Over the past few years, several trends have been played out in the crypto market. Decentralized finance came into the focus of crypto fans again and again. DeFi is, at the same time, a development that is not likely to disappear too quickly. DeFi applications could disrupt the financial world in the next few years. Then, DeFi tokens would also profit in the long term. Therefore, future-oriented investors can position themselves early for DeFi’s triumphant march.
Besides the future potential of DeFi, the following article also presents five DeFi tokens whose price could rise significantly in the next few years.
What is DeFi?
DeFi stands for decentralized finance. This is a multifaceted ecosystem in which consumers regain personal responsibility. Henceforth, the users themselves decide about money again and hold their assets in safe custody on their own responsibility. Smart contracts are taking their place instead of intermediaries in the financial system. They offer the advantage of significantly faster processing and lower costs. Meanwhile, numerous DeFi projects target different usescases: Lending, Borrowing, DEX, Digital Assets, Crypto Derivatives or Payment.
DeFi offers these opportunities in the next decade!
In principle, decentralized finance can fundamentally change the financial system as we know it today. Through blockchain technology and smart contracts, we could see financial services become cheaper, transparent, and more trustworthy in the coming years. Simultaneously, DeFi offers the opportunity for widespread equality.
This is because many people around the world still have no real access to the economic and financial system. The prospects for the future of decentralized finance are good, and its acceptance is likely to increase rapidly. In any event, DeFi applications are likely to become more and more part of our everyday lives and may even completely disrupt the financial and banking system.
This societal development offers the opportunity to benefit from the increasing adoption of many cryptocurrencies to investors. Whereas DeFi could spell crisis for traditional financial players and banks, opportunities are emerging for bold investors.
5 Best DeFi Tokens You Should Buy Today
Now that you have a better understanding of DeFi finance, in the following, we will introduce five best DeFi tokens, stay tuned.
Terra (LUNA): using stablecoins to succeed thanks to DeFi establishment
The leading platform for stablecoins is Terra. Over the past weeks and months, Luna, a native token that reduces volatility in stablecoins, performed better than the overall market. However, how come the Terra network is a beneficiary of the rising adoption of DeFi?
Simple, because the stablecoins have a bridging function, linking cryptos to fiat currencies. By tying them to more stable currencies, stablecoin holders benefit from lower volatility. For instance, stablecoins can thus earn interest while the downside potential is limited by coupling to real assets. Therefore, stablecoins became an essential asset in the lending sector of decentralized finance. If more people use DeFi applications, demand for Stablecoins should also continue to pick up. Terra network would be the first to benefit from this.
Lucky Block: strong upside potential from the decentralization of the gambling market
True, the gaming market is basically not part of our financial system. Still, the new Lucky Block cryptocurrency acts like a DeFi token. That is because the lottery market is to be disrupted by decentralization via blockchain technology. Here, there are many parallels to the financial world. Because blockchain technology can increase user trust in financial services and provide more transparency among participants in a crypto lottery. Simultaneously, costs also decrease here, which results in higher chances of winning for the participants of the Lucky Block lottery.
What Lucky Block aims to do is to build a global crypto lottery. National borders do not exist in the crypto space – an exciting approach that shows strong parallels to the DeFi sector and offers price potential due to the growth opportunities in the online gaming market.
Chainlink (LINK): Reliable Information as the Basis for Decentralized Finance
Finally, Chainlink is an exciting crypto project that could benefit from the DeFi boom. This Oracle solution aims to provide blockchains with reliable information to enable decentralized finance in the first place. Blockchain and DeFi applications are expected to generate several trillion US dollars in value in the next few years. Chainlink, for instance, is providing the critical infrastructure here to securely and quickly generate new revenue streams in a world full of smart contracts.
But Chainlink focuses on securely connecting smart contracts to data outside the chain. This is because advanced smart contracts in the future in the DeFi sector will require data from outside to validly and soundly execute the contracts. External data, though, will always pose certain security risks. Chainlink is among the leading Oracle solutions that aim to solve this problem.
Aave (AAVE): peer-to-peer lending for crypto interest
Aave protocol is a famous example of DeFi applications that are already successful today. Here, Aave is based on the Ethereum blockchain. As an open-source DeFi protocol, Aave’s holders can have a say in the governance of the crypto project. However, the basic focus of the project, which was launched in 2017, is on generating passive income through crypto deposits and borrowing.
But DeFi fans can benefit not only from the various services in the Aave protocol. They can simultaneously invest in the native token AAVE, which, being a governance token, enables co-determination over the future of the DeFi protocol while offering the chance for price increases. Finally, more and more people are likely to learn about and appreciate the benefits of a decentralized financial system in the future.
As demand for DeFi on Aave increases, the AAVE Coin price will rise. Active further development of the Aave protocol increases the chances of generating further growth. Currently, they are already the fourth largest DeFi project after TVL on the Ethereum blockchain, with a total value locked of $11 billion.
Ethereum: the leading smart contract blockchain for DeFi
Admittedly, Ethereum is not a typical DeFi token. Still, Ethereum’s network should not be missing from this list. This is because, despite a steady decline in market share, the blockchain is still the leader in the DeFi sector. In the years 2020 and 2021, there was a sharp increase in the number of DeFi applications and users on the Ethereum network. For those who want to use the existing coins profitably, the Ethereum blockchain offers several options.
Ethereum is likely to remain the leader in DeFi applications in the medium term. By upgrading ETH 2.0 and combining it with various Layer 2 applications like Polygon, DeFi users can bypass the high gas fees and benefit from faster speeds. At present, the Maker lending platform, DEX Curve Finance, along with Convex Finance, are the applications with the largest TVL on the Ethereum blockchain.
Which DeFi token should I buy?
If crypto fans build a diversified crypto portfolio, DeFi tokens cannot be missing. This is because currently, the Decentralized Finance space is much more tangible than megatrends like the Metaverse. Consequently, the chances are good that DeFi adoption will increase, and our financial world will become more decentralized. Finally, the manifold advantages over traditional financial intermediaries cannot be denied.
Yet, there is one crux to the matter. This is because more and more crypto projects and DeFi tokens are floating around in the DeFi sector, and not every coin will catch on. By contrast, Lucky Block has a unique selling point as an innovative crypto lottery. This is not about decentralizing credit, trading derivatives or crypto exchanges.
Instead, it is about disrupting online lotteries. Lucky Block thus goes a step further than other DeFi projects and aims to change the gambling world. If this ambitious plan succeeds, an early investment in the LBLOCK token could be worthwhile for all crypto fans.
