According to Blockworks, total value locked (TVL) has been a primary measure for a protocol's success since DeFi Pulse popularized the metric in 2019. However, some argue that TVL can distort the underlying value of a protocol and suggest using revenue as an alternative metric. Here are the top 5 DeFi protocols by revenue in 2023:
1. Maker — $95.91 million: Maker has gradually purchased US Treasury bonds since 2022, capturing yield from rising interest rates. Its Spark Protocol subDAO gave investors exposure to the T-bill yield through a locked version of its DAI stablecoin.
2. Lido — $55.79 million: Lido capitalized on Ethereum's move to proof-of-stake in 2022 by allowing users to stake their ether with the platform in exchange for its tokenized staked ether (stETH). StETH grew to become the ninth-largest cryptocurrency with a market capitalization of over $20 billion.
3. PancakeSwap — $52.31 million: PancakeSwap is the second-largest decentralized exchange (DEX) by volume behind Uniswap. The DEX launched v3 of its platform in March, focusing on concentrated liquidity and launching a gaming marketplace.
4. Convex Finance — $42.23 million: Convex is an asset management protocol that lets liquidity providers and stakers lock up tokens issued by Curve and earn yield. Convex controls 48% of vote-escrowed Curve tokens and a third of vote-escrowed Frax tokens.
5. GMX — $37.52 million: GMX is a perpetual swap exchange that allows DeFi traders to make highly leveraged trades without the need for large amounts of capital. GMX is the largest protocol by TVL on Arbitrum and was the largest recipient of the layer-2's October grant allocation.
