Over the years, Defi has increased its market size. The total value locked up in Defi has risen from less than $10 billion to over $40 billion. This has also increased the market capitalization of all the tokens that are traded in the Defi smart contract. Many tokens have seen their value increase to over 500% in the past few months. For example, blue-chip tokens have soared in value, with household names UNI, AAVE, SNX, and others experiencing new heights.
Decentralized finance is a combination of traditional banking services with decentralized technologies like blockchain. Decentralized finance is like another form of finance that doesn’t require the services of a middle man. And for Defi to achieve that, it utilizes smart contracts on a blockchain, with Ethereum being the most prominent among them.
Defi applications are similar to smartphone applications, but they are developed with smart contracts. They typically run on the Ethereum blockchain, where Ether is its native cryptocurrency – the second largest cryptocurrency after Bitcoin. Yet, the ETH network fees have become a source of concern for traders for the past few months.
However, the coming of the EIP 1559 will create an upgrade to Ethereum that will reduce the volatility of transaction fees and will burn Ether for every transaction sent. The EIP – 1559 is an upgrade that will change Ethereum’s network fee structure and overall monetary policy. There have been concerns over the impact of the EIP – 1559 on Defi. However, the coming of the EIP – 1559 doesn’t mean that users will pay less in fees for using platforms and protocols. The BASE FEE and tips will still add up, and higher tips will mean faster transactions. In essence, the coming of the EIP 1559 will not stop miners from collecting mining fees; instead, it will stabilize the network and make it more efficient for traders and users.
In this article, we are going to look into the top 10 Defi season picks. We analyzed the potentials for future growth of these coins and their market cap before selecting them. One of the advantages of Defi is that it removes third parties, replacing them with globally accessible, autonomous smart contract-powered protocols. And with the elimination of central authority, anyone that has access to an internet connection can access financial products and services anytime from any part of the globe.
Most of the financial services and products that Defi users access include borrowing and lending, alternative saving products, decentralized trading, financial derivatives, etc.
Top 10 Defi Season Picks
Uniswap $UNI
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Uniswap is a decentralized exchange protocol built on Ethereum. It is an automated liquidity protocol. The protocol doesn’t have an order book or any centralized party to make trades. The Uniswap allows traders to trade without the services of a middleman, with a high degree of decentralization and censorship resistance. The Uniswap protocol enables users to swap Ethereum based tokens and provide liquidity to earn an investment income. For example, users can swap ETH to USDT, or you can earn UNI tokens and trading fees by providing liquidity.
One of the things that make Uniswap unique is that it is not just a decentralized exchange; it attempts to solve the issues that platforms like EtherDelta experience with liquidity. Through the automation of market-making, the protocol incentivizes activity by limiting risk and reducing costs for all parties. This procedure also removes identity requirements for users. This means that anyone can create a liquidity pool for any pair of tokens. Uniswap is one of our top picks for this Defi season.
AAVE $AAVE
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Aave is a non-custodial Defi protocol where users can lend, borrow and earn interest on crypto assets, all without the services of a middleman. It is one of the emerging Defi cryptocurrencies that is running on the Ethereum blockchain. However, Aave is a system of smart contracts that allows for these assets to be managed by a distributed network of computers running its software. What this means, in essence, is that Aave users do not need to rely on a particular person or institution to manage their funds. They only need to trust that its code will execute as written.
One thing that makes the project unique is that it permits users to borrow and lend more than 20 cryptocurrencies. And the Aave flagship product, “flash loan,” is the first uncollateralized loan option in the Defi space. However, it has to be paid back within the same transaction. It is one of the Defi projects to watch out for in the year.
ThorChain $RUNE
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ThorChain is a permissionless cross-chain liquidity platform that allows for interoperable blockchain communication. It is a non-custodial liquidity marketplace for blockchains that permits users to swap assets freely through multiple networks (cross-chain transfers). For the team to achieve their target, they built bi-directional bridges between two blockchains. It means that a user can freely swap any asset on the network in a permissionless, non-custodial manner.
The main aim of building the protocol was to allow for a cross-chain transaction. The team behind the project believed that centralized exchanges had a flawed system, and there is not enough liquidity for users. Another thing that makes the project unique is that it helps to remove the issue of impermanent losses or the regular temporary losses that liquidity providers encounter while contributing to liquidity pools. It is one of the projects that is projected to explode in the year.
Terra $LUNA
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Terra is a blockchain protocol that develops and supports stablecoin payments and open financial infrastructure. The network leverages a native token, stablecoin protocol, oracle system, and smart contracts to offer users programmable money for the internet. The project brings users multiple stablecoin options that allow for instant settlement. To achieve this, Terra relies on a price stability algorithm that actively altars the monetary supply of an asset to retain value. Through this avenue, Terra can be able to provide users with lower fees, more stability, seamless cross-border exchanges, and highly responsive financial assets.
One unique thing about this project is that it is able to set itself apart via its use of fiat pegged stablecoins, stating that it combines the borderless benefits of cryptocurrencies with the day-to-day price stability of fiat currencies. It retains its one-to-one peg via an algorithm that automatically adjusts stablecoin supply based on demand. Terra is one of the projects taunted to develop in the year.
Sushi $SUSHI
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Sushiswap is a software running on Ethereum that wants to incentivize a network of users to operate a platform that allows users to buy and sell crypto assets.
Sushi is a community-driven Defi protocol, serving up delicious interest for the users who held crypto assets. The protocol allows users to utilize the passive income Defi tools like liquidity providing, yield farming, and staking. Also, because of the decentralized nature of automated market maker (AMM), Sushi has fewer hurdles to execute your cryptocurrency trades, and fees are paid to users who provide liquidity to the pool, just like the way it is supposed to be.
The Sushi platform permits users to trade cryptos without the need for a central operator administrator. This means that it is the holders of SUSHI that make decisions relating to the SushiSwap software. It is another excellent project in the Defi space.
Curve finance $CRV
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Curve (CRV) is a decentralized exchange (DEX) and a liquidity pool that permits users to trade with stablecoins or trade stablecoins easily and quickly. It works like Uniswap, but the key difference between them is that on Uniswap, you can swap any ERC 20 token (as long as there is liquidity). In contrast, Curve is specifically for trading stablecoins on Ethereum. In short, it only focuses on assets with parity 1 to 1 with national currencies.
This feature has made Curve a favorite for liquidity providers and stablecoin traders who are looking for a minimal slippage to minimize losses. Slippage is the difference between the expected price of a trade and the price at which the trade is executed, and it is one of the primary causes of losses in some cryptocurrency exchanges. Curve currently supports the trading of the following stablecoins; USDT, USDC, DAI, etc. The Curve is one of the Defi projects to watch out for in the year.
Balancer $BAL
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The Balancer is a decentralized finance protocol based on Ethereum that permits for Automated MARKET Making. Its goal is to create a decentralized mechanism for exchanging ERC 20 tokens and promoting AMM. To achieve this, Balancer uses a combination of crypto assets to offer its service, allowing for trading without a financial intermediary like an exchange.
You can see Balancer as a kind of index fund which permits users to create funds depending on the cryptocurrencies in their portfolio. These funds are known as balancer pools, and a user that wants to provide liquidity to a pool can do so by just depositing an asset in them.
Users earn a portion of the trading fee when they provide liquidity to a balancer pool. These rewards are paid to the network for utilizing their funds, and they are in BAL token. The Balancer Defi project is one of the projects that has been estimated to increase in popularity this year.
Alchemix $ALCX
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Alchemix is a decentralized finance protocol that permits the creation of synthetic tokens representing the future yield of a deposit. It was built using decentralized smart contracts on the Ethereum network. It allows users to retrieve near-instant tokenized value against temporary deposits of stablecoins. Alchemix lets you reimagine the potential of Defi by providing highly flexible instant loans that repay themselves over time. There is no liquidation.
In the protocol, users can deposit DAI to mint synthetic protocol token (alUSD), a synthetic stablecoin that tokenizes your future yield. Also, a yield that is earned by your collateral from yearn.finance vaults automatically repay your advance over time. Users can still redeem their alUSD back into DAI one to one in Alchemix or trade it on decentralized markets like Crv.finance or Sushiswap.
Alpha Finance $ALPHA
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Alpha finance Lab is a network of interoperable Defi products and solutions. They focus mainly on Defi space and seek to provide maximum returns to Defi users at a lesser risk. To achieve this, Alpha finance conducts market research to explore unmet market demand. Subsequently, they unveil products to meet the market demand. The alpha finance lab looks to bring users across various blockchains, such as Binance smart chain (BSC) and Ethereum. The goal of the platform is to unveil an ecosystem of Defi products that address the unmet needs of users while at the same time remaining simple and easy to access.
Unlike other Defi platforms, Alpha finance lab is looking to ensure that its solutions don’t offer only demand utility but are also user friendly while making Defi more accessible to users. It is another Defi project that we believe has a bright future and is capable of skyrocketing in the future.
Badger DAO $BADGER
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Badger DAO is an open-source, decentralized autonomous organization (DAO) that is focused on building products and infrastructure of simplifying the use of Bitcoin as a form of collateral across many smart contract platforms. The Badger builders, the developers of the platform, can collaborate and implement BTC as collateral to as many blockchains as possible. The developers of the platforms are rewarded with incentives in the form of a Badger token from the developer mining pool for every implementation.
The ideas of the platform are less competing and more collaborating. Thus, making it a community-led initiative. All the decisions are made through a governed vote including, how, what, and when Badger DAO products are created. This ensures that Badger always puts the community first in every decision-making. It is one of the Defi projects that is drawing a series of speculation in the year. With the majority seeing the project increasing in value in this Defi season.
Conclusion
With the ongoing surge in Defi, we are projecting many Defi projects to escalate in value. The above projects are most of the projects capable of skyrocketing in value in the coming years. If you found this article helpful, drop your comment below.
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Written by: Narender Charan
