Decentralized finance (DeFi) has been one of the most exciting and innovative sectors in the crypto space in the past few years. DeFi protocols aim to provide various financial services such as lending, borrowing, trading, investing, and more, without relying on intermediaries or centralized authorities.
By leveraging smart contracts, blockchain technology, and decentralized governance, DeFi protocols offer users more control, transparency, efficiency, and access to financial opportunities.
We will look at the top 5 DeFi protocols by revenue in 2023, based on the data from defipulse.com. Revenue is defined as the total fees generated by the protocol from its users, excluding any subsidies or incentives. Revenue is a good indicator of the value proposition, adoption, and sustainability of a DeFi protocol.
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Here are the top 5 DeFi protocols by revenue in 2023:
Uniswap: $1.2 billion
Uniswap is the leading decentralized exchange (DEX) on Ethereum, allowing users to swap any ERC-20 tokens without intermediaries or order books. Uniswap also enables users to provide liquidity to various pools and earn fees from each trade.
Uniswap has been the most popular and widely used DeFi protocol since its launch in 2018 and has maintained its dominance in 2023 with a 32% market share of the DEX sector. Uniswap’s revenue comes from a 0.3% fee that is charged on every swap and distributed to the liquidity providers.
Aave: $800 million
Aave is a decentralized lending and borrowing platform that supports a variety of assets, including stablecoins, cryptocurrencies, and interest-bearing tokens. Aave allows users to borrow funds at variable or fixed interest rates, as well as to lend their idle assets and earn passive income.
Aave also offers innovative features such as flash loans, credit delegation, and liquidity mining. Aave’s revenue comes from a 0.25% origination fee that is charged on every loan and a 0.09% flash loan fee.
Compound: $600 million
Compound is another decentralized lending and borrowing platform that operates on Ethereum. Compound differs from Aave in that it uses a compound interest rate model that adjusts the supply and demand of each asset in real time.
Compound also issues its own governance token, COMP, which allows holders to propose and vote on protocol changes. Compound’s revenue comes from a 0.05% origination fee that is charged on every loan.
Maker: $400 million
Maker is a decentralized credit platform that enables users to generate Dai, a stablecoin pegged to the US dollar, by locking up collateral such as ETH, WBTC, or other tokens. Dai can then be used for various purposes such as trading, lending, or paying for goods and services.
Maker also maintains the stability of Dai through a system of collateralized debt positions (CDPs), interest rates (stability fees), and automated feedback mechanisms (liquidations and auctions). Maker’s revenue comes from the stability fees that are paid by CDP users when they repay their Dai.
Curve: $300 million
Curve is a specialized DEX that focuses on stablecoins and low-volatility assets. Curve offers low slippage, high liquidity, and low fees for swapping between similar assets, such as USDC, USDT, DAI, sUSD, etc.
Curve also allows users to provide liquidity to various pools and earn fees and rewards from both the protocol and third-party platforms such as Yearn, Synthetix, or SushiSwap. Curve’s revenue comes from a 0.04% fee that is charged on every swap and distributed to the liquidity providers.
Stablecoins set to outshine Visa in settlements by 2024 With a $137B market surge
Stablecoins are digital currencies that are pegged to a fiat currency or a basket of assets. They aim to provide the benefits of cryptocurrencies, such as fast and cheap transactions, without the volatility and risk of price fluctuations. Stablecoins have been gaining popularity and adoption in recent years, especially as a means of cross-border payments and remittances.
One of the main advantages of stablecoins is that they can offer faster and cheaper settlements than traditional payment systems, such as Visa. Visa is one of the largest payment networks in the world, processing over $11 trillion worth of transactions in 2020.
However, Visa also charges fees for each transaction, which can vary depending on the region, currency, and type of card. Moreover, Visa transactions can take up to three days to clear and settle, depending on the intermediary banks involved.
Stablecoins, on the other hand, can settle transactions in minutes or even seconds, using blockchain technology and smart contracts. They also have lower fees than Visa, as they do not rely on intermediaries or third parties.
According to a recent report by Juniper Research, stablecoins are expected to surpass Visa in terms of the value of settlements by 2024, reaching $1.7 trillion, compared to Visa’s $1.5 trillion. This would represent a massive increase from the current value of stablecoin settlements, which is estimated at $540 billion in 2020.
The report also predicts that the market capitalization of stablecoins will grow from $35 billion in 2020 to $172 billion in 2024, driven by the increasing demand for digital payments and the growing adoption of stablecoins by various sectors and regions. Some of the factors that could boost the growth of stablecoins include:
The emergence of central bank digital currencies (CBDCs), which are digital versions of national currencies issued by central banks. CBDCs could increase the trust and legitimacy of stablecoins, as well as provide interoperability and compatibility between different platforms and systems.
The development of decentralized finance (DeFi), which is a movement that aims to create financial services and products that are accessible, transparent, and permissionless, using blockchain technology and smart contracts. DeFi could offer new use cases and opportunities for stablecoins, such as lending, borrowing, trading, investing, and saving.
The expansion of stablecoin offerings and innovations, which could cater to different needs and preferences of users and customers. For example, some stablecoins could offer more stability and security, while others could offer more flexibility and scalability. Some stablecoins could also incorporate features such as governance, rewards, or privacy.
Stablecoins are set to outshine Visa in settlements by 2024 with a $137 billion market surge in four years. This could have significant implications for the future of payments and finance, as well as for the adoption and innovation of cryptocurrencies and blockchain technology.