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DeFi Primitives Deep Dive

A close look at the core DeFi protocols every serious user should understand: Uniswap V4, Aave, Lido, MakerDAO/Sky, Pendle, EigenLayer, GMX, Compound, and Curve. Mechanics, current 2024-2026 metrics, and why each one matters.

15 min · advanced · part of Smart Contracts: Programmable Money

The DeFi Stack You Actually Need to Understand

Decentralized finance has matured into a stack of composable building blocks that together handle hundreds of billions of dollars in deposits and trillions of dollars in cumulative volume. Most of the visible DeFi activity flows through fewer than two dozen core protocols. If you understand the eight or nine most important ones in detail, you understand most of DeFi. This lesson walks through those primitives one at a time, with current metrics and the specific design choices that distinguish each protocol. The goal is not to memorize numbers but to understand the mental models so that the next protocol you encounter slots cleanly into a category you already know. A useful framing: every DeFi protocol fits into one or more of five buckets. Decentralized exchanges (Uniswap, Curve), money markets (Aave, Compound), liquid staking (Lido), credit/stablecoin issuance (MakerDAO, now Sky), and yield primitives (Pendle, EigenLayer, GMX). Once you see the buckets, the field stops looking chaotic and starts looking like a coherent financial system.

Also in this lesson

  • Uniswap V4 and the Hooks Architecture
  • Aave (Money Markets) and Lido (Liquid Staking)
  • MakerDAO/Sky/USDS and Pendle
  • EigenLayer Restaking and GMX Perpetuals
  • Compound and Curve veCRV
  • For Deeper Reading

Key terms

Uniswap V4 Hooks
Developer-defined contracts attached to Uniswap pools that modify behavior at specific lifecycle events (before/after swap, liquidity add, etc.). Launched January 31, 2025; turns Uniswap into a programmable liquidity engine.
Singleton Architecture
Uniswap V4 design where all pools share a single PoolManager contract rather than separate deployed contracts. Drastically reduces gas costs for multi-hop swaps and pool deployment.
Aave aToken
Interest-accruing receipt token issued when a user deposits an asset into Aave. Balance grows continuously with accrued interest. Aave peaked at $30.5B TVL September 2025; ~$20B after April 2026 Kelp hack.
Liquid staking token (LST)
A tokenized representation of staked ETH (or other assets) that remains liquid while the underlying earns staking rewards. Lido stETH/wstETH is the dominant LST with ~24% market share, holding ~8.72M ETH.
USDS / Sky
The successor to DAI under MakerDAO's Endgame rebrand. Migration completed April 7, 2026; combined supply ~$13B with ~23.5% real-world asset backing.
Real-World Asset (RWA)
Tokenized representations of off-chain assets such as treasury bills, money market funds, or private credit. Sky/USDS is the largest RWA-backed stablecoin protocol.
Pendle PT/YT
Pendle splits yield-bearing tokens into Principal Tokens (claim on underlying at maturity) and Yield Tokens (claim on accrued yield until maturity), enabling fixed yield, leveraged yield, and yield speculation.
EigenLayer Restaking
Mechanism that allows staked ETH to be reused to secure additional protocols (AVSs). Mainnet June 14, 2023; full April 9, 2024; slashing live April 17, 2025. Peak TVL ~$28.6B Sept 2025.
AVS (Actively Validated Service)
A third-party protocol that uses EigenLayer-restaked ETH for security. EigenDA was the first AVS launched, providing data availability for rollups.
GMX Real Yield
GMX distributes 63% of fees from GM pools to liquidity providers in ETH or AVAX (not in the protocol's own token), making it a canonical example of fee-funded "real yield" in DeFi.
veCRV (Vote-Escrowed CRV)
Curve's governance system: lock CRV for 1 week to 4 years; receive veCRV proportional to lock length (max 4:1). Earns 50% of trading fees, 80% of crvUSD interest, and votes weekly on emissions.
Curve Wars
Multi-protocol competition to accumulate veCRV influence, since veCRV votes determine where CRV emissions flow. Convex Finance accumulated ~50% of all veCRV through its CVX-incentivized lock model.

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Educational only — not financial advice.