Taking stock of the top 5 DeFi protocols with the highest revenue in 2023

Author: Jack Kubinec, DeFi reporter; Translation: Golden Finance xiaozou

Since TVL (Total Value Locked) was brought to the public by the DeFi trend in 2019, this metric has been used as the main criterion for measuring the success of a protocol.

But with DeFi stuck in a bear market for much of 2023, some have pointed out that TVL may distort the underlying value of the protocol. Others say thatDeFi should abandon this metric entirely as it is not as meaningful as claimed.

Oleg Fomenko, co-founder of Sweat Economy, said: “10 giant whales will make your TVL suddenly soar... We I’ve seen many projects fall into the same trap.”

There is another metric - revenue: protocol revenue minus Rewards paid to liquidity providers (LPs).

The revenue data in this article are calculated based on DeFiLlama data as of December 13. It is worth noting that Uniswap Labs only started generating revenue after starting interface fees in October. Blockworks Research estimates that based on current conditions, Uniswap Labs is expected to earn $17.7 million in annual revenue.

1, Maker -- $95.91 million

Since 2022, Maker has gradually purchased U.S. Treasury bonds to earn income from rising interest rates. Maker’s Spark Protocol subDAO is part of what founder Rune Christensen calls Maker’s future endgame, giving investors exposure to U.S. Treasury yields through a locked version of its DAI stablecoin. The locked-in DAI yield was once as high as 8% this year. The savings DAI token sDAI is held up as an example of a real-world asset because it is essentially a tokenization of U.S. Treasury bonds.

2, Lido -- $55.79 million

Lido capitalizes on Ethereum's 2022 shift to proof-of-stake, allowing users to stake their ETH on the platform in exchange for tokenized staked ETH (stETH), which is the staking reward paid to users. Can also be traded or used as collateral. stETH has grown to become the ninth largest cryptocurrency with a market capitalization of over $20 billion. Lido has recently received a boost from the hype surrounding Ethereum’s upcoming Dencun upgrade, which was initially planned for release in 2023 before being delayed. Lido currently handles over 32% of all staked ETH, sparking a debate over the centralization of the network by the liquidity staking platform.

3, PancakeSwap -- $52.31 million

PancakeSwap is the second largest decentralized exchange (DEX) after Uniswap. In March this year, DEX launched the v3 version of its platform, which focuses on concentrated liquidity. LPs can concentrate their liquidity within a specific range to increase the chances of their funds being used for trading and earning fees. PancakeSwap has also adjusted its governance model and launched a gaming market. PancakeSwap was originally a native application of the BNB Smart Chain and is still the largest DeFi application on the chain. Almost all PancakeSwap trading volume comes from the BNB Smart Chain.

4, Convex Finance -- $42.23 million

Convex is an asset management protocol that allows LPs and stakers to lock Curve-issued tokens and earn revenue. Curve is the second largest DEX on Ethereum after Uniswap, and the fate of Convex is largely tied to Curve. Convex allows LP and Curve’s CRV token holders to increase their token earnings. Convex controls 48% of voting escrow Curve tokens and one-third of voting escrow Frax tokens.

5, GMX -- $37.52M

GMX is a perpetual contract exchange. Perpetual contracts (perps) allow DeFi traders to trade with high leverage without requiring large amounts of capital. Unlike traditional futures, Perps have no expiration date when traders need to buy or sell an asset. GMX is the largest TVL protocol on Arbitrum and the largest recipient of October’s L2 grant, bagging 12 million ARB, which is about $14 million at today’s prices.