🏆DeFi Leaderboard
A ranking system for DeFi protocols based on decentralization.
The purpose of the DeFi leaderboard is to analyze the risk profile of DeFi projects, similar to how L2beat shows risk profiles for layer 2 blockchains and bridges. This information should be used as part of a due diligence process before using a platform, and can also shed light on why we chose not to build on top of certain other projects that lack decentralization.
| Name | Upgradability | Admin Power | Real Yield |
|---|---|---|---|
Wise Lending | No | Low | Yes |
Uniswap | No | Low | Yes |
Curve | No | Low | Partial |
Pendle | No | Low | Partial |
Aave | Yes | High | Yes |
Paraswap | Yes | High | Partial |
Bend DAO | 24hr Delay | High | Partial |
Penpie | Yes | High | Partial |
Stella | Yes | High | Partial |
Upgradability refers to whether the code of the contract is "set-in-stone" and unchangeable, or if the admin can upgrade the code at will. The middle ground is code that can be upgraded, but only after a certain time delay, which may or may not be useful for users to withdraw their funds if necessary.
Admin Power refers to functions in the contracts that admin control. Of course the admin has unfettered access to change the code at will in an upgradable contract, but contracts that cannot be upgraded can still carry grave risks, if the admin has control over powerful functions that can access or manipulate user deposits.
Real Yield refers to how much of the APY is coming from sustainable means, such as transaction fees or staked ETH rewards vs valueless tokens. Many protocols pad rewards with their own tokens, because the team either can mint more tokens for free, or has control a treasury of pre-mined tokens.
Tokenomics refers to the quality of the token design, which is a combination of distribution, intrinsic value, inflation, and liquidity. A well distributed token is better, because there are less whales, which means less risk of price manipulation. Intrinsic value is something hardly any tokens have, outside of WISE, which is backed by ETH (most tokens are backed by nothing but speculation and brand). Tokens with less inflation are more sustainable, and slight deflation is ideal. Liquidity is arguably the most important aspect of tokenomics, and more is better. Serious market cap growth cannot happen without deep liquidity.
Additional categories that could be added include Oracle provider, Oracle back-up, liquidation mechanism, verified contracts, audits, on chain.
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