Continuing the series on the main types of cryptocurrencies, we will talk about DeFi cryptos (Decentralized Finances):
DeFi cryptocurrencies are part of an ecosystem of financial applications built on public blockchains, such as Ethereum. Unlike the traditional banking system, DeFi eliminates intermediaries (such as banks or brokers), allowing anyone with internet access to:
- Lend and borrow crypto assets;
- Trade assets in a decentralized manner;
- Earn interest (staking or yield farming);
- Use stablecoins;
- Create decentralized insurance and derivatives.
The infrastructure behind this is smart contracts, which execute programmed rules automatically.
To what matters: what are the best investments for the short and long term?
SHORT TERM (considering volatility and potential for hype):
- $UNI
Most used decentralized exchange (DEX).
Good liquidity and frequently impacted by news of partnerships or updates.
- $SNX: Decentralized derivatives platform.
Can benefit from the rise in narratives related to "traditional finance on-chain".
- $AAVE: Lending protocol.
Moves a lot with announcements of new integrations or compatible chains.
LONG TERM (solid fundamentals and continuous adoption):
- $LINK
Not pure DeFi, but essential for the sector.
Provides oracles (external data for smart contracts).
Strong partnership with institutions and DeFi projects.
- $MKR: Responsible for the decentralized stablecoin DAI.
Well-structured governance model and real use of the stablecoin.
- $ETH
Backbone of DeFi.
Many DeFi projects are executed on the Ethereum network.
ETH is used to pay fees and is fundamental to the ecosystem.