Decentralization became more appealing since Bitcoin revealed the benefits of a system not controlled by a central body. The concept of Decentralised Finance (DeFi) involves breaking down complex bureaucratic financial processes and remodeling them into a more friendly, secure, and accessible digital process.
The definition of DeFi is not univocal, but it essentially refers to any open ecosystem that allows for the construction of decentralized financial applications (dApps), tools, or services. They can be considered an upgrade to traditional cryptocurrencies as they provide additional alternative financial services for users such as loans, lending, saving, trading, investment, and more.
The DeFi space is still in its early stages with new projects popping up every day. This makes it difficult to determine which project will be successful in the long run. However, we have listed the top 6 Defi projects that have a high potential for success in 2023.
Ethereum's smart contracts and the possibility to create new projects and tokens in its ecosystem made ETH the undisputed father of DeFi projects.
In addition to having the second largest cryptocurrency in the industry by market capitalization, the Ethereum ecosystem is home to nearly 20% of the tokens across the industry and Ethereum is the ‘core’ of over 1000 tokens today listed on several exchange platforms. Ethereum's advantages include a network that has been tested over years of operation and billions of dollars worth of transactions. It has the largest blockchain and cryptocurrency ecosystem, as well as a large and dedicated global community.
Ethereum will continue to be mainstream as long as the popularity and demand for Defi protocol use cases persist. Therefore, the demand for Ether, its native token, will likely continue to increase. If you are looking to invest in a solid Defi project, Ethereum is definitely a go-to.
You probably have heard of Uniswap. It is a decentralized exchange protocol that runs on the Ethereum blockchain. The UNI coin is used to provide liquidity on the platform. Uniswap allows users to trade DeFi tokens and other cryptocurrencies without the need for a central exchange.
The platform uses an Automated Market Making Model (AMM) in which the price of tokens is determined based on the relationship between supply and demand. Users can store and deposit their crypto assets on the platform and receive the DeFi Coin, UNI, as a reward. This process is referred to as yield farming and is one of the ways users can earn income on Uniswap. Uniswap also has a governance structure that allows users to Participate in decisions making where it concerns the future development of the platform.
UNI token holders can vote on changes to the platform and have an impact on the Uniswap roadmap and development. Overall, Uniswap is one of the main DeFi platforms and a major player in the ecosystem of decentralized exchanges.
As an investor interested in DeFi projects and cryptocurrencies, you should keep an eye on Chainlink. Chainlink is a DeFi token and platform that acts as an oracle network that bridges the gap between smart contracts and real-world data. Many decentralized applications in the crypto space require oracles to communicate with different real-world data. Chainlink is the current leader when it comes to Oracle service provision.
Chainlink has evolved greatly since 2019, offering over 75 price feeds for 300 smart contracts and decentralized applications. It is important to note that Chainlink as a project has developed to the degree that it provides funding for blockchain initiatives deemed valuable to the ecosystem.
Chainlink is also an important token in the metaverse as it bridges the physical and digital worlds thereby facilitating the tokenization of assets such as artworks, land, or currencies.
As a DeFi token, Chainlink also offers yield farming and lending opportunities. By using Chainlink as collateral, you can trade on a Decentralised Exchange like Uniswap or get Flash Loans to maximize your yield. Chainlink is also a governance token and holding means that owners can participate in platform decision-making processes.
If you are interested in DeFi coins, you should buy Chainlink and hold them in order to benefit from the growing importance of the platform. With its innovative approach, Chainlink has the potential to play an important role in the field of decentralized finance in the future.
Aave is one of the most famous DeFi platforms out there and it offers unique Features such as flash loans and liquidity pools. Aave allows users to lend and borrow crypto assets to earn interest or get credit. The platform uses an innovative model of interest calculation based on supply and demand to a variable to determine the interest on a pool.
With Aave, you can add liquidity to different pools and earn on the platform. Aave offers flash loans which is an innovative way to get short-term credit without having collateral. This makes it an attractive tool for arbitrage trading where a large amount may be needed for significant profit or other quick trading strategies.
Aave is also a governance platform, giving users the right to vote on important decisions about the future of the platform. Aave tokens are used to participate in voting and allow holders to also benefit from earnings on the platform.
Overall, Aave is among the leading DeFi platforms, offering a wide range of features that allow users to benefit from the growing importance of DeFi projects. If you are interested in DeFi projects and cryptocurrencies, you should consider investing in Aave.
Pancakes Wap is a decentralized exchange (DEX) built on the Binance Smart Chain and was developed as an alternative to centralized exchanges. The Platform solves some challenges common with centralized exchanges such as high transfer fees, liquidity restrictions, and security concerns.
Pancakeswap allows users to exchange their cryptocurrencies directly without the need for a central intermediary. The platform is particularly known for its low fees and high liquidity as it supports the use of liquidity pools and yield farming. Pancakeswap is also a governance platform that grants voting and decision-making rights to users who hold its token. This is possible via the DeFi Coin, CAKE.
Pnackacake Swap supports yield farming where users can pool cryptocurrencies in different liquidity pools to generate additional interest on stakes. Overall, Pancakeswap is a promising DeFi project that offers users a safe, cheap, and effective way to use their cryptocurrencies while also generating income.
Yearn Finance is a DeFi project that acts as an Automated Market Maker (AMM). The platform is known for its advanced Financial services and is one of the fastest-growing platforms in the DeFi space. Yearn Finance is designed to offer users an easy way to invest their wealth while also getting maximum returns.
Yearn Finance allows users to leverage different liquidity pools and automatically switch their assets between different DeFi protocols, thereby seeking the pool that will give the largest yield. The platform uses advanced algorithms and smart contracts to optimally manage users' assets and minimize risks.
The Defi coin, YFI, is a governance token and users of yearn with this token can participate in the decision-making and vote on matters that concern the future of the platform.
Overall, Yearn Finance is a promising DeFi platform that offers users a simple and effective way to grow their wealth, invest and get maximum returns.
A table of the top 10 Defi coins in 2023 (Data pulled from CoinMarketCap)
To choose the best DeFi Coins 2023, you need to take a number of factors into account. The focus here is on the innovative strength of each project and user-friendliness. Asides from these, you should take into account the following factors.
Decentralized finance is considered to be a relatively new asset class and has been particularly popular since 2020. Due to how volatile these projects may be, some DeFi projects are already considered obsolete after three years. Therefore, we want to take a look at newer DeFi tokens that have potential in 2023.
GMX is a DeFi cryptocurrency running on the Avalanche blockchain. The Avalanche Blockchain makes it possible to conduct fast, secure, and inexpensive transactions and can process up to 4000 transactions per second. This makes GMX a fast and efficient way to transfer and trade cryptocurrencies.
GMX is also part of the DeFi ecosystem on Avalanche and offers users many ways to use and earn their cryptocurrencies. DeFi services offered include DeFi Lending, DeFi Trading, and DeFi Payment. This allows users to leverage their cryptocurrencies in various use cases while earning attractive returns.
Thanks to Avalanche's fast transaction times, security, and open developer platform, GMX has a solid foundation to establish itself in the fast-growing world of DeFi and cryptocurrencies. GMX is a promising investment opportunity for those who believe in the future of DeFi and Avalanche as the leading DeFi project.
Genius Yield, built on the cardano chain, offers an all-in-one solution to benefit from advanced algorithmic trading strategies and yield optimization opportunities in the DeFi world without having to deal with the complexities of managing the capital. It is considered Cardano's most advanced yield optimizer.
Genius Yield’s goal is to make Defi accessible to everyone without all the complexities and technical know-how involved.
Genius Yield is a relatively new project launched in the first quarter of 2023, and many are already looking at the immense scaling possibilities it brings to the Defi ecosystem. Not only does Genius Yield offer users multiple sources of passive income, holding $GENS token grants users governance rights on the future development of the Genius Yield platform.
Osmosis is a DeFi coin based on the Cosmos blockchain, which is required for the operation of the decentralized exchange of the same name. The platform is an Automated Market Making (AMM) exchange where tokens are priced based on the supply and demand ratio.
Users can pledge their coins as collateral to ensure network security and earn rewards in the form of OSMO tokens. Staking also involves users in the governance structure of the platform and gives them a say in important decisions.
Osmosis offers a variety of DeFi services, including the ability to trade and provide liquidity on decentralized exchanges such as Uniswap.
The platform also makes it possible to bet on different cryptocurrencies and achieve high liquidity. As Defi garners popularity, Osmosis has the potential to become a major player in the space.
The DeFi projects mentioned above are some of the best in the industry and definitely good investments. However, it is important to note that the cryptocurrency market is highly volatile and any investment should be thought through carefully before being made.
The DeFi space is growing at an incredible pace and there are many projects that offer great investment opportunities. However, it is important to do your own research before making any investment decisions. Even if you believe in the potential of a Defi project, you should only invest funds that you can afford to lose due to the high risk and volatility of this market.