DeFi coins are considered the next big thing in the crypto-verse.
They connect the traditional banking system with cryptocurrencies and offer users standard financial facilities, such as loans, lending, and insurance.
DeFi leverages DApps and distributed ledger technology (DLT) to allow permissionless financial transactions within a peer-to-peer network.
This article will share the top decentralized finance coins you should invest in 2022 and ahead.
Let's begin by learning more about DeFi coins.
A decentralized finance coin is a financial currency that transfers value during a financial transaction.
They offer frictionless banking and let you borrow in seconds.
To start investing in DeFi, you need a crypto wallet to store, send, and receive DeFi coins.
Next, you need to purchase coins that exist in the Ethereum blockchain network.
Decentralized finance offers the highest level of security because it eliminates the need for central banks for financial transactions.
Some DeFi coins also act as governance tokens that grant the holders voting rights and other management power.
The applications that are used for transactions of decentralized finance coins and cryptocurrencies are called DApps.
To understand how decentralized finance coins work for its most common feature of borrowing and lending, let's take a look below.
Set up the crypto wallet where you'll be sending and receiving DeFi coins.
For instance, MetaMask is one of the most popular wallets supporting Ethereum and is easy to use for all the DeFi protocols.
Then, purchase the desired coins that are compatible with the DeFi protocol. Ether coins or ERC tokens will likely be bought since all the protocols are aligned with Ethereum.
You can participate in the protocol of your choice. One can participate in lending and borrowing without losing coin custody.
Visit any protocol's website, connect your wallet, and you'll see your acquired DeFi coins.
Interact with the protocol to borrow or lend your token coins.
On lending, you'll earn interest, whereas, for borrowing, you'll have to put your money in another asset as collateral.
Here are the top advantages of decentralized finance (DeFi) Tokens:
Decentralized finance (DeFi) Coin is one of the biggest trends in the blockchain industry. They offer financial instruments, while NFTs provide value-added services.
Here are the top ten DeFi coins to buy in 2022 and ahead:
Aave is an ERC-20 token that runs on the Ethereum blockchain. It is a decentralized finance protocol allowing people to lend and borrow crypto.
Aave was founded in 2017 by Stani Kulechov. It was earlier known as ETHLend until September 2018, when it was rebranded.
The World's leading security firms audit Aave to keep your investments safe and sound.
The first Aave token (earlier ETHLend) was distributed in November 2017, with a total of one billion coins sold. Seventy-seven percent went to investors for investment, while 23 percent to the project and the project's founders.
Aave connects cryptocurrency borrowers with lenders eliminating intermediaries. Lenders can earn interest from lending their funds to others. Users can make an investment in this token without the help of a third party.
Hence, with Aave, people can become their banks and loan money to other people like a bank does to earn good interest.
Aave Quick Stats November 2022:
Uniswap is a leading decentralized trading protocol with over $1.1T+ Trade Volume.
It aims to automate token trading and offers open access to anyone holding the tokens.
Uniswap financial exchanges are secured, improving trading efficiency compared to traditional exchanges.
Uniswap was launched in November 2018 by Hayden Adams but has gained immense popularity recently due to a surge in token trading.
The Uniswap ecosystem offers over 300 DeFi apps that enable developers, traders, and liquidity providers to participate together in an open financial marketplace accessible to all.
This decentralized crypto exchange offers crypto wallet support and lets you earn crypto with liquidity mining.
Uniswap is a type of decentralized exchange (without any central authority) known as an automated market maker (AMM).
It uses smart contracts to set prices and carry out trades.
Uniswap can provide crypto trading because its liquidity pools are a collection of funds locked in a smart contract. People can use these liquidity pools for crypto trading.
To start using Uniswap, you need to connect your crypto wallet.
To trade crypto, choose the "Swap" option, then select the crypto you want to sell and receive.
For liquidity mining, select the "Pool" option.
Uniswap currently charges a 0.3% fee for trading tokens on their decentralized exchange platform.
Uniswap Quick Stats November 2022:
The SushiSwap project is an automated market maker promoted by Chef Nomi in 2020.
The fundamental objective of creating the Sushiswap cryptocurrency was to allow users to create liquidity pools and get rewards in return in the form of Sushi digital assets.
SushiSwap decentralized exchange's native token is Sushi.
In contrast to Uniswap, SushiSwap charges traders a fee of 0.3%, xSushi holders receive 0.05%, and liquidity providers receive 0.25%.
The reward scheme is designed so that investors can be benefitted the maximum from it. The reward starts from block number 10,750,000. Investors receive 100 Sushi for each block which is distributed among the members of the respective pools.
The price of the Sushiswap is expected to grow with a growth rate of 1325.589% within the next five years.
The average expected price is $11.9 in the year 2024.
Sushi was introduced as the forked version of Uniswap. But with time, it has managed to maintain critical features of Uniswap and some additional financial services to compete with other DEXs.
Other than DEXs, it has some other key features such as Kashi lending, BentoBox dApps, Farm, etc.
Sushiswap is becoming one of the leading platforms with the highest TVL and massive trading volume.
Also, when staking SUSHI for xSUSHI, users earn 0.05% fees on all trading values.
SushiSwaps users need to sign up on a crypto wallet to start investing.
Select the 'swap' option on the home screen.
Choose the two tokens for trading/swapping, for example, SUSHI & ETHER.
Click approve and finally 'swap' to complete.
Wait for the transaction to complete and finally click 'OK.
SushiSwap Quick Stats November 2022:
Cosmos (ATOM) is another good cryptocurrency that aims to become an ecosystem of blockchains designed to scale and synergize with each other.
It focuses on "creating an Internet of Blockchains, a network of blockchains that can communicate with each other in a decentralized way."
Cosmos is a proof-of-stake chain. To grab ATOM as a reward and maintain a series of networks, ATOM holders can stake their tokens.
Cosmos is catering to three significant problems in the blockchain:
Cosmos atoms are traded on various crypto wallets.
In the wallet, you can choose the validator to delegate the atom.
Using your wallet, you can make a simple transaction that says 'stake or delegate.'
This will lock the ATOM, and they'll become non-transferable, and the chosen validators are allowed to operate within the selected validator network.
Cosmos Quick Stats November 2022:
Maker is a kind of Ethereum token that can be described as a governance token, utility token, and recapitalization resource of the Maker system.
The idea of the Maker token was conceived in 2015, and it launched in 2017.
Rune Christensen, a Denmark-based entrepreneur, created MakerDao, one of its kind entity inside the larger Maker ecosystem.
Another Ethereum token, Dai, is generated through the Maker system that focuses on trading on exchanges at a value of exactly US$1.00.
One of the most extensive decentralized applications on the Ethereum blockchain is Maker.
The supply of Maker token is dependent on the market conditions of Dai token and is not fixed. Its unique feature is that the token holder directly gets access to participate in governing the Dai token.
One of the essential utilities of Maker tokens is directly participating in the voting system of the management of protocol and Dai.
There is recapitalization resource value attached to the Maker token as its supply can increase if the debt is more than surplus.
Hence, DAI tokens are locked in a DSR (DAI Savings Rate) contract allowing investors to earn interest on the DAI.
Maker Quick Stats November 2022:
The Compound is one of the emerging decentralized finance protocols that use several crypto assets allowing lending and borrowing without banking institutions acting as intermediaries.
It is software running on the Ethereum blockchain that motivates a distributed network of computers to operate the traditional monetary market.
This DeFi coin allows users to deposit crypto into a pool (lending) that is accessible by borrowers. Lenders, in return, earn interest on the deposits.
On every deposit, new crypto is being awarded to the lenders by the Compound. For example, cETH, cBAT, cDAI, etc. Each token is transferable and tradable without restriction.
Lenders and borrowers are connected on Compound with rewards paid in cryptocurrency and smart contracts running on Ethereum.
Compound lenders are rewarded with COMP tokens based on the c tokens held in their wallets.
Interest is being incentivized to the lender with a varied interest rate.
The users can also take loans from any other cryptocurrency that Compound offers up to the limit of collateral attached.
If the asset's value increases, borrowers might get liquidated for the difference amount between the collateral asset and borrowed asset.
Compound Quick Stats November 2022:
The Curve is a very popular Automated Market Maker (AMM) platform that offers exchanging of tokens with low fees and slippage by only liquidity pools of the same category assets.
The platform provides users with the finest trading rates, acting as a decentralized platform for exchange.
It was first introduced by a Russian Scientist named Michael Egorov in 2020, with its whitepapers launched in November 2019.
Egorov is also the founder of Loancoin, a decentralized bank, and lending network.
If you are providing liquidity into a pool, you are exposed to all the cryptocurrencies involved in that particular pool.
Say there are ten cryptocurrencies involved in a pool, and your stake will be divided among all the various crypto ratios.
To add liquidity to Curve, users will have to follow the below steps:
Curve finance Quick Stats November 2022:
Kyber Network is a great multi-chain trading hub for cryptocurrency and liquidity protocols. It aggregates the liquidity of many sources to provide instant and secure transactions on any decentralized platform.
The transactions done on the Kyber Network are present on the blockchain. Hence, they can be verified with any of the Ethereum explorers.
It focuses on solving liquidity issues in DeFi Industry and allows developers to build products and services without worrying about different liquidity needs.
Kyber was founded by Loi Luu, Victor Tran, and Yaron Velner in 2017, with its headquarters in Singapore. Its base chain is Ethereum.
A unique feature of Kyber is that it allows users to switch between tokens without the help of a third-party centralized exchange.
In 2021, World's first dynamic automated market maker protocol was launched called Kyber DMM. This is highly reactive to market conditions to maximize returns, minimize fees, and provide high capital efficiency for liquidity givers.
Kyber Network is made up of a set of smart contracts feasible for any kind of intelligent contracts-blockchain network, but it is usually implemented on Ethereum.
There are two types of trades for Kyber Network:
Trading with the core asset, i.e., Ethereum
Trading without core assets being involved directly
Though both the trades are different, and the latter is a lengthy process, both exchanges are completed in a single blockchain.
Kyber Network Quick Stats November 2022:
Yearn finance was founded by Andre Cronje in February 2020. Cronje is not new to the concept of cryptocurrency and is well versed in its aspects. He also holds positions at smart contract ecosystem Fantom and CryptoBriefing.
Yearn finance was created to ease out the investing in crypto for the investors who are technically not sound by providing an automated system to provide them with maximum profit.
It uses many bespoke tools as an aggregator for different Decentralized finance protocols like Curve, Compound, and Aave to yield maximum profit.
It's best for investors who wish to invest in Decentralized finance but do not have enough time to study and research to maximize their returns.
There are 30000 Yearn finance coins available for supply, which is fixed.
One of the unique protocols in crypto, Yearn.finance is designed for rookies who wish to invest and trade in cryptocurrencies. It is available on crypto exchanges like Gemini, Kraken, Binance, etc.
Yearn finance works with its four core products which functions as below:
The Yearn finance is an ERC-20 token that can easily be stored on any Ethereum-supporting wallet.
Yearn.finance Quick Stats November 2022:
DeFi (DEFC) coins are the native currency for the decentralized finance swap platform, which focuses on decentralizing exchange and eliminating intermediaries involved in financial transactions.
The key features of the token are reflection, liquidity pool acquisition, and burning.
Decentralized finance coin is based on Binance Smart Chain and is easily transferable from one wallet to another.
Decentralized finance coin holders are motivated to hold their tokens for a more extended period and are rewarded static reflection tokens for holding the tickets.
The DeFi coin holders are taxed at 10 percent for their holding, and half of the taxed amount is redistributed in the form of DeFi coins to the holders. The other half is used to supply liquidity to the decentralized exchange.
DeFi coin provides users with a feature to lend or invest their tokens into liquid funds in return for a predetermined rate of interest.
Another key feature of the DeFi coin is the ongoing burning program that involves the destruction of existing tokens and dropping them in burnt accounts so that it limits the supply of tokens in that market, leading to a hike in the market price of the token.
DeFi can get DEFC listed on DeFi Swap Exchange. Moreover, if you are investing and staking on DeFi Swap Exchange for a year (365 days), your annual percentage yield will be 75%.
DeFi Coin Quick Stats November 2022:
DeFi coins work the same as fiat coins without being managed by any bank or intermediary. It is built on the Ethereum blockchain.
Peer-to-peer financial transactions take place using crypto wallets.
Users can invest, lend, and borrow Decentralized finance tokens using websites like Binance, Gemini, etc.
Decentralized finance eliminates the role of intermediaries through direct P2P networks.
It aims to create an open, transparent, and permissionless financial market to enhance and improve the consumer experience.
Users can avail services of lending, borrowing, and investing without being skeptical about the middleman.
Before investing in any DeFi protocols, one must study and research the liquidity, period of operation, and the total deposit amount of that protocol.
The market capitalization of the token will determine the risk involved in that token. The investment in DeFi might make users a target for cyber and crypto crimes or phishing.
You should be careful while investing in DeFi and operating the system.
There are complexities and problems attached to investing in DeFi coins, at least for unaware and traditional investors.
The legalities and regulations involved with these coins are puzzling. To ease this out for investors, platforms like Rebuschain are designed.
Here is a sneak peek of why this platform is designed and how it works.
Rebuschain is a regulated platform that assists in narrowing the gap between traditional and decentralized financing allowing market participants like banking and financial institutions to sell both DeFi and Traditional instruments within the same platform.
It is a blockchain solution that allows the integration of both instruments on a single network making DeFi readily available for everyone.
REBUS is the native coin of rebus chain technology, and it is used to pay for all transactions, fees, and services. Its maximum supply is one billion.
How Does Rebuschain Work?
Here are the steps to explain the functioning of Rebuschain:
REBUS is the utility currency on the Rebuschain platform that allows fast, secure, and cost-saving transactions.
Investing in this currency benefits TradFi investors and DeFi investors as it promises to provide them with security and ownership in the crypto world effortlessly with the help of asset managers and financial institutions.
REBUS token uses blockchain technology to satisfy regulatory requirements without giving up liquidity.
The token’s value is derived from several transactions on the Rebuschain platform. This makes REBUS token an attractive prospect to invest in as crypto.
Since the crypto market is in a hyper-adoption phase with confusion and complexities for TradFi investors, investing in REBUS will allow investors to reduce the difficulties and increase the utilities involved in transactions.
It supports any investments made in the Cosmos ecosystem and provides investors with a secure decentralized network through proof-of-stake.
DeFi coins have performed tremendously in recent years- with Yearn. Finance, Uniswap, and Sushi Swap generating huge profits since launching.
It is believed that decentralized finance coins can be the next big thing in the World of cryptocurrency and blockchain.
Different decentralized finance coins, with their unique features relating to peer-to-peer lending and borrowing, make it tempting for investors to opt for these coins.
Investments in decentralized finance coins can be a good idea, but one must start investing after a lot of research and at their own risk.