DeFi has established itself as the top sector for high value tokens. With DeFi tokens outperforming BTC in 2020, the ecosystem is quickly turning towards popular protocol tokens as a means of value capture for DeFi’s growth.
DeFi Token Trends for 2021.
As ETH rises on a steady tear, select DeFi tokens are fighting to keep up with the growth. The biggest gainers are those of well established blue chips like AAVE and SNX along DEX governance tokens like SUSHI and UNI.
There’s a lot of talk around Layer 2 (L2) scalability, especially with gas costs reaching new highs amidst the ETH bull run. With Synthetix planning to move to L2 on January 15th and Uniswap soon to follow with Uniswap V3, its likely that these governance tokens will play increasingly important roles in their respective ecosystems. Compound’s choice to build out Compound Chain signals a sign in this direction, and it’s likely that other key governance tokens like BAL will help shape protocol upgrades in 2020.
Meta-governance projects like INDEX will look to play into the conversation while yield farming aggregators like ALPHA look to capture idle ETH for interest-earning vaults.
Outside of DeFi, centralized exchange tokens like FTT (FTX’s token) continue to perform well amidst retail attention, best highlighted by Celsius’s mysterious ecosystem propelling CEL to new ATHs. But, don’t let price trick you. With all custodial tokens comes an added degree of trust.
Stay safe out there!
This list will be updated periodically. The tokens mentioned on this list are meant to serve as education and should not be treated as investment advice.
To see which DeFi tokens have the highest market cap at any given time, we recommend this awesome tool from DeFiMarketCap.
Aave – AAVE
Total Supply: 16,000,000 AAVE
Aave is a leading lending protocol that leverages a native token AAVE to secure the protocol and participate in governance. Aave is currently undergoing its migration from LEND to AAVE at a rate of 100:1, which you can do through the Migration Portal. AAVE can be staked via the Safety Module for AAVE rewards.
Synthetix – SNX
Total Supply: 190,075,446
Synthetix is a leading derivatives protocol backed by a native token SNX. In order to mint new derivatives – called Synths – users must stake at least 750% of the Synths value in SNX. Maintaining this ratio – referred to as a cRatio – allows users to earn native inflation along with a pro-rata portion of trading fees from the Synthetix Exchange.
yEarn – YFI
Total Supply: 30,000 YFI
yEarn is an automated liquidity aggregator offering a number of different yield farming opportunities. The protocol is governed by a native token – YFI – which was launched with no premine and did not hold an Initial DEX Offering. Users can stake YFI to participate in governance and claim a pro-rata share of protocol fees.
Uniswap – UNI
Total Supply: 1,000,000,000 UNI
Uniswap is the leading decentralized exchange in DeFi. In mid-September, Uniswap airdropped 15% of its supply to past users through a program marked ‘UNIversal Basic Income‘. Today, UNI can be earned by providing liquidity to select pools and will eventually be used for governance as a larger portion of the supply is issued.
Sushiswap – SUSHI
Total Supply: 250,000,000 SUSHI
SUSHI is the governance token of the Sushiswap AMM and lending protocol. It is earned by LPs by providing liquidity to select pairs on Sushiswap, and can be staked via the Omaske bar to earn protocol fees and issuance. SUSHI is also used to vote on new Onsen launch partners, or projects that receive added SUSHI rewards for conducing an Initial DEX Offering through Sushiswap.
Compound – COMP
Total Supply: 10,000,000 COMP
As the native governance token behind the leading lending protocol, COMP is earned by users for lending or borrowing assets. COMP is used to govern important protocol decisions that can be voted or delegated on the Compound Governance Dashboard.
COMP is allocated to markets relative to the amount of interest accrued, meaning assets that generate the most interest will earn the most COMP per day. Here’s a great tool to keep up with which assets are earning the most COMP on any given day.
DeFi Rate is making a big push to be a Compound delegate, and you can read our bid about why you should consider delegating to us here.
Kyber Network – KNC
Total Supply: 210,623,056 KNC
Kyber Network is a leading DEX that captures value through a native token – Kyber Network Crystals (KNC). Fees collected from the exchange are largely used to burn KNC. Kyber recently underwent it’s Katalyst tokenomics upgrade, introducing key governance mechanisms through the advent of the KyberDAO.
Using KNC, users will have the ability to vote (or delegate) on important protocol decisions including the distribution of fees collected from DEX trading.
Maker – MKR
Total Supply: 1,005,577 MKR
Maker is the decentralized lending protocol responsible for the creation of DAI. MKR is used to vote on protocol decisions through the Maker voting dashboard and is burned using a portion of Stability Fees collected from outstanding loans.
0x Protocol – ZRX
Total Supply: 1,000,000,000 ZRX
0x Protocol is a DEX liquidity protocol used to funnel liquidity to a number of different exchanges. ZRX is used to govern the protocol along with being staked by Market Makers as a means of collecting trading fees.
Balancer – BAL
Total Supply: 100,000,000 BAL
Balancer is an automated asset management and liquidity protocol governed by a native token – BAL. Since launch it’s Liquidity Mining program in June, Balancer has seen strong growth on all fronts. BAL is used to govern important protocol decisions like protocol fees, support assets, and Factors relative to how BAL is earned.
UMA – UMA
Total Supply: 100,224,817 UMA
UMA is a derivatives protocol for the creation of permissionless synthetic assets. The native token – UMA – is used to govern protocol decisions and can be used to challenge underlying registries that are out of sync with the synthetic asset they are attached to.
Curve – CRV
Total Supply: 3,030,000,000 CRV
Curve is a liquidity aggregator for same-peg assets like stablecoins and Bitcoin wrappers. The native token – CRV – is staked via the Curve DAO for both time-weighted governance right and liquidity multipliers on CRV liquidity mining. In the future, it’s been hinted that the Curve DAO will use protocol fees to purchase and burn CRV off the open market.
Alpha Finance – ALPHA
Total Supply: 1,000,000,000 ALPHA
Alpha Finance is a yield farming aggregator behind Alpha Homora, a product to lend idle ETH that is used to farm on leverage. The risk-savvy platform is governed by ALPHA, with a portion of yield directed back to a community treasury managed through governance.
Index Cooperative – INDEX
Total Supply: 10,000,000 INDEX
Index Cooperative is a community governances index management protocol behind the DeFi Pulse Index (DPI). The INDEX governance token is used to decide how indexes are comprised, and how the assets in those indexes are used in meta-governance of their respective protocols. The team behind the Index Co-op is the same as Set Protocol and TokenSets.
Ren Protocol – REN
Total Supply: 1,000,000,000 REN
Ren Protocol is an interoperable bridge to port assets to Ethereum using the RenVM. To become a validator on the network, users must post 100,000 REN as collateral to host a darknode. Those which operate a darknode are entitled to a pro-rata share on all trading fees which are collected from the protocol.
Nexus Mutual – NXM
Total Supply: 4,355,684 NXM
Nexus Mutual issues mutual members NXM in exchange for ETH that is deposited to the Capital Pool to protect against smart contract vulnerabilities. In the event that a claim is passed, ETH from the capital pool is used to compensate the affected party. Members can stake NXM on various contracts to collect a portion of fees that are earned when covers are purchased. In the near future, Nexus will introduce pooled staking which allows all covers purchased to be allocated across all those that stake their NXM.
Bancor – BNT
Total Supply: 69,148,554 BNT
Bancor is a DEX which is fueled by a native token – BNT. A portion of trading fees collected from the exchange are distributed to BNT holders. Bancor is currently rolling out it’s a V2 upgrade that introduces BNT staking through a BancorDAO.
Loopring – LRC
Total Supply: 1,374,513,897 LRC
Loopring is a Layer 2 exchange protocol that offers scalability solutions to optimize throughput on Ethereum. LRC is staked to earn a portion of trading fees earned both on the DEX on on applications like Loopring Pay.
Note: This list will be updated periodically as new tokens are brought to our attention. If you would like to see your token mentioned on this list, please contact us with a breakdown on what your token is used for and why it should be listed.
Numerai – NMR
Total Supply: 10,979,551 NMR
Numerai is an AI-based hedge fund responsible for the creation of Erasure – a prediction protocol in which users stake NMR to signal confidence in their predictions. NMR was recently listed on Coinbase.
bZx – BZRX
Total Supply: 1,030,000,000 BZRX
bZx is a lending and margin protocol behind products like Fulcrum and Torque. The project recently debuted its BZRX governance token with an upgraded token model kickstarted by an Initial DEX Offering. BZRX is used to cover protocol deficits and can be staked via the bZxDAO for trading fees and inflation.
PieDAO – DOUGH
Total Supply: 100,000,000 DOUGH
PieDAO is an automated asset management protocol offering access to a variety of DeFi indexes. It’s native token – DOUGH – is used to govern the indexes and offers fees to DOUGH holders as indexes are traded. DOUGH can currently be earned through a number of liquidity mining programs.
mStable – MTA
Total Supply: 100,000,000 MTA
mStable is a liquidity aggregator for same-peg tokens called mASSETS like mUSD. The protocol is governed by a native token – MTA – which can be staked via the Earn feature for a claim on protocol fees and MTA inflation. MTA was debuted with an Initial DEX Offering but decided to use Mesa for fair price discovery to avoid bot front-running.
Outside of protocol-specific tokens, we’ve seen the rise of various flavors that are given to a depositor for supplying assets to a DeFi protocol. Examples of these token flavors include:
- cTokens – ERC-20 tokens which represents an underlying loan being supplied out on Compound Finance. cTokens accrue interest over time based on the supply interest rate and therefore, each token becomes redeemable into an increasing amount of the underlying asset.
- dTokens – Dharma‘s token flavor which offers the same benefits as cTokens with 10% of collected interest being siphoned back to Dharma as a revenue stream.
- oTokens – oTokens are options offered on the Convexity Protocol used in products like Opyn. When purchasing a put users receive oTokens in return.
- TokenSets – Set Protocol-based asset management tokens. Investors buy into a single ERC-20 token with a programmable trading strategy and underlying components like ETH and cUSDC.
- tBTC – a decentralized and trustless system for wrapping Bitcoin proposed by Keep Project and the Cross-Chain Working Group. Bitcoin is deposited into a multi-sig wallet where the key holders are incentives to act accordingly by locking up other crypto assets as collateral (in this case ETH). Once this is confirmed on-chain, the TBTC smart contract mints the user with a 1:1 equivalent of the token on Ethereum.
- wBTC – wBTC is a multi-institutional framework for wrapping Bitcoin on Ethereum through the use of Merchants and Custodians to issue, burn, and custody of the underlying assets.
DeFi tokens create new and unique ways to gain access to promising opportunities in a permissionless fashion.
As we continue to watch new protocols explore different forms of tokenization, it’s likely that the opportunities for end-users to capture in the upside of the most popular DeFi products will only become more and more accessible.
If there is a token that you feel should be added to this list, please contact us.