Last year DeFi tokens outperformed Bitcoin and Ethereum and went on to have the highest growth. In the first 6 months of 2020, when Bitcoin grew by 32%, and Ethereum grew by 82%, the combined growth of the Ethereum Defi tokens in the top 100 together grew by about 237%.
Furthermore, in the first quarter of 2021, the dollar value of crypto assets that come under DeFi apps grew by 150%, from $20 billion to $50 billion.
All in all, decentralized finance is booming and is said to be the future of financial services. With these developments, the DeFi space is becoming one of the most sought-after investment opportunities in the crypto world.
So, if you’re looking to join the bandwagon, there couldn’t have been a better time. But before that, you have to do your own research and start keeping an eye on the best decentralized apps and tokens out there.
As someone who has been following the journey of DeFi tokens, I have read quite a bit and made a few observations about the trends DeFi is said to follow this year and the top DeFi tokens out there. So let me help you out with your research and walk you through these.
This way, you can make more informed decisions before choosing the DeFi projects that interest you. So let’s jump right in.
Top 10 DeFi Tokens 2021
1. Uniswap (UNI)
Uniswap currently tops the chart on Coin Market Cap and is the leading decentralized exchange. UNI, the platform’s native token, was introduced in September 2020, and within a matter of eight months, its value surged from $2.94 to $21+ (as of August, 2021).
With a market capitalization is $12M+ (as of August 1st, 2021), the platform allows the trading of DeFi tokens and liquidity provider tokens. The token is used for on-chain governance, staking in pools, and also as a reward for staking.
2. Chainlink (Link)
As the name suggests, Chainlink is a smart contract platform that acts as the link between real-world data and smart contracts. Furthermore, Chainlink is the market leader amongst Oracles and, since 2019, has provided over 75 price feeds to about 300 smart contracts and DeFi applications.
The Link token is used to pay for smart contract transactions and compensate operator nodes who retrieve data, turn it into blockchain format, and perform many other functions.
3. PancakeSwap (Cake)
PancakeSwap is a decentralized network that is built on the Binance Smart Chain. It is similar to Uniswap but also provides lottery tickets, an auction market for NFTs, and its primary purpose is to exchange BEP20 tokens on the Binance Smart Chain.
Like Uniswap, it leverages the Automated Market Maker system to generate liquidity pools. The platform also charges low fees and hence is gaining traction from a lot of users.
4. Compound (COMP)
Compound is a decentralized platform where end users can borrow crypto, lend it, and earn interest on those crypto assets. All you need to do is deposit your other crypto assets in the Compound pool, and in return, you’ll get cTokens. These tokens represent your stake in the pool.
The value of these cTokens increase, and hence you will get interest as well. Any time you want to retrieve the underlying asset you deposited, you can do so.
5. Aave (AAVE)
This DeFi platform follows a decentralized lending protocol, functioning as a non-custodial lending platform. Its native token, AAVE, is a governance token. It has a few use-cases as follows: While lending, if you provide AAVE token as collateral, you will be receiving a discount on the transaction fees. On the other hand, people who borrow AAVE are not charged any fee at all.
Furthermore, if you hold enough AAVE tokens, you get governance rights over the platform and are hence known as the governance token.
6. Maker (MKR)
Maker made the MKR DeFi coin after they made DAI. Though DAI is a stable coin made to reduce the risk of volatility, MKR ensures that DAI’s value is fixed at $1. However, the token has other utilities such as lower fees, better interest rates, and voting rights within the MakerDAO ecosystem if you invest in Maker.
7. Avalanche (AVAX)
This DeFi platform is essentially an ecosystem where anyone can build custom blockchain networks and dApps. The AVAX coin is used as a transaction fee and is also part of the consensus mechanism within the ecosystem.
It is a direct competition to Ethereum and follows the proof-of-stake protocol. Furthermore, it also provides an easy migration system for people who want to shift from Ethereum to its own ecosystem.
It’s faster, far more scalable than Ethereum, and possesses the interoperability factor mentioned earlier in the trends section.
8. Synthetix (SNX)
Synthetix is one of the fastest-growing exchanges out there that allows you to swap tokens. However, What makes it special is it enables users to create and their own synthetic assets, known as Synths. These synths are usually representations of the real-world assets wherein their values are attached to these tokens.
You can trade these Synths for cryptocurrencies, indices, and other assets such as gold on Synthetix decentralized exchange itself.
All you need to do to mint these is provide collateral in SNX to the exchange. Furthermore, it also distributes a portion of its collected fees amongst the users.
With its ability to bridge real-world assets and the crypto world, Synthetix is emerging as one of the biggest exchanges out there.
9. Fantom (FTM)
Fantom is a decentralized exchange that is changing its approach towards how blockchains function on a foundational level. It aims to be a DAG-based blockchain. This means that instead of the complete ecosystem looking like a chain, it will look like a direct acyclic graph.
Furthermore, it uses the asynchronous Byzantine Fault Tolerance principles in its consensus mechanism. This way, other nodes will not have to the existence of other nodes while entering the system.
It plans on using the Lanchesis protocol, and together these allow the network to be faster, scalable, and much more secure. Today, Fantom is the fastest blockchain out there that can confirm one within 2 seconds.
10. Yearn (YFI)
Yearn, or Yearn Finance, is a revolutionary exchange that aims to simplify the process of yield farming and enable users to earn maximum profits. Usually, yield farming can be pretty complex due to the various steps involved and the constant attention it demands from us to keep a tab on the prices.
Yearn Finance provides a system called Vaults. When you deposit your cryptocurrencies into these vaults, you get access to the bot-run methods for swapping your funds between the different protocols based on where you can earn the maximum yield or profits.
This automation process makes yield farming a reasonably straightforward process for new users and even saves enormous time and energy for all users.
DeFi Trends in 2021
- Liquidity Mining or yield farming is one of the major trends seen in DeFi this year and is becoming more than a passing fad. This involves people adding their crypto assets to the liquidity pool in exchange for higher interest rates. Since this helps in boosting the DeFi protocols, it will not go out of style anytime soon.
- DeFi is said to monetize the gaming industry by creating blockchain games and letting people buy or sell collectibles within the games and a whole lot more. In fact, work on this has already begun. For instance, the Atari Chain has launched their DeFi platform, where they aim to become the go-to cryptocurrency for developers and gamers within the industry.
- Scalability issues have been a challenge for DeFi platforms. But these will be solved with cross-chain technologies. It means that people will be able to share assets between two separate chains. For example, transferring assets between the Ethereum blockchain and another blockchain network will become a norm. Polkadot, a multi-chain technology that consists of multiple parachains on it takes interoperability to a whole new level where data can be shared between different chains.
- Besides gaming and farming, there will be further integration between DeFi and NFTs, where the DeFi apps will enable people to capitalize on their NFT holdings.
- Decentralized Exchanges or DEX’s are seeing a steady growth in the trading volume. Moreover, the top decentralized applications used are decentralized exchanges – Uniswap and PancakeSwap.
So these are a few trends I’ve observed so far in 2021, and most companies’ work is indicative of them.
In essence, DeFi is the fastest growing sector within the blockchain and crypto industry. In the coming few years, it is said to become much more diverse in terms of its applications and integrate with sub-sectors such as gaming, NFTs, and more.
These are some of the top DeFi tokens and exchanges out there. But, as you see, the applications of each of these projects are pretty distinct. Hence, you can understand these and other projects’ applications to identify what interests you the most and start investing!
Anish loves reading, researching, and writing about crypto and blockchain. He started his crypto journey early in 2017, what started as a fad is now a full-time hobby. He curates guides after thorough research on platforms and is responsible for the most in-depth guides on the site. You will find him walking his dog (not Doge) when he is from his Laptop.