Decentralized finance (DeFi) has been on an interesting journey since the peaks of the fondly remembered DeFi Summer. According Binance Research Report, while numerous tokens have already been in a bear market for many months, developers and builders continue to dedicate time and energy to building the financial systems of the crypto world.
DeFi platforms and builders
With the traditional finance sector a multi-trillion dollar industry, DeFi platforms and builders have sufficient reason and incentive to continue to build in DeFi and vie for a larger slice of the proverbial pie.
Despite scalability being somewhat limited due to high transaction fees, inconsistent liquidity and security concerns, development is consistent and growing, while fundraising in DeFi continues to hit an all-time high.
In this section, we explore how this central sub-sector of crypto has been developing in the last few months.
Decentralized finance (DeFi) is a financial ecosystem consisting of decentralized applications (dApps) built on blockchain networks, with Ethereum being the most popular.
It is difficult to pinpoint the exact time when DeFi was born, as there is no universally recognized date that marks the birth of the DeFi field. It can be said that DeFi has gradually taken shape as different components of the blockchain technology stack and key developments in the crypto industry have worked together to solve specific problems or innovate on existing features/services.
DeFi runs on a decentralized network, mainly blockchain technology, which means that no single entity can control the entire system.
This is different from traditional finance, where centralized institutions oversee and manage financial transactions. DeFi relies on smart contracts – digital contracts that are automatically executed when certain conditions are met without the need for intermediaries.
In addition, in DeFi, decentralized autonomous organizations (DAOs) are responsible for the development and sustainability of DeFi projects. Each DAO can implement a governance structure according to its own rules and procedures, including voting mechanisms, vesting schedules, token delegation, protocol development, etc.
Here’s an in-depth guide to the best DeFi projects that exist not only on Ethereum but also on other popular chains like Solana, TRON, Base, and more.
The 14 DeFi projects worth paying attention to in 2024
- Uniswap: Ethereum’s top decentralized trading platform
- Aave: The largest lending platform on Ethereum
- Lido: Ethereum’s leading staking protocol
- EigenLayer: Ethereum’s top re-staking protocol
- Ondo Finance: The largest RWA protocol
- PancakeSwap: Top decentralized trading platform on BNB chain
- Jito: Top dApp on Solana Blockchain
- MakerDAO: Creator of the largest decentralized stablecoin (DAI)
- Raydium: Leading Decentralized Exchange on Solana
- 1inch: Ethereum’s veteran decentralized trading platform
- Aerodrome: Top Lending Protocol on Base
- Just Lend: The largest lending protocol on TRON
- Honorable mention projects: Indigo Protocol, Benqi
The following projects have been handpicked based on their popularity and influence in the DeFi market. Without further ado, let’s take a look at some of the best DeFi projects of 2024.
The crypto fundraising landscape in Q2 2024 saw remarkable activity, with 521 projects successfully raising over $3.563 bn.
This represents an increase from the previous quarter’s 469 projects, highlighting growing investor interest. Notably, 141 projects did not disclose their raised amounts.
Top Fundraisers and Sector Breakdown
The Infrastructure sector led in both total funds raised ($1.59 bn) and the number of projects (158), with Monad securing the highest single amount at $225 mn, followed closely by Bitstamp with $200 mn. The DeFi sector also showed strong performance, ranking second in both total amount raised and number of projects.
Fundraising Rounds and Investment Types
The Undisclosed Round was the most lucrative, raising $841 mn, followed by Series A rounds with $698 mn. In terms of the number of investments, Seed Rounds led with 143 projects, followed by Undisclosed Rounds with 137 projects.
Sector-Specific Insights
The Infrastructure sector featured some of the most recognizable projects, including Monad, Aethir, Berachain, Optimism, and Auradine. The DeFi sector saw significant contributions from sub-sectors like Staking (26%), Real World Assets (RWA) (13%), Decentralized Exchanges (DEX) (12%), Derivatives (10%), and Prediction Markets (9%).
Blockchain Services also attracted substantial investment, particularly in Cloud Services (30%) and Mining (30%), with other areas like Security & Privacy (7%), Decentralized Physical Infrastructure Networks (DePIN) (6%), Data Services (5%), AI (4%), and RWA (3%) gaining attention.
To open our discussion, we can take a top-down view to illustrate how DeFi has been evolving when broken down via chain. DeFi started on Ethereum and most of the largest dApps are still based on the chain.
DeFi TVL for most of the brief history
The first-mover advantage was notable and Ethereum has commanded upwards of 95% of DeFi TVL for most of the brief history of this nascent sector.
Nonetheless, this dominance started to wane throughout 2024, at least in part due to high transaction fees and scalability concerns, and Ethereum has seen its share of DeFi TVL drop from 97% at the start of 2024 to ~63% today.
According Crypto Market Review, looking closer at 2024, the first few months of the year saw a rapid (and in hindsight, an unsustainable) rise in the TVL of the Terra ecosystem, driven largely by the ~20% yields available on their Anchor Protocol.
BNB Chain, which has ranked second by TVL for over a year (except for a brief period of being usurped by Terra) has seen some sustainable growth this year, increasing market share from ~7% to upwards of ~8%.
Additionally, BNB Chain has been one of the major ecosystems to have offered incentives to Terra developers to migrate over and bring their talent to work on its projects. For Tron, a chain that has largely been absent from top TVL rankings for a long time, the increase in TVL has largely been driven by their USDD algorithmic stablecoin, again offering attractive yields to attract users.
Average monthly DeFi TVL by Chain
Crypto was not spared from the market downturn that also plagued traditional asset classes such as stocks and bonds.
Black swan events such as the suspension of fund withdrawals by several centralized lending platforms and the collapse of the algorithmic stablecoin TerraUSD (UST) in the first half of this year contributed to further negative sentiments and worries.
Fundraising Amounts
The majority of projects raised between $3 mn and $10 mn (155 rounds), followed by those with undisclosed amounts (141 rounds), and those raising between $1 mn and $3 mn (112 rounds).
Q2 2024’s fundraising highlights a clear investor focus on Infrastructure, DeFi, and Blockchain Services sectors. Key areas of interest include Layer 1/2 solutions, AI, DePIN, and staking-related projects.
This trend indicates a preference for projects with real-world applications that drive mass adoption or generate user yields through staking activities.
Cryptomarket booms and busts
That said, market booms and busts are not uncommon and are characteristics of market cycles. The market downturn has helped to weed out excesses and the reset in valuations back to more sustainable levels is arguably a positive development for the long-term viability of the ecosystem.
Nonetheless, price action alone is not representative of the health of the ecosystem, nor does it show the full picture of the underlying developments.
As such, in this report, we aim to share a holistic review of the past half-year in crypto by analyzing the latest data, trends, and outlook across different areas of the crypto ecosystem.
We remain optimistic about the long-term outlook for crypto since we continue to see further adoption and innovation in the space.
Regardless, having reviewed the underlying trends and developments across different sectors in the crypto ecosystem, one thing is certain – we are in a BUIDL market.
Excesses are steadily being flushed out of the system, and investors are now more rational in terms of capital allocation. Developers continue to improve their products and smart contracts continue to work as programmed.
Rome was not built in a day. Nothing great comes without time, persistence, and hardwork. Challenges and hurdles are not uncommon. Yet, as numerous communities and the great minds in crypto work together to lay the bricks and build the foundation for a decentralized and permissionless future, we remain more optimistic than ever. We look forward to a future with increased freedom of money.
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