Web3 has initiated a new era of decentralized finance (DeFi), which uses blockchain technology to revolutionize how traditional financial services work. The total value locked (TVL) in DeFi will be more than $150 billion by the middle of 2025. This shows how fast it is expanding and how many people are using it. This article lists the ten best DeFi projects that will transform the way money operates in the future. We speak about their primary characteristics, how they work in the real world, who runs them, how safe they are, and how they are altering the business.
Decentralized finance, or DeFi, is a blockchain-based system that mimics and improves on existing financial services like lending, borrowing, trading, and managing assets without the need for middlemen. Most of DeFi operates on Ethereum and other smart contract platforms that work with it. You can build anything with different pieces, like “money Legos,” and it has explicit guidelines for how it works. Here are a few of the more important ones:
- You don’t need anyone’s permission to utilize DeFi protocols if you have a self‑custodial wallet.
- You can combine protocols and put them on top of one other to make new financial products.
- Transparency: Transactions on the blockchain are open to everyone, which makes it less likely that someone will commit fraud.
- Innovation: Open‑source development and rapid iterations have made new features possible, such as yield optimization and automated market makers (AMMs).
Since MakerDAO started in late 2017, DeFi has risen in waves. AMMs (like Uniswap), lending markets (like Aave), yield aggregators (like Yearn Finance), and liquid staking (like Lido) are some of the things that have come and gone in these waves. The greatest protocols now have billions of dollars in total value locked (TVL), serve millions of users, and handle trillions of dollars in trading volume per year.
This article talks about the finest DeFi projects based on how many people use them, how much money is locked up in them (TVL), how safe they are, and how well they are run.
How to Choose
We used these standards to choose the “best” DeFi projects:
- Total Value Locked (TVL): Informs you how big the protocol is and how much people trust it.
- User Adoption and Activity: This includes the number of distinct persons who use the service, the number of active addresses each day, and the number of transactions.
- Innovative Features: AMMs, liquid staking, flash loans, and the ability to operate across chains are some of the new and cool things.
- Security and Audits: Well‑known companies like CertiK and Quantstamp have done audits, and there are other bug‑bounty programs.
- Governance Model: How many individuals own tokens, how decentralized it is, and how the treasury is handled.
- Ecosystem and Integrations: The ability to connect with other DeFi protocols, cross‑chain bridges, and partnerships.
We picked the most significant features of DeFi, like lending markets, decentralized exchanges (DEXs), stablecoin protocols, yield aggregators, and liquid staking. The following list is in order of score, which is based on these measures (TVL data from July 2025).
1. Uniswap
A quick summary and some new ideas
In November 2018, Uniswap was the first company to implement the automated market maker (AMM) model. It got rid of order books and built liquidity pools where users can put in token pairings and get compensated. Uniswap v3, which came out in May 2021, added focused liquidity and several levels of fees. This made capital work better.
Key Features
- Concentrated Liquidity: People who supply liquidity choose the price ranges they wish to put their money into.
- Different cost levels: Depending on how much risk they are ready to accept, pools can charge 0.05 %, 0.30 %, or 1.00 % of the entire sum.
- Anyone can add a new trading pair without asking for permission.
- Optimism and Arbitrum can help you pay less for petrol and get things done faster when you use Layer 2.
What to Use
- Token Swaps: More than $500 billion worth of trades have taken place.
- Providing liquidity: Users who place tokens in pools gain money without having to do anything.
- Uniswap v3 pool TWAP oracles: On‑chain price oracles that help with DeFi analytics and borrowing rates.
Governance and Security
- The UNI token is in charge of Uniswap’s governance. A specific amount of individuals need to vote on ideas.
- ConsenSys Diligence undertakes security checks, and there is a bug reward program to assist protect the TVL, which is worth more than $7 billion.
Website: uniswap.org
2. Aave
A Look Back and a Look Ahead
When it first started in 2017, Aave was called ETHLend. It changed its name in 2018. Aave is a non‑custodial lending protocol that came up with “flash loans,” which are loans you can acquire right away without needing permission or collateral. You have to pay them back in one go.
Key Features
- Flash Loans: You can execute arbitrage, swap collateral, and refinance debt without having to spend any money up front.
- Credit Delegation: This lets people you trust take over your credit lines.
- Aave V3 has a high‑efficiency mode, an isolation mode for new assets, and the ability to transport assets between chains.
- There are two types of rates: those that stay the same and those that change. People who need to borrow money might choose the one that works best for them.
How to Use
- When people put their crypto collateral in, they get interest on it. This is what decentralized borrowing and lending means.
- Arbitrage Strategies: Advanced trading algorithms can execute their work thanks to flash loans.
Safety and Rules
- People who possess the Aave governance token (AAVE) vote on modifications to the protocol, how risky it is, and how the treasury should be used.
- There is a bug bounty of $5 million, and PeckShield and Trail of Bits check the code. As of July 2025, this protects more than $12 billion in TVL.
Website: aave.com
3. Compound
A brief overview and some fresh ideas
In 2018, Compound Labs started Compound. It made algorithmic interest rate models famous by displaying how the cost of borrowing fluctuates in real time based on supply and demand.
Key Features
- cTokens: Tokens that represent deposits and generate interest. You can buy and sell them on DeFi.
- Governance through COMP: Token holders can vote on and suggest modifications.
- Interest Rate Curves: The greatest approach to spend money and resources is with dynamic rates.
Possible Uses
- Passive Yield: You can earn interest on your money by putting it into DAI, USDC, and ETH.
- Collateralized Borrowing: When you borrow money and give goods you own as collateral.
Safety and Governance
- Compound’s governance has improved in many ways, such as by adding off‑chain vote delegation and modifying the timelock.
- OpenZeppelin has checked out the protocol, which protects more than $8 billion in TVL.
Website: compound.finance
4. MakerDAO
A Look at New Thoughts
MakerDAO has been around the longest in the DeFi market, when it issued the DAI stablecoin in December 2017. Users put up collateral in Maker Vaults to mint DAI. The government and the Dai Savings Rate (DSR) maintain the peg constant.
Key Features
- ETH, WBTC, and other tokens can be used as collateral for Multi‑Collateral DAI (MCD).
- DAI Savings Rate: The interest you earn on DAI while it is in the DSR contract.
- Emergency Shutdown: A means to protect collateral on the blockchain should things go very wrong.
How to Use
- Getting Stablecoins: DAI is a well‑known stablecoin that users use to trade in DeFi.
- People keep DAI to save money and protect themselves from price increases.
Safety and Management
- People that own MakerDAO’s token (MKR) decide how much risk to assume, how to increase collateral, and how to make the system better.
- If Trail of Bits and MixBytes have audited you, and you have a solid community forum, people are more likely to trust you. The market value of DAI is more than $6 billion.
Website: makerdao.com
5. Curve Finance
A brief overview and some fresh thoughts
Curve Finance, which debuted in January 2020, is all about trading low‑slippage stablecoins and wrapped tokens that use optimized bonding curves.
Key Features
- StableSwap Algorithm: You won’t lose money if you have pools with assets that are similar.
- Gauge Voting: People who own veCRV vote on how much they should get for making liquidity available.
- It can be used on Ethereum, Polygon, Fantom, and other platforms.
What You Can Do With It
- Low‑fee trades between USDC, USDT, and DAI are good stablecoin swaps.
- Users lock up CRV to earn veCRV, which pays them more. This is known as liquidity mining.
Rules and Safety
- The Curve veCRV coin can help people realize their long‑term goals.
- Curve has more than $15 billion in TVL, and both Quantstamp and Runtime Verification have looked at it.
Website: curve.fi
6. SushiSwap
A summary and some new ideas
SushiSwap was a fork of Uniswap in August 2020. People used it because it granted them “SUSHI” prizes. It now features a full DeFi suite with lending (Kashi), yield aggregation (Onsen), and chain‑to‑chain swaps.
Main Features
- The Onsen Program makes it more appealing to have liquidity pools across networks.
- You can adjust the level of risk with two distinct loan pairs: BentoBox and Kashi.
- Cross-Chain Bridge: Sushi’s Trident AMM and bridge make it easy to go between chains.
How to Use
- Incentivized Yield Farming: SUSHI awards increase APYs.
- Isolated Markets: Kashi pairs make lending markets that are just available to one user.
Rules and Safety
- People that own SUSHI tokens can suggest improvements to a snapshot governance model.
- PeckShield audits and security grants help keep TVL safe, and it’s worth more than $4 billion.
Website: sushi.com
7. Balancer
A short summary and some new ideas
Balancer (2020) makes AMMs better by letting users make weighted pools with up to eight tokens apiece and adjust the weights (for example, 80/20 or 90/10). This enables people adjust how their portfolios are balanced.
Key Features
- You may set things like costs for exchanging and changes in weight with Smart Pools.
- LBPs (Liquidity Bootstrapping Pools): Fair token launches that happen when prices move up or down.
- Balancer V2: A vault design that uses less gas and features a switch for protocol costs.
How to Use
- Automated Portfolio Management: Getting to know passive index funds.
- Token Launches: LBPs to make sure everyone receives their fair share and to get the cheapest price.
Governance and Security
- People who own BAL tokens vote on changes to the rules and fees.
- OpenZeppelin and Least Authority have both looked at Balancer, which is valued $2.5 billion.
Website: balancer.fi
8. Yearn Finance
A short recap and some fresh ideas
Andre Cronje started Yearn Finance in July 2020. It puts yield‑farming tactics into “vaults” that automatically spread money among different protocols to get the best returns.
The most critical parts
- Vault Strategies: Scripts produced by the community boost returns on all platforms.
- yTokens: Shares in vaults that automatically add to returns.
- Rivet Finance: Lets you buy insurance against the danger of smart contracts.
How to Use
- Yield Aggregation: With just one click, you can access complex farming systems.
- Auto‑Compounding: This feature automatically adds rewards back to the account.
Governance and Security
- There are illustrations and suggestions for how to run YFI tokens that don’t come from any one area.
- PeckShield, OpenZeppelin, and a $2 million bug bounty all support it, and there is more than $3 billion in TVL.
Website: yearn.finance
9. PancakeSwap
A quick summary and some fresh ideas
As of September 2020, PancakeSwap is the best DEX on the Binance Smart Chain (BSC). It has AMM trading and lower fees than other Ethereum competitors.
Key Features
- You can obtain rewards by staking CAKE and joining the CAKE & SYRUP Pools on the Binance Launchpad.
- Initial Farm Offering (IFO): New projects sell tokens.
- There are ways to make prediction and lottery games more fun to play.
How to Use
- Low‑Fee Swaps: It costs less than $0.10 to make a trade, and it takes less than three seconds to stop it.
- Farms and pools: Help people who own CAKE make money by growing and staking.
Safety and Management
- The CAKE token is governed by the community.
- CertiK awarded PancakeSwap a PANCAKE safety score of 90 out of 100. The facility has a TVL of above $5 billion.
Website: pancakeswap.finance
10. Lido
An overview and some new ideas
Lido (December 2020) enables you stake ETH and other PoS tokens in a way that lets you earn yield by giving out stETH, which is a tokenized version of staked ETH.
Main Characteristics
- Liquid Staking: This keeps staked assets liquid and helps them function together.
- Multi-Validator Architecture: Pools stake with approved operators to make things less centralized.
- In DAO governance, LDO token holders are in charge of managing fees and node operators.
Possible Uses
- Yield Generation: Every year, you obtain ETH staking incentives that are roughly 4–5 % APR.
- DeFi Integration: You can utilize stETH as collateral or liquidity in many other protocols.
Safety and Management
- People who own Lido DAO tokens vote on grants, whether or not operators can work for them, and how much it costs to stake.
- Sigma Prime and Least Authority assess the safety of staked assets valued more than $18 billion.
Website: lido.fi
A lot of individuals wish to know these things.
- What is TVL, and why is it important?
The Total Value Locked (TVL) is the sum of all the money that has been put into a DeFi protocol. It informs you how many people believe in it, how big the protocol is, and how much money is there. A high TVL usually signifies that a lot of people are utilizing the service and that it is safe. You should also look at it with other figures, like how many people are using it and how many transactions there are. - Are DeFi platforms secure?
CertiK, Quantstamp, and OpenZeppelin are some of the companies that look into how safe DeFi protocols are. But oracles can be hacked, smart contracts can have difficulties, and the economy can be weak. Users should put projects that have been checked first, join bug‑bounty programs, and employ insurance alternatives where they are offered. - What sets AMMs apart from ordinary exchanges?
Automated Market Makers (AMMs) don’t employ an order book to match orders. They use liquidity pools instead. You can add token pairs to a pool and trade them to generate money. Everyone can use AMMs, and they always have money accessible. Traditional exchanges, on the other hand, rely on centralized order books and market makers. - What are flash loans, and how do individuals use them?
You don’t have to put up any collateral for flash loans, and you have to pay them back in one transaction on the blockchain. You can execute arbitrage, collateral swaps, and liquidations without having to put any money down upfront. If the loan isn’t paid back, everything returns back to as it was before, thus the lender is safe. - How can I make money using DeFi?
Here are several common ways:- Providing liquidity: You can earn trading fees and other prizes by putting tokens into AMM pools like Uniswap or Curve.
- Lending markets: You may make money by giving away things on lending markets like Aave and Compound.
- Yield Aggregators: Use vaults like Yearn Finance that automatically make strategies better.
- Liquid Staking: You can stake PoS tokens and receive something like Lido’s stETH that are easy to sell.
- What does it mean to put money at risk?
People can stake assets like ETH to gain network rewards and still use derivative tokens like stETH with liquid staking. You can either trade these derivatives or utilize them as collateral in DeFi protocols. This makes money work better. - What do people do with governance tokens?
People who possess governance tokens, such as UNI, AAVE, and COMP, can suggest changes to the protocol and vote on them. These modifications could mean modifying settings, using money from the treasury, or creating new features. Most of the time, the number of tokens you have or the number of votes you provide to someone else determines how much power you have to vote.
Last Words
The DeFi industry is still moving swiftly because new projects keep coming up with innovative ways to lend money, provide liquidity, optimize yield, and stake. The purpose of each initiative is to make the financial system open, clear, and easy to use. However, they all satisfy various financial demands. Uniswap and MakerDAO were two of the first companies to leverage the technology. Curve and Lido are more focused.
References
- Uniswap. “Protocol Documentation.” https://uniswap.org
- Aave. “Documentation.” https://aave.com
- Compound. “Compound Finance.” https://compound.finance
- MakerDAO. “MakerDAO Governance.” https://makerdao.com
- Curve Finance. “Curve Docs.” https://curve.fi
- SushiSwap. “Sushi DeFi Platform.” https://sushi.com
- Balancer. “Balancer Protocol.” https://balancer.fi
- Yearn Finance. “Yearn Vaults.” https://yearn.finance
- PancakeSwap. “PancakeSwap Exchange.” https://pancakeswap.finance
- Lido. “Lido Finance.” https://lido.fi
- DeFi Llama. “DeFi TVL Rankings.” https://defillama.com
- DeFi Pulse. “DeFi Pulse Analytics.” https://defipulse.com
