The DeFi dapps that could help to push the industry forward this year
The DeFi dapps that could help to push the industry forward this year
Which top DeFi projects are ready to make it big in 2023? The market has had a volatile year, but amidst the challenges many DeFi projects have launched more diverse products to fulfill the increasing needs of different DeFi users. In this article, we introduce the DeFi projects with a strong user base and high revenue in the recent past. And they have the potential to continue this positive trend in the next year.
According to DappRadar’s recent annual industry report, DeFi TVL fell from a high of $211.4 billion in January to $55 billion in December – a loss of 73.97%. Several factors contributed to the drop in TVL, such as user withdrawals, cryptocurrency devaluation, and more. For an in-depth analysis, you can read the full report.
But it’s worth noting that the falling numbers aren’t the whole story of the industry. Many DeFi protocols continue to buck the trend with constantly improved features, working towards building a healthier and more sustainable DeFi future.
Let’s take a look at some of the most innovative DeFi dapps on the market.
Uniswap is the most used DEX
Uniswap is a DeFi protocol and decentralized exchange on Ethereum for swapping ERC-20 tokens. This means that users can convert token A to token B using this dapp. Unlike most exchanges, Uniswap doesn’t realize liquidity by matching buyers and sellers. Instead, it uses a math equation and pools of tokens to achieve market-making automatically.
Uniswap is also decentralized and open source. So anyone can review the code and propose improvements.
The DeFi protocol has now evolved to V3. The latest version can help traders and liquidity providers maximize returns, minimize price slippage, and manage downside risk more effectively. Interestingly Uniswap V3 uses NFTs to indicate ownership over a certain position in the liquidity pool. Yes, these NFTs are tradable, and of course represent a value.
To use Uniswap, users have to pay a fee to the protocol, which is the source of its revenue. Currently, Uniswap is the most profitable of all DeFi protocols, with a 7-day average daily transaction fee of $733,809.
GMX offers zero slippage and shares profit with users
GMX is the largest decentralized exchange in the Arbitrum ecosystem, and it also supports Avalanche. This DeFi protocol offers decentralized perpetual and spot trading with zero slippage and low cost through a liquidity pool, GLP.
Unlike Uniswap, GMX uses dynamic pricing supported by Chainlink Oracles and it aggregates prices from leading volume exchanges rather than using an automated market maker. This improves trading efficiency and helps to achieve zero slippage when executing market orders.
The protocol has two cryptocurrencies in its ecosystem: GMX and GLP. Holding these two tokens generates benefits for users. Specifically, 30% of the fees generated from transactions are allocated to GMX stakers in the form of ETH (on Arbitrum) or AVAX (on Avalanche) and 70% to GLP holders.
This way of giving back to the community has also given GMX a big boost in user support over the past year. Impressively, the project has managed to achieve significant increases in both user numbers (UAW) and token prices during the bear market.
Lido lets everyone earn Ethereum staking rewards
The long-awaited Ethereum upgrade finally happened. With the arrival of The Merge, Ethereum has transitioned to a proof-of-stake network. With that it has become much more energy efficient while also allowing anybody to become a validator by staking 32 ETH. A validator is a network node that receives rewards for transaction confirmations, and because 32 ETH is quite some money, alternatives have popped up. And of those alternatives is Lido.
By staking ETH through Lido, you own a share of a validator. Therefore, users earn a percentage of the block rewards, paid in ETH Also, users do not need to lock their ETH during this period. Once users have staked on Ethereum through Lido Finance, they will receive stETH, an ERC-20 token, at a ratio of 1:1 and can trade it freely.
Holding stETH tokens entitles one to receive a staking incentive, even if these stETH are bought on a secondary market. Therefore, stETH is acceptable and very desirable as collateral to participate in lending protocols such as Aave.
Over the past year, Lido has expanded its staking solutions to multiple networks, such as Solana, Polygon, and Polkadot. As you can see from the chart below, Lido’s Unique Active Wallets (UAW) and transactions have been on the rise overall over the past year. It currently ranks second among all DeFi protocols with a TVL of $5.9 billion.
Curve, the Uniswap for stablecoins
In the cryptocurrency industry, highly volatile cryptocurrencies are not well-suited as a payment medium. The emergence of stablecoins aims to provide an alternative to the high volatility of popular cryptocurrencies, including bitcoin (BTC). Therefore experts expect these stablecoins to play an increasingly important role in the digital economy.
Curve is an Ethereum-based, decentralized exchange focused on stablecoins. It enables users to enjoy incredibly low slippage even when converting a large amount of stablecoins.
Curve’s platform token, CRV, primarily serves platform governance. Staking CRV gives users access to veCRV. The latter enables holders to vote on decisions such as incentive structures, fee payment methods, and long-term profitability practices for liquidity providers.
As you can see from the chart below, Curve’s popularity continued to climb in Q4 this year, with a few obvious spikes. Curve is so popular and influential, that there’s an underlying digital battle for control and supremacy, also known as The Curve Wars.
Synthetix fuels derivatives trading
Derivatives trading in cryptocurrencies has always been in high demand because it allows users to carry out more diverse investment strategies. These can yield more returns in a short period of time, especially when compared to the spot market. However, this also means that users need to take higher risks.
Synthetix is a decentralized synthetic asset protocol. It offers Synths, on-chain synthetic assets that track the prices of other assets and create a mirrored version on-chain. The Synthetix platform supports over 20 Synths representing fiat currencies, commodities (e.g. gold), and crypto assets.
Synthetic asset trading enables trading without actually holding the asset. Such advanced trading can satisfy the investment appetite of more experienced traders, and its popularity has grown significantly over the year.
Find top DeFi dapps using DappRadar
In 2022, many people worldwide still live in countries where their fiat currencies severely and consistently depreciate. In addition, a part of the population lacks access to the most basic banking services. However, DeFi has emerged to bring change to many of the problems that exist in traditional finance.
On the other hand, DeFi still has a long way to go regarding technology, service capabilities, and user experience. The DeFi industry is still at a very early stage, but as long as developers continue to innovate, DeFi will play a more critical role in people’s lives.
Meanwhile, you can always leverage DappRadar’s various tracking tools to gain data-driven insights into this vibrant industry.
And of course, you can find the top DeFi dapps and Exchanges through the DappRadar Rankings.
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