Decentralized finance, commonly referred to as DeFi, represents a revolutionary financial ecosystem built on blockchain technology. This innovative system enables secure, peer-to-peer transactions and a wide range of services such as lending and trading, all without the need for traditional centralized intermediaries like banks or brokers.
In this article, we will delve into the 11 most promising DeFi projects to keep an eye on in 2024. Our exploration will span various categories within the DeFi landscape, including decentralized exchanges (DEXs), staking protocols, lending protocols, and derivative protocols. Among the top DeFi projects to watch in 2024 are well-known names like LIDO, UNI, BAL, AAVE, MKR, and COMP.
DeFi has burgeoned into a thriving $50 billion market, encompassing thousands of diverse applications and opportunities. Within this expansive domain, some of the most popular use cases include liquid staking, decentralized exchanges, and lending platforms.
Prominent DeFi projects in the current landscape include Lido, Aave, Uniswap, Maker, Curve, Balancer, and Yearn Finance. As the DeFi space continues to evolve, these projects are poised to play pivotal roles in shaping the financial landscape of 2024 and beyond.
In the broader context of exploring the top 11 DeFi cryptocurrency projects to watch in 2024, it’s also essential to examine specific cryptocurrencies like XLM and XRP and understand how they fit into the evolving DeFi landscape.
| Name | Symbol | Category | Market Cap | Total Value Locked (TVL) |
|---|---|---|---|---|
| Uniswap | UNI | DEX | $4.82 billion | $3.74 billion |
| Curve | CRV | DEX | $704 million | $2.48 billion |
| Balancer | BAL | DEX | $238 million | $853 million |
| Aave | AAVE | Borrowing/Lending | $1.72 billion | $6 billion+ |
| MakerDAO | MKR | Borrowing/Lending | $1.43 billion | $5.48 billion |
| Compound | COMP | Borrowing/Lending | $498 million | $2.24 billion |
| Lido | LIDO | Staking | $2.60 billion | $19.3 billion |
| Synthetix | SNX | Derivatives | $1.23 million | $648 million |
| Stargate | STG | Cross-Chain | $131 billion | $350 million |
| Convex Finance | CVX | Yield | $342 billion | $1.88 billion |
| Yearn Finance | YFI | Yield | $281 million | $338 million |
Understanding Decentralized Finance (DeFi)
Decentralized Finance, or DeFi, is a financial ecosystem built on blockchain technology. Some major financial institutions, like Bank of America and ING, consider it to be even more disruptive than Bitcoin.
DeFi projects are created on decentralized networks that have smart contract functionality. They provide community-focused financial services that facilitate peer-to-peer transactions. In DeFi, smart contracts handle operations independently, eliminating the need for intermediaries.
Decentralized applications (dApps) in the DeFi space aim to make finance more accessible, enhance financial privacy and freedom, and bypass censorship. Many dApps also issue their own cryptocurrencies.
Currently, the DeFi market is valued at over $50 billion, with the Ethereum blockchain being the most commonly used infrastructure in this space. As DeFi continues to evolve, it is set to have a significant impact on the financial industry.
Exploring the Possibilities in DeFi
The world of Decentralized Finance (DeFi) is on a mission to revolutionize traditional financial services, aiming to migrate them onto trustless systems ideally governed by community-driven Decentralized Autonomous Organizations (DAOs). Picture activities such as trading, lending, and asset management all being conducted within this innovative space. DeFi goes beyond what traditional finance can offer, introducing unique services like staking and cross-chain protocols.
Here’s a glimpse of what you can accomplish in the realm of DeFi:
- Trade Tokens: Engage in the buying and selling of tokens on decentralized exchanges (DEXs). These platforms provide not only a marketplace for regular tokens but also cater to the burgeoning world of non-fungible tokens (NFTs);
- Lend and Borrow: Take advantage of lending platforms like Compound and Aave, where you can borrow or lend digital assets with ease;
- Yield Farming: Generate passive income through yield farming strategies. By providing liquidity on DEXs, lending protocols, and other DeFi services, you can earn rewards over time;
- Governance Participation: Hold governance tokens and actively participate in decision-making processes by voting on proposals that shape the DeFi ecosystem;
- Stake Your Crypto: Explore the world of liquid staking, allowing you to utilize your collateral on various decentralized applications (dApps) and maximize your crypto holdings.
In addition to these core DeFi activities, some platforms extend their offerings to include services such as insurance, betting, gambling, and more. As DeFi continues to evolve, its versatility and potential applications are bound to expand even further, reshaping the financial landscape in the process.
Top Decentralized Exchanges (DEXs) for Crypto Trading
Decentralized Exchanges (DEXs) are blockchain-based trading platforms that facilitate seamless token swaps by connecting directly to your self-custody wallet. Unlike centralized exchanges like Binance, DEXs don’t rely on order books; instead, they operate as Automated Market Makers (AMMs), hosting liquidity pools for trading.
Here’s a look at some of the best DEXs available today:
Uniswap (UNI)
- Token: UNI;
- Category: DEX;
- Market cap: $4.45 billion;
- Total Value Locked (TVL): $3.74 billion.
Uniswap stands as the largest DEX by trading volume and TVL, boasting a staggering $3.7 billion worth of cryptocurrencies locked in its pools. It offers pairs of two tokens, such as USDC/ETH, with many pools incorporating stablecoins to mitigate impermanent loss risks.
Liquidity providers (LPs) deposit assets into these pools and earn rewards from trading fees paid by traders. Uniswap originally launched on Ethereum in 2018 but is now accessible on ten other blockchain networks, including Polygon, Arbitrum, Avalanche, and BNB Chain.
Curve (CRV)
- Token: CRV;
- Category: DEX;
- Market cap: $537 million;
- TVL: $2.48 billion.
Curve specializes in stablecoins, including tokens pegged to traditional assets like fiat currencies. It has also expanded its support to Wrapped Bitcoin (WBTC) and Wrapped Ethereum (WETH). Curve hosts pools with two, three, or four crypto assets.
While Curve was once the leader in TVL, a recent $70 million hack led to a significant outflow.
Balancer (BAL)
- Token: BAL;
- Category: DEX;
- Market cap: $164 million;
- TVL: $853 million.
Balancer, one of the pioneering DeFi platforms, distinguishes itself by acting as an index fund. It manages pools composed of multiple tokens, sometimes as many as eight. These pools automatically adjust asset allocations to maintain desired balances in response to price fluctuations.
Operating on Ethereum and six other chains, Balancer offers various pool types, including public, private, and smart pools, catering to different preferences and risk tolerance levels.
These DEXs exemplify the innovative and dynamic nature of the DeFi space, providing users with alternatives to traditional centralized exchanges while facilitating efficient and decentralized trading experiences.
Aave (AAVE)
Aave (AAVE) stands as a formidable contender to Maker as the largest lending platform in terms of Total Value Locked (TVL). Currently, it boasts an impressive $6 billion worth of cryptocurrencies held as collateral.
The latest iteration, V3, extends its reach to 10 different blockchain networks, including Ethereum. This allows users to participate in lending and borrowing activities involving a diverse range of tokens.
MakerDAO (MKR)
- Token: MKR;
- Category: Borrowing/Lending;
- Market cap: $1.37 billion;
- TVL: $5.48 billion.
Maker (MKR) operates as a comprehensive ecosystem, encompassing a lending platform, the creation of a decentralized USD-backed stablecoin known as DAI, and a decentralized autonomous organization (DAO) governing the network.
Operating on the Ethereum blockchain, this platform enables users to deposit various crypto assets as collateral to secure loans in DAI.
Compound (COMP)
- Token: COMP;
- Category: Borrowing/Lending;
- Market cap: $360 million;
- TVL: $2.24 billion.
Compound (COMP) functions as a lending platform, facilitating lending and borrowing activities for a wide array of crypto tokens. It played a pivotal role in igniting the DeFi frenzy in 2020 with the launch of its governance token, COMP. Following its introduction, the TVL in the DeFi space skyrocketed from $1 billion to over $10 billion in less than three months.
Top DeFi Platforms for Staking and Derivatives
The emergence of liquid staking protocols gained prominence following Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS). Under PoS, block validators are required to deposit 32 Ether, locking it throughout the staking process.
Liquid staking platforms have taken on the role of Ethereum block validators, pooling user deposits without imposing any minimum thresholds. Additionally, they introduce liquid staking tokens (LSTs) in exchange for the staked ETH, allowing users to harness the value of their ETH while exploring yield farming opportunities during the staking process.
Lido (LIDO)
- Token: LIDO;
- Category: Staking;
- Market cap: $2.23 billion;
- Total Value Locked (TVL): $19.3 billion.
Lido reigns supreme as the largest liquid staking platform, boasting a staggering $19 billion worth of ETH locked within its ecosystem. It also holds the distinction of being the largest DeFi project, commanding a significant one-third share of the entire sector. Lido stands as the preferred choice for those seeking to stake Ethereum.
Best Derivative Trading Platform
DeFi derivative trading platforms empower users to trade tokenized derivatives that represent not only traditional assets like fiat currencies, commodities, or bonds but also various cryptocurrencies. Some platforms, like dYdX, offer perpetual futures, while others, such as Synthetix, facilitate trading in tokenized versions of a diverse array of assets. Among these platforms, Lyra emerges as the premier DeFi derivative protocol for options trading.
Synthetix (SNX)
- Token: SNX;
- Category: Derivatives;
- Market cap: $1.08 billion;
- TVL: $648 million.
Synthetix (SNX) operates as a trading platform across both the Ethereum and Optimism networks. It enables users to create and trade synthetic assets (synths), which replicate the price movements of real-world and digital assets. By utilizing the native SNX token as collateral, users can generate synths like sBTC (synthetic Bitcoin) and sUSD (synthetic USD), tracking the prices of Bitcoin and the US dollar, respectively.
These liquid staking and derivative trading platforms exemplify the innovative capabilities of the DeFi sector, providing users with opportunities to maximize their assets while participating in decentralized finance activities.
Top Cross-Chain Protocol
Cross-chain protocols play a pivotal role in enhancing blockchain interoperability, effectively bridging the gap between different chains and reducing fragmentation in the crypto market.
Stargate (STG)
- Token: STG;
- Category: Cross-Chain;
- Market cap: $110 million;
- Total Value Locked (TVL): $350 million.
Stargate Finance (STG) emerges as a cross-chain liquidity protocol, functioning as a bridge for users and dApps to seamlessly transfer tokens across various blockchain networks. It facilitates the movement of native assets among 13 different chains, including Ethereum.
Best Yield Protocols
While decentralized exchanges (DEXs) and lending protocols provide opportunities for passive income, yield farming projects specialize in identifying the most lucrative DeFi opportunities.
Convex Finance (CVX)
- Token: CVX;
- Category: Yield;
- Market cap: $300 million;
- TVL: $1.88 billion.
Convex Finance (CVX) stands as a DeFi protocol that offers enhanced rewards to Curve LPs. It leverages pooled control of voting power and incentivizes CRV stakers and LPs to maximize their profits.
Yearn Finance (YFI)
- Token: YFI;
- Category: Yield;
- Market cap: $281 million;
- TVL: $338 million.
Yearn Finance (YFI) operates as a yield aggregator, diligently scanning the DeFi landscape for passive income opportunities across platforms like Curve, Aave, Maker, and Compound.
Users can deposit their cryptocurrency and seek out the most favorable interest rates, with rewards distributed in the form of the native token, YFI, which also functions as a governance token.
These platforms exemplify the dynamic nature of DeFi, offering solutions that bridge blockchain ecosystems, while also presenting opportunities for users to maximize their earnings through yield farming and liquidity provision.
Conclusion
Decentralized finance is at the forefront of financial innovation. As we witness a shift towards democratization and decentralization in the financial industry, DeFi projects are gaining traction. This guide delves into the most promising DeFi projects of 2024 and the vast potential they hold, demonstrating the future possibilities within the DeFi space.
As we delve deep into the world of decentralized finance, the potential and scope of DeFi projects is undeniably immense. By eliminating intermediaries and promoting peer-to-peer interactions, these projects are democratizing the financial landscape and fostering a promising future. Understanding them is the key to unlocking limitless opportunities in the emerging DeFi marketplace. As we witness this financial revolution, being aware and taking part can lead us all towards a more innovative and inclusive financial future.