The decentralized finance (DeFi) sector continues its meteoric rise, offering an open alternative to traditional financial services built on blockchain networks. As DeFi adoption grows, the tokens powering these decentralized protocols are increasing in value and investment appeal. According to CoinMarketCap, the current market capitalization of the top 100 DeFi tokens is over $64 billion. 24-hour trading volume exceeds $44 billion. This demonstrates the immense interest and activity happening in the space.
Below are the top 10 DeFi coins among the top 100 as ranked by market capitalization. These cryptocurrencies have strong fundamentals and long-term growth potential as DeFi expands in 2023:
1. Lido Staked Ether (STETH)
Lido Staked Ether is the leading staking solution for Ethereum, allowing users to earn staking rewards on the ETH they deposit. This is accomplished by receiving stETH tokens representing staked ETH. stETH can be used across DeFi for liquidity and yields. With a market cap exceeding $18 billion, STETH accounts for over 28% of the total value locked in DeFi. As Ethereum transitions to proof-of-stake, staking participation will rise, benefitting Lido and STETH.
Lido makes Ethereum staking accessible to anyone. Users don’t need to run infrastructure or lock up tokens to earn yields from validation. This ease of use drives adoption. And with Ethereum moving to proof-of-stake consensus, staking participation is projected to rise steadily in 2023 and beyond. As the dominant gateway to staked ETH liquidity, Lido and STETH are poised to capture the lion’s share of growth in this area. The protocol shows no signs of slowing down, processing over $1 billion in staking deposits so far.
2. Chainlink (LINK)
Chainlink has become the go-to oracle network for connecting off-chain data to on-chain DeFi applications. By getting accurate data to smart contracts in a decentralized way, Chainlink powers many DeFi use cases. With a nearly $8.6 billion market cap, LINK’s valuation reflects Chainlink’s integral role across DeFi and the broader Web3 ecosystem. More adoption equates to more upside for LINK.
Chainlink oracles already secure billions of dollars in value across lending, trading, NFTs, and more. As these sectors grow, Chainlink will undoubtedly play an expanding role in getting blockchains data about prices, events, and real-world occurrences. The project has hundreds of partnerships with massive entities like Google Cloud, Oracle, and SWIFT Blockchain. With best-in-class security and an extensive selection of price feeds, Chainlink sits firmly atop the oracle market.
3. Dai (DAI)
As DeFi’s most trusted decentralized stablecoin, Dai is a staple in the crypto economy. Its $1 peg is maintained autonomously via collateralization and decentralized oversight. With a $5.3 billion market cap, Dai has proven itself as a permissionless and transparent alternative to fiat-backed stablecoins for trading, lending, and everyday transactions. DAI’s growth trajectory is tied directly to DeFi’s growth.
MakerDAO governs Dai autonomously, using economic incentives and direct voter participation to manage risk parameters. This decentralized model provides complete transparency while maintaining stability. Dai saw strong growth in 2022, with circulating supply expanding nearly 60% to over 5 billion tokens. As demand rises for trusted stablecoins to hedge volatility and transact on-chain, expect Dai adoption to continue accelerating.
4. Uniswap (UNI)
Uniswap pioneered automated liquidity protocol and has risen to become the top decentralized exchange for ERC-20 token trading. UNI gives holders a stake in governance and a portion of the protocol fees. With a nearly $4 billion market cap and over $650 million locked in the protocol, Uniswap will continue benefiting from the general migration toward decentralized financial services.
Uniswap V3 launched in 2021 brought concentrated liquidity and multiple fee tiers. This improves capital efficiency for LPs while maintaining high liquidity for swappers. Trading volume routinely exceeds $1 billion per day. Development remains robust, with the team releasing app interfaces, NFT features, and enhanced arbitrage and pricing oracles. As an industry leader, Uniswap will thrive long-term if DeFi adoption grows as projected.
5. Lido DAO (LDO)
Lido DAO is the decentralized autonomous organization behind Lido Finance and its popular liquid staking solution. LDO holders can participate in governance and receive staking rewards.
With Ethereum moving to proof-of-stake, Lido is positioned to keep garnering more traction. This gives LDO excellent investment potential with a market cap over $2 billion.
Lido DAO launched in 2021 to decentralize governance for Lido Finance, which now has over 400,000 ETH staked. LDO holders vote on parameters and treasury management. The team plans to introduce smart governance frameworks and optimized staking yields for long-term sustainability. As Ethereum expands, the decentralized nature of Lido will be key to providing accessible liquid staking options.
6. THORChain (RUNE)
THORChain is pursuing an ambitious goal of allowing cross-chain swaps between different blockchain ecosystems like Bitcoin, Ethereum, and Binance Smart Chain. With a market cap above $1.6 billion, RUNE has high upside potential if THORChain can successfully execute on its interoperability roadmap. The project currently handles over $1 billion in weekly trading volume.
After a series of exploits in 2022, THORChain developers introduced a more robust security model and relaunched the mainnet. The team continues working on Chaos Mainnet upgrades.
If THORChain can deliver on trustless, inexpensive swaps across chains, it would be a gamechanger for decentralized finance. RUNE should trend upward if the protocol can reach network stability and add desired features like derivatives.
7. Injective Protocol (INJ)
Injective Protocol is building advanced decentralized exchange technology focused on derivatives and futures. Traders can access high capital efficiency. With a $1.45 billion market cap, INJ offers appealing exposure as Injective establishes itself as a major venue for decentralized trading and synthetic assets.
One key feature is the Solstice orderbook, which solves frontrunning issues that plague many DEX models. Injective also offers novel products like futures and index tokens based on assets like gold. The roadmap includes optimized cross-chain bridges, options trading, NFT integration, and more. As Injective rolls out improvements in usability and offerings, INJ has major upside potential as a portion of derivatives trading enters DeFi.
8. Aave (AAVE)
As one of DeFi’s leading lending/borrowing protocols, Aave continues attracting high value locked numbers across its liquidity pools. Users can lend, borrow, and earn yield. With a nearly $1.4 billion market cap, AAVE has proven its worth as a core DeFi money market. DeFi lending is on an upward trajectory, making AAVE a smart long-term investment.
Aave V3 added support for social collateral and credit delegation, where users can share liquidity and vouch for borrowers. This improves capital efficiency and makes the pools more sustainable long-term.
The roadmap includes structured products for fixed yield exposure, multi-chain capabilities, and seamless fiat on/off ramps. With strong foundations as an early mover, Aave should continue its ascent up the DeFi ranks.
9. The Graph (GRT)
The Graph provides key indexing and querying data needed for certain decentralized apps to operate efficiently. Its $1.34 billion market cap reflects the growing developer demand. As more data and computations are required by emerging Web3 apps, The Graph is well-positioned to be the go-to indexing protocol across multiple blockchain ecosystems.
The Graph leverages blockchain data to build open APIs called subgraphs. These allow dApps to efficiently query blockchain data for price info, data points, and analytics. Indexing is automated via the GRT token.
As complexity and data needs grow across DeFi, NFTs, and metaverses, The Graph offers the best web3 data infrastructure. With ubiquitous usage already, GRT has room to appreciate further as adoption spreads more extensively.
10. Maker (MKR)
Lastly, no list would be complete without Maker, the decentralized finance trailblazer behind Dai. MKR allows holders to govern the MakerDAO ecosystem and earn rewards. With a market cap floating around $1.26 billion, Maker will remain a cornerstone in DeFi. As Dai expands, so does the investment appeal of shares in MakerDAO through MKR tokens.
MakerDAO continues trailblazing with novel models like protocol-owned liquidity, which helps stabilize Dai. MKR tokenomics are improved by burning MKR to offset protocol losses. Developments on the horizon include multi-collateral Dai for real-world backed stablecoins, oracles built on Chainlink, and direct fiat on/off ramps. As one of DeFi’s most innovative ecosystems, MakerDAO ensures MKR remains a top governance token.
Conclusion
As shown by the top 10 DeFi tokens alone with a combined market cap over $40 billion, decentralized finance is establishing itself as the future of financial services. These protocols and their associated tokens make smart long-term investments for believers in the blossoming Web3 economy.
