Keep Your Eyes (and Wallet) On These Top DeFi Coins in 2022

Keep Your Eyes (and Wallet) On These Top DeFi Coins in 2022

There's a bright future in store for the best DeFi coins, which include AAVE, LINK, AVAX, CAKE, and UNI.

Keep Your Eyes (and Wallet) On These Top DeFi Coins in 2022
Liz Aldrich

Published Jan 6, 2022Updated Jan 24, 2022

Crypto

Crypto

Technology

Technology

Active Investing

Active Investing

Decentralized Finance (DeFi) is taking over the crypto world, and with it, so are DeFi coins. Crypto enthusiasts are shouting from the rooftops about the potential of their favorite DeFi projects, and some have even claimed that the top DeFi coins changed their lives.

Whether you're looking to level up your crypto investing game and start yield farming with DeFi coins or you're just interested in the future of decentralized finance, here are the best DeFi coins and projects to pay attention to in 2022.

What is DeFi (decentralized finance) and why is it important?

Decentralized finance (DeFi) is a method of implementing financial services (from payments to lending to saving, trading and investing) that don't rely on a centralized intermediary such as a bank, brokerage, marketplace, advisor, or other financial institution. DeFi applications spread out or "decentralize" control by operating on blockchain technology (usually Ethereum) and using open-source code that anyone can program. 

Proponents of DeFi argue that by being controlled by a single, centralized entity, traditional financial services are inefficient, discriminatory, prone to human error, and don't offer transparency to consumers. What's more, intermediaries often charge fees and have the ability to deny access to certain consumers at will. DeFi, on the other hand, provides the infrastructure for faster and more efficient financial transactions while giving consumers greater access and full control over their finances.

While the principles behind cryptocurrency are steeped in decentralization, not everything in the crypto world is considered fully decentralized. For example, most popular crypto exchanges are centralized in that they're controlled by a central entity—this can offer additional reliability and ease of use. However, they may offer both centralized and decentralized products. For example, Crypto.com offers a DeFi wallet that's considered decentralized because you own your own private keys, unlike many exchanges that hold your private keys for you.

cryptocom
Crypto.com

3.5

Crypto

What coins are considered DeFi?

When it comes to crypto coins, some are more decentralized than others. Some cryptocurrencies are issued and controlled by more centralized entities while others are issued by decentralized groups of anonymous people who pass control onto consumers once the coins have been issued. Many DeFi coins offer things like voting rights to coin holders to increase decentralization and pass governance over to the people. 

The blockchain a coin lives on also influences its level of decentralization. Most DeFi coins operate on Ethereum, which is fully decentralized. However, a growing number of DeFi coins use Binance Smart Chain, which is considered "centralized DeFi" or "CeDeFi" because the blockchain is governed by only 11 validators chosen daily as compared to Ethereum's 77,000 validators.

Centralized DeFi (CeDeFi) coins vs fully decentralized DeFi coins

Stablecoins provide a good example of the spectrum of centralization vs decentralization when it comes to DeFi coins. Most stablecoins are pegged to an external asset such as a commodity or fiat currency. For example, USD Coin (USDC), which is issued by some of the creators of crypto exchange Coinbase, is backed by reserves of the US dollar. Since the US dollar is controlled by a centralized government, and the coin is issued by a centralized exchange, USDC isn't fully decentralized.

On the other hand, Dai (DAI) is considered to be one of the best stablecoins by proponents of DeFi because, while its value is also pegged to USD, it maintains that peg using algorithms and open-source code that anyone can access and scrutinize. Its issuers, in effect, created the coin and then handed control of it over to the people who use it.

Top DeFi coins by market capitalization

Market capitalization (market cap) isn't the only factor you should consider when choosing the best DeFi coins to invest in, but it's certainly an important one. Often times, larger market cap means the crypto is less volatile, while crypto with smaller market caps are generally a riskier bet. Of course, if you get in when a coin is still small and it goes to the moon, so does your investment—but this is far from guaranteed. Below are the top DeFi coins by market cap according to CoinMarketCap.

DeFi coin

Market capitalization

Avalanche (AVAX)$25.26B
Terra (LUNA)$24.70B
Uniswap (UNI)$14.11B
Wrapped Bitcoin (WBTC)$14.07B
Chainlink (LINK)$11.62B
Dai (DAI)$6.46B
Fantom (FTM)$5.32B
Tezos (XTZ)$4.50B
The Graph (GRT)$4.24B
Loopring (LRC)$3.52B

Data accurate as of 12/2/2021

Best DeFi coins

The best DeFi coins are fully decentralized and offer some form of objective value. Other factors worth considering include market cap (particularly if you're worried about stability), gas fees, staking, scalability, and what exchanges it's listed on. Here are some of the best DeFi coins to watch in 2022.

Aave (AAVE)

AAVE has performed well in the past couple of years, and it's one of the top DeFi coins in terms of market capitalization, coming in at $3.28 billion as of December 2021. The Aave platform was one of the first DeFi platforms out there. It offers a robust borrowing and lending system and lets you earn rewards on your deposits.

Chainlink (LINK)

Coming in at #5 in terms of market cap, LINK is a popular option when it comes to the best DeFi coins. This makes it a great option for beginners, but it's a wise play for just about anyone thanks to the value Chainlink offers to the DeFi world. Not only is Chainlink technology used to transfer reliable data to smart contracts, but it also plans to launch a Programmable Token Bridge that will enhance connectivity between DeFi blockchains.

Uniswap (UNI)

With a market cap of over $14 billion, UNI is another one of the best DeFi coins if you're looking for something well-established. It's also one of the top 20 crypto coins by market cap, making it a safe (albeit perhaps a little overvalued) bet. As a popular decentralized exchange where you can buy, sell, and swap crypto directly wallet to wallet, it provides ample value to the DeFi community and is unlikely to tank anytime soon.

PancakeSwap (CAKE)

While CAKE is far from being one of the top DeFi coins by market cap, it sits at $3 billion as of December 2021, so it's not small either. This DeFi coin is attractive for its growth potential. It's a popular choice amongst DeFi coin enthusiasts because PancakeSwap—a decentralized exchange—makes it easy to "yield farm," or earn high interest and rewards on your crypto. While it's taken a small dive in recent months, CAKE is still up 3,116% year-over-year as of early December 2021.

Avalanche (AVAX)

Coming in at #1 in terms of market cap, AVAX has been a favorite DeFi coin for a while, and with good reason. Unique and highly scalable, the Avalanche project is a smart contracts platform with a good foothold in the NFT community—so if you believe in the value of NFTs, AVAX is certainly worth considering. The Avalanche protocol also claims to beat out DeFi favorite Ethereum when it comes to speed and cost.

DeFi coins on Coinbase

If you're looking for DeFi coins on Coinbase, the second most popular crypto exchange supports a long list of them, including AAVE, Cardano (ADA), LINK, Compound (COMP), GRT, DAI, DOT, Solana (SOL), and more. One of the easiest crypto exchanges to use, Coinbase is great for DeFi beginners.

coinbase
Coinbase

4.4

Crypto

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