2022 has seen a lot of DeFi projects, and their associated tokens launched. However, before picking the best DeFi coins in 2022 to invest in, it is important to understand what DeFi is all about.Â
- Also learn about: Best cryptocurrencies to invest in currently
What is DeFi?
DeFi stands for decentralized finance, sometimes called open finance, and is a term that encompasses the shift in narrative brought about by decentralized technology – especially the blockchain. DeFi coins transfer value in a financial transaction and are built on unique blockchain networks. The principal characteristic of DeFi is that it is not controlled by a particular person or group and can be accessed by anyone who has an internet connection and appropriate device.Â
This decentralization is achieved with security protocols, software, hardware advancements, and peer-to-peer financial networks. Recently, many DeFi projects and associated coins have sprung up.
You can lend, trade, and borrow from anywhere globally using software that verifies and records such actions in a distributed database. The distributed database uses a consensus mechanism to verify transactions. DeFi is designed to use cryptocurrency to carry out transactions.
There are a host of good DeFi coins to invest in 2022; however, it is important to note that many DeFi projects are mainly unregulated and not insured by FDIC like other traditional financial investments. Hence, investors must carry out sufficient research and risk assessment before investing.
Best DeFi Coins to Invest In
DeFi is predicted to be as successful as cryptocurrency innovation in the next few years. Although this may or may not happen, we have compiled a list of the best DeFi coins to invest your money in 2022 (in no particular order)
Uniswap (UNI)
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The DeFi project, Uniswap, enables users to swap tokens on a peer-to-peer basis without a third party. The platform uses an automated market maker (AMM) to set token prices based on different variables (volume, demand, and market capitalization). The platform’s native coin is UNI and has grown by 140 percent since its launch.Â
Decentraland (MANA)
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This is a DeFi project planning to be utilized in the metaverse. It is powered by the Ethereum blockchain and enables users to virtually invest, purchase, and trade real estate plots (known as Land on the game). Each plot of land is an NFT (non-fungible token). The native currency of Decentraland is MANA â an ERC-20 token.
Cosmos (ATOM)
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This DeFi project is designed to tackle blockchain interoperability- multiple blockchains communicating with each other. Cosmos uses open source tools to provide blockchains with an opportunity to share data. Cosmos hub- a proof-of-stake blockchain network that stores each new blockchain created. The network operates using a digital toke called ATOM. ATOM is distributed as a reward to network validators and is currently valued t $9.41, a 46 percent increase from its value at the time of release.
Graph (GRT)
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The Graph is behind an innovation that allows blockchains to store and extract data without overloading the network effectively. For blockchains to use this technology, they use GRT tokens to pay for transactions. The GRT token had amassed a 700 percent increase in value compared to its price when first launched.
SushiSwap (SUSHI)
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Sushiswap provides users with a chance to trade digital currencies without a go-between. It also incorporates other services like investing tokens on liquidity pools (where users provide liquidity by staking their tokens) to earn a yield on crypto holdings, staking, and lending agreements. Users can invest in the project by purchasing SUSHI – the native coin of the platform.
Lucky Block (LBLOCK)
The Lucky Block project was initially founded in late 2021 and is in the final stages of launching a lottery gaming platform.
The lottery gaming platforms will not be run by bodies connected to any concerned governing body. To maintain this decentralization, Lucky games are executed using smart contract technology. The project’s token held a prelaunch in January 2022, and at the end of the same month, it was launched to the public through Pancakeswap. According to CoinMarketCap, the project has surged by 6,000 percent.
DeFi Coin (DEFC)
DeFi Coin is a cryptocurrency token native to the new DeFi swap decentralized exchange where services like swapping, staking, and yield farming services are offered. DeFi swap offers a healthy interest rate for the DEFC holders. The coin has been in development for several months but was launched in May 2022 with a 300 percent surge in price. The team behind this coin specifically stated that it is not a get-rich-quick scheme like other projects.
How to Start Investing in DeFi
Below are outlined steps to begin investing in DeFi.
- Choose a crypto exchange. There are many reputable crypto exchanges to choose from which will allow you to purchase DeFi coins.
- Purchase your DeFi coins. You will have to choose a coin that aligns with the DeFi protocol you intend to participate.
- Participate in your preferred protocol. Different protocols permit lending and borrowing. You pick the one you like and connect your wallet so it has access to the DeFi coins.
Conclusion
DeFi is an innovation with exciting prospects, and investing in it could be a brilliant idea. However, before investing, ensure you do a lot of research and pick a suitable exchange. Another method to earn a yield on your DeFi investment is DeFi lending or DeFi farming, but this should be after thorough research. When doing your research, pay attention to the innovation of the project, its utility, the blockchain it’s built on, and the team behind the project.
Owning a DeFi coin gives you governance rights in the project, and the increase in value of the coin in the long term could yield good results. However, the value of the DeFi coin could also deplete in the long run.