An Overview of Top 10 Defi Platforms on Ethereum

This blog is an overview of the top 10 Defi Dapps on the Ethereum blockchain network according to the defillama as of May 2023.

Introduction

The blockchain technology is growing steadily every day and new use cases and projects keep emerging. Blockchain technology has revolutionized numerous industries including Finance, Economy, Politics, Gaming, and more. So far one of these fields where the blockchain is widely applied is the Finance. It has enabled the creation a new financial system which is seen to be making waves all around the world. This system is called the Decentralized Finance, a financial system that is open, transparent and also being accessible to anyone with just an internet connection.

Through the various Defi platforms, people now have full access to financial services such as lending, borrowing, trading, and investing. All these services are made available without the involvement of any centralized authority or intermediary, saving users time, money and also allowing them to have full control of their finances. Defi has offered a level of financial freedom which the traditional system cannot achieve. In this blog, I will be having an overview of the top 10 Defi projects on the Ethereum network in terms of total value locked up according to the ranking on Defillama.

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Defi on Ethereum and Smart Contracts

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This new financial system began since the creation of Bitcoin as it was created as a digital currency which allow users to own and control its value and can also be send around anywhere around the world. The Ethereum network, which is the second Blockchain network has improved the decentralized finance system through the implementation of smart contracts. They are self-executing contracts which are capable of settling agreements between 2 parties (buyers and sellers). These are written in lines of code which allows developers to create decentralized applications on the network, these makes it possible offer services that are not possible in the Bitcoin network. This concept has been applied in the creation of Dapps that aims at decentralizing financial services such as borrowing, lending, staking, investing, and savings making wave for a decentralized financial system.

The Ethereum network was launched in 2015 and it permitted creation of various Decentralized applications. The first defi project on the network was MakerDAO, which was launched in 2017. It is a protocol that issues the DAI stable coin. It is considered by many as the foundation of Defi in the Ethereum network. After MakerDAO, new Defi projects have been created on Ethereum and the numbers keep growing every year.

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Top 10 Defi Projects on Ethereum

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Defi projects are usually ranked based on their total value locked(TVL). It is basically, the amount of user funds that are deposited in that protocol. This section of the blog contains the top 10 Defi projects on Ethereum based on their TVL as at the time of making this post.

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Lido

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Year Launched : 2019
Category: Liquid Staking
TVL: $13.15 Billion
dapp

Lido is the top ranked Ethreum based Defi project in terms of Total value Locked in dilemma. It is also available for Solana, Polygon, Terra, Kusama and Polkadot . Lido allows you to stake your ETH without having to worry about all the technical details. They take care of everything for you, from running the nodes to distributing the rewards. Users earn rewards by simply depositing their ETH without locking it and maintaining infrastructure. Through this, they can also participate in on-chain activities such as Lending and trading. Lido is it's non-custodial which means that users are in control of their funds at all times. Funds can be withdrawn any time in Lido without delay

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MakerDao

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Year Launched: December 2017
Category: Collateralized Debt Position (CDP)
TVL: $6.27 Billion
dapp

MakerDao is one of the most well-known Defi platforms on Ethereum. It was the first Defi project on Ethereum. Its purpose is to create a stablecoin called DAI that is pegged to the US dollar. This is achieved by creating a system that allows users to deposit collateral in the form of ETH and other ERC-20 tokens. The MakerDao protocol then generates DAI tokens that can be used for transactions, loans, and more. It's a pretty nifty system that has gained a lot of popularity in the Defi community.

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Wrapped Bitcoin (WBTC)

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Year Launched: January 2019
Category: Bridge
TVL: $4.2 Billion
dapp

WBTC stands for Wrapped Bitcoin, and it's a token that is backed by Bitcoin. The goal of WBTC is to bring Bitcoin onto the Ethereum platform, making it possible to use Bitcoin in Defi applications. Essentially, users deposit Bitcoin into a custodial service, which then generates WBTC tokens that can be used on the Ethereum network. It's a great way to expand the use cases of Bitcoin and bring it into the world of Defi.

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Curve Finance

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Year Launched: January 2020
Category : DEX
TVL: $3.88 Billion
dapp

This project is all about stablecoins and liquidity pools. It's a decentralized exchange that specializes in trading stablecoins like USDT, USDC, and DAI. And with liquidity pools, users can provide funds to earn fees on trades. What's great about Curve is that it's designed to be efficient with low slippage, making it a popular choice for traders.

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AAVE

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Year Launched: August 2020
Category: Lending
TVL: $4.56 Billion
dapp

AAVE is a lending platform. Users can borrow and lend cryptocurrencies on the platform. It is a cross platform protocol as it is available in 7 other blockchain networks including Avalanche, Polygon, Arbitrium, Optimism, Fantom, Metis and Harmony It's similar to MakerDao in that it uses collateral to generate loans, but AAVE allows for a much wider range of collateral types. The platform also offers flash loans, which are loans that are issued and repaid within the same transaction. It's a great platform for those who want to earn interest on their crypto holdings or take out a loan without going through traditional financial institutions.

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Uniswap

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Year Launched: November 2018
Category: Trading Protocol
TVL: $3.59 Billion
dapp

Uniswap is a decentralized exchange on Ethereum with UNI as it's native token. It runs on 5 other networks which include polygon, Arbtrum, BSC, Celo and optimism. It's unique because it uses an automated market maker system, which means that trades are executed based on an algorithm rather than an order book. This results in lower fees and quicker trades. Plus, Uniswap allows anyone to create a market for any ERC-20 token, which promotes innovation and decentralization.

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Convex Finance

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Year Launched: Mid 2021
Category: Yield
TVL: $3.14 Billion
dapp

Convex is a yield aggregator that optimizes your returns by automatically moving your funds to the highest-yielding protocol. It operates by pooling user funds together and using complex algorithms to determine the most profitable yield farming strategy. It's like having a personal financial advisor, except it's all done through smart contracts.

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Coinbase wrapped swapped ETH (cbETH)

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Year Launched: August 2022
Category: Liquid Staking
TVL: $2.1 Billion
website

This platform allows users to convert their Ethereum holdings into a wrapped version of ETH that's compatible with other blockchain networks. It's essentially a bridge between Ethereum and other blockchain platforms, which makes it easier for users to access different Defi protocols.

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InstaDapp

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Year Launched: 2019
Category: Services
TVL: $2.1 Billion
dapp

This platform is all about simplifying DeFi for users. It's a dashboard for managing your DeFi investments and transactions across multiple platforms. With Instadapp, you can easily move your funds between different protocols and take advantage of the best interest rates and yields. Plus, the user interface is clean and intuitive, making it easy for anyone to use.

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Compound Finance

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Year Launched: September 2018
Category: Lending
TVL: $1.85 Billion
dapp

This platform is all about lending and borrowing. Users can lend out their cryptocurrency to earn interest or borrow cryptocurrency by putting up collateral. It's a great way for crypto holders to earn passive income or get access to funds they might need. What's interesting about Compound is that the interest rates change based on supply and demand, making it a truly dynamic market.

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Conclusion

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The Ethereum network is currently leading in the Defi space thanks to its smart contracts. The network powers the vast majority of the leading Defi projects. The development of smart contracts has significantly improved the use cases for blockchain technology, and Defi is just one of them. Many Ethereum-based DeFi projects face challenges related to high gas fees and network congestion, these are the issues that Ethereum 2.0 aims to solve. There are several Defi projects running on other blockchains, like Polygon, Algorand, Binance Smart Chain, Solana, Avalanche, and others.

There are also a number of Defi projects on Hive and they are powered by the Hive Engine smart contract some of the Hive based Defi projects include but not limited to CubFinance, Dlease, Waivio and TribalDEX. It is obvious that, the blockchain and web3.0 is capable of leading the finance sector in the near future, especially when it faces mainstream adoption. This will give users control over their assets, increase accessibility. It is recommended to always explore more on any of these platforms to know more about how they actually work before dealing with them.

Thank you for reading

Cover Image used in this post made with canva

Glossary: Leoglossary

Consulted sources and Further Readings:

defillama
DappRadar
makerdao
ethereum.org
finematics|history of defi

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I hope you found this useful. I am Abdul-Salam Issahaku, from Ghana. I am a student web developer and a blockchain enthusiast. I blog about technology, life and investments. You can follow me to be part of my Hive family. Thank you for your time.

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Posted Using LeoFinance Alpha