Protocol income data analysis: Which five DeFi protocols are the most profitable in the past six months?

Written by: Poopman

Compilation: Deep Tide TechFlow

Below is a list of the five most profitable DeFi protocols that have gained a significant presence in the decentralized finance industry over the last six months. The income of these agreements comes from various fee models, such as lending, trading, market making, etc., and encouraging users to participate and hold through token incentives. Let’s take a look at the features and benefits of these agreements.

Definition of “Profit”

The fee model of DeFi is different, but in general, DeFi projects make profits in the following ways:

  • transaction fee

  • loan fee

  • Stability Fee (e.g. LiquityProtocol)

Additionally, DeFi distributes profits through three main channels:

  • protocol library

  • token holder

  • LP (Liquidity Provider)

Although the first two can be classified as agreement revenue, LP profit is different. LP profits are “supply-side income”, meaning profits are redistributed to those who provide liquidity in the pool. For example, Uniswap generates more than $700 million in fees per year, but it only makes a profit because most of these revenues go back to LPs.

To assess the profitability of a project, “revenues” would be a better metric, as they represent “net income” after allocating fees to LPs. In short, revenue = fee revenue – token incentives. Now that we’ve defined what “profitability” is, let’s dive in.

Top 5 Most Profitable DeFi Protocols

1st place: MakerDAO ~ $7.16 million

MakerDAO allows users to lend out its stablecoin $DAI, which is pegged to the U.S. dollar, against ETH/BTC/USDC/LINK as collateral.

cost model

When someone borrows through MakerDAO, they have to pay a stability fee, which is used to buy $MKR and burn it later.

Over the past six months, MakerDAO has generated $7.25 million in revenue from fees. After deducting the token incentive of USD 93,200, MakerDAO’s total revenue was USD 7.16 million, firmly ranking first in the revenue list.

2nd place: Gains Network ~ $5.73 million

Gains Network is a derivatives trading platform built on Arbitrum and Polygon, providing users with cryptocurrency and foreign exchange trading options and providing leveraged trading.

cost model

Gains charges a transaction fee when a user opens, closes, or updates a transaction. In addition, there are rollover fees, funding fees, and liquidation fees. Over the past six months, Gains has earned $7 million from fees. However, $GNS offers no incentives, so only $1.27 million in supply side fees are required.

This means that GainsNetwork earned approximately $5.73 million, placing it in second place on the list of top earners.

3rd place: GMX ~ $3.64 million

GMX is a popular perpetual contract trading platform that achieves low exchange fees and zero price impact transactions on Arbitrum. Users can conduct spot transactions and trade perpetual futures on GMX, with a maximum leverage of 50 times.

cost model

GMX distributes the fees generated from swaps and leveraged trades to those who hold $GMX and provide liquidity to $GLP. Over the past 6 months, GMX earned $67.54 million in fees, of which $47.27 million (70%) went to supply-side fees for GLP holders. The remaining $20.26 million was used as revenue, but $16.6 million (82%) was used for token incentives.

Despite performing well during the bear market, due to the high cost of token incentives, GMX’s profits were relatively small, earning only third place on the list of most profitable projects.

4th place: Convex ~$1.57 million

Convex is a yield booster built on top of CurveFinance. By controlling more than 50% of veCRV, Convex leverages its governance power to increase CRV rewards in Curve, thereby enhancing yield.

cost model

Convex earns from 3CRV earnings, $CRV and other liquidity mining rewards. Over the past six months, Convex earned $70.51 million in fees, with 80% of that revenue ($56.31 million) going to Curve LP market makers.

The remaining $14.17 million in revenue was primarily used for token incentives ($CVX), leaving only $1.57 million in earnings.

Fifth place: 1inch ~ $1.27 million

1inch is a non-custodial DEX aggregator based on ETH and BSC.

cost model

In the past six months, 1inch has generated $1.97 million in revenue. After deducting token incentives worth US$693,000, 1inch’s revenue reached US$1.27 million, ranking fifth on the list.

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