3 Best DeFi Projects to Watch Out for in 2022
Filip Dimkovskion April 30, 2022.
Decentralized finance, or DeFi, is a relatively new approach to finance, primarily based on a network with peer-to-peer transfers. The technology behind DeFi is blockchain (the same one that’s behind cryptos), largely working on the base of smart contracts (programs which are predefined to run when specific conditions are met).
Based on this new approach, new, so-called, DeFi protocols have appeared, using smart contracts that run on the blockchain. With a DeFi protocol, all users can transfer funds from one address to another, borrow, lend, or do almost anything as if it was traditional finance.
How to Invest in DeFi
Now that you understand the basics of DeFi, you can probably imagine why it’s thought of as being one of the most revolutionary approaches to finance so far. If you believe that DeFi has a big future ahead of it, and it’s not up to its maximum potential, then it’s probably a good idea to invest in DeFi.
Investing in DeFi is simple. In fact, over the last few years, thousands of cryptocurrency projects have been launched into the DeFi space. All of them have their own coin that works based on blockchain technology, and that coin rises in value as the DeFi project grows. Here is a step-by-step guide on how to invest in DeFi:
- Open a crypto wallet at an exchange (you can choose a CEX or a DEX)
- Find the DeFi projects that appeal to you and purchase coins
- Hold and earn a profit on your investment
Of course, the process sounds too simple, as there are thousands of DeFi projects to choose from. If you’d like to learn more about which are the best DeFi projects and why you should invest in them, continue reading below.
3 Best DeFi Projects in 2022
SushiSwap is a decentralized exchange (DEX), and its goal is to give users the option to perform everything that traditional finance offers - lending, borrowing, and transferring assets from one address to another without having an intermediary.
One of the most popular reasons for SushiSwap’s rise in popularity over the last months has been its yield farming feature. It essentially allows its users to place and hold their coins on the platform, where they can be used for liquidity, lending, and staking. If you want to invest in SushiSwap and you see a bright future for them, you can buy their token SUSHI.
AAVE is a relatively new DeFi project with a primary goal of making lending and borrowing easier for everyone. If you have some crypto that you’d like to earn interest on, you can stake it on this platform where it will be lent out to borrowers.
However, the features it offers aren’t the only reason why you should invest in AAVE. In fact, AAVE’s coin has had an incredibly upward price trajectory over the last 2 years. In June 2020, one AAVE coin was sold for just $40, but now, as of May 2022, one AAVE coin is worth $170, and it reached an all-time high of $630 in May 2021. If AAVE manages to reach its all-time high again (there’s a solid chance it will), you can expect a 4x return on your investment - even more if you’ve staked the coin and earned interest.
The revolutionary technology dubbed “the Web 3.0”, also known as the MetaVerse, has had an explosion in popularity in the last few years. Decentraland is a DeFi project built on the ETH blockchain, offering all its users to buy, sell, rent, and build digital real estate in the form of virtual land over the MetaVerse.
As of May 2022, many experts in the crypto space think that the MetaVerse is in its earliest stages of development. Many think that the virtual world known as the MetaVerse will attract millions of people in the following years, where they can build virtual lives and live in an alternative world. With Decentraland, the whole situation with the MetaVerse becomes a lot more realistic, so buying its MANA coin is definitely a worthwhile investment.
We can conclude that DeFi is a relatively new technology, yet it has surpassed all expectations so far over the last few years. Of course, the technology is far from living up to its full potential, but its use cases will continue to grow as time goes by.
This is why we believe that buying DeFi coins and investing in big projects is worthwhile. The returns you might get might not be impressive in the following year or two, but once DeFi manages to live up to its full potential and becomes widely adopted, you can expect a solid return.