The Real Yield Journey of DeFi Protocols: 7 Projects to Follow

In the DeFi field, many projects attract liquidity through high token rewards. Although this practice can temporarily increase TVL, it also carries potential risks. If tokens are over-issued without creating corresponding value, or if users lack loyalty, the project is likely to run into trouble.

A truly valuable DeFi protocol should possess the following characteristics:

1. The product has a high market fit, maintaining user engagement even in different market conditions.
2. Continuously generate on-chain income through products
3. Income exceeds operating costs and token emissions
4. Pay returns with stable currencies (such as ETH and stablecoins)

The following are 7 DeFi protocols that meet these criteria:

1. BTRFLY (Redacted Cartel)

BTRFLY has launched the V2 version, transitioning from a dilution model to a real yield model. Users can lock BTRFLY to earn rlBTRFLY, thereby earning income distributed in ETH. These earnings come from the project's funding and product ecosystem.

2. Gains Network (Polygon)

This is a decentralized leverage trading platform that offers up to 150x leverage for cryptocurrencies, stocks, and forex. Currently, it provides DAI Vault and GNS-Dai LP, with single-coin GNS staking coming soon.

3. Umami (Arbitrum)

Umami provides two main ways to earn:

1. Deposit UMAMI to obtain mUMAMI and earn stable WETH passive income from the protocol revenue, with an annual interest rate of approximately 5%.
2. GLP/TCR USDC Pool: Annual interest rate of approximately 20%. Fees are collected through the minting of GLP, and market fluctuations are hedged through TracerDao's non-liquidation hedge.

4. Kujira (Cosmos L1)

Kujira offers a variety of products, including Orca (liquidation tool), Fin (Decentralized Finance order book trading), Blue (core of the ecosystem), and USK (decentralized stablecoin). Staking KUJI allows you to earn a share of the protocol revenue, with a current annual interest rate of 0.49%.

5. Trader Joe (Avalanche)

As the top DEX on Avalanche, Trader Joe allows users to stake JOE for sJOE to earn stablecoin rewards. The platform charges a fee of 0.05% on each swap, which is converted into stablecoins and distributed to sJOE holders every 24 hours.

6. Synthetix (Ethereum / Optimism)

Synthetix is one of the most innovative projects in the Decentralized Finance space. Users can create synthetic assets through Kentra and trade real-world assets on-chain. Staking SNX can earn you:

1. sUSD from traders (the native stablecoin of Synthetix)
2. SNX's inflation rewards

7. GMX (Arbitrum / Avax)

GMX is a decentralized exchange for contracts, offering up to 30 times leverage. Platform features:

1. Charge a fee of 30% in swaps and leveraged trading
2. Convert the fees into ETH / AVAX and distribute them to the staked GMX token holders.

GMX performed outstandingly during the bear market, ranking as the number one dApp on Arbitrum, with its usage continuously increasing.

Tools for Research Projects

• TokenTerminal / CryptoFees: Find revenue sources
• Dune Analytics: View Project Dashboard
• Messari: Get token supply information
• Internal protocol dashboard: Understand project details

When evaluating a project, the following issues need to be considered:

• What is the source of the yield?
• How much revenue did the protocol generate?
• What is the supply and emission of the native token?
• Which token is used to pay out rewards?
• What is the appeal of the network?

Risk Warning

1. The revenue-sharing model of some protocols may face regulatory risks.
2. Many projects based on financial engineering, such as contracts and options, may carry potential risks.

Investors should fully understand the risks when participating in these projects and make informed decisions based on their own circumstances.