Decentralized Finance (DeFi) has revolutionized the financial world, offering groundbreaking solutions in staking, lending, synthetic assets, and more. In this article, I've handpicked 10 of the most notable DeFi projects that every Solidity developer, auditor, or crypto enthusiast should know about.
Each project is outlined with only the most important information, so you can quickly grasp its relevance, innovation, and impact. This includes:
- **What it is**
- **Launch details / TVL**
- **Problems solved**
- **How it works**
- **How the protocol profits**
Let’s dive in!
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1. Lido — Liquid Staking **What it is:** Liquid staking for ETH and other assets (e.g., stETH). **Launch & TVL:** Dec 2020 (Lido DAO); **$31.7B TVL** (Jan 2025).
**Problems solved** - **Locked funds:** Liquid token (stETH) stays usable across DeFi. - **High capital requirements:** Stake any amount (no 32 ETH minimum). - **Complexity:** No validator setup needed.
**How it works** Deposit ETH → receive **stETH** → accrues staking rewards → usable in DeFi; **LDO** governs.
**How it profits** ~10% fee on staking rewards, split between node operators and DAO treasury.
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2. Aave — Lending **What it is:** Permissionless lending/borrowing; largest lending TVL. **Launch & TVL:** Jan 2020; **$19.07B TVL** (Jan 2025).
**Problems solved** - **Access to credit:** Borrow with collateral—no credit checks. - **Idle assets:** Earn interest via deposits. - **Liquidation risk:** Features like stable rates, flash loans.
**How it works** Deposit to pools → receive **aTokens** → earn interest; borrowers post collateral; **AAVE** governs.
**How it profits** Interest spread + **0.09%** flash-loan fee.
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3. EigenLayer — Restaking **What it is:** Restake ETH/LSDs to secure additional services for extra rewards. **Launch & TVL:** Jun 2023; **$14.44B TVL** (Jan 2025).
**Problems solved** - **Limited validator rewards** → extra yield via restaking. - **High security bootstrapping** → shared security. - **Underutilized staked assets** → higher capital efficiency.
**How it works** Validators restake → secure Actively Validated Services (AVSs) → earn rewards; community governance.
**How it profits** Service fees distributed: **90%** to LSD depositors, **5%** node operators, **5%** EigenLayer.
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4. ether.fi — Staking **What it is:** ETH staking with user control over validator keys via DVT; issues **eETH**. **Launch & TVL:** May 2023; **$8.20B TVL** (Jan 2025).
**Problems solved** - **Key custody risk** → users retain validator key control. - **Liquidity constraints** → liquid **eETH**. - **Centralization** → supports solo stakers.
**How it works** Stake ETH → maintain key control (DVT) → receive **eETH** with rewards; **ETHFI** governs.
**How it profits** Service fees shared among validators, node operators, treasury.
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5. Ethena — Crypto-Native Stablecoin (USDe) **What it is:** Decentralized stablecoin **USDe** using hedging + staking yield; introduces the “Internet Bond.” **Launch & TVL:** Feb 2024; **$5.88B TVL** (Jan 2025).
**Problems solved** - **Bank dependence** of fiat-backed stablecoins. - **No yield on stables** → yield via staking/perps. - **Limited access** to dollar instruments → Internet Bond.
**How it works** Crypto collateral + delta-hedging → mint **USDe**; yield from staking + perpetual swaps; **ENA** governs.
**How it profits** Fees on mint/management/yield strategies → fund development & incentives.
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6. Maker — Stablecoin & Lending (DAI) **What it is:** Pioneer of crypto-backed stablecoin **DAI** via over-collateralized vaults. **Launch & TVL:** Dec 2017; **$5.42B TVL** (Jan 2025).
**Problems solved** - **Centralized stablecoin risk** → crypto-backed DAI. - **Decentralized borrowing** without credit checks. - **Price stability** for on-chain use.
**How it works** Open vaults with collateral (ETH/WBTC) → mint DAI; liquidation & stability mechanisms; **MKR** governs.
**How it profits** Stability fees, liquidation penalties, surplus auctions.
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7. Uniswap — DEX / AMM **What it is:** Permissionless token swaps via AMM pools. **Launch & TVL:** Nov 2018; **$4.81B TVL** (Jan 2025).
**Problems solved** - **CEX custody/blackouts** → self-custodial swaps. - **Listing barriers** → anyone can create pools. - **KYC hurdles** → open access.
**How it works** Liquidity pools; constant-product AMM (**x*y=k**); **UNI** governance.
**How it profits** Swap fees (e.g., 0.3%) paid to LPs; protocol fee switch configurable.
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8. Pendle — Yield Tokenization **What it is:** Split yield-bearing tokens into **Principal (PT)** and **Yield (YT)** to trade future yield. **Launch & TVL:** Jun 2021; **$4.44B TVL** (Jan 2025).
**Problems solved** - **Illiquid yields** → tradable YT/PT. - **Yield uncertainty** → fixed-income via selling YT. - **Limited strategies** → flexible yield exposure.
**How it works** Deposit stETH, etc. → receive PT + YT → trade/hedge/lock yield; **PENDLE** governance.
**How it profits** Fees on issuance and swaps → treasury.
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9. Morpho — Optimized Lending **What it is:** Matches lenders/borrowers P2P atop Aave/Compound to improve rates. **Launch & TVL:** Jul 2022; **$3.23B TVL** (Jan 2025).
**Problems solved** - **Suboptimal rates** in pooled lending. - **Capital inefficiency** for unmatched funds. - **UX complexity** for users.
**How it works** Meta-layer on top of lending markets; matching engine; base yield fallback; **MORPHO** governance.
**How it profits** Fees on optimized matches.
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10. Compound — Lending **What it is:** Over-collateralized money market; supply to earn, borrow against collateral. **Launch & TVL:** Sep 2018; **$2.42B TVL** (Jan 2025).
**Problems solved** - **Decentralized borrowing** without banks. - **Idle assets** earn interest. - **Liquidity risk** mitigated via over-collateralization.
**How it works** Supply assets → receive **cTokens**; borrow with collateral; **COMP** governance.
**How it profits** Interest from borrowers; reserves retained by protocol.
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Conclusion Congratulations if you made it all the way through! We hope this quick guide to the top DeFi projects of 2025 has been insightful and valuable.
Don’t forget to follow **CD Security** on Twitter, as well as the author **chrisdior.eth**, for daily Web3 insights and security tips.