https://newsletter.banklesshq.com/p/which-defi-protocols-are-profitable

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Dear Bankless Nation,

Today, it’s standard for startups to optimize for growth in the early years.

They forget about profitability and instead entirely focus on gaining a strong product market fit.

It’s a tested strategy that has built some of the largest web2 companies in the world.

Here’s the alpha: DeFi protocols aren’t that different.

Today, protocols are focused on gaining users, liquidity, and anything else that it needs. And because DeFi projects control their own “money”, they can rely on nifty tricks like token emissions to generate short-term traction.

But is it sustainable?

Is that usage just masked with token incentives?

Are users actually willing to pay for the service the protocol offers?

Could it be profitable?

Today, Bankless analyst Ben Giove answers this by taking a deep dive into six major DeFi protocols—Uniswap, Aave, Compound, Maker, Lido, and Maple—and assesses their path to profitability.

— Bankless team

Image credit: Logan Craig

Author:* Ben Giove, Bankless Analyst*

A defining theme of the 2022 bear market has been the increased focus on fundamentals across all sectors of crypto and in particular DeFi.

As prices have decreased, wanton spending habits and the lack of sustainable business models have come into the limelight. While many blue-chip DeFi protocols have been praised for their ability to generate revenue, there has been less attention on whether or not they are really profitable.