Decentralized finance (DeFi) protocols offer crypto investors a great way to beat the ROI of TradFi services. They have been gaining traction despite this brutal bear market, as they offer a range of financial services and products accessible to everyone.
These protocols are also designed to be resilient against market fluctuations, meaning users can benefit regardless of whether the overall market is bullish or bearish.
Here are five DeFi protocols that don’t care if it’s a bull or bear market – allowing you to take advantage of the opportunities presented by both trends. By understanding how these platforms work and what features they offer, you can make more informed decisions about your investments.
1. KUMA
Market Segment – RWA
For years, crypto curious have asked, “How do I get crypto to my bank account?” The KUMA Protocol has people in 2023 saying, “How do I get money from my bank account into crypto?”
But why? Bonds yield on-chain.
The KUMA protocol works with RWAs – Real World Assets. Essentially, they’re a bond reseller. They buy the bonds and then sell them to DeFi users, giving investors that want a safer, more stable yield the opportunity to do so without leaving the crypto space.
RWAs have been a hot topic in the last couple of years. As most of Web3 – at least right now – is all about finance, many protocols have tried to blend the TradFi and DeFi worlds to offer the best of both to users.
The KUMA protocol is pulling it off. Stablecoins were once the retreat of choice during periods of uncertainty, but now there’s another option. Right now, $USK, KUMA’s stablecoins backed by one-year UST-Bill, pay 4% seemlessly.
2. GMX
Market Segment – Perpetuals
When the most recent bear first hit, everything tanked. Or at least all of the major players did. Crypto startups folded left and right. But GMX held on. The protocol kept chugging along as the nasty downturn raged on after constant drama in the news.
Eventually, people noticed and it became one of the few bright spots during the shift in market sentiment.
What are perpetuals, exactly? Well, in finance, they’re called “perps”. And what they allow retail users to do is to long and short crypto just like the big boys do. You can also use leverage, which will amplify your gains…as well as your losses.
GMX is backed up by its powerful GLP product, essentially its version of Curve’s Tricrypto pool. This funds the trading on the platform, and the rewards for being a GLP holder are just as good, if not better, than longing and shorting.
3. Pendle
Market Segment – Yield
Pendle is operating as a next-level yield farming protocol. Here’s how it works:
- Find the pool that interests you on your favorite DEX
- Make LP for that pool
- Stake on Pendle
- Receive an increased APR in their token
Pendle is the latest token to be listed on centralized exchanges. Don’t worry, investors are still pretty early, and there’s a ton of yield to bring in if you’re a farmer.
4. Thena
Market Segment – DEX (Solidly Model)
The success of Thena has caught everyone in DeFi by surprise. The original Solidly was a great idea but failed miserably in practice. This team launched with fresh ideas and has steadily built and shipped since its inception in January 2023.
The Solidly model differs from the old UniSwap V2 model in a few ways, but the biggest is gauge voting. Rather than having fees go to LPs, they instead go to holders of the locked Thena token, named veTHE, as it uses Curve’s ve(3,3) locking model.
Locking THE allows users to vote on the pools, with total votes influencing emissions for the next epoch.
Thena has already released its concentrated liquidity product, Fusion, and is beta testing a revolutionary perpetuals platform.
5. Frax
Market Segment – Stables, Yield
The Frax team keeps building. Bear, bull, it doesn’t matter to them.
What started as a stablecoin protocol (FRAX) backed by Curve ve(3,3) locking model (FXS), has become so much more. They now offer lending and have their own LST product – with investors having the option for frxETH or sfrxETH, which is the staked version.
Users can find LPs on almost every major blockchain. According to DeFi Llama, it’s the 14th largest protocol in all of DeFi, which is quite the feat for a team that started off trying to figure out how to cash in on the algo-stable craze.
P.S. – It’s not an algo-stable anymore.
Final Thoughts
Decentralized finance protocols offer users a range of financial services and products. By understanding how these platforms work and what features they offer, investors can make more informed decisions about their investments regardless of the market conditions.
The five DeFi projects we discussed are examples of crypto projects which have been successful in both bull and bear markets, and they’re just the tip of the iceberg.
Ultimately, this highlights the potential for success within the cryptocurrency space, whether it’s a bullish or bearish market.
Image by Nattanan Kanchanaprat from Pixabay
