Overview of Real Yield Protocols in the DeFi Sector: 7 Quality Projects Empowered by Tokens

In the DeFi ecosystem, many projects attract liquidity through high token rewards. Although this practice can boost TVL in the short term, it also has potential issues: first, excessive emissions may lead to token devaluation; second, user loyalty is low, and once incentives decrease, users will shift to other projects.

A truly high-quality DeFi protocol should possess the following characteristics:

1. The product has a high market fit, and it can maintain user activity even without additional incentives.
2. Generate actual on-chain income through products
3. Revenue exceeds operating costs and Token emissions
4. Pay earnings with mainstream cryptocurrencies such as ETH or stablecoins.

Based on these standards, the following 7 protocols are worth paying attention to:

1. BTRFLY (Redacted Cartel)

After the launch of the V2 version, BTRFLY is transitioning from a dilution model reliant on bonds to a real yield model. Users can earn rlBTRFLY by locking BTRFLY, thereby earning ETH share income. These earnings come from the fund management and product ecosystem of BTRFLY.

2. Gains Network (Polygon)

This is a decentralized leverage trading platform that offers up to 150 times leverage for cryptocurrencies, stocks, and forex. Currently, it provides DAI Vault and GNS-DAI LP, with single coin GNS staking coming soon.

3. Umami (Arbitrum)

Umami offers two main ways to earn:

1. Deposit UMAMI into mUMAMI to earn approximately 5% annualized WETH yield from protocol income.

2. GLP/TCR USDC pool: annualized yield of approximately 20%. This pool generates fees by minting GLP and uses TracerDao to hedge against market volatility.

4. Kujira (Cosmos Ecosystem )

The Kujira ecosystem includes multiple products: the liquidation platform Orca, the DEX order book Fin, the core of the ecosystem Blue, and the decentralized stablecoin USK. Staking KUJI can earn a portion of the protocol's revenue, with the current annualized yield at 0.49%. As the ecosystem develops, the yield is expected to further increase.

5. Trader Joe (Avalanche)

As the largest DEX on Avalanche, Trader Joe allows users to stake JOE to earn sJOE, thereby earning USDC stablecoin rewards. The platform charges a 0.05% fee on each transaction, which is converted into stablecoins and distributed to sJOE holders every 24 hours.

6. Synthetix ( Ethereum/Optimism )

Synthetix is one of the most innovative projects in the Decentralized Finance space, allowing users to create synthetic assets through Kentra and trade various assets on-chain, including cryptocurrencies, forex, and precious metals. Staking SNX can earn you:

1. sUSD earnings from traders of Kwenta Futures, Lyra Options, etc.
2. SNX inflation rewards

7. GMX (Arbitrum/Avalanche)

GMX is a decentralized contract exchange that offers up to 30x leverage. The platform takes a 30% fee from trading and leveraged trading, converts it into ETH/AVAX, and distributes it to GMX stakers. As the number one dApp on Arbitrum, GMX's usage rate continues to rise.

Tools for Researching DeFi Projects

• TokenTerminal/CryptoFees: Find revenue data
• Dune Analytics: Provides data dashboards for protocols such as GMX, Gains.
• Messari: Token supply information
• Official data dashboard of each protocol

When evaluating DeFi projects, it is important to pay attention to the following key issues:

• What is the source of income?
• How is the actual income of the protocol?
• Token supply and emission situation?
• What kind of token is used to pay the rewards?
• What is the core competitiveness of the project?

Potential Risks

1. The revenue sharing model of some protocols may face regulatory pressure.
2. Most projects rely on financial engineering, such as contracts and options, which have a certain level of complexity.

Overall, these DeFi protocols with real yields provide users with a more sustainable way to capture value, making them worthy of attention in the current market environment.