Decentralized finance (DeFi) is being heralded as the next big thing in the cryptocurrency and blockchain technology arena.
Simply put, this phenomenon refers to projects that aim to provide traditional financial services - such as loans, savings accounts and asset exchanges - but without the need for third-party intermediaries.
In this guide, we analyze the best DeFi coins to buy in 2022 so that you can enter the decentralized finance space while it is still in its infancy.
Let's take a closer look at the best DeFi projects to invest in
To choose the best Defi tokens for your investment portfolio, you need to consider the following indicators:
- Current market capitalization
- Growth potential
- Results so far
- Targets and roadmap of goals
- The cost of the token
- Exchanges on which the token is listed
When considering your options, you should also consider the most undervalued cryptocurrencies, as they often have the greatest potential for exponential growth in the future.
Taking these basic factors into account, below you will find our analysis of the best Defi 2022 projects.
1: Cronos (Crypto.com) - Cronos DeFi is a sleeping giant
Cronos' steady rise in popularity at DeFi
The year 2021 was a landmark year for the decentralized finance space. Thousands of people have found their way to alternative financial products, services and opportunities. While Ethereum remains the largest chain in terms of Total Value Locked, other networks are gaining momentum. Cronos is one of the ecosystems quietly climbing the rankings and now represents more than $2.45 billion in TVL.
More importantly, this TVL marks a significant journey for Cronos. At the beginning of November 2021, the network had locked in a total value of less than $300 million. Less than a week later, the amount had doubled and has been rising ever since. TVL's current value is nearly a record high for Cronos, and it looks like there is still room for further growth. In addition, the network is now home to dozens of DeFi protocols, confirming developers' interest in the network.
Interestingly, Cronos now has several DeFi inter-chain protocols in operation. Beefy Finance, Autofarm, EmpireDEX and CougarSwap are just some examples. However, each blockchain has advantages and disadvantages, and the high fees associated with Ethereum remain a pressing problem for many DeFi ventures. The discovery of alternative blockchains could bring much-needed relief and improvement. With its low fees and high capacity, Cronos is an excellent No. 1 candidate.
Cronos is Exciting native projects and protocols
While it's good to see established projects exploring Cronos, the network also has some native DeFi protocols worth noting. For example, VVS Finance i MM Finance provide their users with decentralized trading, farming and staking functions. With TVLs of $1.39 billion and $389 million, respectively, these are the two largest DeFi protocols on Cronos.
Tectonic is a different creation, as the cross-chain money market is a powerful solution for those looking for passive profit opportunities. In addition, the protocol introduces instant liquidity loans for users with inactive cryptocurrencies. Increasing overall liquidity in the Cronos ecosystem will increase its appeal and exposure. Moreover, Tectonic represents more than $310 million in Total Value Locked, confirming the high interest in this protocol.
Moreover, the DeFi segment is more than just DEXs, lending and borrowing. Non-transferable tokens (NFTs) are also having an outstanding 2021. These assets continue to play an important role in decentralized finance, as they can serve as collateral across various networks. Cronos has a thriving NFT ecosystem, with various innovative projects and collections hitting the market.
2: Uniswap - The best leading decentralized exchange Defi
Next on our list of top Defi projects to watch in 2022 is Uniswap. This project represents the true definition of decentralized finance, as it is home to an innovative exchange platform that allows traders to exchange tokens on a peer-to-peer basis. In other words, no centralized site is needed to buy and sell cryptocurrencies through Uniswap.
This stands in stark contrast to the industry norm, which is dominated by large centralized cryptocurrency exchanges such as Binance, FTX and Coinbase. They all stand between buyers and sellers, earning huge commissions along the way. In the case of Uniswap The exchange does not use traditional order sheets to match market participants.
Instead, the platform runs an Automated Market Maker (AMM) model. In its simplest form, Uniswap's AMM will set token prices based on a number of variables - such as volume, demand and market capitalization. This allows for a seamless and unencumbered way to trade cryptocurrencies in a decentralized manner.
As for the native coin Defi -. UNI, the project is among the top 25 digital assets in terms of market capitalization. When the token was first listed on public exchanges in 2020, you would have paid about $7. As of 2022, UNI has reached over $17, an increase of over 140%. Still, investors will expect a return to the $40-plus level that UNI reached in 2021.
3: Terra - Defi's leading cryptocurrency, which continues to hold its own in the market
There's no denying that the broader cryptocurrency market - and the Defi coin market in particular - has been largely bearish in 2022. Nonetheless, there seems to be no stopping the appreciation of the Terra, which continues to do remarkably well. For those who don't already know, Terra is a decentralized financial project that specializes in algorithmic stablecoins. Its native token is LUNA.
Unlike most stablecoins on the market, Terra does not focus only on major fiat currencies such as the US dollar or the euro. On the contrary, Terra's protocol covers the full range of other national currencies - including, but not limited to, the South Korean won, the Japanese yen and the Chinese yuan.
In fact, Terra even supports SDR (Special Drawing Rights) - a currency backed by the International Monetary Fund. In terms of performance, - Terra was valued at just 1,30$ per token when it was listed on exchanges in 2019 - according to the CoinMarketCap. In early 2022, the same Defi cryptocurrency is valued at more than $90.
This means that in less than three years of trading, Terra has increased its value by more than 6800%. Most recently, in the four weeks preceding the writing of this guide, Terra was trading at just $44 - meaning that the project's value has more than doubled in just one month. As a result, Terra is now among the top ten cryptocurrencies in terms of market capitalization.
4: Decentraland - Invest in MetaVerse with a MANA token
Looking for the best MetaVerse coin in 2022? MetaVerse is expected to become extremely popular in the coming years. Facebook has even changed the name of its NASDAQ-listed company to Meta Platforms. If you want to invest early in this growing concept, you can do so by buying MANA tokens, which are a native digital asset Decentraland.
In its most basic form, Decentraland is a project built on the blockchain Ethereum, which offers a virtual game world that everyone can access. One of the most innovative things about Decentraland is that users can buy virtual land and then build digital properties.
These properties - along with a whole set of other items in the game - can then be sold on the open market. This business model has already reached the status of proof-of-concept for several reasons. First and foremost, some real estate plots sold through the decentralized platform have raised more than $1 million.
Second, the MANA token - which is the native currency used for all purchases and sales made through the Decentraland platform - is now a multi-billion dollar project. In 2018, MANA was worth just $0.025. In mid-2021, the cryptocurrency's value reached nearly $6, a significant increase of nearly 24,000%. Did you know that Decentraland is one of the best Web 3.0 coins to buy in 2022?
5: Yearn.finance - Defi services through decentralized credit agreements
Another project on our list of top Defi projects for 2022 is Yearn.finance. The project specializes in decentralized financial services, which currently focus on peer-to-peer style lending. By this we mean that Yearn.finance creates a bridge between borrowers and lenders without requiring a centralized intermediary.
This is made possible by technology smart contract, which allows ordinary consumers to use Yearn.finance to borrow capital without going through a credit check. The loans are funded by investors who want to make money from their cryptocurrency holdings.
This gives investors an attractive rate of return. Yearn.finance also allows investors to provide liquidity to trading pairs, which again provides an APY that far exceeds anything offered by traditional banks and financial institutions. As for investing in the Yearn.finance project - you can do so by purchasing its Defi coin - YFI.
CoinMarketCap notes that YFI first appeared on public exchanges in July 2020, with a starting price of $907. Since then, the YFI token has peaked at more than $93,000. This translates into profits of more than 10,000%. Another important advantage of this Defi cryptocurrency is that, with just over 36,000 tokens, the total supply of this digital asset is very limited.
6: The Graph - Blockchain Index Services via GRT token
The Graph is behind an innovative technology that allows blockchain networks to "index" data. This simply means that blockchains can efficiently store and mine data - such as transactions and mining logs - without overloading the network. At the moment, it is claimed that more than 25 blockchains are using The Graph technology for this purpose.
In order for these blockchains to index their data, they must use the GRT token to pay for transactions. Looking at its price since its launch in late 2022 - when the GRT token was priced at 0.21$ - it has since reached more than 2.20$. This represents an increase of more than 700%. However, GRT is available at a reduced price in early 2022, below 0.40$ per token.
7: SushiSwap - Defi platform with popular token
So does Uniswap, SushiSwap is a decentralized exchange that allows users to buy and sell digital currencies without the need for a third-party intermediary. However, SushiSwap offers many other services that are in line with the goals of decentralized finance.
These include the ability to monetize owned cryptocurrencies by investing tokens in liquidity pools, staking and even loan agreements. At the moment, SushiSwap has attracted more than $2 billion in liquidity in transactions worth $172 billion. You can invest in SushiSwap by purchasing a SUSHI token.
8: Cosmos - Highly rated Defi protocol offering Blockchain interoperability
Cosmos is another top-rated Defi cryptocurrency that you might consider adding to your investment portfolio. This project offers an innovative solution to the age-old problem of blockchain interoperability. By this we mean that the Cosmos protocol allows competing blockchains to talk to each other.
This would allow Bitcoin, for example, to share and download data from the Ethereum blockchain - and vice versa. This promising concept has made Cosmos one of the most coveted Defi coins of 2022.
In terms of performance, ATOM - which is Cosmos' native digital token - was trading at just over $21 in the 12 months before this was written. As of early 2022, the token's price is already over $30, a modest increase of more than 35%.
9: - Decentralized protocol to provide liquidity to cryptocurrency Defi
Kyber Network is a decentralized protocol that provides Defi coins with much-needed liquidity. The reason this needs to be addressed is that the Defi cryptocurrency trading scene is somewhat fragmented - meaning the tokens are scattered across multiple exchanges - such as Uniswap, Pancakeswap, SushiSwap, Curve, SpookySwap and others.
As a result, Kyber Network is able to extract a lot of liquidity from all of the aforementioned platforms - ensuring that Defi cryptocurrencies provide the right market conditions for buyers and sellers. At the moment, Kyber Network's market capitalization is less than $500 million, so there is still plenty of room in the market for upside potential.
10: AAVE - Open Source Defi protocol
AAVE describes itself as an open source liquidity protocol that creates a gap between peer-to-peer investors and borrowers. Through the platform AAVE Investors can feed the loan pool with cryptocurrency tokens in exchange for interest. The specific APY rate offered will depend on the token in question.
The funds are then distributed to borrowers, who are required to pay a security deposit to access immediate financing. AAVE token is currently the leading Defi coin in terms of market capitalization and value. When the token was launched in 2020, you would have paid just $53. By the turn of 2022, AAVE was trading for more than $262 - an increase of nearly 400%.
If you want to buy an AAVE or Basic Attention Token, you can find some of the most competitive fees on eToro.
What are DeFi cryptocurrencies and what are their uses ?
Defi's basic definition of cryptocurrency is digital currencies that perform a specific function in a project that offers decentralized financial services. For example, in our analysis Defi's top cryptocurrencies of 2022 we mentioned that Yearn.finance and AAVE offer a decentralized lending service that does not require a third-party intermediary. Another such DeFi project is MakerDAO.
In order for these platforms to function without a centralized intermediary, transaction fees are paid in their respective Defi currencies - YFI and Aave tokens. Similarly, Uniswap and SushiSwap offer decentralized trading services where buyers and sellers can exchange tokens on a peer-to-peer basis. Again, the Defi coins of these projects power the platform.
Early 2022 CoinMarketCap notes that more than 500 Defi cryptocurrencies are currently active in the market, including 1inch tokens. On the one hand, this can make it difficult to determine,which Defi project to invest in. But on the other hand, if you want to gain exposure to the broader decentralized finance industry, you might consider diversifying among dozens of different projects.
Are DeFi projects a good investment?
Defi cryptocurrencies can be a good investment for your portfolio if you want to put some capital into a market niche that is growing at an express pace.
However, Defi projects - like all cryptocurrencies - are extremely volatile and often speculative. Therefore, we suggest doing some analysis before investing in the best Defi projects for your portfolio.
For starters, you may want to consider some of the key points outlined below:
Development of the investment sector of DeFi projects
Before turning to fundamental research data, we should start by examining how quickly the broad investment scene of Defi projects has developed.
- Many of the Defi projects we're talking about today were not launched until 2020 - which shows how new the market is.
- However, according to CoinMarketCap, the total valuation of the more than 500 Defi projects active in this space now exceeds $137 billion.
- At first glance, this may seem like a significant amount of capital.
- However, when you consider that at the moment the market capitalization of the entire cryptocurrency scene is nearly $2 trillion, Defi projects still represent a relatively small segment of the sector.
Taking this into account, it can be concluded that the market for Defi projects is still very undervalued.
If you want to diversify your investments into multiple Defi projects, you can easily do so with a broker eToro, operating under SEC regulations - not least because you only need to meet a minimum of $10 on each transaction you make.
Some of the best performing cryptocurrency assets are Defi projects.
If you want to invest in the best Defi projects on the market because you care about above-average profits - you will be pleased to know that this niche segment of the cryptocurrency scene has yielded phenomenal returns in recent years.
For example:
- Let's say you invested 5,000 $ in Yearn.finance when this cryptocurrency was first launched in July 2020.
- You would pay about $907 per token.
- If you had maintained your investment in Yearn.finance until mid-2021, you could have paid out more than $93,000 per token.
- Thus, your original investment of $5,000 would become worth more than $500,000 😁.
Another example:
- Let's assume that you knew about the MetaVerse phenomenon back in 2018 and therefore decided to invest $5,000 in Decentraland.
- This way you would pay just $0.025 per token.
- And if you were to hold out until mid-2021, when Decentraland reached a price of almost $6 per token - this represents an increase of almost 24,000%.
- Your original investment of $5,000 would therefore be worth more than $1.2 million 😁.
Of course, not all Defi projects have achieved such significant price increases. Therefore, there is no guarantee that the Defi currencies you choose will achieve the same results as Yearn.finance or Decentraland.
That's why it's important to do your own research and diversify into several Defi projects before investing.
Foundations of cryptocurrency Defi
Now that we have discussed the technical performance of the Defi industry, we can look at the fundamentals. After all, if you want to invest in the broader Defi industry, it's good to understand why this market seems so attractive to beginners.
In short, the main idea behind Defi is to take traditional financial services away from centralized operators such as banks. This means that in the near future we could see ordinary consumers getting loans from Defi platforms - which are then funded by investors.
This peer-to-peer model can be extended to a whole range of financial services - such as brokerage transactions, insurance and much more. And if decentralized finance reaches its full potential, the best Defi coins discussed on this site will only benefit from it in the long run.
Plenty of entry opportunities with low capitalization
Another great advantage of investing in decentralized finance is that many of the best Defi projects on the market have a small price tag.
This means that the growth potential offered will be much more attractive compared to projects that already have a large market capitalization.
For example, according to CoinMarketCap, of the more than 500 Defi cryptocurrencies listed on the platform, fewer than 20 have a market capitalization above $1 billion.
Defi cryptocurrency price
The market price of Defi cryptocurrency functions just like any other digital asset. This means that market prices are determined by supply and demand.
For example, when Decentraland went from a price of 0.025$ to almost 6$ in just four years, it was because buying pressure far outstripped selling orders.
If you're wondering how to track Defi cryptocurrency prices, you may want to consider using a data collection platform CoinMarketCap.
Alternatively, if you choose to purchase Defi coins through a user-friendly platform such as eToro, you can simply go to your portfolio to assess how your investments are performing in real time.
Where to buy Defi cryptocurrencies
As for where to buy Defi cryptocurrencies, this will ultimately depend on the token you choose.
For example, if you want to invest in new Defi projects that have a small market capitalization, you may have to invest through a decentralized exchange.
However, if you are interested in leading Defi coins with large market capitalization - such as Bitcoin Cash, Uniswap, AAVE or SushiSwap - you should have plenty of options on centralized platforms that are more suitable for beginners.
Our market research shows that eToro is the best place to buy Defi coins - here's why:
eToro - the best place to invest in DeFi projects
eToro was founded in 2007 and is currently used by 20 million traders of various skills. The platform is regulated by the Securities and Exchange Commission (SEC) and registered with FINRA. Additional regulations come from authorities in the UK, Australia and Cyprus. This allows you to safely invest in the best Defi projects of your choice. As for available Defi projects, most of the projects discussed today are available for purchase on eToro.
This includes everything from Ethereum Classic, Litecoin, Zcash and AAVE to Tron, SushiSwap and The Graph. Regardless of which Defi cryptocurrencies you decide to buy, eToro only charges a spread fee - that is, the difference between bid and ask prices. What's more, you can deposit your eToro account via debit or credit card, e-wallet or bank transfer without incurring any fees. The minimum deposit and investment in Defi projects is just $10.
Another option available to you on eToro is to invest in CryptoPortfolio. In a nutshell, it offers a ready-made, diversified basket of digital currencies that are priced based on market performance, valuation and other fundamental variables. Most importantly, CryptoPortfolios are managed by the eToro team, so you can invest in the broader Defi space in a passive manner.
Another passive investment tool available on eToro is the Copy Trading feature. Instead of investing money in a pre-prepared portfolio, with this tool you will invest capital in a successful trader who uses the eToro platform. We also like eToro for its access to other asset classes - it includes thousands of stocks and ETFs that can be traded without commissions. eToro is available online or through the cryptocurrency app on iOS/Android, and it only takes a few minutes to open a verified account.
How to buy Defi cryptocurrency on eToro
If you are interested in buying other popular Defi projects - eToro, an SEC-regulated broker, allows you to invest in cryptocurrencies in less than five minutes. Using this broker, you will need just $10 to invest in the best Defi cryptocurrencies.
Step 1: Open an eToro cryptocurrency account
First, visit the eToro website and open an account using the link below . You will need to provide some personal information, such as:
- Name
- Date of birth
- Address of residence
- Cell phone number
- E-mail .
Then send a copy of your passport or driver's license to verify your eToro account immediately.
Step 2: Deposit funds from (minimum amount 10$)
To buy the best Defi projects on eToro, deposit a minimum of 10$.
Some of the payment methods supported by eToro are:
- Debit cards
- Credit cards
- Paypal
- Neteller
- ACH
- Bank transfer
- Trustly
Best of all, eToro does not charge any transaction fees on deposits and withdrawals .
Step 3: Start searching for Defi cryptocurrency
You can then use the search box at the top of the page to find the Defi cryptocurrency of your choice.
In our example above, we want to buy Decentraland.
Step 4: Purchase Defi token
To finalize your investment in the Defi project, you must enter the total rate in the "Amount" field. In summary, it can be any amount from $10 and up.
When you click on the "Trade" button, eToro will execute your order.
The views and opinions expressed here are solely those of the author and should not be taken as financial advice either. Every investment and transactional activity involves risk, so you are advised to do your own research when making any trading, investment or financial decisions.
