33 types of DeFi Protocols (Part 7)
Learn about Payment Protocols, Leveraged Farming, and NFT Marketplaces.
Part 1 covered Liquid Staking, Lending, and Decentralized Exchanges. Part 2 covered Bridges, Collateralized Debt Positions, and Services. Part 3 covered Yield Protocols, Tokenization of Real World Assets, and Derivatives. Part 4 covered Yield Aggregators, Cross Chain Protocols, and Synthetics. Part 5 covered Launchpads, Indexes, and Liquidity managers. Part 6 covered Insurance, Privacy, and Algorithmic Stablecoins. Part 7 covers Payment Protocols, Leveraged Farming, and NFT Marketplaces.
1. Payment Protocols
DeFi payment protocols enable transparent, peer-to-peer transactions. Unlike conventional systems, they operate on blockchain technology. This eliminates the need for middlemen and reduces costs.
Protocols like Lightning Network enhance scalability and speed. This makes micro-transactions feasible and efficient.
Additionally, stablecoins play a crucial role in mitigating volatility, paving the way for mainstream adoption.
No. of protocols: 16
Combined TVL: $227 million
The Top 3 protocols by TVL are:
Lightning Network ($180 million)
Flexa ($34 million)
Sablier ($3 million)
2. Leveraged Farming
In leveraged farming, individuals can borrow additional assets to farm or stake at a larger scale than they could with just their own assets. They may use their existing assets as collateral to borrow more assets from a lending protocol.
The borrowed assets can be used to provide liquidity in a farming protocol or to stake in a staking protocol, which in turn generates yield. The yield generated can be significantly higher due to the increased scale of operations.
While the potential for higher yields is attractive, leveraged farming also amplifies risks. The borrowed assets need to be repaid with interest, and if the yield generated is less than the cost of borrowing, individuals could end up with a net loss.
Moreover, if the value of the collateral assets drops significantly, it could trigger a liquidation event where the collateral assets are sold off to repay the borrowed amount.
No. of protocols: 21
Combined TVL: $146 million
The Top 3 protocols by TVL are:
Alpaca Leveraged Yield Farming ($52 million)
Gearbox ($28 million)
Extra Finance ($21 million)
3. NFT Marketplace
NFTs (Non-Fungible Tokens) are unique digital assets verified using blockchain technology. NFT marketplaces are platforms for buying, selling, and trading NFTs.
Through smart contracts and decentralized protocols, these marketplaces ensure provenance and authenticity.
No. of protocols: 34
Combined TVL: $135 million
The Top 3 protocols by TVL are:
Blur Bids ($68 million)
ImmutableX ($36 million)
NFTX ($13 million)