DeFi, or decentralized finance, is the fastest growing segment of Web3. From staking to market making, learn about the best DeFi coins to invest in here.
In this guide, we will review the most popular decentralized finance (DeFi) cryptocurrency coins in 2023.
🍒 tasty takeaways
Largest DeFi segments: DEXs – 31%; lending protocols – 17%
DEX coins: Uniswap (UNI), Curve (CRV), PancakeSwap (CAKE), Balancer (BAL)
Staking coins: Lido (Lido) & Rocket Pool (RPL)
Lending/borrowing Coins: Aave (AAVE), Compound (COMP), Just (JST)
Derivative Coins: GMX (GMX) & dYdX (DYDX)
|Uniswap||UNI||$4.88 billion||$4 billion||Ethereum, Arbitrum, Polygon, Optimism, Celo||DEX|
|Curve Finance||CRV||$710 million||$5.6 billion||Ethereum, Avalanche, Arbitrum, Binance Smart Chain, Fantom, Harmony, Optimism, Polygon, Aurora, Celo, Gnosis, Moonbeam, Kava||DEX|
|PancakeSwap||CAKE||$680 million||$3.5 billion||Binance (BSC), Aptos, Ethereum||DEX|
|Balancer||BAL||$309 million||$1.27 billion||Ethereum, Arbitrum, Polygon, Optimism, Gnosis||DEX|
|Lido||LIDO||$2.2 billion||$9 billion||Ethereum, Solana, Moonbeam, Moonriver, TerraClassic||Staking|
|Rocket Pool||RPL||$749 million||$1 billion||Ethereum||Staking|
|Aave||AAVE||$1.08 billion||$5 billion||Ethereum, Polygon Avalanche, Optimism, Arbitrum, Fantom, Harmony||Lending/Borrowing|
|Just||JST||$240 million||$3.28 billion||Tron||Lending/Borrowing|
|Compound||COMP||$336 million||$1.88 billion||Ethereum||Lending/Borrowing|
|GMX||GMX||$600 million||$1.1 billion||Avalanche, Arbitrum||Derivative|
|dYdX||DYDX||$375 million||$368 million||Ethereum||Derivative|
All DeFi protocols operate under open-source blockchain technology. The predominant blockchain for DeFi is Ethereum. Therefore, no DeFi portfolio would be complete without ether (ETH).
In order to determine the weighting of your DeFi token portfolio, it will be helpful to have an understanding of the various DeFi markets and their respective sizes as gauged by total value locked.
Let’s get started!
🤔 Take Note! Though commonly referred to as ‘coins’, the cryptocurrencies produced by DeFi protocols are actually tokens, ERC-20 tokens to be precise.
Top DeFi Categories: Total Value Locked
Total DeFi Value: $81 billion USD
CDP (Collateralized Debt Position): 12%
4 Best DEX Protocol Coins
DEX stands for decentralized crypto exchange. Unlike traditional exchanges, decentralized exchanges allow users to maintain custody over their private keys. This control helps crypto participants to secure their cryptocurrency.
Here are the most popular DEXs and their respective coins. Charts provided by messari.
📚 Read! TVL vs Market Cap Explained
Protocol: Uniswap (V1, V2 & V3)
Token symbol: UNI
Market cap: $4.88 billion
Total value Locked (TVL): $4 billion
Chains: Ethereum, Arbitrum, Polygon, Optimism, Celo
What is Uniswap (UNI)?
Uniswap is the largest decentralized crypto exchange (DEX) protocol in existence. This peer-to-peer crypto exchange provides liquidity to hundreds of different ERC-20 cryptocurrencies by employing automated market makers. Uniswap, launched in 2018, was the first DEX to gain widespread adoption. According to data from DefiLlama, UNI is currently the 7th largest decentralized finance (DeFi) protocol as measured by total value locked.
‘UNI’ is the native token that powers the Uniswap ecosystem.
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2. Curve Finance
Protocol: Curve Finance
Token symbol: CRV
Market cap: $710 million
Total value locked (TVL): $5.6 billion
Chains: Ethereum, Avalanche, Arbitrum, Binance Smart Chain, Fantom, Harmony, Optimism, Polygon, Aurora, Celo, Gnosis, Moonbeam, Kava
What is Curve Finance (CRV)?
Curve, launched in 2010, is the second-largest DEX protocol in 2023. Like Uniswap, Curve uses smart contracts (automated market makers) and liquidity pools to provide liquidity to hundreds of crypto pairs. Though Curve has less market share than Uniswap, this protocol is interoperable with ~12 different blockchain networks while Uniswap supports only 4.
The Curve DAO (decentralized autonomous organization) is controlled by owners of the ‘CRV’ governance token.
Protocol: PancakeSwap (AMM, AMM1 & StableSwap)
Token symbol: CAKE
Market cap: $680 million
Total value locked (TVL): $3.5 billion
Chains: Binance (BSC), Aptos, Ethereum
What is Pancake Swap (CAKE)?
PancakeSwap is the largest and most-used DEX for the Binance blockchain (BSC). Like the other DEXs on our list, PancakeSwap provides liquidity through automated market markets. In addition to BSC, PancakeSwap is compatible with Aptos and Ethereum. PancakeSwap offers its users slightly lower fees than Uniswap.
‘CAKE’ is the token native to PancakeSwap. In addition to being a governance token, CAKE is used as an incentive for liquidity providers to become market makers on the Pancake Swap DEX.
📚 Read: Top DEXs for 2023
Protocol: Balancer (V1 & V2)
Token symbol: BAL
Market cap: $309 million
Total value locked (TVL): $1.27 billion
Chains: Ethereum, Arbitrum, Polygon, Optimism, Gnosis
What is Balancer (BAL)?
Balancer is a DEX that offers investors access to non-standardized liquidity pools. Most DEXs contain only 2 cryptos in their liquidity pools; Balancer allows up to eight cryptocurrency tokens in their pools. With this exception, Balancer is almost identical to Uniswap.
Balancer (BAL) is the ERC-20 token that runs the Balancer ecosystem.
📚 Read! 5 DeFi Arbitrage Strategies
2 Best Staking Protocol Coins
Crypto-staking protocols allow crypto participants a decentralized solution to staking crypto. With the SEC beginning to crack down on centralized crypto staking activities in 2023, decentralized staking protocols have been exploding in popularity. Their respective tokens, too, have been rising in value. Here are a few more popular crypto-staking protocols to invest in for 2023.
1. Lido (LIDO)
Protocol: Lido (V1, V2, V3 & Arc)
Token symbol: LIDO
Market cap: $2.2 billion
Total value locked (TVL): $9 billion
Chains: Ethereum, Solana, Moonbeam, Moonriver, TerraClassic
What is Lido?
In addition to being the most popular crypto-staking dApp (decentralized application), the Lido protocol is one of the most popular protocols in existence. Its impressive TVL of $9.19 billion puts it way ahead of its staking competitors. Lido allows any investor to stake crypto by investing in staking ‘pools’. The staking pools of Lido are ‘liquid’, which implies investors can unstake their coins at any time.
The ‘LIDO’ governance token allows investors to participate in the protocol’s governance, voting on such issues as staking rewards.
2. Rocket Pool (RPL)
Protocol: Rocket Pool
Token symbol: RPL
Market cap: $749 million
Total value locked (TVL): $1 billion
Rocket Pool Performance
What is Rocket Pool?
Rocket Pool is the second-largest staking protocol. Currently, the only coin you can stake with Rocket Pool is ether (ETH). While Lido has a small permission set of nodes (those who actually do the validating), Rocket Pool allows anyone to be a node. This helps to spread out node risk. However, Rocket Pool does currently pay less APR on staking ETH when compared to Lido.
‘RPL’ is an ERC-20 utility token issued by Rocket Pool that allows its owners to vote on changes to the protocol.
3 Best Lending/Borrowing Protocol Coins
Borrowing and lending dApps are blockchain-based protocols that allow users to both borrow and lend crypto at APRs far superior to traditional financial services. To assure that loans don’t go underwater, over-collateralization ratios are employed in these networks.
1. Aave (AAVE)
Protocol: Aave (V1. V2, V3 & Arc)
Token symbol: AAVE
Market cap: $1.08 billion
Total value locked (TVL): $5 billion
Chains: Ethereum, Polygon Avalanche, Optimism, Arbitrum, Fantom, Harmony
What is Aave?
Aave is the fourth largest DeFi protocol in the world. It is also the largest dApp in the lending/borrowing space. Any crypto participant can earn interest by depositing cryptocurrencies into Aave liquidity pools. Borrowers can tap into these same pools to borrow cryptocurrency at very generous rates.
‘AAVE’ is the cryptocurrency native to the Aave network. This ERC-20 token permits its owners to vote on changes to the network.
2. Just (JST)
Protocol: JustLend. JustStables
Token symbol: JST
Market cap: $240 million
Total value locked (TVL): $3.28 billion
What is Just?
Just is the go-to lending and borrowing protocol for the Tron blockchain network. Just is considered a two-token protocol – its ecosystem is built around JST and USDJ (JustStable), the latter of which is a US dollar-pegged stablecoin.
The ‘JST’ token has many uses, some of which include voting on protocol changes and the payment of interest.
3. Compound (COMP)
Protocol: Compound (V3)
Token symbol: COMP
Market cap: $336 million
Total value locked (TVL): $1.88 billion
What is Compound?
Compound is an Ethereum borrowing/lending platform much like Aave. However, unlike Aave, Compund has not yet expanded to other Layer 1s and Layer 2s.
Compound does, however, offer tons of liquidity for its small niche and is always on the radar for yield farming.
‘COMP’ acts as both Compound’s utility and governance token.
2 Best Derivative Protocol Coins
Derivatives refer to financial instruments that derive their value from a different underlying asset. In crypto assets, derivate protocols represent decentralized versions of popular futures and options products that exist in traditional finance.
📚 Read: What Are DeFi Options?
1. GMX (GMX)
Token symbol: GMX
Market cap: $600 million
Total value locked (TVL): $1.1 billion
Chains: Avalanche, Arbitrum
What is GMX?
GMX is one of the few protocols to come out of 2022 profitable. This DeFi protocol, offered only on the Avalanche and Arbitrum blockchains, is a decentralized spot and perpetual exchange. It is also the largest derivative protocol in existence. When you connect your self-custody wallet to GMX, you can speculate on the price of BTC, ETH, and AVAX with leverages of up to 50x.
‘GMX’ acts as both the utility and governance token for the GMX protocol.
📚 Read: 6 Ways to Leverage Your Crypto
2. dYdX (DYDX)
Token symbol: DYDX
Market cap: $375 million
Total value locked (TVL): $368 million
What is dYdX?
dYdX is an Ethereum-based derivatives protocol that offers margin trading on popular products such as BTC and ETH. Leverage on dYdX is maxed out at 25x.
‘DYDX’ is this protocol’s governance token. DYDX is also a utility token as it is used to pay fees and staking rewards.
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Best DeFi Coins FAQs
The most significant DeFi coins in 2023 are Lido (LIDO), MakerDAO (MKR), and Curve (CRV).
A good DeFi coin will have both high liquidity and an engaged community. Since most DeFi projects run on the Ethereum blockchain, buying ether (ETH) may be a good investment for DeFi newbies. Other popular DeFi coins with high liquidity and an engaged community include Compound (COMP), Maker (MKR), and Chainlink (LINK).
Cardano is a blockchain network, like Ethereum or Bitcoin, and not a DeFi project
The safest DeFi is the DeFi token with the lowest volatility. Ether (ETH) is the blockchain that supports most DeFi projects. Indirectly, buying ETH may be the safest DeFi investment.