Derivatives protocols fetch reliable asset prices from oracle services, which forms the foundation of a derivatives contract. This allows users to trade and speculate on the prices of both cryptocurrencies and assets that are not native to the blockchain, such as gold, fiat currencies, or stocks. The primary business model for derivatives protocols is to generate revenue by taking a cut of the trading fees paid by users.

Crypto derivatives are financial contracts that derive their value from an underlying asset. They allow investors to speculate on or hedge the price action of an asset without directly owning or interacting with it. Crypto derivatives are a diverse market sector, with protocols that allow users to trade perpetual contracts, options contracts, interest rate swaps, and more.

Derivatives

Aevo

ApeX Protocol

ApolloX

Bluefin

Buffer Finance

Deri Protocol

Dopex

Drift Protocol

dYdX

Gains Network

Hegic

Holdstation

Hyperliquid

IPOR Protocol

Kwenta

Levana

Level Finance

Lyra

Metavault.Trade

Mummy Finance

Opyn

Orderly Network

Pendle

Perpetual Protocol

Pika Protocol

Polynomial Protocol

Premia

RabbitX

Satori Finance

Solv Protocol

SynFutures

Synthetix

Thales

UniDex

Vertex

Volmex

Voltz

Users deposit assets into the protocol which then invests the assets according to predefined rules. The protocols usually charge a management fee and sometimes also a performance fee (revenue).

Asset management protocols offer smart contract-based ‘investment products', often referred to as vaults. The products invest user assets according to predefined investment strategies, with the goal of generating better yields than what the user could access on their own.

Asset management

Blockchains (L1) bring down the cost of incorporation to one function call. Once a DAO is deployed on a blockchain, it inherits the advantageous features of blockchains: access to global capital markets, global participation from contributors and customers, transparent and highly automated rules of operation, and an immutable audit trail.

Blockchains (L1) are smart contract execution environments that allow for the permissionless creation of smart contract-based businesses or DAOs.

Blockchains (L1)

Blockchains (L2) scale throughput horizontally by moving a set of transactions to a separate blockchain, and batching and settling them back to the underlying Blockchain (L1). This means that 1,000 transactions on the L2 become 1 transaction on the L1, which increases the throughput of the L1.

Blockchains (L2) are smart contract execution environments that allow for the permissionless creation of businesses and regularly timestamp their transaction activity to another Blockchain (L1) for increased security.

Blockchains (L2)

A cross-chain transfer can be executed in multiple different ways, usually by unlocking liquidity from liquidity pools or minting equivalent synthetic representations on the destination chain. The primary business model for bridges is to generate revenue by taking a cut of the transfer fees paid by users. That is, the bridge takes a portion of the relayers’ and/or liquidity providers’ revenue.

Bridges establish connections between blockchains. Each blockchain has a unique set of ground rules and parameters, and most do not have an in-built system to communicate with other blockchains. As a result, bridges were developed to allow blockchains to communicate with each other, enabling key functionalities such as cross-chain asset transfers.

Bridges

Currently, most DEXs work as automated market makers (AMM). Instead of relying on traditional bid-and-ask orders, AMMs use liquidity pools and mathematical formulas to determine asset prices. Alternative DEX mechanisms include order books, aggregators, and hybrid models combining various approaches. Typically, DEXs generate revenue by taking a cut of the trading fees paid by traders.

Decentralized exchanges (DEXs) are smart contract-based platforms that enable trading of digital assets without the need for centralized intermediaries. Traditional financial transactions lack transparency and must rely on centralized intermediaries. In contrast, transactions on DEXs execute according to transparent rules set by smart contracts and provide complete visibility over the exchange process. As a result, DEXs reduce counterparty risk and increase execution guarantees.

Exchanges (DEX)

The primary business model for most gaming protocols is to generate revenue by receiving funds from in-game purchases, or by taking a cut from both primary and secondary sales of in-game assets. 

Gaming protocols utilize smart contracts for in-game digital assets and asset management. These digital assets are used for in-game characters and economies. Some protocols invest into game related assets.

Gaming

Oracles provide access to critical data or information outside of the blockchain ecosystem. Onchain domain name registries improve the UX of finding, identifying and utilizing a wallet address of an entity.

Infrastructure protocols are smart contract-based protocols that provide support functionality for e.g. DeFi protocols and DAOs in general. Some examples are oracles and domain name registries.

Infrastructure

Users purchase insurance policies that cover them against different types of risk. The users pay a certain premium which depends on what type of policy they buy. The goal of the insurance protocol is to receive more in premium payments (revenue) than it has to pay out in claims.

Insurance protocols protect users and projects against potential risks and losses. Users can purchase products that provide coverage for different kinds of risks. The risks can for example be related to governance attacks, oracle failures, smart contract exploits and asset custodians.

Insurance

Interoperability

Once an asset is represented as a token onchain, it can be deposited as collateral into a lending protocol, and a loan can be taken out against it. The primary business model for lending protocols is to generate revenue by taking a cut of the interest paid by borrowers. That is, the lending protocol takes a portion of the lenders’ revenue.

Lending protocols are smart contract-based marketplaces that allow for permissionless lending and borrowing of assets. Lending platforms are transparent, and operate on a global scale, removing the need for intermediaries like banks or financial institutions.

Lending

Users deposit assets into the protocol and in return receive a derivative liquidity token (liquid staking derivative, LSD). By holding the token the user is able to earn staking rewards without giving up the liquidity. The protocols usually take a cut of the staking rewards generated (revenue). 

Liquid staking protocols allow users to stake their assets and maintain liquidity via a derivative liquidity token (liquid staking derivative, LSD) that represents the underlying asset.

Liquid staking

Creators and collectors trade assets on NFT marketplaces. The primary business model for NFT marketplaces is to generate revenue by taking a cut of the primary or secondary sales. 

NFT (non-fungible token) marketplaces are smart contract-based marketplaces that enable trading and minting of unique digital assets. 

NFT marketplaces

Users bet against each other, the house or liquidity providers. The primary business model for prediction markets is to generate revenue by taking a cut of the betting volume. 

Prediction markets are smart contract-based marketplaces that enable users to bet on different events.

Prediction markets

Crypto social media projects leverage blockchains to operate in a more decentralized and transparent manner. By utilizing blockchain technology, these platforms ensure that user interactions, content sharing, and transactions are recorded on an immutable and distributed ledger.

The "Social" market sector covers crypto native social media projects.

Social

Once a user has deposited collateral into a stablecoin protocol, they’re able to borrow stablecoins minted by the protocol. The primary business model for stablecoin issuers is to generate revenue by charging stablecoin borrowers interest on their loans. That is, the stablecoin issuer captures the interest paid by borrowers.

Decentralized stablecoin issuers are smart contract-based credit facilities that allow users to borrow stablecoins against crypto or real-world collateral assets. Stablecoins are often pegged to fiat currencies or other cryptocurrencies.

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Derivatives

Top projects in Derivatives based on daily trading volume in the past 180 days.

Competitive landscape

Daily circulating market cap for in the past 180 days.