Decentralized finance (DeFi) is one of the hottest cryptocurrency topics that has found its way into the limelight in recent months. Through DeFi platforms, users have gained tools to borrow, save, trade, or lend cryptocurrencies without requiring conventional market authorities.
From lending and borrowing platforms to stablecoins and tokenized BTC, there’s a DeFi application for almost everything. Many people are now considering the DeFi coins as an excellent investment, as they offer a trustless way of accessing financial services.
The explosive growth of the DeFi sector has led to the creation of diverse projects and protocols, all vying for a piece of the pie. With so many options available, it might be hard to know which coins are worth investing in. Here, we share five of the best DeFi coins worth buying today.
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Maker (MKR)
Maker is a decentralized autonomous organization (DAO) that controls the Dai stablecoin system. The project aims to minimize the volatility of Dai by using Ethereum as collateral. Users of the Maker Platform may borrow against a variety of different cryptocurrency pairs, all of which are compatible with the protocol.
The governance token of the Maker Protocol is MKR. MKR holders can vote on network governance issues and help secure the system against financial attacks. They also receive rewards for participating in governance and can earn a portion of the protocol’s transaction fees. MKR, is also one of the top-performing assets in the DeFi space, with a year-to-date return of over 1,600%.
Aave (AAVE)
Aave is an open-sourced and non-custodial protocol that allows users to deposit their crypto assets and earn interest on them. It also offers flash loans, which allow borrowers to take out a loan and repay it within the same transaction. The protocol uses a system of collateralized debt positions (CDPs) to reduce the risk of defaults.
Aave is an Ethereum-based protocol. It does, however, employ a distributed network of computers running its software to allow assets to be handled by a decentralized network of machines. Aave users do not have to trust any central authority or organization and only entrust the code. Because there’s a limited quantity of AAVE and usage charges are used to buy AAVE and eliminate cryptocurrency from circulation, Aave has value.
Compound (COMP)
The Compound protocol is a series of Ethereum smart contracts that allow users to lend or borrow assets. It also allows users to provide liquidity to the lending pools in return for a fee. The protocol currently supports a variety of ERC20 and ERC721 tokens.
COMP is an ERC20 governance token that gives holders voting rights over the Compound protocol. The COMP token is a cryptocurrency that will allow anybody to earn extra money by lending or borrowing. There’s also a built-in incentive system that holds tokens for users as they decide on how the platform will develop in the future.
UniSwap (UNI)
UniSwap is an automated market maker (AMM) protocol that allows users to swap ERC20 tokens. The UniSwap project runs on the Ethereum blockchain. They reward a worldwide network of users for maintaining and trading cryptocurrencies purchased and sold by traders directly. To do so, Uniswap uses a variety of liquidity pools. The UniSwap interface is user-friendly and intuitive. The AMM system also helps to keep prices stable.
The native token of the UniSwap protocol is called UNI. The UNI is a utility coin that allows its holders to influence how the network functions and gains from the rising value over time. This is why it’s a crucial token that must be included in any portfolio.
Curve Finance (CRV)
Curve Finance is a DEX built on the Ethereum blockchain. It’s designed to trade Ethereum-based assets with minimal slippage and gas fees. The protocol uses a system of liquidity pools to facilitate trades between different ERC20 tokens. CRV token holders, who also earn a portion of the platform’s trading fees, manage these pools. Curve allows users to lock up cryptocurrencies so other users can trade them.
CRV is a governance token that gives holders voting rights over the protocol’s liquidity pools. It also entitles them to a share of the platform’s trading fees. CRV tokens are currently ranked as the fifth-largest DeFi asset by TVL.
Bottom Line
Investing in the top DeFi coins is a great way to get exposure to the explosive growth in the sector. These assets offer high returns potential and are backed by strong fundamentals. The best DeFi coin largely depends on what you’re looking for and some factors to consider such as the governance model and liquidity.
While there’s always risk inherent in investing, these assets have the potential to provide investors with outsized returns. Be sure to do your research before investing in any DeFi project.
