# Emerging defi protocols By [Untitled](https://paragraph.com/@0xc20412854171f1d76e63432c6cdede147be3f733) · 2025-06-29 --- Top 3 Emerging DeFi Protocols 1. Grove (Sky Protocol) Launch & Backing: Launched within the past day or two, backed by a $1 billion tokenized credit commitment within the Sky ecosystem . Tokenomics: SKY tokens underpin the protocol and likely entitle holders to staking rewards and network governance. The heavy institutional credit backing adds confidence in the token’s value floor. Value Props: Institutional-grade on-chain lending: Facilitates asset-backed, tokenized credit aligned for enterprise and institutional usage. Scalability-ready: Built to support large loan volumes from the outset. Market Impact Potential: Grove positions Sky Protocol as a DeFi entry for TradFi, which opens institutional pipelines previously blocked by regulatory friction. 1. Mode AIFi (Mode / OP‑Stack L2) Launch & Timing: Within the past month, Mode launched veMODE (vote escrow) and debuted its integrated AIFi ecosystem, funded by $6M from Optimism crypto.news +1 [news.todayindefi.com](http://news.todayindefi.com) +1 . Tokenomics: Vote‑escrowed MODE (veMODE): Offers up to 6× boost, locking MODE (or MODE/ETH LP tokens), and distributes a $2M OP incentive pool. Incentive-alignment via vote-escrowed fixtures and bribe market potential. Value Props: AI‑enabled governance & yield: AI agents (e.g., Giza’s ARMA, Brian, Sturdy V2) can autonomously farm, vote, and manage risk [theblockbeats.info](http://theblockbeats.info) +3 [gate.io](http://gate.io) +3 [cointeeth.com](http://cointeeth.com) +3 . Security layer: AI-powered sequencer secures transactions proactively. Market Impact Potential: Mode is among the first fully integrated AIFi L2s—blending governance, AI automation, and incentive design, setting a new paradigm for future L2s. 1. Boros (Pendle V3 Extension) Launch & Context: Debuted within the last month as Pendle’s V3 expansion, Boros introduces margin-enabled yield trading crypto.news +6 crypto.news +6 [reddit.com](http://reddit.com) +6 . Tokenomics: Continues using $PENDLE and vote-escrowed vePENDLE with existing revenue splits (80% to ve holders, 10% to treasury, 10% operations). No token inflation, revenue comes organically from system usage. Value Props: Funding rate derivatives: Enables hedging and speculation on funding rate movements, a previously underutilized trading primitive. Leveraged yield exposure: Users can trade yield funding with leverage for enhanced returns. Market Impact Potential: Crafts a new “rate tokenization” asset class, bridging traditional derivatives with DeFi, and expanding yield strategies—especially appealing to structured finance and market makers. Strategic Analysis & Comparative Overview Protocol Type Innovation Token Model Impact Potential Grove Credit/Lending Institutional tokenized credit SKY token, utility/staking High: Enables TradFi-onchain bridges Mode L2 + AIFi AI automates governance & yield veMODE with OP incentives Medium-High: Pioneering AIFi L2 Boros Yield Derivatives Funding rate trading with leverage vePENDLE, sustainable yield Medium: New trading primitives Collective Significance: Institutionalization of DeFi (Grove). AI automation in core L2 functions (Mode). Complex financial primitives onchain (Boros). These protocols demonstrate converging trends: bridging legacy finance, on-chain AI, and sophisticated derivatives. --- *Originally published on [Untitled](https://paragraph.com/@0xc20412854171f1d76e63432c6cdede147be3f733/emerging-defi-protocols)*