DeFi token price falls, but utility is increasing

The decentralized finance (DeFi) sector has been sitting in the backseat since its frenzy in the summer of 2020 to the first quarter of 2021. Currently, investors are debating whether the sector will Whether the cryptocurrency is in a bull or bear market, that is to say, a good time to check the state of DeFi and determine which protocols might be establishing new trends.

Here’s a look at the top-ranked DeFi protocols and a review of the strategies used by users of these protocols.

Stablecoins are the foundation of DeFi

DeFi protocols related to stablecoins are the foundation of the DeFi ecosystem and Curve is the go-to protocol when it comes to Cryptocurrency bet.

Top 5 protocols by total locked value. Source: Defi Llama

Data from Defi Llama shows that four of the top five protocols in terms of total value locked (TVL) are connected to stablecoin creation and management.

It’s important to note that while these protocols have come to the fore when it comes to TVL, the value of their native tokens has mostly dropped significantly from the 2021 all-time high.

The main takeaway is that participating in the stablecoin side of the DeFi market through staking and farming has provided steady returns while also earning governance tokens for these platforms as an added bonus. additional to help mitigate the drop in token value.

As it stands, stablecoins play an integral role in the overall soundness of DeFi and continue to expand as newer protocols like Frax Share and Neutrinos climb up the TVL rankings in the context of more and more interconnected blockchain networks.

Lending and borrowing is at the core of DeFi’s value proposition

Lending platforms are another important component of the DeFi ecosystem and one of the key features that investors can interact with even during a bear market. AAVE and Compound are leading now with TVLs of $12.09 billion and $6.65 billion, respectively.

Like other stablecoin protocols, AAVE and Compound have seen the value of their native tokens peak in 2021, and both have fallen into multi-month long recessions.

AAVE/USDT 1-day chart vs COMP/USDT. Source: TradingView

AAVE’s TVL growth has surpassed Compound’s largely due to Polygon and Avalanche’s cross-chain integration, which increases the number of supported assets and allows users to avoid high gas fees on the Ethereum network.

Long-term crypto enthusiasts who are averse to risk can benefit from simply lending their tokens to a modest yield.

Aave versus the yield of synthetic stablecoins. Source: DeFi Prime

Related: Altcoin Roundup: JunoSwap, Solidly, and VVS Finance Give DeFi a Much-needed Refresh

Liquid staking adds utility to DeFi

The increasingly popular liquidity staking is also adding new utility to decentralized finance. Liquid staking protocols like Lido Financewas initially launched as an Ethereum staking solution but has since expanded support to Terra (LUNA), Solana (SOL), Kusama (KSM) and Polygon (MATIC).

Data from Defi Llama shows that TVL on Lido hit a new all-time high of $14.96 billion on March 10 as the addition of new assets continues to attract more value to the protocol.

Total value locked on Lido. Source: DeFi Llama.

On Lido, users can stake Ether and Solana and receive stETH or stSOL, which can then be used as collateral on AAVE to borrow stablecoins. Those assets can then be used for trading or agricultural purposes, thus increasing the overall profit earned from the initial deposit.

Other notable liquid staking protocols include staking provider Eth2, StakeWise, Cosmos .-based pStake protocol and Stader . Laboratories.

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The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move is risky, you should do your own research when making your decision.