Algorand DeFi: Beginners Guide
Learn more about the most popular dApps across Algorand's DeFi ecosystem!
Welcome back to the Club, gov!
Are you new to Algorand? Do you need help navigating Algorand’s DeFi ecosystem?
Then this guide is for you.
We’ll cover the most popular DeFi protocols across Algorand as well as the Algorand Foundation’s unique rewards program that incentivizes DeFi adoption.
And if you’re an Algorand DeFi vet already in the know, do us a favor and share this with someone who needs it.
Let’s dive in!
The Algorand Foundation announced the launch of the Aeneas Liquidity Rewards Program, which is the second phase of its $300 million Viridis Fund, back in December 2021. Aeneas is the Foundation’s first official liquidity incentive program in which users are provided with rewards for simply engaging with Algorand’s DeFi ecosystem. Its goal is to grow the TVL of the ecosystem and accelerate DeFi adoption.
Gov Tip: Learn more about the Aeneas rewards program here.
The Aeneas rewards program is a unique value proposition specific to the Algorand DeFi ecosystem and every ALGO holder should be taking advantage of it. The amount of ALGOs distributed through this rewards program is extremely generous, and the program is friendly to DeFi beginners, enthusiasts, and pros alike by providing a variety of ways to earn rewards. From staking and lending to providing liquidity, there is an option for all risk averse levels to start earning on their ALGO.
There are a variety of DeFi protocols to earn ALGO from. From DeFi Hubs to lending markets and DEXs, here are our current favorites.
Algofi is Algorand’s premiere DeFi hub with a full suite of products powered by the Algorand Virtual Machine (AVM) including a Decentralized Exchange (DEX) with Zap features, crypto lending market, stablecoin (STBL), stablecoin swap, Governance vault, staking, farming, and enhanced analytics. Additionally, features such as flash loans, protocol governance, and cross-chain functionality will be released in the next couple of weeks if not sooner.
With a UI that’s simple to navigate and the ability to borrow, lend, swap, stake, farm, and commit to Governance on one protocol, Algofi is a real time saver and the very definition of convenience. And their STBL Peg Index is one of if not the most consistent ways to stake stablecoins – and it returns ~17.5% (APR) with an added Aeneas rewards boost.
TVL Position: 1st
Humble is a DeFi suite built on Algorand that when fully operational will include a wide range of features: a DEX, yield farming, liquidity mining, stablecoin pools, derivatives, cross-chain functionality (i.e. cross-chain swaps), limit orders, a DAO, live customer support, and much more.
Humble launched with one of the most popular Aeneas rewards programs, rewarding users for farming their liquidity pool tokens. The rewards are accrued per block, so you always know how much you’ve earned. And the fact Humble is one of the easiest dApps to pick up and use with its slick UI, smooth UX, and live customer support desk doesn’t hurt its cause.
After a successful launch in June, the community is excited to see what this up and coming DeFi hub has in store next.
TVL Position: 5th
Guides: Humble Beginners Guide
Tinyman is a Decentralized Exchange (DEX) that uses the Automated Market Maker (AMM) model similar to Uniswap on Ethereum and enables users to swap tokens and provide & farm liquidity. In the future, they plan to offer a token for protocol governance and gamification elements through NFTs.
Tinyman is the OG Algorand DEX and has the deepest LPs in the ecosystem due to their first to market advantage. With a focus on improving their UI & UX and supporting bridged assets, Tinyman is constantly upgrading. To earn extra rewards from the Aeneas program on Tinyman, you can farm your LPTs in their staking program.
TVL Position: 3rd
Guides: Tinyman Beginners Guide
Pact is an AMM focused on providing users with cheaper swap fees and offering liquidity providers 100% of the fees they accumulate and 1% taker fees on certain LPs – a truly unique value prop across the Algorand ecosystem and the main reason they call themselves the “home of liquidity” on Algorand. In the future, Pact plans to release a stablecoin swap, farming features, protocol governance, Ledger support, and enhanced analytics.
Pact has one of the slickest UIs and best UXs across Algorand, allowing users to see how much of each token they have in each pool at any given time and providing an easy way to track your rewards per pool. And its simple and easily trackable Aeneas rewards distribution makes earning ALGO fairly straightforward.
TVL Position: 4th
Guides: How to Earn on Pact
Folks Finance is a crypto lending market that allows users to lend, borrow, and farm ALGO, ASAs, Liquidity Pool (LP) tokens, and stablecoins through a user-friendly UI and a unique incentive system that rewards good actors (i.e., users who pay their loans back).
Folks also introduced the first ALGO liquid staking Governance program (“Liquid Governance”). Governors who commit their ALGOs to Governance through Folks Finance will receive a new asset named “gALGO” – which is pegged to the value of ALGO – in a 1:1 ratio. gALGO can be deposited, leveraged as collateral, or taken off the platform to participate in other DeFi protocols.
Both Liquid Governance and the rewards aggregator are fairly unique features to the ecosystem, and provide users with the ability to earn more ALGO. And on top of both of these features, Folks is currently participating in the Aeneas rewards program which is providing a boost to their lending market, farming, and Liquid Governance features.
Gov Tip: You can earn a ~15% APR on ALGO deposits alone.
TVL Position: 2nd
Alandia is a lending protocol that directly connects borrowers and lenders allowing borrowers to take an ALGO loan against their NFTs. This process is simple: borrowers post their NFT(s) with desired ALGO loan amount, interest rate, and lending period. Prospective lenders then submit their bid on the package with the option to offer more or less ALGO, higher or lower rates, and shorter or longer periods. In the future, Alandia plans to provide other collateral types (i.e., ASAs).
Alandia is an awesome tool for the ecosystem because it provides prospective borrowers with the opportunity to unlock liquidity tied up in their NFT collection, and prospective lenders with the opportunity to earn a relatively passive yield on their ALGO. In the event a loan needs to be foreclosed on (due to a default on payment), lenders have the opportunity to make even more ALGO on the NFTs they foreclosed on – if they provided a loan at a competitive price.
TVL Position: Not tracked
Guides: Alandia Strategy Guide
We hope the above provides enough guidance for you to get started in the Algorand DeFi ecosystem. We didn’t list every protocol, so there’s additional exploring you can do.
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See you around, gov.
Disclaimer: This isn’t financial advice and the information provided in this article should be used for educational purposes only. Do your own research, make plans that work for your own personal situation, and don’t ever invest more than you’re willing to lose.