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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 traditional finance’s capabilities inside the cryptocurrency space. It does that by disassembling the various financial services and decentralizing them.
Specifically, the decentralized finance 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 assets 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 decentralized finance projects optimize and come out with better tokenomics and more secure infrastructures.
15 Best DeFi Crypto Projects
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 is one of the best DeFi investments.
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 keeps the stablecoin overcollateralized to ensure the pegging remains stable.
The minting process is not managed by a centralized organization, as anyone storing collateral can mint DAI tokens.
Supply
- Max Supply: no max supply;
- Total Supply: 5,210,394,915 DAI;
- Circulating Supply: 5,210,394,915 DAI.
Market Cap
The DAI token has a market cap of around $5.2 billion at the time of writing this article.
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 the top DeFi projects;
- Providing liquidity to various protocols;
- Collateral in DeFi ecosystems.
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 has grown 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 helpful to the ecosystem.
In the DeFi space, Chainlink makes a significant impact by facilitating other projects with oracles to ensure their functionality. So, we consider that Chainlink deserves its place among our top DeFi crypto projects.
A few examples of notable projects using Chainlink oracles are Synthetic, AAVE, and KyberSwap.
Supply
- Max Supply: 1,000,000,000 LINK;
- Total Supply: 1,000,000,000 LINK;
- Circulating Supply: 507,999,970 LINK.
Market Cap
The LINK token has a market cap of around $3.8 billion 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:
- 30% handled towards the company for continued development;
- 35% public token sale;
- 35% allocated to node operators and the ecosystem.
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% yearly.
Utility
The LINK token has quite a few use cases, such as:
- In smart contracts;
- Fees network;
- Staking.
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.
- Max Supply: 720,000,000 AVAX;
- Total Supply: 420,844,160 AVAX;
- Circulating Supply: 324,781,440 AVAX.
Market Cap
The AVAX token has a market cap of around $5.7 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;
- 0.27% 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:
- The incentive for securing the network;
- Paying Fees;
- Staking;
- The base unit of account between multiple blockchains deployed on Avalanche.
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: 1,000,000,000 UNI;
- Circulating Supply: 762,209,327 UNI.
Market Cap
The UNI token has a market cap of around $5.2 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;
- The reward for staking in pools.
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: 14,093,193 AAVE
Market Cap
The AAVE token has a market cap of $1.15 billion 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.
FANTOM (FTM)
FANTOM is a smart contracts platform providing developers with DeFi services through its 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 ecosystem 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: 3,175,000,000 FTM;
- Circulating Supply: 2,776,260,108 FTM.
Market Cap
The FTM token has a market cap of almost $1.25 billion 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 and basically, it’s kind of a new defi. The distribution goes as follows:
- 37% private investors;
- 1.57% retail investors;
- 15% advisors;
- 10% founders and 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 81.000 FTM.
Utility
The FTM token has the following utility:
- Lending & borrowing;
- Minting synthetic assets;
- Governance;
- Staking & delegation.
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 asset value 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: 308,069,419 SNX
- Total Supply: 313,040,451 SNX
- Circulating Supply: 249,729,602 SNX.
Market Cap
The SNX token has a market cap of around $754 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.
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: 1,039,853,133 FRAX;
- Circulating Supply: 1,039,853,133 FRAX.
FXS Supply
- Max Supply: no max supply;
- Total Supply: 99,822,984 FXS;
- Circulating Supply: 74,332,772 FXS.
Market Cap
The FRAX token has a market cap of around $1.03 billion, and FXS has a market cap of approximately $877 million at the time of writing.
Allocation & Distribution
As FRAX is made to always be in use, its allocation and distribution largely comprise 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, of the 12% of FXS allocated to Accredited Private Investors, 5% was vested over the first six months, and the remaining 5% was vested over one year with a six-month cliff. Also, the 3% of FXS allocated to Strategic Advisors and Early Contributors is vested over three years.
Utility
In terms of utility, the FRAX token has the following:
- Providing liquidity to various protocols;
- Collateral in DeFi ecosystems;
- Used in Borrowing and lending protocols.
As for FXS, the token has the following utility:
- Governance;
- Accumulates fees;
- Recapitalization system.
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 interest.
In exchange for liquidity, the liquidity providers receive cTokens (for ETH – cETH) in return for redeeming later and collecting interest.
The protocol also allows for borrowing by depositing 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 $370 million at the time of writing this article.
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 1273 new tokens daily, of which 50% go to borrowers and 50% to lenders.
Furthermore, the 22.26% allocation for founders and team is subjected to a 4-year vesting period.
Utility
The COMP token’s use cases are:
- Governance;
- Paying out rewards;
- DeFi Staking;
- Borrowing and lending.
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 the base and is utilized to allocate resources within the network. It is used to award Indexers, Curators, and Delegators for performing network tasks and staking tasks.
Supply
- Max Supply: no max supply;
- Total Supply: 10,595,999,625 GRT;
- Circulating Supply: 8,824,163,81 GRT.
Market Cap
The GRT token has a market cap of around $1.4 billion 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 circulation supply and unlocked more tokens every six 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.
MAKER (MKR)
Maker is a big project comprising the decentralized organization MakerDAO and the 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 by 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 participate directly 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 of staked Maker tokens.
Supply
- Max Supply: 1,005,577 MKR;
- Total Supply: 977,631 MKR;
- Circulating Supply: 977,631 MKR.
Market Cap
The MKR token has a market cap of around $913 million at the time of writing.
Allocation & Distribution
The MKR tokens are preminted, and according to CoinGecko, the total supply is distributed as follows:
- 69.50% Founders & Project;
- 15.00% Team;
- 4.00% Seed Round 1;
- 6.00% Seed Round 2;
- 5.50% Seed Round 3.
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.
TEZOS (XTZ)
Launched in 2017, Tezos is a cutting-edge blockchain platform that powers smart contracts and decentralized applications (dApps). It runs on its own unique blockchain and uses “tezzies” (XTZ) to motivate those who support the network by “baking”. Tezos is one of the most successful ICOs to date.
In distinction from other blockchains, Tezos sets itself apart with its self-amending capabilities. This means that the Tezos protocol can continually improve and adopt innovations without the fear of splitting the network into two separate versions.
Supply
- Max Supply: no max supply;
- Total Supply: 950,185,347 XTZ;
- Circulating Supply: 928,773,045 XTZ.
Market Cap
The XTZ token has a market cap of $1.1 billion at the time of writing this article.
Allocation & Distribution
XTZ token was distributed as follows:
- 79.59% ICO Participants;
- 0.41% Early Backers and Contractors;
- 10% Tezos Foundation;
- 10% Dynamic Ledger Solutions.
Vesting & Inflation
To support the long-term stability of the network, the Tezos Foundation and DLS allocations have a vesting period of four years.
XTZ is an asset with a controlled rate of inflation. The rate is capped at a maximum of 5.51% per year, but it may fluctuate. The newly minted XTZ, which contributes to the inflation, is given as a reward to the network’s supporters called “bakers” and “endorsers.”
Utility
Some of the XTZ token’s use cases are:
- On-Chain Governance;
- Staking;
- Self-Amendment.
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: 370,137,893 CAKE;
- Circulating Supply: 188,906,299 CAKE.
Market Cap
The CAKE token has a market cap of almost $750 million at the time of writing this article.
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
In the past, CAKE had no max supply cap, but today it has a hard cap of 750M. However, regarding tokenomics, CAKE may seem to have disastrous inflation. The team behind the project is constantly looking for ways to reduce inflation in order to make deflation higher than emissions. Since the first reduction in block emissions, this team managed to reduce the number of CAKE entering circulation from 40 CAKE per block to 11.16.
The newly emitted tokens are distributed to Yield farmers and Syrup Pools.
Utility
The primary use of the CAKE token is staking. In addition, the token is also used for the following:
- Crowd pooling;
- NFTs Auctions;
- Participation in various features of the PANCAKESWAP environment.
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 ensures 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 $154 million at the time of writin
Allocation & Distribution
UMA tokens were 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.
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, 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 REN
Market Cap
The REN token has a market cap of around $124 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 2023, we see dozens decentralized finance of projects with amazing tokenomics and capabilities that push the crypto space further.
We’ve chosen these safest DeFi projects as the 15 Best DeFi Crypto Projects to showcase the capabilities that are coming into the market and not as financial advice, so invest in defi projects cautiously.
Therefore, keep your eyes open for the best opportunities, and never forget to do your own research. Because it seems we have not seen the last of what cryptocurrency and blockchain can bring to the financial world.
