There's a hot new narrative cooking in DeFi. It's called "Real Yield", where protocols pay out yield to users based on revenue generation.
Real yield is a type of yield farming where protocols give yield as payment to users based on revenue generation. The narrative is new in the crypto space and here are top 10 picks that might benefit from this. The projects could become giants in the next cycle.
How does a project become a "Real Yield?" The project puts several factors into consideration:
Ability to accumulate new users.
Ability to rewards token holders by increasing revenue generation .
What is the Origin of the " Real Yield Narrative?"
In 2021, what did projects do to attract more TVL( Total Volume Locked) on their crypto coins? The projects offered high interest APRs, which in turn attracted users. APR means Annual Percentage Rate, it stands for interest a user accrues annually.
DeFi protocols that implemented this include:
$AXS (Axie Infinity)
$ANC (Ancor Protocol)
$TIME (Wonderland)
$SUNNY (Sunny Aggregator)
The projects put incentive on emissions dilution. Nearly half of the DeFi protocols in 2021 used aggressive emission models to attract liquidity quickly. Reasons for this ?
High rate of competition
High retail interest
FOMO and Greed - “Fear of Missing Out” that led to Greed.
Problems With the Aggressive Emissions Model
The model is not sustainable because it cannot offer artificial yields for a long time. The projects have to move to sustainable models later on. As a result, many DeFi projects collapsed.
Investors got burnt to crisp, especially $LUNA and $UST investors. The collapse of many DeFi projects and sudden liquidation exposed the flaws of DeFi systems. Some users sank into depression after losing life savings.
Many projects offering incentivized liquidity were padded by emissions therefore increased TVL, for example, $LUNA. By removing it, projects with weak points were exposed.
Many protocols too did not have a securely designed and engineered model. Most projects that were fast had engineering flaws. A recent hack on the Solana proves this.
Therefore, a collapse in many of the projects in 2022 helped the market shift from "fake" to more "stable" projects. The market is now taking it's time to secure bridges and web3 projects especially after recent hacks. Crypto hackers are evolving, why wouldn't DeFi platforms? Hence, "Real Yield".
Here Are the Top 10 Real Yield Projects That Generate Yield via Actual Revenue Generation
The gradual shift of the crypto space to real DeFi projects is seen in the growth of perp DEXs and the Ethereum ecosystem. The ecosystem is waiting eagerly for the Merge, set to happen this year. Ethereum is moving from PoW to PoS.
The first category of tokens fall under the "Decentralized Perpetual Exchange" sector. They offer leverage trading with deep liquidity and low fees, whilst possessing all the positive qualities of a DEX vs CEXs:
No KYC
No Counterparty risk
Security
Sovereignty
Top 10 "Real Yield" DeFi Projects of 2022
Here is a list of the top 10 real yield narrative projects of 2022
$DYDX
$GMX
$GNS@GainsNetwork_io
$SNX (@synthetix_io)
$UMAMI
$RBN
$BTRFLY
$DPX
$LOOKS
$FXS
$CVX
$CRV
So far these are the top ten and an extra two projects. CreativeSeasonOfficial will give more information about each in a separate article. Stay tuned. However, for more detailed information, follow @milesdeutscher.
What other project categories do you think fall under this category? Here are some of the replies.
Info credits: Miles Deutscher
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