In the past, TVL (total value locked) has been used as a primary measure for a decentralized project’s performance. However, TVL is now no longer accurate as a few wallets (crypto whales) can hold a significant amount of the total supply. So, a possible alternative metric could be revenue: the fees protocols collected minus the rewards they paid to liquidity providers (LPs). Here are the top 5 DeFi projects by revenue in 2023, cited data from DeFiLlama as of December 13.
Maker – $95.91 million
Since 2022, Maker has another revenue from investing in US government bonds. In addition, Maker’s Spark Protocol subDAO, part of founder Rune Christensen’s so-called Endgame for Maker’s future, gave investors exposure to the T-bill yield through a locked version of its DAI stablecoin.
sDAI is a token representing DAI deposited into Maker’s DAI Saving Rate (DSR). Basically, sDAI is an encrypted token of US government bonds, also known as Real World Asset. The yield of sDAI once reached 8% in 2023.
Lido Finance – $55.79 million
Lido Finance is the leading ETH liquid staking protocol in the market, currently handling over 32% of all ETH staking. Lido allows users to stake ETH and receive stETH (Lido’s ETH wrap token) as rewards. This ETH wrap token can be used for transactions or as collateral. stETH has grown and become the 9th largest coin with a capitalization of more than $20 billion, according to Blockworks data.
In mid-December, the protocol announced that TVL exceeded the $20 billion threshold for the first time since April 2022, mainly due to excitement surrounding the Dencun upgrade scheduled to take place at the end of February 2024.
PancakeSwap – $52.31 million
PancakeSwap is the second largest decentralized exchange (DEX) by volume after Uniswap. It launched version v3 in March, focusing on concentrated liquidity, where LPs can concentrate their liquidity within specific ranges to enhance chances of their funds being used for a trade and earning fees. Nearly all of PancakeSwap’s volume comes from the BNB Smart Chain.
Convex Finance – $42.23 million
Convex is an asset management protocol that allows users to stake the CRV of the DEX Curve to earn profits. The majority of Convex’s revenue is tied to Curve, whereby Convex controls 48% of vote-escrowed Curve tokens and a third of vote-escrowed Frax tokens.
GMX – $37.52 million
GMX is a derivatives DEX which allows traders to execute highly leveraged trades without requiring large amounts of capital. This is the largest protocol on Arbitrum by TVL and is also the project that received the highest funding from layer-2 in October, about $14 million at the current exchange rate.