Stablecoins
Stablecoins play a crucial role in DeFi, offering cryptocurrencies that maintain a stable value tied to fiat currencies like the US dollar. These coins are important for DeFi applications as they provide a reliable medium of exchange and a stable unit for transactions and investments. There are different types of stablecoins, including fiat-backed, algorithmic, and collateralized variants. Popular stablecoins in the DeFi space include USDT, USDC, DAI, and BUSD.

Insurance
As DeFi is still in its early stages, it faces risks such as smart contract vulnerabilities and breaches. To mitigate these risks, a growing number of insurance solutions have been introduced. These products help reduce liability, safeguard against losses, and preserve property.

Synthetic Assets
Synthetic assets offer exposure to real-world assets like gold, fiat, or other cryptocurrencies. These are backed by collateral, typically tokens, which are locked into Ethereum-based smart contracts. DeFi enables the integration of various smart contracts, making it easier to create synthetic assets with built-in incentives and agreements.

Decentralized Exchanges (DEXs)
Decentralized exchanges (DEXs) are a major DeFi use case, allowing users to trade cryptocurrencies in a decentralized, trustless, and transparent manner. DEXs utilize smart contracts to facilitate trades, eliminating intermediaries like traditional centralized exchanges. Benefits of DEXs include greater security, privacy, and user control over assets. Popular DEXs in DeFi include Uniswap, SushiSwap, and Curve, which provide low-cost, permissionless trading without the need for KYC or AML procedures.

Tokenization
Tokenization refers to the creation, issuance, and management of digital assets on blockchain networks. It is a fundamental feature of Ethereum and a key driver of DeFi. These tokens enable global access to assets, creating new opportunities for trade, investment, and the secure transfer of value.

Analytics & Risk Management
Decentralization and transparency in DeFi allow users to access large amounts of data for analysis. This data can be leveraged to make informed financial decisions, discover new opportunities, and develop effective risk management strategies.

Liquidity Provision
Liquidity providers act as intermediaries by facilitating the exchange of assets in short-term holdings. They provide liquidity at all times by placing buy or sell orders based on market information and asset pricing. In modern markets, liquidity providers must diversify their strategies to efficiently match buyers and sellers and manage risk transfer.

Infrastructure Tooling
In the DeFi ecosystem, composability refers to the ability to connect and interact with various system components, creating a network effect. Infrastructure tooling is a vital DeFi use case, allowing projects to be interconnected and fostering the growth of a decentralized financial network.

Digital Identification
Blockchain-based digital identity systems are gaining traction, and when combined with DeFi, they enhance access to global economic systems. These digital identities allow users to access personal and financial data from anywhere with an internet connection, further expanding the reach of DeFi.

Complying with AML & CFT
DeFi faces challenges with traditional KYC regulations that contradict its emphasis on privacy. To address this, DeFi introduces the concept of Know-Your-Transaction (KYT), which focuses on analyzing transactional behavior in real time while maintaining user privacy. KYT is a significant development in DeFi’s efforts to comply with regulatory standards while safeguarding user confidentiality.

Savings
Given the high inflation rates and low interest on fiat currencies, many risk-averse individuals are seeking new ways to save and invest. DeFi projects have capitalized on this by offering innovative savings solutions that aim to provide better returns and more secure savings opportunities.

Payment Solutions
DeFi was initially driven by the need to serve unbanked and underbanked populations. Today, DeFi’s core attributes make it a strong alternative to traditional global payment systems. Compared to these conventional systems, DeFi offers faster, safer, and more transparent payment solutions. By eliminating intermediaries, DeFi-based payments can reach underserved populations and simplify transactions.

Decentralized Autonomous Organizations (DAOs)
In DeFi, DAOs are decentralized organizations that serve as alternatives to centralized financial institutions. Built on the Ethereum blockchain, DAOs handle various financial functions such as fundraising, asset management, and governance. DAOs have become a foundational element of DeFi’s ecosystem, supporting decentralization across industries and use cases like payments, analytics, trading, and more.