What Are The Best DeFi Coins For The Rest Of 2021?

Jump on the DeFi bandwagon and consider investing in these best-performing DeFi coins. 

Last Updated September 17th 2021
9 Min Read

Planning to invest in DeFi coins in 2021? Want to stay ahead of the DeFi trends? Then you’re probably asking yourself:

“What DeFi cryptos should you invest in 2021? Will 2021 be a good year to invest in DeFi Coins? What can we expect from the DeFi market in 2021?”

Let’s take a look!

The decentralized finance (DeFi) market has received heightened interest from crypto-enthusiasts in recent years, attracting investors from all across the world. In its simplest form, DeFi is a term used for financial applications built on blockchain technology, and it aims to democratize the economic landscape by replacing centralized institutions.

Today, DeFi platforms can provide you with a full spectrum of financial services, ranging from trading, borrowing, lending, decentralized exchanges, asset management, and more.

The most popular DeFi platforms have designed their native tokens as a means to facilitate their operations as well as incentivize users. So if you are interested in getting a piece of this innovative marketplace early, investing in DeFi coins is one of the best ways to go.

So what are the best DeFi coins to invest in the rest of 2021?

First, let us look at a few emerging tokens and study their role within their respective DeFi ecosystems. 

Top 5 DeFi Coins to Consider in 2021:

1. Uniswap (UNI): The Top DeFi Platform

UNI is one of the hottest DeFi tokens in the market, making now a good time to consider investing.

Uniswap is a leading decentralized exchange that is currently dominating the DeFi market. It employs an Automated Market Maker system (AMM) to ensure sufficient liquidity for the ERC20 tokens traded on its site. The Uniswap protocol has attracted a loyal following as per its crypto-asset solutions. It allows you to have complete control over your private keys, integrates with external wallets, and allows you to trade at low fees.

Uniswap launched the UNI token in September 2020 as a means to reward its USERS. The DeFi coin entered the market at a trading price of $2.94. Over the course of a few months, the token shot up to $27. Therefore, the DeFi coin can arguably be deemed one of the best-performing tokens in the industry, with a surge of over 1,100% in a matter of just eight months. 

Uniswap pioneered the use of liquidity pools that help spur innovation by allowing new platforms access to capital. There are thousands of such pools in use on the platform. Also, liquidity providers earn profits by simply putting their funds into these liquidity pools. Specifically, users deposit tokens into a liquidity pool smart contract and receive pool tokens in return. These tokens can be traded for ETH instantly at any time.

The entire system utilizes UNI as its primary token. UNI is an ERC-20 token that is compatible with the Ethereum ecosystem. Currently, UNI is traded on various other popular exchanges, including several top-performing centralized exchanges like Coinbase Pro.

When you purchase UNI, you will also receive incentives and discounts on the Uniswap protocol. For instance, depending on the size of UNI holdings, you will be able to vote on different policies proposed for the Uniswap ecosystem. The Uniswap protocol has already come up with a four-year plan for its allocation of UNI tokens. Out of a total of 1 billion coins, 60% is reserved for Uniswap community members. 

If you are looking to become a part of this growing ecosystem, consider investing in UNI now.

Check Out: Will Uniswap Make Me Rich in 10 Years? 

2. Sushiswap (SUSHI): Taking DeFi Market by The Storm

SUSHI has generated massive returns over the past months, making it a favourite among the crypto community.

SushiSwap (SUSHI) is a DeFi platform designed to improve on other Ethereum dApps out there. Specifically, SushiSwap has introduced additional community control mechanisms and DeFi features compared to other protocols. It is an automated market maker (AMM) that helps in mitigating centralization in the market.

Unlike centralized exchanges that depend on an order book to link traders and dictate pricing, AMMs utilize smart contracts to build markets for any two crypto tokens. In this manner, the protocol achieves automated trading liquidity between any two cryptocurrencies. Sushiswap enables any project to obtain liquidity through smart contracts known as liquidity pools. Experts believe that AMMs are ideal places to acquire scarce and low liquidity tokens.

One of the main benefits of SushiSwap is that the majority of the fees get paid back to users. Liquidity providers receive massive rewards for their continued contributions. Notably, SushiSwap was the first AMM to send all profits back to the community that maintains it. 

Unlike other AMMs, SushiSwap is not bound by rules or regulations. Instead, it uses its network to distribute orders and avoid liquidity issues. The concept of the SUSHI token was very similar to the Uniswap coin. However, instead of just being able to earn rewards, holders also get to keep accruing fees. The token also allows holders of SUSHI to gain voting rights and appoint members to the platform’s board.

SUSHI is a cryptocurrency with its ups and downs, and it has a unique value proposition. Its decentralized nature makes it an excellent choice for investors. Buying SUSHI now could help you generate massive returns in the future.

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3. Aave (AAVE): The next big DeFi Protocol

Aave has garnered the attention of the world as one of the best DeFi projects for all the right reasons.

Aave is a famous decentralized lending system driving the demand and interest in the DeFi space to new heights. This next-generation protocol was one of the first projects to allow users to borrow, lend or earn interest through crypto holdings. 

Since its inception, Aave developers have worked dedicatedly to ensure the network is accessible to everyone. Features such as open access and ease of use make Aave ideal for retail investors and institutions alike. Aave has progressed to become one of the most popular DeFi apps out there. 

The Aave protocol offers various benefits to users. For one, users gain transparency over the entire platform's activities and lending processes. While traditional lending services work in a closed-door manner that leaves customers uncertain about their activities, Aave is a blockchain platform that is transparent to all.

One of Aave's top features is allowing the borrower to gain exposure to various cryptocurrencies without owning them outright. Using Aave, users can earn rewards without the need to trade their favourite digital assets, which reduces the risk of loss. 

AAVE is the platform's ERC-20 utility token. It is a deflationary asset listed on numerous notable exchanges, including Binance. For various reasons, Aave is emerging as the crypto platform of the future, making now an excellent time to buy AAVE coins.

Don't Miss: Pros and Cons of Investing in Aave

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4. Compound (COMP): Unprecedented Growth Journey 

Compound is a fast-growing crypto platform, budding with potential.

Compound Finance is an emerging DeFi lending protocol that allows users to deposit cryptocurrencies and earn interest. Users can also borrow other crypto assets using the platform. Compound utilizes smart contracts that automate the storage and management of capital.

The interest rates for lending and borrowing on Compound have adjusted algorithmically, meaning that the platform automatically modifies them based on demand and supply. Additionally, COMP holders can also make adjustments to interest rates. 

Compound tokens (cTokens) are ERC20 tokens that represent a user's holdings deposited in the protocol. By putting ETH or other ERC20 tokens in Compound, users receive an equivalent amount of cTokens. For instance, locking up USDC in the protocol generates cUSD–tokens that the user can redeem for normal USDC later, in addition to the interest paid in USDC. 

Apart from earning interest on crypto assets, users can also borrow digital assets on Compound. Borrowing crypto has the added step of ensuring the value of your collateral is higher than a minimum amount relative to the loan. Compound, although relatively new, has witnessed significant growth and demand in recent times. 

For these reasons, Compound is one of the best-performing DeFi tokens of 2021. 

Read Also: Is Compound A Good Investment And Should I Invest in COMP?

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5. Maker (MKR): The Future of DeFi

Consider investing in Maker if you believe in the future of decentralized finance.

Maker is a decentralized autonomous organization (DAO). The protocol allows users to lock in their Ethereum tokens to produce DAI, the stablecoin that MKR supports. The MakerDAO generates DAI coins using CDP smart contracts. Notably, DAI was the first decentralized stable coin on the Ethereum blockchain. Exchanges between MKR, DAI, and ETH occur using the Oasis Direct system. Oasis Direct is MakerDAO’s decentralized token exchange platform.

Maker enables cheaper and lightning-fast transactions. It eliminates the complexities involved in the decentralized ecosystem by using Maker protocol. The platform was created with the sole objective of a multi-functional and multipurpose advantage. The DAI token has unique properties. Instead of being backed by fiat currency like other stablecoins, DAI is backed by Ethereum. In 2021, more than 2.52% of Ether coins have been locked into Maker DAO. 

Notably, the Maker protocol boasts various unique features. For instance, MKR employs a deflationary protocol to help maintain its value over time. As part of this system, a small interest fee in MKR is due whenever a CDP smart contract closes. Thus, a portion of this fee gets burned. In this way, the system maintains a healthy balance between the supply and demand of the digital asset. For various reasons, deflationary protocols are now becoming a standard feature in the DeFi sector. 

Another primary function of MKR is to ensure that DAI remains pegged to the dollar. This dual crypto strategy helps prevent volatility and provides users with more security regarding the project’s resilience.

Maker also boasts the Collateralized Debt Position (CDP) contract. These contracts are what make Maker autonomous. These advanced smart contracts are unique to the Maker ecosystem. A CDP contract initiates whenever you send ERC20 tokens to the Maker platform in exchange for DAI tokens. 

Purchasing Maker can allow you to invest in a growing network of app developers operating on the Ethereum network as it is likely to soar in 2021.

Check Out: Why Maker Coin Will Skyrocket

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Why Invest in DeFi Projects?

1. Decentralization - DeFi projects are independent of governments and regulators. Powered by decentralized apps (dApps), DeFi makes its way into a wide range of financial transactions worldwide.

2. The interest of institutional investors - Large banks, investment funds, and global businesses are entering the DeFi market. 

3. Growth potential - From taking out the middleman to turning basketball clips into digital coins with monetary value, DeFi prospects could be far-reaching.

Bottom Line: What DeFi Tokens To Buy

DeFi, as a sector, is working to facilitate faster, cost-effective financial transactions every day, with no paperwork, no minimum transaction amount, and complete transparency and accountability. According to experts, UNI, SUSHI, AAVE, COMP, and MKR are some of the top DeFi tokens to invest in 2021.

DeFi is here to stay, and it is not too late to become a part of this fast-growing sector. That said, investors are advised to research and perform due diligence before investing.

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