10 DeFi Potential Projects Worth Preemptive Investment

Written by: Karen, Foresight News

This article will provide readers with a roundup of 10 new DeFi potential projects, highlighting their unique features or innovations. However, most projects are still in the early stages of development, reminding users to interact cautiously and DYOR.

Morpho: Lending Optimization Protocol on Ethereum

Morpho can be considered a loan pool optimizer, a peer-to-peer layer built on top of loan pools like Compound and Aave, enhancing the capital efficiency of loan pool positions by seamlessly matching lenders and borrowers. It retains the same liquidity, liquidation guarantees, and risk parameters associated with the underlying protocols. As of the time of writing, the total liquidity supplied through Morpho is nearly $300 million, with total borrowings amounting to $156 million.

It is well known that in current lending protocols, most pools have a severe mismatch between borrowed and loaned amounts, leading to significant discrepancies between the interest paid by borrowers and the interest earned by lenders, resulting in low capital efficiency. So how does Morpho enhance capital efficiency?

Morpho primarily achieves a win-win situation by matching user lending and borrowing demands through a priority queue. Specifically, users are ranked based on the amount they wish to lend or borrow. When a lender provides liquidity to the protocol, their liquidity is first matched with the largest borrower, then with the second largest, third largest, and so on, until the provided liquidity is fully matched or there are no more borrowers to match. Conversely, when a borrower is ready to borrow liquidity, they are first matched with the largest lender, and so forth. Given the potential for multiple matches, Morpho also considers gas consumption, allowing users to customize their maximum gas settings. If the gas spent reaches the maximum value, the remaining unmatched liquidity will return to the base pool.

In other words, Morpho lending users can receive the underlying pool's APY in the worst-case scenario, and when their funds are matched, they will receive an enhanced P2P APY. In both cases, users will always receive rates equal to or better than those of the underlying protocol.

In terms of rewards, Morpho accumulates rewards from the underlying protocol on behalf of users and also distributes its own token, MORPHO, to users.

Morpho completed a $18 million funding round in July this year, led by a16z and Variant, with participation from Nascent, Semantic Ventures, Cherry Ventures, Mechanism Capital, Spark Capital, Standard Crypto, Coinbase Ventures, and others.

Portal: https://www.morpho.xyz/

Sturdy: Interest-Free Lending and Yield Protocol

Sturdy Finance is an interest-free lending and yield protocol. According to official documentation, the Sturdy team consists of crypto-native workers who previously worked at Polymath, Gelato Network, and Injective Protocol. In March this year, they completed a $3.9 million seed and strategic funding round, led by Pantera Capital, with participation from Y Combinator, SoftBank's Opportunity Fund, KuCoin Ventures, mgnr, One Block Capital, Dialetic, and Orange DAO.

Sturdy is currently live on Fantom and Ethereum, where it will collateralize the collateral provided by borrowers into DeFi protocols like Yearn, Convex, and Lido, with staking rewards used to pay interest to depositors. Sturdy has already indicated that it will release a governance token in the future.

In terms of interest rates, borrowing on Sturdy is interest-free for borrowers. However, when the asset utilization exceeds 80%, for every additional 1% of utilization, a 3% interest rate must be paid. If the health factor falls below 1, liquidation will occur. For lenders, they can earn relatively stable yields.

Last week, Sturdy announced it would issue the STRDY token and will airdrop to early users and partners, with daily announcements regarding the airdrop for partner users.

Portal: https://sturdy.finance/

Perennial: Derivatives Protocol

Perennial is a derivatives protocol that announced a $12 million funding round led by Polychain Capital and Variant earlier this month, with participation from Archetype, Coinbase Ventures, Scalar Capital, Robot Ventures, and others. The two co-founders of Perennial, Kevin Britz and Arjun Rao, previously co-founded Astro Wallet in 2017, which was later acquired by Coinbase.

Perennial uses a DeFi-native trading model, meaning no order books, zero slippage, and permissionless leverage, as well as DeFi-exclusive markets (like Squeeth) and composable positions. Perennial acts as a peer-to-pool derivatives AMM, where traders deposit collateral to gain leveraged exposure, and liquidity providers can provide funds for the fees paid by traders.

Additionally, Perennial sees itself as a derivatives underlying protocol, allowing developers to launch any synthetic market with just a few lines of code. Tools built on the protocol can simplify and automate retail user participation. Perennial's initial core features include "peer-to-pool AMM," USD settlement, LP flexibility, and more.

As of the time of writing, within a week of launching on the Ethereum mainnet, the total funds provided by liquidity providers to Perennial amount to $1.8 million, with over $40,000 in open positions for traders. Although current trading activity on Perennial is low, the platform has not yet released a token, which may be worth keeping an eye on.

Portal: https://perennial.finance/

Panoptic: Oracle-Free Perpetual Options Protocol Based on Uniswap

Panoptic was founded in July by Kristensen, former research head at Advanced Blockchain AG, and Guillaume Lambert, a professor of applied physics at Cornell University, aiming to establish a perpetual, oracle-free decentralized crypto options trading protocol.

Unlike typical options protocols, the Panoptic protocol does not use a clearinghouse to settle options but instead uses LP positions in Uniswap V3 as the fundamental building blocks for trading long and short options. Core features include never expiring options, anyone can deploy options markets on any asset in a permissionless manner, and anyone can lend funds to options traders as liquidity providers.

Undeniably, Panoptic will be able to provide options trading opportunities for long-tail assets, but potential risks also exist, such as excessive leverage ratios, paying large premiums for options, and liquidation risks. Mechanically, when an options buyer transfers the liquidity pre-deployed by the seller from the Uniswap V3 pool to Panoptic, the trading activity on Uniswap generates LP fees owed by the buyer to the seller, which is the source of the premium. Readers interested in the Panoptic mechanism can check the official documentation.

Panoptic plans to launch its platform in the first quarter of next year, with the first version based on Uniswap's automated market maker (AMM), and plans to support other AMMs afterward.

Panoptic completed a $4.5 million funding round this month, led by Gumi Cryptos Capital, with participation from Uniswap Labs Ventures, Coinbase Ventures, Jane Street, SevenX Ventures, and Avalanche Foundation's Blizzard fund.

Portal: https://www.panoptic.xyz/

Fluidity: Liquidity Incentive Layer

Fluidity completed a $1.3 million seed funding round led by Multicoin Capital in October this year, with advisors including investor ZachXBT. The project will be built on Ethereum and Solana and has launched today on the Ethereum mainnet, having previously launched on the Ropsten testnet and Solana Devnet in January.

Fluidity will wrap user-deposited stablecoins into Fluid Assets at a 1:1 ratio, and users will earn rewards when they use, send, or receive Fluid Assets on-chain. The rewards are generated from the accumulated yield produced by Fluidity depositing and borrowing these underlying assets in other currency markets. Users can redeem the underlying assets at any time.

Regarding reward distribution, Fluidity has created a lossless reward savings pool that randomly allocates different sizes of rewards to users of Fluid Assets. The payment mechanism is determined by the Transfer Reward Function (TRF), which randomly distributes rewards based on the size of the reward pool, the trading frequency of Fluid Assets, the gas fees paid, and the number of random reward tiers.

Fluidity also allows developers to set the distribution methods and timing of these rewards. Use cases for Fluid Assets include sending, receiving, and trading tokens, minting, trading, and selling NFTs, and executing trades on DEXs. Fluidity is building a universal incentive mechanism that can be embedded into different systems, platforms, and protocols.

In summary, Fluidity allows users to obtain wrapped tokens without losing stablecoins while building a random reward incentive mechanism to encourage the liquidity of wrapped tokens. Additionally, Fluidity proposes to leverage the concept of Utility Mining in liquidity mining to allocate most governance tokens to guide liquidity. The governance token economics can be found here.

Portal: https://fluidity.money/

Spectral: Credit Risk Assessment

Spectral has established an on-chain scoring system equivalent to the traditional FICO score, called the Multi-Asset Credit Risk Oracle (MACRO) score, allowing users to check their on-chain scores through its platform. Spectral has already launched a public beta version V0.3.0 on the Arbitrum testnet, allowing users to obtain on-chain credit scores based on their on-chain interaction activities.

Currently, we can mint Non-Fungible Credit (NFC) tokens in Spectral based on on-chain interaction activities. Spectral also allows users to bundle any number of addresses, representing the combined credit of multiple addresses with a single MACRO score. The main wallet will receive the NFC, and the MACRO score will also improve due to the length of the credit history and the diversity of the credit mix.

NFC represents our credit value in the DeFi lending market and is fully programmable and composable, holding promise to become the credit risk assessment infrastructure in the DeFi world.

Spectral completed a $23 million funding round in August this year, led by General Catalyst and Social Capital, with participation from Samsung, Gradient Ventures, Section 32, Franklin Templeton, Circle Ventures, and Jump Capital.

Portal: https://www.spectral.finance/

Nibiru: Cosmos Ecosystem DeFi Hub

Nibiru is not only a PoS blockchain platform based on Cosmos but also a DeFi Hub supporting derivatives and spot trading. In September this year, Nibiru completed a $7.5 million seed funding round at a $100 million valuation, with participation from Tribe Capital, Republic Crypto, and Kraken.

The Nibiru ecosystem includes the perpetual futures protocol Nibi-Perps, the spot trading protocol Nibi-Swap, and the partially collateralized stablecoin NUSD, among others. Nibi-Perps has already launched a public testnet, with the initial testnet version based on a virtual AMM mechanism, with positions settled in USDC.

Portal: https://nibiru.fi/

Exponential: DeFi Rating and Investment Protocol

Exponential completed a $14 million seed funding round in October, led by Paradigm. Exponential is not just a DeFi rating protocol but also an investment protocol that can easily discover, evaluate, and invest in cross-chain liquidity pools. It can also assess its own wallet address to analyze investment risks. Exponential will personalize recommendations for the best liquidity pools based on users' risk tolerance.

Currently, Exponential allows users to analyze wallet risks and explore risk-return opportunities in liquidity pools, and it has opened applications for an investment waitlist.

Portal: https://exponential.fi/

nftperp: NFT Perpetual Contract Protocol on Arbitrum

The NFT perpetual contract trading platform nftperp has launched its Beta mainnet on Arbitrum One, allowing users to collateralize WETH instead of NFTs to long or short blue-chip NFTs, with a maximum leverage of 5 times.

The nftperp trading mechanism uses a virtual automated market maker (vAMM) model, requiring no real liquidity providers and having no order book. The assets collateralized by traders are stored in a smart contract vault, where all losses and gains for traders are processed.

nftperp has also recently completed a $1.7 million seed funding round, with participation from Dialectic, Maven 11, Flow Ventures, DCV Capital, Gagra Ventures, AscendEX Ventures, Perridon Ventures, Caballeros Capital, Cogitent Ventures, Nothing Research, Apollo Capital, Tykhe Block Ventures, and OP Crypto.

Portal: https://nftperp.xyz/

Vertex: DEX on Arbitrum

Vertex is a DEX on Arbitrum, covering services such as spot and derivatives trading, yield, and lending. Vertex initially planned to launch on Terra but ultimately decided to launch on Arbitrum, where it is currently live on the public testnet.

Vertex combines the advantages of order books and AMMs, with the core protocol being an on-chain trading protocol (constant product AMM) with an off-chain order book. The order book serves as an off-chain sorter for order matching, and the liquidity from the AMM pools is injected into the off-chain order book, providing traders with deeper liquidity, smaller spreads, and slippage.

Vertex has briefly outlined its token economics in the official documentation, stating that in addition to the VRTX token, it will also create a liquidity staking token xVRTX and a non-transferable voting token voVRTX.

Portal: https://vertexprotocol.io/