Top 10 DeFi Hidden Gems

Dear Bankless Nation,

It’s a wild on-chain world out there. Today, we’re digging into ten under-the-radar DeFi projects that our analyst team members are pretty excited about.

– Bankless team

Bankless Writer: Jack Inabinet

Exploring the frontier of crypto is scary.

Many newcomers to crypto avoid making the leap on-chain; we don’t blame you if you fall into this camp!

But today, we’re highlighting 10 of our favorite hidden DeFi gems. The first 2 are available to everyone, but we’ve saved the rest for our Bankless paid subscribers

1. Smilee Finance

What is it?

Anyone who has provided liquidity to an AMM is familiar with impermanent loss (IL). Smilee unlocks the potential of IL by allowing traders to take positions on price volatility.

The protocol’s core primitives are on-chain options and derivatives enabling volatility trading at scale. To start, Smilee turns IL from a bug to a feature through their “Impermanent Gain” & “Real Yield” products.

Essentially, you can short volatility (akin to LPing on an AMM) while earning a yield, or long volatility with Impermanent Gain options offering up to 5,000x leverage and no liquidations. Smilee allows LPs to hedge their IL exposure and traders to speculate on volatility.

Smilee recently announced components of its Smilee v1.69 update, including a synthetic AMM and Directional Impermanent Gain options, enabling traders to enter and exit positions at any time while giving them the ability to double leverage by taking a directional preference on volatility.

Because of the flexibility of its custom synthetic engine, Smilee can offer a variety of exotic derivative payoff structures, including those for impermanent gain, options, variance swaps, structured products and insurance.

How to interact?

Smilee has already successfully undergone one round of incentivized testnet testing and a second round showcasing v1.69 is on its way. You’ll need a private Discord invite to gain access to the incentivized testnet and Bankless has secured 25 of them for our Citizens! For details on how they’ll be distributed, join the Bankless Nation Discord (gated to Citizens only) and keep up with the announcements.

2. Aevo

What is it?

Aevo is an orderbook options exchange from the Ribbon Finance team built on Aevo Chain, a custom OP Stack rolldApp – an L2 solution that’s built on Optimism’s code base that exclusively services the Aevo Exchange.

Similar to leading options provider dYdX, Aevo runs an off-chain orderbook and executes matched transactions on-chain with its smart contracts.

Currently, Aevo Exchange offers calls, puts, and futures on ETH, and the newly-launched Aevo OTC makes altcoin options accessible to anyone (well, anyone who can place a minimum $10k notional trade). The team intends to ship BTC options, increase market maker integrations, and integrate with Ribbon’s DOV vaults at a future date.

How to interact?

Aevo Exchange may be gated to Exchange Pass HODLers and Aevo OTC is for whales only, but have no fear, Bankless has your solution: we’re handing out 30 of these NFTs to Bankless Citizens!

Join the Bankless Nation Discord and go to the announcements tab to learn how to get your name on the list to receive one of these elusive passes. Once you’ve received your Exchange Pass, you’ll be able to bridge USDC from Ethereum into Aevo Chain and begin trading perps and options on Ether.