DeFi began its rapid growth in August 2021, reaching a peak of $260 billion in December 2021. The period of rapid growth in the DeFi sector is also known as DeFi Summer. During this time, the protocols that were actively launched in 2020 and earlier were named "DeFi 1.0" protocols.

The Dynamics of DeFi TVL

Over the last month, the performance of many DeFi tokens has shown significant growth. The top performers in terms of growth over the 30-day period are:

Maker DAO (MKR): +52.8% Compound (COMP): +48.3% ChainLink (LINK): +17.5% Synthetix (SNX): +16.3%

However, not all of the DeFi 1.0 sector has shown positive performance over the last month. Projects like Yearn Finance and Aave have experienced negative dynamics in the value of their native tokens: -3.04% and -3.83% respectively.

During the same 30-day period, ETH showed a decrease of 2.61%. Thus, the majority of DeFi tokens outperformed ETH. It is worth noting that even on a yearly basis, many DeFi tokens have started to outperform ETH in terms of returns.

Additionally, the DeFi Pulse Index (DPI) demonstrated a return of 15.8%, significantly surpassing the returns of ETH. The DeFi Pulse Index (DPI) is a capitalization-weighted index that tracks the performance of some of the largest protocols in the DeFi space. DPI includes many projects from DeFi 1.0, such as Uniswap, Compound, Aave, MakerDAO, and others.

The intensive growth of the DeFi segment is driven by several reasons: It involves time-tested DeFi protocols. Many of them emerged between 2018 and 2020, making them "veterans" in the cryptocurrency market. Mature projects with a track record possess experienced teams, well-known funds, and well-established dapps. For example, Aave (formerly ETHLend) and MakerDAO were among the first decentralized solutions in the crypto lending market.

Projects that emerged during this period endured bear cycles and became stronger thanks to other crucial events for the crypto space, such as the FTX and TerraUSD crash, and alike. While DeFi 1.0 protocols may yield lower returns compared to their "younger" competitors, investors still prefer platforms that have a longer history and are more credible.

The majority of DeFi 1.0 projects have strong financial positions, demonstrated by significant treasuries and revenue generated by these protocols.

Many DeFi 1.0 protocols hold substantial treasuries that can be used for further product improvements or active marketing campaigns. Uniswap, one of the prominent representatives of DeFi 1.0, has a treasury volume of $2.4 billion. Other protocols may have smaller treasuries but still remain substantial.

Let's analyze the volume and revenue dynamics generated by the major DeFi 1.0 protocols.

Synthetix

Synthetix is a DeFi protocol that operates as a collection of smart contracts on the Ethereum blockchain. It allows users to mint synthetic assets, known as "synths," that mimic the value of real-world assets or other cryptocurrencies. These synths can represent various assets like traditional currencies, commodities, or cryptocurrencies. The process of minting synths involves collateralization, where users buy SNX tokens and lock them in a special contract, allowing them to generate synths.

Founded by Kain Warwick, Synthetix was formerly known as Havven, and it started as a project focused on creating stablecoins pegged to the value of traditional fiat currencies. However, it later evolved to include the creation of synthetic assets for a wide range of assets. The governance of Synthetix is now carried out through decentralized autonomous organizations (DAOs), where SNX token holders can vote on protocol changes and decisions.

In summary, Synthetix is a DeFi protocol that uses blockchain technology and smart contracts to allow the creation of synthetic assets that track the value of various real-world and crypto assets, without the need for any intermediaries.

Synthetix’s Revenue

Over the last 24 hours, Synthetix generated fees of $522,513. For comparison, Ethereum, being the largest ecosystem, generated $5.27 million in fees during the same period.

MakerDAO

MakerDAO is a peer-to-peer (P2P) and decentralized organization built on the Ethereum blockchain. It runs as a lending, borrowing, and savings platform, offering a stablecoin DAI.

Users can participate by locking their ETH as collateral in smart contracts, which enables them to generate DAI loans. To unlock their collateral, users need to repay the loan along with associated fees. MakerDAO ensures stability by utilizing liquidity and the threat of liquidation to maintain the value of DAI.

The protocol was one of the first projects in the DeFi space, founded by Rune Christensen, and operates as a Decentralized Autonomous Organization (DAO). DAI serves as a stablecoin pegged to the US dollar, while MKR is used for governance and liquidity provision. The collateral assets that back DAI can be various Ethereum-based assets, approved by MKR token holders. Users interact with the Maker Vaults, non-custodial smart contracts that allow them to leverage their collateral to create DAI loans.

Over the last 24 hours, MakerDAO earned $301,791, and the revenue dynamics for the month are as follows:

However, it should be noted that not all DeFi 1.0 protocols consistently show such high revenue figures. For example, according to DefiLlama, AAVE generated $31,710 in the last 24 hours, while Curve Finance earned $17,659 in the same period. Nevertheless, these protocols demonstrate a stable level of revenue, even in bearish market conditions. Another factor contributing to the significant growth of the DeFi 1.0 sector is the continuous product improvements and updates implemented by the projects. Let's review the last upgrades of some DeFi protocols.

Curve Finance DeFi Stablecoin Platform Launches crvUSD

Curve Finance, a famous DeFi protocol, introduced a new stablecoin called crvUSD running on the Ethereum blockchain. The decentralized collateralized-debt-position (CDP) stablecoin enables users to mint crvUSD against their crypto collateral, providing liquidity and earning yields on their deposits. The protocol incorporates LLAMMA (Lending-Liquidating AMM Algorithm), an automated market maker algorithm that aims to reduce liquidation impact for borrowers. LLAMMA ensures smoother transitional liquidation processes by converting ETH backing crvUSD into stablecoins as it approaches liquidation price, and converting it back to ETH when prices rise again.

Synthetix takes on counterparty risks with Infinex derivatives exchange

Kain Warwick, the founder of Synthetix, announced the launch of a new project called "Infinex" to compete with centralized exchanges (CEXs) while offering a more user-friendly experience. Infinex will use Ethereum layer-2 Optimism and allow users to sign up with just a username, password, and email. The platform creates a new public-private key pair for each user, enhancing security for trading while storing the key client-side in the browser. The project aims to capture more value and drive user acquisition in the DeFi space.

Aave Launches Decentralized Stablecoin GHO on Ethereum

Aave, a DeFi lending protocol, launched its decentralized stablecoin called GHO on the Ethereum mainnet. GHO will be governed by the Aave DAO community, allowing token holders to vote on its supply, risk parameters, interest rates, and minting permissions. Users can mint GHO by providing collateral to the Aave V3 protocol on Ethereum, ensuring overcollateralization. The collateral deposited into Aave V3 will continue to earn yield, reducing the borrowing cost of GHO. Interest paid by GHO borrowers will be directed to the Aave DAO Treasury, while AAVE token stakers in the Safety Module will receive discounts on GHO. The initial minting capacity is set at $100 million and can be updated by the DAO through governance approval.

Closing Thoughts

As pioneers in the field, DeFi 1.0 projects demonstrate stable financial performance along with owning substantial treasuries. Moreover, these projects continue to grow rapidly, regularly implementing product improvements. This positively impacts the profitability of their native tokens and sows some optimism in the DeFi 1.0 segment.

Despite the lower returns of DeFi 1.0 protocols compared to their "younger" competitors (such as GMX, Pendle, Maverick, etc.), market participants still prefer using well-known platforms, as they proved their reputation through time.

With Notum, you can enter the DeFi 1.0 narrative by buying the DPI index with one click. You can explore the complete basket option included in the index and find out more by clicking the link.

Notum offers assets to buy and compare them based on various metrics and indicators. Projects are thoroughly categorized, and most DeFi 1.0 tokens can be found in the "Infrastructure," "DEX," and "Lending" sections on the Explore page.