DeFi "new narrative"? This article takes stock of DeFi protocols with real benefits
Author: Miles Deutscher
Original compilation: TechFlow intern
Author: Miles Deutscher
Original compilation: TechFlow intern"A hot new narrative is brewing in DeFi called "real yield," where protocols pay users yield based on revenue generation. So, I picked a few projects in this growing industry to see how they could become the backbone of the next cycle."real income means generating from
for real"Proceeds from revenue, not from token offerings. Real benefits work in a reflexive way: more revenue = more benefits paid to users, and vice versa."Therefore, yes
real income"A stake in the project becomes a bet on the project's ability to: a) accumulate new users, and b) increase revenue generation over time to reward token holders."but before I do any
choose
Before, I thought it was most important to understand where this narrative came from.
Let's go back to 2021, when the most common form of user acquisition was to provide ample APR to attract more TVL, some examples of DeFi protocols: $TIME, $SUNNY, $AXS, $ANC...
Almost all DeFi protocols in 2021 will use an aggressive token inflation model to quickly attract liquidity. Why? Because the game has already started, the interest and greed of retail investors have reached unprecedented heights. Like investors, projects feel FOMO and don't want to miss out.
The problem is, this model is not sustainable. Projects can only provide artificial benefits for a while, then until they are forced to switch to a sustainable model. Without this artificial incentive for users to deposit, many DeFi protocols have suffered breakdowns of varying degrees."This also resulted in heavy losses for many investors, most notably LUNA and UST. The subsequent collapse of PTSD and DeFi led to a massive loss of retail investors, creating a key flaw in the current DeFi landscape."a) Inflation stimulates liquidity"filling"TVL, once invalidated, many chains
reality
value will be revealed."b) Many protocols do not have well-designed underlying value accumulation mechanisms."What is the result? As the market turns more risk-off, from"Fake"arrive
real
A drastic shift in earnings agreements. Evidence of this shift is the recent growth of derivatives DEXs, and the expected ecosystem rebound from the merger of ETH."So I picked out my favorite "Real Earnings" items. I'll give you a brief rundown of what they do, how they generate revenue, and what I think their potential is."The first category of tokens belongs to
Decentralized Perpetual Exchange
no counterparty risk
Safety
sovereignty
Safety
So, first on my list is $DYDX. According to Tokenterminal, it is the largest and most actively used perpetual DEX, generating over $321 million in annualized protocol revenue, which puts it in the top three of all DAPPs.
DeFi "new narrative"? This article takes stock of DeFi protocols with real benefits
So, for now, DYDX doesn't have the best token economics out of all its competitors, but...
DeFi "new narrative"? This article takes stock of DeFi protocols with real benefits
I think the biggest upside for Dydx comes from launching their own chain on Cosmos, this flexibility gives them a unique advantage over other DEXs and is one of the reasons why I am long-term bullish.
$GMX is the largest project on Arbitrum ($250M TVL), and the seventh largest project on $AVAX ($90M)."Based on a unique multi-asset pool, GMX earns fees for liquidity providers and facilitates 30x leveraged trading of spot assets with low slippage."$GMX has arguably the best token economics of any perpetual DEX. Staking GMX tokens earns you 30% of platform fees, paid in $ETH, and an esGMX model to incentivize
fluidity."gTrade "DeFi "new narrative"? This article takes stock of DeFi protocols with real benefits
The most recent volume exceeds $15 billion. It has a sleek user interface, excellent token economics, and a relatively “moderate” market cap of $60 million compared to its peers.
CertiK gave $GNS a strong security rating, with a trust score of 87 and a community score of 84. Given DeFi's recent vulnerabilities, it's always good to know a project is trustworthy before investing in it.
DeFi "new narrative"? This article takes stock of DeFi protocols with real benefits
A friend made a prediction on the price of $GNS based on the revenue model. $GNS is theoretically worth ~$100 (currently ~$2.50) at $1 billion in daily transaction volume.
In my opinion, the above three DEXs are good long-term assets. This comparison will help you understand the differences between them to help you determine where to allocate capital effectively.
You can stake $SNX to earn $sUSD and $SNX, which generate this yield through protocol fees (generated from the minting/burning of synthetic assets). $SNX currently generates $100 million in annualized protocol revenue and ranks as the #9 dAPP by revenue on Tokenterminal.
We can also observe that both $SNX and $GMX are in the top 10 in terms of fees, surpassing the 7-day average fee, which is $100 million in fees across the crypto space.
$UMAMI, its biggest innovation is its USDC treasury, unlike Anchor, it pays 20% sustainable yield generated from minting GLP and charging transaction fees, they will also launch $ETH and $BTC insurance soon library.
DeFi "new narrative"? This article takes stock of DeFi protocols with real benefits
There are a few caveats
I think it's a misconception that "real benefits" are objectively better. Inflation serves their purpose, and many protocols have managed to acquire many new users, increase APR by generating more tokens, and build great communities."Real Yield"Many tokens that started out as aggressive token schemes are gradually moving to a fee-based model. Ultimately, only protocols that generate real revenue will succeed, and hype and inflation are only good for temporary price performance.
Therefore, although this list may now be considered a"Real Yield"despite this,
