Cronje has launched a new product called yCredit. Through the protocol, funds can be deposited to borrow or buy ERC-20 tokens. The currently supported tokens are AAVE, BNB, BUSD, CRV, COMP, DAI, ETH, LINK, MKR, REN, renBTC, SNX, SUSD, TUSD, UNI, USDC, USDT, wNXM, wBTC, and YFI.
However, Cronje has warned that the protocol is in a testing phase and could have security risks so all investors should use it with caution.