The tokens entered the market trading at $2.94. UNI tokens were launched in September 2020 as a means to reward Uniswap users. The token was built using the ERC-20 token standard, which means that it is compatible with the Ethereum blockchain. UNI is the primary token of Uniswap, which is one of the leading decentralized exchanges (DEXs). The tokens are vital for protocols where cryptocurrencies can be used as collateral or where synthetic assets are created. As a result, price is pegged to the stability of a DeFi protocol. If there is a shortfall on a borrowing platform due to user loans being liquidated, any gaps can be covered by collateral tokens. Collateral tokensĬollateral tokens are tokens that are used to stabilise a DeFi protocol. By encouraging community participation, holders of such tokens can actively participate in the development of the sector. They effectively represent the 'De' in DeFi. Governance tokens represent the foundation of decentra. Most tokens issued within DeFi applications fall into this category. They represent voting power within DeFi protocols and enable holders to influence daily operations and future development. Governance tokens are DeFi tokens that give holders governance rights. Each DeFi protocol implements specific fees and processes for collection. These include:įee tokens are simply DeFi tokens designed to facilitate the collection of fees generated by a DeFi protocol. Each DeFi token holds a unique purpose within the associated DeFi protocol. However, unlike cryptocurrency coins that help secure a blockchain network, DeFi tokens are used in decentralized applications that are built on top of an existing blockchain. Tokens are usually built on the same blockchain that hosts the DeFi application.īuilt on the blockchain, DeFi tokens have the same seamless transferability and transparency as all other cryptocurrencies. DeFi applications mirror conventional financial concepts, such as exchanges, lending, borrowing and insurance. What are DeFi tokens?Įach DeFi token is developed for use within an associated decentralized finance application. DeFi protocols are usually governed by token holders through a DAO (decentralized autonomous organization). Funds deposited into DeFi protocols in general can be at risk of smart contract vulnerabilities, malicious developers and hacks.

DeFi protocols are experimental works in progress.

Major defi coins