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Alternative metrics, Lido's rise, and PancakeSwap's dominance reshape DeFi landscape

Debate over using total value locked (TVL) as a measure for DeFi success
Uniswap Labs projected to earn $17.7 million in annual revenue
2023/12/25 (Dec 25th, 2023 2:26 pm)
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Maker and the Spark Protocol

Maker stands out for its strategic investments in US Treasury bonds, capitalizing on rising interest rates to capture yield. The Spark Protocol subDAO, part of Founder Rune Christensen’s vision for Maker’s future, offered investors exposure to T-bill yield through a locked version of the DAI stablecoin. At its peak, the locked DAI’s yield reached 8%, making it an exemplary real-world asset.

Lido’s Staked Ether (stETH)

Lido capitalized on Ethereum’s shift to proof-of-stake in 2022 by allowing users to stake their ether on the platform in exchange for tokenized staked ether (stETH). This token pays users staking rewards and can be traded or used as collateral. With a market capitalization exceeding $20 billion, stETH has become the ninth-largest cryptocurrency. While Lido handles over 32% of all staked ether, concerns over the platform’s centralized position on the network have sparked debates.

PancakeSwap and Concentrated Liquidity

PancakeSwap is the second-largest decentralized exchange (DEX) by volume, trailing behind Uniswap. In March, PancakeSwap launched v3, focusing on concentrated liquidity. This enables liquidity providers (LPs) to concentrate their funds within specific ranges, increasing the likelihood of their liquidity being utilized for trades and earning fees. As the dominant DeFi app on the BNB Smart Chain, PancakeSwap derives nearly all its volume from the chain.

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Convex and Curve

Convex, an asset management protocol, allows LPs and stakers to lock up tokens issued by Curve and earn yield. As the second-largest DEX on Ethereum after Uniswap, Curve’s performance significantly impacts Convex. By amplifying yield from Curve’s CRV tokens, Convex controls 48% of vote-escrowed Curve tokens and a third of vote-escrowed Frax tokens.

Perpetual Swaps and GMX

Perpetual swaps (perps) offer DeFi traders the ability to engage in highly leveraged trades without requiring vast amounts of capital. Unlike traditional futures, perps don’t have an expiration date tied to the buying or selling of assets. GMX, the largest protocol on Arbitrum in terms of TVL, received a substantial grant allocation of 12 million ARB, worth approximately $14 million at current prices, as part of the layer-2’s October grant distribution.

What is the Spark Protocol subDAO?
The Spark Protocol subDAO is part of Founder Rune Christensen's vision for Maker's future and offers investors exposure to T-bill yield through a locked version of the DAI stablecoin.
What is stETH and how does Lido capitalize on Ethereum's shift to proof-of-stake?
stETH is a tokenized version of staked ether, allowing users to stake their ether on the Lido platform in exchange for stETH tokens. Lido handles over 32% of all staked ether and offers users staking rewards.
What is the main feature of PancakeSwap v3?
PancakeSwap v3 focuses on concentrated liquidity, enabling liquidity providers (LPs) to concentrate their funds within specific ranges. This increases the likelihood of their liquidity being utilized for trades and earning fees.
How does Convex amplify yield for LPs and stakers?
Convex allows LPs and stakers to lock up tokens issued by Curve and earn yield. By amplifying yield from Curve's CRV tokens, Convex controls a significant portion of vote-escrowed Curve tokens and vote-escrowed Frax tokens.
What are perpetual swaps and how does GMX benefit from them?
Perpetual swaps are financial derivatives that allow traders to engage in highly leveraged trades without the need for a specific expiration date. GMX, the largest protocol on Arbitrum, received a grant allocation of 12 million ARB as part of the layer-2's October grant distribution.

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