The DeFi sector has forever changed the cryptocurrency industry as the best DeFi projects have encouraged investors to move their funds around the market.
Not only do hodlers manage to keep their funds intact, but through the power of yield farming, collateralized tokens, and decentralized exchanges, they manage to use top DeFi projects to drive the whole crypto market to new limits.
What Is DeFi?
DeFi, short for Decentralized Finance, refers to a crypto sector that works to bring most of the traditional finance’s capabilities inside the cryptocurrency space. It does that by disassembling the various financial services and decentralizing them.
Specifically, this sector brings the power of smart contracts to currency services such as lending, borrowing, earning interest, and trading assets. That’s why it is often stated that DeFi works like traditional banking to some extent.
DeFi projects usually denominate dapps and infrastructures such as asset management tools, decentralized exchanges (DEX), DeFi infrastructure & Dev Tooling, and many others.
Although they are risky to invest in and use, the more time passes, the more they optimize and come out with better tokenomics and more secure infrastructures.
15 Best DeFi Crypto Projects
1. DAI (DAI)
DAI is an Ethereum-based stablecoin launched and governed through the Maker Platform and MakerDAO.
The main difference between DAI and the other popular stablecoins is that DAI is fully decentralized and is integrated by hundreds of dapps and DeFi projects.
While most decentralized coins did not perform well, DAI has grown in popularity and use by keeping a steady price close to 1 USD. Also, the Decentralized Autonomous Organization is keeping the stablecoin overcollateralized to ensure the pegging remains stable.
The minting process is not managed by a centralized organization, as anyone storing a collateral can mint DAI tokens.
Supply
- Max Supply: no max supply
- Total Supply: 6,716,433,685 DAI
- Circulating Supply: 6,716,433,685 DAI
Market Cap
The DAI token has a market cap of around $6.7 billion (at the time of writing).
Allocation & Distribution
DAI tokens are minted by users that store in the collateral. That causes the supply and allocation to be dynamic.
Vesting & Inflation
The DAI token doesn’t have any type of scheduled vesting or inflation. The price is always close to 1 USD, and they are minted and burned as the market evolves.
Utility
The DAI token’s use cases are:
- Interact with Ethereum dapps and DeFi projects
- Providing liquidity to various protocol
- Collateral in DeFi ecosystems
2. CHAINLINK (LINK)
Many dapps in the crypto space need oracles to interact with different kinds of data. And the current leader in oracles is Chainlink.
Chainlink offers a decentralized data set through a series of oracles and smart contracts, providing a middle ground between real-world data and blockchain applications.
Since 2019, Chainlink grew exponentially, providing over 75 price feeds to 300 smart contracts and decentralized applications.
It’s important to notice that Chainlink as a project was developed and evolved to the point that it’s giving grants to crypto initiatives deemed useful to the ecosystem.
In the DeFi space, Chainlink makes a significant impact by facilitating other projects with oracles to ensure their functionality.
A few examples of notable projects using Chainlink oracles are Synthetic, AAVE, KyberSwap.
Supply
- Max Supply: 1,000,000,000 LINK
- Total Supply: 1,000,000,000 LINK
- Circulating Supply: 491,599,970.45 LINK
Market Cap
The LINK token has a market cap of around $3.5billion (at the time of writing).
Allocation & Distribution
LINK tokens are preminted. Therefore, the Max Supply is the same as the total supply.
According to Coinmarketcap, the total supply of LINK is distributed as follows:
- 35% locked in smart contracts
- 41% In circulation
- 24% allocated to node operators
Vesting & Inflation
It appears there is no vesting or lock-up schedule for LINK.
Yet by checking the historical data on CoinMarketCap with WayBackMachine, it seems that Chainlink increases the circulating supply by 4-5% every year.
Utility
The LINK token has quite a few use cases, such as:
- In smart contracts
- Fees network
- Staking
3. AVALANCHE (AVAX)
Avalanche is an interoperable smart contracts platform for launching decentralized finance applications, financial assets, and other services. The platform supports the Ethereum virtual machine as well as application-specific sharding, network-level programmability, and NFTs.
Avalanche uses a proof-of-stake consensus protocol to offer a network where decentralized assets are traded and launched by users with sub-second transaction confirmations.
Supply
- Max Supply: 720,000,000 AVAX
- Total Supply: 404,229,626 AVAX
- Circulating Supply: 296,335,186.36 AVAX
Market Cap
The AVAX token has a market cap of around $4.7 billion (at the time of writing).
Allocation & Distribution
The 720M token supply is distributed as follows:
- 50% Staking rewards
- 9.26% Foundation
- 10% Public sale
- 3.46% Private Sale
- 2.5% Seed Sale
- 7% Community & Developer Endowment
- 5% Strategic Partners
- 10% Team
- 2.5% Airdrop
- 0.28% Testnet Incentive Program
Vesting & Inflation
Initially, AVAX had a vesting period of 1 year for the Seed Sale and Private Sale and Public Sale tokens. But nowadays, the tokens are being released at a yearly minting rate of 7-12% as staking rewards.
And to balance the supply coming into the market, AVAX employs a burning mechanism that takes out the fees paid on the network.
Utility
The AVAX token’s use cases are:
- Incentive for securing the network
- Paying Fees
- Staking
- Base unit of account between multiple blockchains deployed on Avalanche
4. UNISWAP (UNI)
Uniswap is mainly known as the current leader in the cryptocurrency DEX space. It is a decentralized exchange built on the Ethereum network, founded in 2017 by Hayden Adams.
The trading protocol was built to be an on-chain automated market maker (AMM) that can determine the price of a cryptocurrency based on the ratio of two cryptocurrencies within a pool.
Uniswap allows for the exchange and trade of various DeFi tokens, as well as Liquidity Provider tokens. And even if you don’t find an ERC20 token in the list, you can still create a pair and swap it for another crypto if you find the smart contract’s address.
And besides swapping, users can also provide liquidity in existing pools or create new pools to provide for.
Supply
- Max Supply: 1,000,000,000 UNI
- Total Supply: 100,000,000 UNI
- Circulating Supply: 762,209,326 UNI
Market Cap
The UNI token has a market cap of around $4.6 billion (at the time of writing).
Allocation & Distribution
The UNI tokens had been preminted at genesis as ERC20 tokens. And according to Uniswap, the token is allocated as follows:
- 60% to the Uniswap community
- 21.266% to team members and future employees
- 18.044% to investors
- 0.69% to advisors
Vesting & Inflation
Until 2024, UNI has a vesting period of 4 years for the 40% allocated to the team, employees, investors, and advisors. After that, UNI will function with a perpetual inflation rate of 2%.
Utility
The UNI token’s use cases are:
- On-chain governance;
- Staking in pools;
- Reward for staking in pools.
5. SYNTHETIX (SNX)
Synthetix is one of the most hyped and fast-growing DeFis out there. It is a decentralized asset insurance protocol built on Ethereum.
Synthetix allows users to mint synthetic representations of real-world assets as tokens that peg the value of the asset they are based on.
The synthetic assets maintain their peg through the principle of no-arbitrage (that allows stakers to burn additional synths) and the open market liquidity for synths on other decentralized exchanges.
Supply
- Max Supply: 291,657,310 SNX
- Total Supply: 297,650,364 SNX
- Circulating Supply: 238,500,594.39 SNX
Market Cap
The SNX token has a market cap of around $495 million (at the time of writing).
Allocation & Distribution
The SNX tokens are preminted, and according to Binance Research, the total supply of SNX will be distributed as follows:
- 0.87% Pre-Sale
- 19.20% Private Sale
- 3.05% Public Sale
- 18.49% Team
- 0.77% Advisors
- 4.62% Foundation
- 1.93% Partnership Incentives
- 1.16% Bounties/Airdrops
- 49.92% Staking
Vesting & Inflation
The Synthetix token’s inflationary money supply schedule was introduced in March 2019 and showed a weekly 1.25 inflation rate decrease:
| Period of time | Increase in SNX Supply | Total SNX Supply after inflation | SNX inflation rate |
| 2018 | 0 | 100,000,000 | 0% |
| 2019 | 75,000,000 | 175,000,000 | 75% |
| 2020 | 37,500,000 | 212,500,000 | 21% |
| 2021 | 18,750,000 | 231,250,000 | 9% |
| 2022 | 9,375,000 | 240,625,000 | 4% |
| 2023 | 4,687,500 | 245,312,500 | 2% |
Utility
SNX’s use cases are as follows:
- Primary use is staking and collateralizing synthetic assets
- Yield Farming
- Trading Fees
- Governance
6. OSMOSIS (OSMO)
Osmosis is an automated market maker built with the Cosmos SDK and is aimed at liquidity providers. The platform is based on a proof-of-stake blockchain, and it offers cross-chain native functionalities compatible with IBC enabled chains and non-IBC enabled chains, such as Ethereum-based ERC20s.
The platform offers a variety of incentives to liquidity providers, DAO (Decentralized Autonomous Organization) members, and delegators such as:
- Sovereign ownership over pools for staked liquidity providers (they can adjust parameters based on market conditions and how competitive the pool is, among others);
- Absolute vote-based governance system over LPs (LP providers can vote to change any pool parameter, such as swap fees, token rates, reward incentives, and curve algorithms).
The OSMO governance token stays at the base of Osmosis’ Superfluid Staking, which allows the token holders to take part in staking and liquidity mining at the same time.
Supply
- Max Supply: 1,000,000,000 OSMO;
- Total Supply: 325,000,000 OSMO;
- Circulating Supply: 282,464,369 OSMO.
Market Cap
The OSMO token has a market cap of around $622million (at the time of writing).
Allocation & Distribution
The OSMO tokens had been preminted at genesis and are distributed as follows:
- 25% Staking Rewards
- 25% Developer Vesting
- 45% Liquidity Mining Incentives
- 5% Community Pool
Vesting & Inflation
OSMO is an inflationary currency and has a planned inflation of 76%, with inflation cut by 1/3 per year. As the token started in June 2021 with an initial supply of 100m OSMO, the plan is to update the circulating supply as follows:
- Year 1: 300m OSMO
- Year 2: 200m OSMO
- Year 3: 133m OSMO
Utility
The OSMO token’s use cases are:
- On-chain governance
- Staking in pools
- Reward for staking in pools
7. FRAX (FRAX & FXS)
Frax is an open-source, permissionless, on-chain fractional-algorithmic stablecoin system that aims to provide highly scalable, decentralized, and algorithmic digital money.
The protocol is currently built on Ethereum and allows future cross-chain implementations.
At the protocol’s base stand two tokens. The FRAX token is a unique $1 stablecoin, with its price maintained through collaterals and algorithms. The Frax Share (FXS) is the governance token that accumulates fees, seigniorage revenue, and excess collateral value.
FRAX Supply
- Max Supply: no max supply
- Total Supply: 1,360,608,793 FRAX
- Circulating Supply: 1,360,608,793 FRAX
FXS Supply
- Max Supply: no max supply
- Total Supply: 99,899,045 FXS
- Circulating Supply: 16,209,404.70 FXS
Market Cap
The FRAX token has a market cap of around $1.35 billion, and FXS has market cap of around $79 million (at the time of writing).
Allocation & Distribution
As FRAX is made to always be in use, its allocation and distribution largely comprise of lending and borrowing protocols.
As for FXS, the tokens are distributed as follows:
- 60% Community Allocation Uniswap Listing
- 5% Development Fund
- 20% Team And founders
- 12% Accredited Private investors
- 3% Strategic Advisors and Early Contributors
Vesting & Inflation
In FRAX’s case, the token supply grows proportionally with its demand.
As for FXS, 100 million tokens were initially created at genesis. Yet, the total supply isn’t fixed but fluctuates depending on the amount of FXS that is burnt and minted.
From FXS’s total supply, the tokens are given in circulation through an emission system that began with a rate of 56,000 FXS/day and currently decreased to 49,315 FXS/day.
Additionally, from the 12% of FXS allocated to Accredited Private Investors, 5% were vested over the first 6 months, and the remaining 5% were vested over 1 year with a 6 months cliff. Also, the 3% of FXS allocated to Strategic Advisors and Early Contributors are vested over 3 years.
Utility
In terms of utility, the FRAX token has the following:
- Providing liquidity to various protocol
- Collateral in DeFi ecosystems
- Used in Borrowing and lending protocols
As for FXS, the token has the following utility:
- Governance
- Accumulates fees
- Recapitalization system
8. UMA (UMA)
UMA (Universal Market Access) is a protocol for creating synthetic derivatives with trustless financial contracts on anything that has a price.
The protocol allows two counterparts to make a trade by structuring a trustless smart contract, eliminating the need for a broker, clearinghouse, or exchange. The self-enforcing smart contract automatically adjusts each side’s margin and makes sure that the trades are always collateralized.
Also, UMA is making itself remarkable by reducing the use of off-chain oracle price feeds to eliminate the risk of oracle manipulation seen in many DeFi protocols.
Supply
- Max Supply: 101,172,570 UMA
- Total Supply: 108,858,567 UMA
- Circulating Supply: 68,947,415 UMA
Market Cap
The UMA token has a market cap of around $150 million (at the time of writing).
Allocation & Distribution
UMA tokens will be distributed as follows:
- 2% Initial Uniswap Listing
- 14.5% Future Token Sales
- 35% Developers and Users
- 48.5% Founders, Early Contributors, and Investors
Vesting & Inflation
Although there is no unlocking schedule for the UMA token, we know that in terms of tokenomics, it has an inflation of 0.05% that increases the supply each time a vote is held. However, the platform also burns tokens to prevent profits from oracle corruption.
Utility
In terms of utility, the UMA token has the following:
- Governing the UMA ecosystem
- Disputes
- Fees
9. COMPOUND (COMP)
Compound is one of the most popular DeFi protocols that give investors earning opportunities by depositing their cryptocurrencies in a liquidity pool in order to earn an interest.
In exchange for liquidity, the liquidity providers receive cTokens (for ETH – cETH) in return to redeem later and collect interest.
The protocol also allows for borrowing by depositing a cryptocurrency collateral, giving out 50-75% loan-to-value loans.
The platform’s native token, COMP, is a governance token used to propose, debate, and vote changes to the protocol.
Supply
- Max Supply: 10,000,000 COMP
- Total Supply: 10,000,000 COMP
- Circulating Supply: 7,267,152 COMP
Market Cap
The COMP token has a market cap of around $393 million (at the time of writing).
Allocation & Distribution
The COMP tokens are preminted, and are distributed as follows:
- 23.96% Compound Labs shareholders;
- 22.26% To founders and team;
- 3.72% Future team members;
- 42.31% Protocol users;
- 7.75% for the community to advance governance through other means.
Vesting & Inflation
The COMP tokens are not mineable, yet the Compound Labs team issues 2800 new tokens daily, from which 50% go to borrowers and 50% to lenders.
Furthermore, the 22.26% allocation for founders and team are subjected to a 4-year vesting period.
Utility
The COMP token’s use cases are:
- Governance;
- Paying out rewards;
- Staking;
- Borrowing and lending.
10. THE GRAPH (GRT)
The Graph is an indexing protocol that handles data queries for blockchain networks like Ethereum, IPFS, and NEAR.
The protocol can be used to build API endpoints that query smart contracts data for servers utilized on DeFi applications or other types of Web3 ecosystems.
GRT is an ERC20 token at base and is utilized to allocate resources within the network. It is used to award Indexers, Curators, and Delegators for performing tasks on the network and staking.
Supply
- Max Supply: 10,057,044,431 GRT
- Total Supply: 10,000,000,000 GRT
- Circulating Supply: 6,900,000,000 GRT
Market Cap
The GRT token has a market cap of around $578 million (at the time of writing).
Allocation & Distribution
The GRT tokens are preminted, and are distributed as follows:
- ~3% Testnet Indexer Rewards;
- ~3% Curator Program Grants;
- ~17% + 17% Early Backers & Backers;
- ~20% Graph Foundation;
- ~6% GRT Sale;
- ~23% Early Team & Advisors;
- ~3% Educational Programs & Bounties;
- ~8% Edge & Node;
- ~3% New Issuance.
Vesting & Inflation
In the beginning, GRT started with 12.5% of the total supply in circulation and has unlocked more tokens every 6 months.
The token also has a new issuance schedule starting at ~3% annually, and a token burning system expected to be ~1% of query fees and all deposit taxes.
Utility
The GRT token’s use cases are:
- Rewards payment
- Staking
- Fees payment on the Query Market
11. MAKER (MKR)
Maker is an ample project comprising the decentralized organization MakerDAO and software platform Maker Protocol that allows users to issue and manage DAI.
The project is based on the Ethereum blockchain, so the decentralized organization and the software platform are governed with the ERC20 token, MKR.
Within the ecosystem, MKR works primarily as voting rights.
And in the DeFi context, Maker is one of the first projects to try building decentralized financial products on top of smart-contract-enabled blockchains.
Aside from being one of the first, MKR is unique for allowing holders to directly participate in DAI governance.
All MKR holders can vote on a number of changes to the Maker Protocol, with their voting power depending on the number staked Maker tokens.
Supply
- Max Supply: 1,005,577 MKR
- Total Supply: 977,631 MKR
- Circulating Supply: 977,631.04 MKR
Market Cap
The MKR token has a market cap of around $907 million (at the time of writing).
Allocation & Distribution
The MKR tokens are preminted, and according to Etherscan, the total supply is distributed as follows:
- 17.76% Maker: Governance Contract
- 8.57% Maker: MCD Pause Proxy
- 55,25% Liquidity providers, exchanges, and investors
- 18.42% Other accounts
Vesting & Inflation
MKR is hard-capped at 1,005,577. Therefore, the number of tokens won’t increase above that level. And aside from the locked tokens, the Maker system employs a buyback-and-burn system that balances the price and tokens in circulation.
Utility
The MKR token’s use cases are:
- Governance
- Paying Fees
- Staking
- Recapitalization system
12. PANCAKESWAP (CAKE)
PancakeSwap is an Automated Market Maker, and Decentralized Exchange made on the Binance Smart Chain that requires no KYC. The project received funding from Binance as a part of the company’s DeFi acceleration program on the Binance Smart Chain.
In essence, PancakeSwap is a clone of UniSwap but also comes with a few new features:
- Two built-in yield farming tools in which you can stake liquidity provider tokens and earn cake or stake cake to earn more cake or other BEP20 tokens
- Lottery tickets
- An auction market for various NFTs
- An initial farm offering
- Gamification through the use of community teams, leader boards, various tasks, and achievements
Supply
- Max Supply: 750,000,000 CAKE
- Total Supply: 336,908,273 CAKE
- Circulating Supply: 143,346,192.64 CAKE
Market Cap
The CAKE token has a market cap of almost $615 million (at the time of writing).
Allocation & Distribution
The BEP20 CAKE token is preminted, and according to BscScan, the distribution goes as follows:
- 33.55% locked in the main staking contract
- 58.89% wallet used for burning tokens
- 17.87% allocated to various smart contracts and holders
Vesting & Inflation
CAKE has no max supply cap, and it functions with an inflation of 750,000 CAKE every day, even after the burning mechanisms are considered. However, the newly emitted tokens are distributed to Yield farmers (60%) and Syrup Pools (40%).
In terms of tokenomics, CAKE may seem to have disastrous inflation. However, the developers want the token to be deflationary, so they always work on the burning parameters.
Utility
The primary use of the CAKE token is staking. In addition, the token is also used for:
- Crowd pooling
- NFTs Auctions
- Participation in various features of the PANCAKESWAP environment
13. AAVE (AAVE)
AAVE is a decentralized lending and borrowing protocol where lenders can earn interest by depositing crypto into specially created liquidity pools, which borrowers can use to take out a loan by giving their digital assets as collateral. The lending and borrowing take place through smart contracts.
The AAVE token is based on the ERC20 standard and is designed in a deflationary way as a core securing element of the Aave Protocol.
Supply
- Max Supply: 16,000,000 AAVE
- Total Supply: 16,000,000 AAVE
- Circulating Supply: 14,093,192.58 AAVE
Market Cap
The AAVE token has a market cap of $964 million (at the time of writing).
Allocation & Distribution
The AAVE token is preminted, but the 13 million tokens put in circulation were redeemed by exchanging LAND to AAVE at a rate of 100:1. The distribution goes as follows:
- 13 million AAVE allocated to the community
- 3 million AAVE in reserve
Vesting & Inflation
The AAVE token is deflationary, and circulation is linked to the total value locked on Aave, as tokens are burned whenever the protocol gathers fees.
Utility
The AAVE token has the following utility:
- Lending & borrowing
- Fees discounts
- Governance
- Staking to support the safety module
14. FANTOM (FTM)
FANTOM is a smart contracts platform providing DeFi services to developers through its own directed acyclic graph consensus algorithm. The platform approaches the market together with tools that simplify existing dapps integration and offer a detailed staking reward system and built-in DeFi instruments.
The smart contracts DeFi and related services are facilitated on the Layer-1 Blockchain, Lachesis. But the Fantom echosystem provides security for other layers as well, including Opera, Fantom’s EVM-compatible smart contract chain.
In essence the project’s mission is to “grant compatibility between all transaction bodies around the world.”
Supply
- Max Supply: 3,175,000,000 FTM;
- Total Supply: 2,545,006,273 FTM;
- Circulating Supply: 2,545,006,273 FTM.
Market Cap
The FTM token has a market cap of almost $509 million (at the time of writing).
Allocation & Distribution
The FTM token is preminted and all the 3.175 billion tokens were minted when the mainnet launched in December 2019. The distribution goes as follows:
- 37% private investors
- 1.57% retail investors
- 15% advisors
- 10% the team
- 4% reserve funds
- 31% allocated to staking rewards
Vesting & Inflation
Fantom preminted its tokens, and the circulating supply is only raised through giving out staking rewards. Currently, the total number of FTM given out daily as staking rewards is around 0.5 billion.
Utility
The FTM token has the following utility:
- Lending & borrowing
- Minting synthetic assets
- Governance
- Staking & delegation
15. REN (REN)
REN is a decentralized interoperability protocol that wants to allow crypto users to transfer any token between any blockchain. The cross-chain value transfer solution does not create synthetic tokens or wrapped tokens but transfers liquidity from one ecosystem to another with existing smart contracts.
The concept of renBTC is similar to wBTC. The difference comes in the fact that, unlike wBTC, the Bitcoin is kept on a network of decentralized nodes called the Dark Nodes and is governed by code in Ren’s case.
And because the REN protocol operates just like a machine, users can make as many requests as they want, when they want.
The Ren Virtual Machine can be integrated into many DeFis to provide them with liquidity and does not require KYC.
Ren VM’s impact is significant in the case of hodlers, allowing people holding Bitcoin to supply their funds to lending protocols and earn interest rather than keeping them idle.
Nodes earn fees in the cryptocurrency exchanged through the RenVM.
Those who want to operate a node need to acquire 100,000 REN to be able to do so.
Supply
- Max Supply: 1,000,000,000 REN
- Total Supply: 999,999,633 REN
- Circulating Supply: 999,037,500.36 REN
Market Cap
The REN token has a market cap of around $107 million (at the time of writing).
Allocation & Distribution
Ren was initially preminted as an ERC20 token, and according to Binance Research, it is distributed as follows:
- 18.67% Bonded in the Dark nodes
- 19.9% Reserve funds
- 10% partnerships, development, and other related activities.
- 56.6% investors and lending pools.
- 13.5% other holders
Vesting & Inflation
All Ren tokens are circulating, but the tokens used to bond are taken off the market. And as demand for operating nodes increases, more tokens will be bonded.
Utility
The primary use case is as a Bond to operate a dark node.
Final Thoughts
In 2022, we see dozens of projects with amazing tokenomics and capabilities that push the Crypto further.
We’ve chosen these projects as the 15 Best DeFi Crypto Projects to showcase the capabilities that are coming into the market and not as financial advice.
Therefore, keep your eyes open for the best opportunities and never forget to do your own research. Because as it seems, we have not seen the last of what cryptocurrency and blockchain can bring to the financial world.
* The information in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We advise you to do your own research or consult a professional before making financial decisions. Please acknowledge that we are not responsible for any loss caused by any information present on this website.
Source: https://coindoo.com/best-defi-projects/