Originally published in My Crypto Advisor on October 18, 2023
The DeFi (Decentralized Finance) space has grown rapidly this decade, with innovative applications emerging in various sectors of the financial industry. The TVL (Total Value Locked) in DeFi is hovering around $37.11 billion, a drastic decline from the $250 billion milestone in December 2021. TVL measures the total value of digital assets locked in a DeFi application and is considered an indicator of general adoption.
Despite the 85% decrease in TVL, Fortune 100 companies such as Citigroup and JPMorgan Chase continue steadfast with blockchain adoption. This fact is most recently evidenced by Citigroup’s launch of “Citi Token Services” which integrates tokenized deposits into their global network for institutional clients and JPMorgan Chase’s debut of the Tokenized Collateral Network (TCN), which recently involved a collateralized trade using a tokenized money market fund between JPMorgan and BlackRock. In this article, we will highlight the top five DeFi applications by TVL.
Lido, the leader in Liquid Staking, takes the top spot, with a TVL of over $14.02 billion. Lido is a Liquid Staking application where market participants receive liquidity for staking coins. In other words, it allows users to stake their coins and generate returns while still having access to liquidity. Lido supports several networks, including Ethereum, Polygon, and Solana.
Coming in second, JustLend with a TVL of over $4.65 billion. JustLend is a lending application on the Tron network, where market participants deposit liquidity to earn interest or leverage as collateral to borrow digital assets. JustLend is governed by a Decentralized Autonomous Organization (DAO), enabling token holders to submit proposals and vote on governance activities for the protocol.
Next on the list is Aave boasting a TVL of over $4.53 billion. Aave is a lending application where market participants can earn yield on deposits and borrow digital assets. Aave supports several networks, including Base, Coinbase’s newly released Layer-2 solution. In January 2022, Aave and Fireblocks legitimized DeFi, pioneering a permissioned DeFi liquidity pool, which provided institutional investors the ability to participate in DeFi while maintaining compliance with KYC/AML requirements.
MakerDAO, with a TVL of over $4.20 billion, introduced the DeFi world to Collateralized Debt Positions (CDPs), a concept where market participants deposit digital assets into a smart contract to generate a loan denominated in the stablecoin, DAI. This novel approach to lending and borrowing has made MakerDAO a significant player in the DeFi space.
Rounding out the top five is Uniswap, a pioneer of the Automated Market Maker (AMM) with a TVL of over $3.03 billion. Uniswap is a Decentralized Exchange (DEX) where market participants can directly trade or “swap” digital assets without an intermediary. Trades are permissionless and executed with liquidity pools instead of a traditional ‘Order Book’ for buyers and sellers.
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Alex Enser
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