Whether you are a crypto native or a newbie investor in the Web3 world, you must have experienced the excitement in the market around DeFi tokens.
It is a disruptive asset class not only in the crypto ecosystem but within the larger financial ecosystem too. In fact, the market cap of DeFi tokens represents 4.4% of the global market cap of all the assets.
If you are a trader who is interested in the asset class but not familiar with its nature, this is the right place for you.
In this article, we explain everything related to DeFi tokens and how traders can capitalise on market trends to realise gains on their DeFi investments.
DeFi (decentralised finance) tokens are cryptocurrencies that are native to DeFi platforms. Being decentralised, such platforms don’t depend on any central intermediatory such as a central bank to settle their transactions. Instead, DeFi platforms settle their transactions through trustless smart contracts running over a blockchain network.
DeFi tokens let users interact with an array of bankless financial services built on a blockchain. Users who are interested in exploring an innovative financial system have found these tokens to be a valuable asset class.
The market cap of DeFi tokens has grown by 17% within the last 30 days to $75.6 billion.
Source: DeFi Market Cap/CoinGecko
Top 10 DeFi tokens to look out for in 2024:
stETH (staked Ethereum) is a DeFi token designed on the Lido DeFi protocol, representing the staked ether. It was launched in 2020 to capitalise on the Ethereum network’s transition to a proof-of-stake (PoS) consensus mechanism.
Being a liquidity focused DeFi token, it is exchanged for the staked ETH token on the Lido blockchain.
The price of stETH rose by 9% within the last 30 days to $2,237.51. Its market cap stood at $20.6 billion.
Source: stETH/USD, CoinGecko
LINK is a DeFi token that is native to the Ethereum-based DeFi oracle, Chainlink. An oracle acts as a tool that felicitates data interaction between smart contracts and off-chain world.
LINK is used to pay node operators for retrieving data from the off-chain networks to on-chain smart contracts.
Even though the price of LINK is nearly the same at ~$15 as it was a month earlier, it is a promising DeFi token to look forward to the next year. Its market cap stood at $8.4 billion.
Source: LINK/USD, CoinGecko
Recently, Chainlink revealed that its latest staking platform pulled in LINK tokens worth over $632 million. Latest Santiment data showed that the top 200 Chainlink wallets added $50 million worth of LINK in the past five weeks.
At the moment Chainlink is around 250% away from its all-time high in 2021:
DAI is a stablecoin pegged to the US Dollar (USD). It is a DeFi token native to the MakerDAO, a leading decentralised autonomous organisation (DAO). It is primarily used as a collateral to borrow tokens on MakerDAO.
Dai holders can also save their Dai and earn interest through the Dai Savings Rate (DSR) mechanism. It is one of the first DeFi tokens to be widely adopted.
Over the last 30 days, the market cap of DAI has grown by nearly 2% to $5.42 billion.
Source: DAI Market Cap, CoinGecko
UNI is the native token of the decentralised crypto exchange Uniswap. Introduced in 2020, it acts as a governance token on the protocol. Token holders can take part in votes such as updates or monetary issues.
Uniswap is the largest decentralised crypto exchange. In November 2023, it announced that the crypto trading platform Talos will let its institutional clientele access to Uniswap’s decentralized liquidity pool for trading. UNI is certainly a leading DeFi token to look out for the next year.
Its value rose 17% over the last 30 days to $6.29. Its market cap stood at $4.73 billion.
Source: UNI/USD, CoinGecko
LDO is the DeFi token that is native to Lido DAO, a prominent DeFi liquidity protocol launched in 2020. The smart contracts protocol runs on the Ethereum blockchain network.
Besides being the native token, LDO also acts as a governance token of the DeFi network. Token holders can vote on the different executive actions taking place on the platform.
The price of LDO is nearly the same as it was 30 days earlier, i.e. $2.30. Its market cap stood at $2.06 billion.
Source: LDO/USD, CoinGecko
INJ is the DeFi token native to the DeFi blockchain network, Injective. It is a decentralised exchange offering traders the opportunity to trade in cross-chain margins, derivatives and forex futures.
The INJ token is used for staking as the Injective protocol is based on a staking mechanism. It is also used to pay the standard market maker fees. Besides, it is also the governance token of the protocol.
The price of INJ has risen by a remarkable 25% over the last 30 days to $22.85. Its market cap stood at $1.9 billion.
Source: INJ/USD, CoinGecko
RUNE is the DeFi token that is native to the decentralised liquidity protocol, ThorChain. The token is used for the governance and security of the network.
Being a decentralised platform, ThorChain allows users to swap one asset for another in a permissionless manner.
With users being increasingly cautious of centralised crypto exchanges due to hacks, the utility of decentralised exchanges such as ThorChain is only increasing.
The price of RUNE has grown by an astounding 30% to $5.91 over the last 30 days. Its market cap stood at $1.77 billion.
Source: RUNE/USD, CoinGecko
GRT is the native DeFi token of the Graph indexing protocol that organises blockchain data for developers to build decentralised applications (dApps).
The GRT token is used by node operators (called Indexers) to stake and earn GRT for processing queries.
GRT’s price has grown by 17% to $0.1601 over the last 30 days. Its market cap stood at $1.48 billion.
Source: GRT/USD, CoinGecko
SNX is the DeFi token native to the decentralised liquidity provisioning protocol, Synthetix. Crypto enthusiasts admire the project’s deep liquidity and low transaction fees.
The SNX token is used as a collateral so that synthetic assets (Synths) can be issued on the network. Being one of the most dynamic features, synths have drawn a large number of DeFi users.
The value of SNX has grown by an astonishingly high rate of over 65% over the last 30 days. With a market cap of $.146 billion, SNX was exchanging hands at $4.58.
Source: SNX/USD, CoinGecko
AAVE is the DeFi token native to the eponymous decentralised money market protocol. Users can swap cryptocurrency across 20 different assets as collateral.
Not only is AAVE the governance token of the protocol, but it can also be staked to earn rewards. The staked AAVE tokens also acts as insurance in the face of unforeseen events such as illiquidity.
The price of AAVE has declined by 10% within the last 30 days to $90.34 amid several ascending triangles. Its market cap stood at $1.32 billion.
Source: AAVE/USD, CoinGecko
It is recommended for BitDelta traders to educate themselves using reliable resources, including the BitDelta Academy, before investing in any DeFi token.
Crypto assets are risky investments, with the DeFi tokens amongst them being most risky. The period during which your staked tokens are locked can be particularly adventurous, given the volatile natures of the prices.
Traders should focus not only on the yields, but other factors such as a DeFi protocol’s governance model, use cases, staking, liquidity, trading volume, and security. Make sure you aren't investing in a scam.
While you buy and hold a DeFi token, make sure to keep a close watch on its price movement. Taking assistance of a bot is also helpful in such circumstances.
DeFi tokens can provide very high returns if you invest wisely. However, your appetite for risks should also be high.
This article is for informational purposes only and not intended as investment or financial advice. It contains opinions and speculations that are subject to change without notice.
The author and publisher disclaim any liability for decisions made based on the content of this article. Readers are advised to conduct their own research and consult a financial advisor before making investment decisions.