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Top 11 DeFi Protocols To Keep an Eye on in 2024

21 mins
Updated by May Woods
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If traditional finance got a blockchain makeover, DeFi protocols would inevitably be the result. Here, decentralized apps (DApps) and smart contracts reign supreme, offering you control over your financial future. 

From staking your digital assets for crypto yield to conducting anonymous crypto swaps, this guide introduces you to the top DeFi protocols to keep an eye on in 2024.

Methodology

11 Top DeFi protocols in 2024

Best decentralized exchanges (DEXs) protocols

1. dYdX

Best DeFi protocol for liquid staking
Token
dYdX
Token max supply
1,000,000,000 DYDX
Market cap
$1.499B
TVL
$401.81M

2. PancakeSwap

Best DeFi protocol for cost-effective transactions
Token
Token max supply
450,000,000 CAKE
Market cap
$974.4M
TVL
$2.224B

3. Uniswap

Best DeFi protocol for community
Token
UNI
Token max supply
1,000,000,000 UNI
Market cap
$8.86B
TVL
$5.543B

4. Curve Finance

Best DeFi protocol for stablecoins
Token
Token max supply
2,091,644,627 CRV
Market cap
$730.32M
TVL
$2.486B

5. Balancer

Best DeFi protocol for multi-tokens pools
Token
BAL
Token max supply
62,244,253 BAL
Market cap
$268.21M
TVL
$1.242B
Top DeFi protocols for borrowing and lending

6. Summer.fi

Best DeFi protocol for services
Token
Summer.fi
Token max supply
N/A
Market cap
N/A
TVL
$5.345b

7. Aave

Best DeFi protocol for liquidity
Token
AAVE
Token max supply
16,000,000 AAVE
Market cap
$1.711B
TVL
$10.564B

8. MakerDAO

Best DeFi protocol for generating a stablecoin
Token
MKR
Token max supply
1,005,577 MKR
Market cap
$2.686B
TVL
$7B

9. Compound Finance

Best DeFi protocol for staking
Token
Token max supply
10,000,000 COMP
Market cap
$487.27M
TVL
$2.668B
Best DeFi protocols for liquid staking

10. Lido

Best DeFi protocol for ETH staking
Token
LDO
Token max supply
1,000,000,000 LDO
Market cap
$2.215B
TVL
$34.445B

Best DeFi protocol for portfolio monitoring

11. De.Fi

Best DeFi protocol for monitoring
Token
DEFI
Token max supply
1,000,000,000 DEFI
Market cap
n/a
TVL
n/a

DeFi protocols compared

ProtocolTypeTVLTokenNo. of blockchains supported
PancakeSwapDEX$2.224BCAKE9
UniswapDEX$5.543BUNI8
CurveDEX$2.486BCRV14
BalancerDEX$1.242BBAL8
Summer.fiDEX$5.345bsummer.fi4
AaveLending$10.564BAAVE12
MakerDAOLending$7BMKR1
CompoundLending$2.668BCOMP4
dYdXDEX$401.81MdYdX1
LidoStaking$34.445BLDO5
De.FiTracker and walletn/aDEFI15

What are DeFi protocols?

DeFi protocols are sets of rules, procedures, and codes that govern decentralized finance (DeFi) systems, enabling users to engage in activities such as trading, lending, and staking tokens within blockchain ecosystems. 

DeFi represents a paradigm shift leveraging blockchain technology, primarily Ethereum, to cultivate an open, permissionless, and borderless financial ecosystem. Unlike traditional systems, developers write smart contracts to deploy DeFi protocols that enable peer-to-peer interactions without intermediaries. By adhering to the same set of rules, DeFi protocols ensure a standardized experience for all participants. 

An example of a DeFi protocol is MakerDAO. The popular DeFi lending platform allows users to borrow against their crypto assets by locking them in exchange for a stablecoin, DAI, thus offering more predictable repayment terms despite the volatility of crypto markets. 

Other protocols allow you to earn a passive income by generating yield from your staked assets. One popular example is the Lido protocol, which allows you to earn on stETH.  Platforms like Lido aim to offer the highest APY on crypto staking, allowing users to maximize returns on their staked assets within the Ethereum ecosystem.

The total value locked (TVL) is often used as a metric to gauge a protocol’s adoption and utility, with MakerDAO being one of the largest by TVL, highlighting its significant role in DeFi.

In 2024, new and more efficient technologies are being developed. For instance, some protocols incorporate asynchronous smart contracts, which allow transactions and agreements to be executed without needing all parties to be present or online simultaneously. This helps streamline operations within networks like Ethereum.

According to DeFiLlama, the top protocol categories are lending, DEXs, bridges, CDP (protocols that mint their own stablecoin using collateralized lending), and restaking. 

DeFi protocols
Protocol categories: DeFiLlama

Why do you need DeFi protocols?

DeFi allows decentralized apps (DApps) and platforms to provide services like crypto lending and crypto yield earning through staking. Users can participate in AMM (automated market maker) systems to improve liquidity. 

These features offer a fertile ground for startups to innovate beyond conventional financial products, fostering rapid experimentation and potential disruption. The global accessibility facilitated by DeFi platforms makes them a significant tool for financial inclusion, allowing startups to reach a worldwide audience. 

The interoperability among various DeFi protocols enhances this further, enabling seamless integration of services like web3 gaming and metaverse tokens, broadening the scope of what blockchain startups can achieve.

The total value locked (TVL) in DeFi platforms serves as a metric of trust and utility, indicating the number of cryptocurrencies staked, lent, or committed to liquidity pools, highlighting the ecosystem’s growth and stability.

By eliminating intermediaries, DeFi significantly lowers transaction costs, making it an attractive model for startups, especially in crypto lending and yield generation. Instead of being worried about your credit score, you can apply for a crypto loan with fewer restrictions than in TradFi. This reduction in costs, combined with the potential for high crypto yield through mechanisms like staking, positions DeFi as an increasingly popular option for both entrepreneurs and investors in the crypto market.

How do DeFi protocols work?

DeFi protocols function by leveraging blockchain technology. While most of them are based on Ethereum, some may also support other networks. At the heart of these services are smart contracts, self-executing contracts with the terms of the agreement directly written into code, which facilitate, verify, and enforce the negotiation or performance of a contract.

DeFi, however, requires thorough research and understanding of several factors, including security, liquidity, and the platform’s governance structure. It’s important to assess the user experience, the degree of interoperability with other DApps and blockchain systems, and the level of community involvement in decision-making processes.

1. Decentralized apps (DApps)

Users can engage with various DeFi platforms or DApps to access a wide range of financial services. 

One common way to participate is through crypto lending on platforms. Protocols such as Aave or Compound allow you to deposit cryptocurrencies to earn interest. The earnings are measured as Annual Percentage Yield (APY), which is a volatile percentage that corresponds to the market’s demands.

2. Liquidity mining

Another popular DeFi activity is liquidity mining. You can provide liquidity to decentralized exchanges (DEXs) by depositing your assets into liquidity pools. This deposit is usually made for a pair of assets, such as ETH-USDT, but it can be anything else.

In return, you earn rewards, often in the platform’s native tokens. This process is critical for ensuring there is enough market liquidity for trading and is facilitated by AMMs, algorithms used by DEXs to determine the price of tokens and facilitate trades.

3. Swaps (trading)

Trading on DEXs is another key function of DeFi protocols. These platforms allow users to trade cryptocurrencies directly with others in a more private and accessible manner than on centralized exchanges. 

This not only supports the decentralized ethos of blockchain but also contributes to the Total Value Locked (TVL).

Should you use DeFi protocols?

should you use defi protocols

Pros 

  • Earn money: You can make your crypto work for you. Put your assets in DeFi platforms to earn interest or rewards.
  • Trade easily: Swap cryptocurrencies directly with others. No need for a middleman.
  • More control: You’re in charge of your money. No bank or institution can block your transactions.
  • Open to everyone: Anyone with an internet connection can join. It’s global and inclusive.
  • Transparent: Everything is recorded on the blockchain. You can see all transactions.
  • New opportunities: Explore new financial services like crypto lending or web3 gaming.

Cons 

  • Risky: Crypto values can change fast. Your investments can shrink quickly.
  • Complicated: Some DeFi stuff is hard to understand. It’s not always beginner-friendly.
  • Security issues: Hacks happen. If a DeFi platform gets attacked, you might lose your money.
  • No customer support: If you have a problem, there’s no customer service to call.
  • Research needed: You need to do your homework before investing. Not all platforms are safe.
  • High fees: Sometimes, you’ll pay a lot to make transactions, especially when the network is busy.

Could DeFi replace traditional finance?

Decentralized finance has the potential to usurp traditional institutions, specifically TradFi. Decentralized finance enables users to transact securely, anonymously, and efficiently and is thus likely to gain popularity as web3 and crypto adoption grows. From crypto lending to staking to market makers, DeFi is exciting but also risky.

Do not interact with any DeFi protocols until you have developed a solid plan and are entirely comfortable with the mechanisms of the platform. Always be aware of the potential for losses, and never invest more than you can afford to lose.

Frequently asked questions

What is the most popular DeFi protocol?

What are the top five DeFi tokens?

What is TVL in DeFi protocols?

How many DeFi protocols are there?

How many DeFi protocols are there?

Is TVL a good metric?

What is a good FDV TVL ratio?

What is the TVL formula?

How to calculate FDV?

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Iulia Vasile
Iulia Vasile is a seasoned professional in the cryptocurrency and blockchain industry, working full-time in the field since 2017. With a background in computer engineering, she has the unique ability to write about complicated topics, including DeFi, NFTs, trading, and AI, in a way that is easy to understand. Iulia learned multiple programming languages while completing her Software Engineering degree in Bucharest at Politehnica University. Iulia brings her expertise and personal...
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