Decentralized finance (DeFi) has emerged as one of the most promising use cases for blockchain and cryptocurrencies, enabling a wide range of financial transactions without the need for a centralized infrastructure or intermediaries.
As a result, DeFi coins, which play a crucial role in facilitating these transactions, have become popular among crypto users.
This article takes a closer look at some of the largest DeFi coins by market capitalization.
Uniswap (UNI)
Uniswap is a decentralized exchange (DEX) built on Ethereum. The DEX allows users to trade ERC-20 tokens with smart contracts called liquidity pools instead of relying on a central intermediary and an order book to match buyers and sellers.
UNI is the native token of Uniswap. The DEX airdropped 400 UNI tokens (worth ~$1,500 dollars at the time, and up to $17,000 for users that held through April 2021) to any user who had interacted with the platform before September 1, 2020.
UNI
Governance: UNI holders can vote on the platform’s protocols, with more tokens held yielding greater decision-making power.
Treasury ownership: Collective ownership of UNI’s community treasury, which is used to fund grants for the UNI protocol.
Protocol fee switch: UNI token holders can enact a protocol fee switch that would entitle all UNI token holders to earn a small percentage of the total trading fees collected by the protocol.
Token supply and distribution
Uniswap has minted one billion UNI tokens that will come into circulation over the course of four years and be distributed in the following manner:
The vesting periods ensure that the DeFi tokens are released gradually and investors don’t sell off a large number of tokens in a short time.
Once the vesting period ends, Uniswap will increase token supply by 2% annually so passive token holders are incentivized to participate and contribute to the protocol.
Aave (AAVE)
Aave is a non-custodial lending protocol that allows users to borrow assets from a liquidity pool or lend assets and earn interest.
Aave started as ETHlend (LEND) in 2017 as a peer-to-peer lending and borrowing platform that matched borrowers and lenders. The platform ran into liquidity issues during the 2018 bear market and faced difficulties in matching loan requests to offers.
The team made significant changes to the underlying technology of the platform and launched ETHLend as Aave, which leveraged the liquidity pool model instead of a peer-to-peer model.
So, instead of lending and borrowing directly with each other, Aave allowed users to lend their assets to a pool (aka add liquidity), and others could borrow from it for a specified interest rate.
AAVE
Governance: AAVE token holders can vote on Aave Improvement Proposals (AIPs) created to update the protocol or its policies.
Staking: In exchange for staking AAVE in the protocol’s safety module, which protects the protocol against shortfalls, token holders will get safety incentives and obtain a portion of the protocol’s trading fees.
Token supply and distribution
The total supply of AAVE tokens is 16 million. At the time of writing there are 14.5 million tokens in circulation.
The remaining two million tokens were created during genesis to be added to the ecosystem’s reserves.
Curve DAO (CRV)
Curve is a decentralized exchange (DEX) that enables users to trade assets that are similar in nature, like stablecoins.
The trading fee on Curve is very low. While Uniswap collects a 0.3% trading fee, Curve only charges 0.04%.
This price reduction may not look like much, but it makes a significant difference for large-volume trades.
CRV
Curve’s native token is CRV, which has three main use cases. All of them involve locking CRV tokens to obtain vote-escrowed (veCRV) tokens, which are simply CRV tokens locked for a certain time.
Governance: CRV token holders can use their veCRV tokens to vote on governance proposals and protocol parameter changes.
Staking: Those who stake CRV tokens can earn rewards collected from the protocol’s trading fees.
Boosting: CRV token holders who have provided liquidity, vote locked, and staked their tokens get a rewards boost of 2.5x on the liquidity provided.
Token supply and distribution
CRV has a total supply of 3.03 billion which is distributed as follows:
Maker (MKR)
Maker is a DeFi project that allows users to generate DAI, a decentralized stablecoin, by putting up any supported Ethereum-based asset as collateral.
If users want to redeem their collateral, they have to pay back their DAI loan along with the platform fees. In the event that the users can’t repay their loan, the protocol will liquidate the assets.
MKR
Governance: MKR token holders can participate in on-chain governance of the Maker Protocol.
Stability fee: All collateralized debt position holders who have borrowed DAI accrue a stability fee which can only be paid in MKR.
Token supply and distribution
During its inception, MakerDAO released 1,000,000 MKR tokens. Here’s what the initial allocation looked like:
The total supply of MKR in circulation is not fixed and can vary depending on the system's performance.
In case the system runs at a loss and requires MKR to be diluted to raise funds, the total supply of MKR can increase. Conversely, if the system is efficiently managed, the amount of MKR may decrease as MKR is destroyed in exchange for extra Dai from the system's surplus.
LIDO DAO (LDO)
Lido is a liquid staking solution that aims to solve illiquidity, immovability, and inaccessibility problems that come with staking cryptocurrencies in blockchain networks using the Proof of Stake (PoS) mechanism.
The way it achieves this is simple: it issues tokens against staked funds in a 1:1 ratio, and users can use these tokens to participate in on-chain activities like lending and borrowing.
Different blockchain networks have different staked tokens and they’re named by adding an “st” prefix to the original crypto token.
For instance, if users stake Ether with Lido DAO, they receive stETH, which can be used to earn yield and staking rewards, just like regular ETH. When users decide to redeem the cryptocurrencies they staked, the staked tokens are burned.
LIDO
LDO is a governance token. LDO token holders can’t do much besides voting on protocol upgrade proposals and deciding on key parameters like platform fees.
Token supply and distribution
When LIDO DAO was initially released in 2020, one billion tokens were minted. The initial token allocation was as follows:
THORChain (RUNE)
THORChain is a blockchain built as a decentralized exchange that allows anyone to swap two assets based on two different chains without the need for a centralized intermediary. It uses the Proof of Stake consensus protocol and has a native DeFi coin called RUNE.
RUNE
Concentrating liquidity: THORChain uses RUNE as a settlement asset to concentrate liquidity for every asset. This ensures that there’s only a single pool with RUNE as the base pair for each asset instead of dozens of shallow pools.
Staking: Users who bond (stake) their RUNE become active validators and earn a portion of swap fees and block rewards.
Governance: Users who have set up THORnodes and staked RUNE receive voting power — every THORnode gets one vote which they can use to change network parameters through a governance mechanism called node-mimir.
Token supply and distribution
The maximum supply of RUNE DeFi coins is 500 million, and all of them were created during the network’s genesis and were initially distributed in the following ways:
dydx (DYDX)
dydx is a decentralized exchange (DEX) that enables users to trade perpetual contracts and spot-trade cryptocurrencies.
Unlike other decentralized exchanges that use automated market makers (AMMs), dydx uses off-chain matching engines like centralized exchanges to conduct trades.
The exchange was developed on the Ethereum blockchain and currently uses Starkware, a Layer-2 solution, to reduce Ethereum gas fees.
DYDX
Governance: Although there’s no official DAO in place, community members can vote on protocol developments.
Incentivize trading: DYDX holders receive a discount on trading fees and receive additional token rewards through the trade-to-earn program.
Staking: Users who stake their token in the safety module receive more DYDX tokens.
Token supply and distribution
DYDX has minted a total of one billion tokens that will be distributed and released over a five-year period, along with community rewards split in the following manner:
Once the five-year period is over, the supply of DYDX tokens will increase at a rate of 2% every year, so holders are incentivized to continue to grow and develop the protocol.
Compound (COMP)
Compound is a decentralized protocol that enables users to supply collateral assets to smart contracts that anyone can borrow against without the need for an intermediary.
Like many other DeFi projects, Compound was initially a centralized protocol. Its second version introduced progressive decentralization with a governance token.
COMP
COMP is the governance token of Compound. It can also be used as collateral to borrow assets on the platform.
Token supply and distribution
COMP launched in June 2020 with a maximum supply of 10,000,000 tokens. Here’s what the initial distribution looked like:
1Inch (1INCH)
1Inch is a DEX aggregator that helps users find the best possible token price by gathering data from all the top decentralized exchanges. It currently facilitates trades across five blockchain networks: Ethereum, BNB Chain, Polygon, Arbitrum, and Optimism.
The platform’s native token is called 1INCH and is available on Ethereum and Binance Smart Chain.
1INCH
Utility: 1INCH tokens are used in the liquidity protocol as a connector between two cryptocurrencies or tokens to achieve high-efficiency routing.
Governance: 1INCH holders can vote on the network's current and future protocols.
Token supply and distribution
1INCH has a total token supply of 1.5 billion. On the day of release, 6% of this supply was unlocked and the remaining tokens will be gradually unlocked over a four-year period by the end of 2024. Here’s what the total token distribution looks like:
Nexus Mutual (NXM)
Nexus Mutual is a smart contract insurance protocol that allows its users to purchase a cover to protect themselves from a financial loss against smart contract failures like bugs.
NXM
NXM’s price is automatically determined by assessing the amount of capital locked in the protocol and the total capital needed to meet all claims while maintaining a certain profitability.
The token is used only within the protocol to vote on governance decisions, buy cover, and participate in risks and claims assessments. It is not listed on exchanges.
However, the community has created the Nexus Wrapper (wNXM) — a wrapped crypto token representing the value of NXM — that can be traded on exchanges.
Yearn Finance (YFI)
Yearn Finance is a suite of DeFi protocols that helps investors, DAOs, and other protocols manage their passive earnings from their digital assets.
It has partnered with multiple DeFi protocols like SushiSwap and C.R.E.A.M to provide token swaps, insurance, and lending services.
It’s also well-known for its vaults that automate yield farming for crypto users.
YFI
Yearn Finance launched YFI in 2021 and gave away all 30,000 tokens to its users.
YFI can be used for governance and allows its token holders to receive a portion of the trading fees the platform earns.
Token supply and distribution
Yearn initially distributed 10,000 tokens to liquidity providers of the yCRV pool. Later, the protocol added two more Balancer pools and distributed the remaining 20,000 YFI.
Balancer (BAL)
Balancer is a decentralized exchange (DEX) that works similarly to Uniswap. It’s an automated market maker that allows users to swap tokens.
The difference is that in addition to providing liquidity pools in a 1:1 ratio, Balancer also provides weighted pools with up to eight tokens, stablecoin pools, and custom logic pools.
BAL
BAL is used for governance and users can also lock their BAL tokens to get veBAL (vote-escrowed BAL) tokens, which unlocks a host of benefits like boosts that allow them to earn more BAL over time.
Token supply and distribution
BAL is an inflationary token and its supply increases over time. At launch, 145,000 BAL were released every week, but after the launch of veBAL, a halving schedule was introduced to cut the inflation rate by half after a fixed period of time until inflation goes to zero. When the inflation is zero, there would be about 96,000,000 BAL.
Here’s what the initial token distribution looked like:
PancakeSwap (CAKE)
PancakeSwap is a decentralized exchange that’s native to the BNB chain (previously Binance Smart Chain). And it works exactly like Uniswap.
CAKE
Staking: Users can earn free tokens by staking CAKE tokens in its Syrup Pools (liquidity pools).
Lottery: Users can purchase CAKE tokens to participate in its lottery.
Minting NFTs: CAKE token holders can create their own profile and start minting NFTs.
Governance: CAKE holders can vote on proposals related to the protocol.
Token supply and distribution
CAKE’s total supply is capped at 750 million tokens and it’s a deflationary token, which means the protocol burns its tokens to reduce the total supply over time.
Rocket Pool (RPL)
Rocket Pool is a liquid staking protocol that allows users to stake ETH by depositing as little as 0.01 ETH.
Once a user deposits ETH to stake it, they receive rETH tokens that they can use on other protocols or simply hold in their wallet.
RPL is the native token and its primary use is to allow holders to vote on protocol-related decisions.
Begin your DeFi journey with MoonPay
Now that you know the top DeFi coins, you can begin your DeFi journey with MoonPay.
To get started, simply buy cryptocurrency via MoonPay using your credit card or any other preferred payment method.
MoonPay also makes it easy to sell crypto like ETH when you decide it's time to cash out. Simply enter the amount of the token you'd like to sell and enter the details where you want to receive your funds.
Swap DeFi coins
Want to exchange DeFi coins like AAVE and COMP for other cryptocurrencies like Ethereum and Bitcoin?
MoonPay allows you to swap crypto cross-chain with competitive rates, directly from your non-custodial wallet.
