to make a financial commitment

Discover the most highly-rated defi tokens with excellent liquidity and thriving communities.

Disclaimer: This article does not provide investment advice. The content and materials presented on this page are for educational purposes only.

The defi ecosystem is a rapidly expanding market that offers investors the opportunity to have more control over their assets without relying on third-party intermediaries.

In November 2021, the total value locked (TVL) in the defi market reached an impressive $179 billion. However, due to the collapse of several prominent crypto companies in 2022, the TVL dropped to a low of $35 billion in October 2023, according to DefiLlama.

Fortunately, the recent market-wide rally has revitalized defi projects. According to DefiLlama, the total defi TVL has been steadily increasing since mid-October 2023 and currently stands at $52 billion.

This guide explores the top-performing defi crypto assets with high liquidity and vibrant communities. Before making any decisions about which defi tokens to invest in, it is important to conduct thorough research and consider the associated risks.

Ethereum: the foundation

While many believe that the defi ecosystem originated with the creation of Bitcoin (BTC) in 2009, it was the Ethereum (ETH) blockchain that provided a robust infrastructure for defi to thrive.

According to data from DefiLlama, Ethereum currently dominates more than 50% of the defi TVL, with a value of over $29 billion. It is important to note that the TVL does not include layer-2 networks built on the Ethereum blockchain.

Although Ethereum itself is not a defi protocol, it deserves the top spot on this list because its underlying infrastructure has facilitated the smooth operation of many defi platforms and decentralized applications (dapps), attracting millions of users.

Furthermore, Ethereum’s development has enabled the execution of defi apps through its smart contracts.

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Liquid staking protocols

Lido Finance: revolutionizing liquid staking

Lido Finance emerged as the first mainstream liquid staking protocol in December 2020 and has become a pioneer in the staking category.

Lido allows users to stake Ethereum and supported assets while maintaining liquidity. This flexibility enables users to earn staking rewards without locking up their assets, which can be particularly beneficial during periods of market volatility. With a TVL of over $22.5 billion, Lido is currently the largest defi protocol in the web3 scene.

Holders of Lido’s native token, LDO, have the opportunity to participate in governance decisions and benefit from the overall growth of the platform. As the popularity of liquid staking continues to rise, LDO has the potential to become a valuable asset.

Rocket Pool: decentralized staking

Rocket Pool aims to simplify the staking process for Ethereum by adopting a decentralized approach. Through resource pooling, Rocket Pool allows individuals to stake with as little as 0.01 ETH, making staking accessible to a wider audience.

The protocol’s commitment to decentralization and community ownership, in line with Ethereum’s principles, is evident in its TVL milestones. Currently, the defi protocol boasts a TVL of $2.9 billion, a significant increase from the $604 million recorded in December 2022.

Following Coinbase’s investment in the token in August 2023, Rocket Pool’s native token, RPL, has gained attention. RPL holders have a stake in the protocol’s governance decisions. As the protocol gains popularity and trust, the demand for the RPL token could potentially increase.

Decentralized exchanges (DEX)

Uniswap: revolutionizing token swaps

Uniswap is an automated market maker (AMM) that aims to democratize liquidity provision, allowing anyone to become a liquidity provider and earn trading fees.

With a TVL of over $3.8 billion, Uniswap plays a crucial role in the defi ecosystem by facilitating seamless token swaps with minimal slippage and fees. The protocol is governed by UNI token holders, ensuring active participation in decision-making and shaping the future of the rapidly growing DEX.

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Balancer: empowering customizable liquidity pools

Balancer is a multi-token automated market maker that empowers users to create or add liquidity to customizable pools and earn trading fees. Known for its flexibility, Balancer allows liquidity providers to create pools with up to eight tokens and set custom weights.

With a TVL of over $993 million, Balancer is among the top 20 defi protocols in terms of total value locked. As a result, the decentralized protocol plays a significant role in the defi ecosystem.

Balancer’s native token, BAL, is essential for governance and liquidity incentives, enabling crucial decision-making similar to other protocols. The combination of liquidity provision and governance participation positions BAL as a token to watch in 2024.

GMX: spot and perpetual DEX

GMX has quickly gained recognition as a decentralized spot and perpetual exchange on the Arbitrum network. With low swap fees and zero price impact trades, GMX has seen rapid growth and increasing interest from the defi community, as evidenced by its TVL of over $600 million.

The GMX token has already demonstrated its potential for significant price surges this year, reaching an all-time high (ATH) of $97 in April. Despite a 45% decrease from this value, the token shows promise due to the expansion of the GMX protocol.

Curve Finance: efficiency in stablecoin trading

Curve Finance specializes in facilitating stablecoin trading in the defi space. As a DEX focused on stablecoins, Curve uses an AMM to minimize slippage and enable seamless trading between stable assets. The platform also promises additional fee income for liquidity provision.

Curve Finance operates on multiple chains, including Ethereum, Arbitrum, Polygon, and Avalanche. Despite a reentrancy exploit that resulted in a loss of $47 million in July 2023, the protocol continues to maintain its influence in the defi market.

Lending protocols

AAVE: pioneering defi lending

AAVE operates as a decentralized money market protocol, allowing users to lend, borrow, and earn interest on cryptocurrencies.

The integration of features such as flash loans and collateral swaps has attracted investors to AAVE, solidifying its position as one of the largest defi lending platforms.

The protocol’s expansion to multiple chains, including Polygon and Avalanche, demonstrates its commitment to providing faster and more cost-effective solutions. The AAVE token serves as a catalyst for advancements, with an impressive 55% growth over the past year.

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Compound Finance: accessible lending and borrowing

Compound Finance distinguishes itself by offering features such as cToken for multiple asset support, absence of credit checks, and dynamic interest rates. Users can supply assets to the protocol’s liquidity pool and earn interest or borrow against their supplied collateral.

Compound has experienced one of the largest increases in TVL, securing a spot in the top 10 defi protocols. The COMP token, representing a stake in governance, aligns the interests of all participants, contributing to a truly decentralized financial system.

Governance protocols

MakerDAO: the backbone of DAI stablecoin

MakerDAO, one of the largest protocols in the defi space, serves as the backbone of the DAI stablecoin. Pegged to the US dollar and backed by surplus collateral, DAI aims to provide a stable and reliable form of cryptocurrency.

MakerDAO’s system allows users to open Collateralized Debt Positions (CDPs), lock in collateral, and generate DAI.

The governance model involving MKR token holders ensures decentralization. In 2024, MKR stands out as one of the top defi tokens to watch, given its role in the MakerDAO ecosystem, maintaining DAI’s stability by collecting fees from Collateralized Debt Positions after DAI minting.

What is a defi coin?

A defi coin refers to a cryptocurrency that is associated with decentralized apps and platforms. These include decentralized exchanges, lending platforms, staking protocols, real-world assets, yield platforms, and dapps.

Is investing in defi a good idea?

Every investment carries its own set of risks. The defi coins mentioned above have high potential, excellent liquidity, and promising utilities. However, it is crucial to conduct extensive research and exercise caution before investing in defi coins.

Where can you buy defi cryptocurrencies?

You can purchase defi cryptocurrencies on various centralized and decentralized exchanges. Some of the leading centralized crypto exchanges that support defi coins include Binance, Coinbase, KuCoin, Kraken, OKX, and Bybit.

What does the future hold for defi?

Experts believe that the future looks bright for defi, as different countries are exploring its potential. The global defi market is expected to reach a value of $232 billion by 2030. However, it is important to remember that the crypto market is highly volatile. It is crucial to learn how to invest in defi wisely, as it involves risks despite its potential for growth.

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