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Cryptocurrency News Articles
3 Must-Buy DeFi Tokens to Invest in Right Now as the Sector Poised for a Renaissance
Oct 02, 2024 at 05:39 pm
One of crypto's most transformative innovations is decentralized finance (DeFi), a system that allows users to access financial services like lending
Interest rates have been a hot topic lately, and their movements can significantly impact the crypto market. As rates lower, traders may be willing to take on more risk in pursuit of higher returns. This could drive a shift away from safer assets like Bitcoin and stablecoins and toward more volatile assets like altcoins and DeFi tokens.
With an influx of liquidity into the crypto market and a renewed appetite for riskier assets, a DeFi renaissance may be on the horizon. After lagging behind in the current bull cycle, DeFi could experience a surge in total value locked (TVL), user growth, and protocol revenue.
This development could present an excellent opportunity for investors to capitalize on the next wave of DeFi adoption and growth. But as always, proceed with caution and conduct thorough research before making any investment decisions.
Now, let's dive into the three cryptocurrencies that are poised to soar in 2023, thanks to their strong fundamentals and key role in the DeFi ecosystem.
1. Maker (MKR)
Maker, the entity behind the MKR (MKR -6.51%) token, is one of the most prominent and innovative protocols in decentralized finance (DeFi). It is best known for creating Dai, a decentralized stablecoin that has played a crucial role in the DeFi ecosystem since its launch in 2017.
Unlike other stablecoins, Dai is unique in that it is not pegged to the U.S. dollar by a centralized entity. Instead, Dai maintains its peg through over-collateralization, which means that users must deposit assets like Ethereum or other cryptocurrencies to mint DAI.
This mechanism enables Dai to operate independently of traditional financial systems, providing a truly decentralized and stable currency for the DeFi ecosystem.
Maker has been a pioneer in DeFi since its early days, and over the years, it has grown into one of the most battle-tested and trusted DeFi projects. It currently boasts a TVL of over $5.6 billion, making it one of the largest protocols in the DeFi space.
In many ways, you could think of Maker as the central bank of DeFi. Just as traditional central banks manage fiat currencies, Maker oversees the supply and stability of Dai through its innovative collateralized debt system.
However, unlike traditional central banks, Maker holders directly benefit from the protocol's profitability. Through Maker's buyback and burn model, the surplus revenue generated by the protocol is used to buy MKR tokens from the open market and burn them, reducing the total supply.
This creates a deflationary effect, potentially increasing the value of each MKR token over time. As a result, MKR holders gain a stake in the success of the Maker ecosystem, offering them exposure to the protocol's growth and profitability—a feature that traditional central banks do not provide to their stakeholders or citizens.
2. Aave (AAVE)
If Maker is the central bank of crypto, then Aave (AAVE -10.87%) would be the most popular commercial bank in DeFi. Much like a traditional bank allows users to deposit money and take out loans, Aave enables users to deposit crypto assets to earn interest or borrow against their holdings.
Since its launch, Aave has quickly become a cornerstone of DeFi, with over $12.5 billion in total value locked (TVL) and nearly $20 billion in user deposits across its lending markets.
Its success is driven by its ability to offer secure, permission-less lending, enabling users to interact with a global liquidity pool without relying on traditional financial intermediaries.
Aave's broad availability across more than a dozen blockchains further solidifies its position as the go-to platform for decentralized lending and borrowing. It has extended its reach to networks like Ethereum, Avalanche, and Polygon, providing essential functionality to the broader DeFi ecosystem.
As a critical infrastructure layer for the developing decentralized economy, Aave's lending markets are vital for liquidity and capital efficiency.
Investing in Aave is akin to owning shares of one of the most popular and essential banks in the crypto world, offering exposure to the protocol's future growth as DeFi continues to expand.
Not to mention, a looming proposal to implement a buyback program could bolster Aave's price well into the future.
3. Aerodrome Finance (AERO)
While Maker and Aave focus on lending, there's another crucial pillar in DeFi: decentralized exchanges (DEXes), and that's where Aerodrome Finance (AERO -10.72%) comes into play.
Aerodrome is a DEX built on Coinbase Global's (NASDAQ:COIN) proprietary blockchain, Base, which has rapidly become one of the most popular chains in the DeFi space.
As Base has risen in prominence, Aerodrome has benefited significantly from increased usage, now standing as the most valuable protocol on Base. It has become the primary hub for
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