DeFi

5 Impactful DeFi Projects to Keep Your Eye On

With a combined TVL of over $22 billion, the article explores five of the top DeFi protocols worth monitoring...

Summary

  • With over $35 billion currently locked in DeFi, these projects are driving innovation across the industry.
  • Lido Finance leads the liquid staking revolution with a TVL of over $13.7 billion, offering staking opportunities across various PoS networks, and dominating staking on Ethereum.
  • Uniswap is a major decentralized exchange with around $3 billion locked in the protocol, operating across multiple blockchains.
  • PancakeSwap is a popular DEX known for its dominance on BNB Chain, with a TVL of $1.296 billion.
  • MakerDAO is the 4th largest DeFi protocol with $4.118 billion locked and allows users to borrow DAI using ETH as collateral.
  • Stargate Finance, an omni-chain DeFi solution built atop LayerZero allows for the transfer of assets across multiple networks while tapping into the protocol’s unified liquidity pools.

Decentralized Finance (DeFi), has unarguably emerged as a transformative force in the world of finance, promising to reshape the traditional sector. Although significantly down from its all-time high(ATH) of $256 billion recorded on December 2, 2021, the Total Value Locked in DeFi currently sits at $35.75 billion, according to data from DefiLlama. 

Amidst an array of DeFi projects vying for attention in this burgeoning ecosystem, a number of innovative protocols, steered by the principles of decentralization, have emerged. This article will provide valuable insights into the top 5 projects that are at the forefront of the decentralized revolution.

Lido Finance (LDO)

Source: DefiLlama

Lido is currently leading the liquid staking revolution, boasting an impressive Total Value Locked (TVL) of over $13.7 billion, the largest across the entire DeFi sector. Lido offers flexible liquid staking opportunities for users across several Proof of Stake (PoS) networks including Ethereum, Solana and Polygon. 

One of Lido’s recent enhancements includes the V2 upgrade, introducing features like the Staking Router. Lido allows users to stake tokens and receive transferable staked tokens (e.g., stETH), which can be utilized in various DeFi applications like Curve and AAVE, offering additional opportunities for staking rewards. Lido operates under a decentralized autonomous organization (DAO) model, giving its native LIDO token holders the authority to influence protocol management decisions. With its user-friendly approach, Lido simplifies the staking process, eliminating the need for a minimum deposit or hardware setup, thus broadening accessibility to a wider audience.

Uniswap (UNI)

Source: DefiLlama

A major player in the world of decentralized exchanges (DEXes), Uniswap currently sits among the top 5 DeFi protocols, with about $3 billion dollars currently locked in the protocol, per DefiLlama data.

Uniswap, through its popular Automated Market Maker (AMM) model allows users to swap crypto assets without the need for an intermediary. Earlier in March 2023, the protocol launched its V3 on BNB Chain, making entry into a competitive arena that has been long dominated by PancakeSwap. 

With its native token UNI, which unlocks various user benefits including liquidity mining, governance participation, and insurance, Uniswap operates across multiple blockchains such as Ethereum, BNB Chain, Polygon, Arbitrum, Base, and more. 

Uniswap's native UNI token, an ERC-20 token, unlocks various DeFi services on the platform, including liquidity mining, governance participation, and insurance. 

PancakeSwap (CAKE)

Source: DefiLlama

Having announced its V3 iteration on BNB Chain and Ethereum earlier in April, PancakeSwap is widely popular for its dominance on BNB Chain. However, the decentralized exchange (DEX) has undergone several developments in 2023, including the launch of its first gamefi project “Pancake Protectors”, the CAKE v2.5 tokenomics remodeling, as well as expansion across multiple chains. PancakeSwap’s multichain expansion spans popular Layer 2 solutions such as Arbitrum, to the newer ones, including Linea and Coinbase-incubated Base network. 

Currently, the total value locked (TVL) on PancakeSwap stands at $1.296 billion, making it the 14th largest DeFi protocol in terms of TVL.

MakerDAO (DAI)

Source: DefiLlama

MakerDAO is currently the 4th largest DeFi protocol, with $4.118 billion locked on the protocol. Built on Ethereum, the decentralized lending protocol allows users to borrow its US dollar-pegged stablecoin DAI, using ETH and other approved cryptocurrencies as collateral. MakerDAO uses a system known as collateralized debt positions (CDPs) to ensure the stability of the DAI stablecoin. The platform’s native token MKR grants governance rights, allowing holders to determine the future of the protocol. 

In September, Ethereum founder Vitalik Buterin sold his entire MKR holdings for the first time, following a blog post by MakerDAO founder Rune Christensen who expressed his admiration for Solana's blockchain. MakerDAO stands out as one of the earliest DeFi protocols in the ecosystem. 

Stargate Finance (STG)

Source: DefiLlama

At the heart of omni-chain DeFi, Stargate, built atop LayerZero allows for the transfer of assets across multiple networks while tapping into the protocol’s unified liquidity pools. With the proliferation of L1 and L2 chains and the surging demand for interoperability, the platform's utility and revenue are poised to continue expanding. Among its native token STG use cases include governance rights, access to staking pools, farming, and liquidity mining opportunities. 

As of writing, about $378.64 million is currently locked on the protocol, with $1.38 million, constituting 1.62% of the STG market capitalization currently staked. 

Conclusion

With a collective Total Value Locked (TVL) of over $22 billion, these five DeFi projects stand as exemplars of innovation and progress in the industry, collectively showcasing the versatility and potential of this growing ecosystem. As the Total Value Locked in DeFi continues to surge over time, these projects, among others, may play a pivotal role in disrupting the traditional financial sector.

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