Curious to know about the top 10 DeFi tokens by market capitalization? This article is what you are looking for.
DeFi is a growing industry in the crypto world. The network utilizes smart contracts to provide non-custodial financial services for the crypto mainstream users. Even more, the use of smart contracts removes the need for a financial intermediary. Included in the services are lending, borrowing, structuring derivative products, and the buying and selling of securities. The vast services are built on the Ethereum platform.
Read More: What is Decentralized Finance (DeFi)
Why has DeFi become so popular?
DeFi Pulse statistics show that the total value locked (TVL) in the DeFi economy has surpassed $10 billion. More so, the TVL keeps growing. The good part about DeFi contracts is that they incorporate stablecoins. Compared to other cryptocurrencies that are prone to volatility, stablecoins are pegged to a fiat currency such as the USD. Moreover, smart contracts oversee trading and lending on the DeFi platform.
DeFi Market TVL (Source: DeFi Pulse)
The amount of cryptocurrency locked in Defi protocols surpassed $14 billion in 2020. Thus, setting an all-time high record (ATH). Remarkably, in October, DeFi projects added $1.32 billion to the TVL in its smart contracts in just one week. DeFi Pulse reports that the DeFi TVL rose from $11.16 billion to over $12 billion within seven days.
Substantially, the best DeFi cryptos Uniswap, Maker, and Wrapped Bitcoin contain over half of the DeFi TVL. Significantly, the vast majority of that amount has been invested this year. Furthermore, most of it gets locked into Ethereum.
Meanwhile, USDC and Dai reported higher trading volume on DeFi in Q3 2020. Moreover, there was a 120% growth in stablecoin supply. Particularly, it expanded from $10 billion as of May to over $22 billion, as of writing.
However, TVL locked in DeFi experienced a major setback in the month of September 2020. This also coincided with the drop of Bitcoin from $12K to $10K. The chart shows a rise and sudden drop pattern, with drops resulting from various controversies in the industry.
These sentiments include the lead developer of SushiSwap, Chef Nomi, who sold a huge chunk of his SUSHI tokens. The move badly affected the DeFi ecosystem. Despite this, the TVL keeps striving to increase.
Additionally, DeFi has seen a boom in 2020 contributing to the growth of the blockchain and cryptocurrency industry. Using Ethereum-based lending apps users are able to loan out their money and generate interest from the loans. Also, they can earn interest by locking up their digital assets.
DeFi users can also earn interest when borrowing and lending. Moreover, the Winklevoss twins, known BTC billionaires behind the Gemini crypto exchange, expressed that they see DeFi as a revolution. For them, billions of dollars are at work earning positive yield by utilizing smart contracts.
DeFi tokens have seen unprecedented growth and experienced a favorable trend in the crypto market in 2020. In this article, we list down the top 10 DeFi tokens. This includes the most sought after, researched, and best DeFi cryptos in the DeFi ecosystem.
DeFi Coins (Source: Coingecko)
Remarkably, a number of DeFi governance tokens have enjoyed moments of bullish price performance in 2020. In line with this, DeFi tokens continue to grow while experiencing what seems to be a strong bull run movement.
DeFi tokens offer a whole array of features. Furthermore, they operate on smart contracts that offer more functionalities than just sending and receiving cryptocurrencies. As a result, DeFi coins have made headlines in 2020 as it attracts a lot of investors.
LINK is an ERC20 token with a current spot price that has continued to hit its all-time high throughout 2020. Despite the strong market volatility the token managed to stand strong and show a bullish performance. More so, Chainlink has managed to maintain its rank as one of the top ten cryptocurrencies.
LINK Price Chart – Source: Coingecko
In addition, LINK’s oracle system makes the crypto famous for startups with complex smart contracts. Meanwhile, the total active number of active addresses and the number of transactions have seen some gains. This means the number of people holding and using LINK from 2018 keeps increasing.
Chainlink has continued to perform extremely well since early 2019, briefly surpassing $8.00 per $LINK this morning.
Below we take a look at on-chain metrics to see how they stack up in recent times pic.twitter.com/zAnwKOeyXl
— CoinMetrics.io (@coinmetrics) July 13, 2020
Apart from being part of the strong DeFi movement, Chainlink has ventured into partnerships outside the crypto market. In a published report, the crypto partnered with travel agency Travala. LINK token holders can now pay for travel booking across 2.2 million accommodation partners of the travel agency.
Driven also by the increased popularity of the DeFi, LINK made a record. Specifically, in August 2020, LINK surged past Bitcoin in trading. Remarkably, it became the most traded cryptocurrency for 24 hours on Coinbase Pro, the largest crypto exchange in the US.
Thus the demand for the token increases as the platform grows.
LINK Surpasses Bitcoin in 24hr trading volume (Source: Coinbase Pro)
LINK has taken a commanding lead against DeFi tokens. Furthermore, it still sits in the top 10 of global DeFi token rankings, according to Coingecko. Binance is one of the most active markets trading it.
DAI is an ERC-20 token with a steady value based on the US Dollar. Following then, the DAI token is backed by crypto collaterals which can be viewed publicly on the Ethereum blockchain. These keep the token’s value stable.
As a matter of fact, Dai reported higher trading volume on DeFi in Q3 2020. In detail, DAI grew over four times in market-share on volume moved by evolving from 4% in Q1 2020 to over 17%.
Additionally, an estimated 65% of DAI’s entire supply is currently being supplied to DeFi protocols for yield farming. Notably, the stablecoin dai (DAI) broke a market capitalization of $1 billion in November 2020.
Furthermore, that naturally has led the demand for most DeFi-related projects and services to surge. Namely, the appetite for decentralized stablecoins, like DAI, and oracles noticeably increased.
DAI Price Chart (Source: Coingecko)
In emphasis, the token trades on over 80 exchanges and has been trading on 532 active markets. Particularly, its highest volume trading pairs are ETH, USDT, and USD.
Wrapped Bitcoin (WBTC)
WBTC is an ERC20 token valued on a 1:1 ratio with Bitcoin. Moreover, the coin was created to enable Ethereum users to buy, hold, and trade Bitcoin within the Ethereum ecosystem. Additionally, users can utilize BTC in smart contracts in a simple manner that is compatible with all Ethereum-based applications.
WBTC 30-day price chart (Source: Coingecko)
Significantly, the total value locked (TVL) of WBTC rose from $500 million in September to over 2 billion in November 2020. Specifically, $616 million worth of the WBTC tokens were created in September. This is a 160% boost from August’s $232 million. Uniswap and Kyber are some of the decentralized exchanges that are trading WBTC.
WBTC has been an integral part of the decentralized finance (DeFi) space. More so, WBTC has been a key driver in the growth of DeFi on Ethereum. In the first half of 2020, WBTC’s TVL grew from $4 million to $36 million. Apparently, it proves the extreme surge in demand for DeFi during the third quarter.
Recently, the TRON network partnered with custody specialist BitGo to bring WBTC into the TRON ecosystem as a TRC-20 token. Similar to the tokenized BTC built on Ethereum’s ERC20 token standard, the WBTC team will utilize the TRC-20 token standard from TRON’s network. Initially, Wrapped Bitcoins and Ethers on Tron will help sidestep surging transaction fees on the Ethereum blockchain.
Source: DeFi Pulse
Most importantly, all BTC holders can lend their Bitcoin in the form of WBTC and earn interest.
Another DeFi project that has been making waves is the Yearn.finance protocol and its native token YFI. On its launch day, YFI was introduced at a price of $1,115 USD and has topped a high of above $40,000 per coin in 2020. Outstandingly, this DeFi token price of 40,000 surpassed the BTC all-time high of nearly $20,000 in 2017. The token’s total supply is limited to 30,000 YFI.
In addition, over 1,000 addresses are holding nearly 10,500 YFI around this price level. These addresses shot up from near-zero on October 20 to 1,626 at the end of October. Hence, a spike in daily active addresses points toward YFI’s network growth in the future.
YFI is ranked among the top 10 mentions on Twitter occasionally. It has also managed to keep crypto investors on their toes.
The DeFi token has managed to lead cryptocurrencies like Tether (USDT), Bitcoin (BTC), Ethereum (ETH), EOS (EOS), and Bitcoin Cash (BCH) in having the most active trading volumes across cryptocurrency exchanges. With YFI achieving a greater milestone in 2020, some crypto analysts have predicted the DeFi token price to go above $70,000. Similarly, others predict up to $100,000; Arthur Hayes, the CEO of Bitmex, is one of them.
However, since September 12, YFI price dropped by 60% from its all-time high of $40,000. The creation of a new gaming project known as Eminence (EMN) by the founder of Yearn.finance Andrew Cronje caused the crypto’s decline in price.
Universal Market Access is the platform that utilizes the UMA token. It is a derivatives protocol for the creation of permissionless synthetic assets. Users can utilize UMA to govern protocol decisions. More so, it challenge underlying registries that are out of sync with the synthetic asset they are attached to.
In the month of April 2020, UMA hosted the first-ever initial decentralized exchange (DEX) offering on Uniswap. Here, 2 million of UMA’s 100 million initial supply were sold at a cost of roughly $0.26 per unit.
Beginning of September, UMA overtook yearn.finance as the biggest “DeFi” protocol on Ethereum with a $1.3 billion market cap. This means the token is experiencing growth in the DeFi landscape.
UMA’s 30-day price chart (Source: Coingecko)
Initially, UMA comprises two main parts. Firstly, the priceless financial contract designs allow users on the platform to create synthetic tokens. Secondly, is the data verification mechanism (DVM), a decentralized oracle service like Chainlink and Band.
Recently, permissionless synthetic asset platform UMA partnered with trustless cross-chain bridge Ren to launch a Bitcoin-backed yield dollar called uUSD, in addition to a joint liquidity mining reward program. The partnership will result in a product that allows investors to leverage Bitcoin permissionless on the Ethereum network
AAVE is the native token of the decentralized platform Aave. Furthermore, the DeFi token operates on the Ethereum platform and this DeFi token price has reflected an impressive growth. The governance token allows its holders to vote on the platform’s future and specific changes related to the ecosystem.
On September 25, 2020, the Aave governance platform made a decision for the community to vote for or against a proposal. Specifically, it was on whether to upgrade the project’s governance tokens. Aavenomics Proposal, was a token swap of Aave’s old token, LEND, converting it to AAVE — a more powerful currency at a 100:1 rate.
On September 30, 2020, LEND token migration to Aave was confirmed. Meaning, every 100 LEND is now equivalent to 1 AAVE. Gemini became the first major cryptocurrency to list Aave and allow custody of its token.
Besides, Aave’s old token LEND received an Electronic Money Institution license from the UK Financial Conduct Authority (FCA) in August. This allows Aave’s parent company, Aave Limited, to issue electronic money (e-money) and provide payment services. After receiving the UK’s FCA approval, the token’s price rallied to a new all-time high.
Synthetix Network (SNX)
SNX made a dramatic rise in 2019. Currently, it is one of the DeFi coins that has made substantial gains in the year 2020. SNX has rallied more than 400% year-to-date. SNX is listed on the Binance exchange making it the second major new DeFi token listed on the exchange following COMP.
Crypto investor and DeFi enthusiast @Arthur_0x commented that DeFi’s listing on Binance was long overdue. Even so, SNX has enjoyed exponential growth in terms of TVL and the amount of sUSD being minted.
SNX token joined Huobi’s decentralized finance consortium, dubbed the Global DeFi Alliance, with other six members. The Global DeFi Alliance seeks to establish collaboration between decentralized finance projects from both the Western and Eastern hemispheres.
Synthetic assets or Synths copy the price of an asset in the real world. They bring it onto the Ethereum blockchain, giving Synth all the properties of an ERC20 token.
Uniswap recorded $15.371 billion in its September volume, surpassing Coinbase once more, which processed $13.6 billion. This makes 65% of the monthly total reported by decentralized exchanges (DEXs), which was $23.5 billion.
But this is not the first time that Uniswap has outperformed Coinbase Pro. On August 30, Uniswap exceeded Coinbase Pro in daily trading volume for the first time. Uniswap processed $426 million while Coinbase had witnessed only $348 million in their 24-hour trading volume.
Uniswap processed $15.3 billion in volume (Source: Dune Analytics, CryptoCompare)
Decentralized exchange Uniswap made an all-time high record in November. It reached over $3 billion TVL. This is the first in the history of DeFi.
Source: DeFi Pulse
COMP is an ERC20 token that fuels the decentralized governance on the Compound platform. All COMP token holders are able to debate, propose, and vote for changes to the Compound protocol.
COMP token is listed on Gemini and OKCoin cryptocurrency exchanges. Also, Gemini’s COMP token listing marks the official entry of DeFi in the City of New York. Moreover, OKCoin exchange supports COMP/USD pairings for customers in over 160 countries. COMP is among the DeFi tokens that have experienced a price rise over the past months.
In addition to the above, Crypto.com launched a liquidity swap protocol known as DeFi Swap, built via the Ethereum blockchain. DeFi Swap enables crypto users to swap tokens for as low as 3% fees and provide DeFi-based services to liquidity providers (LPs). DeFi Swap seeks to add support for several digital assets including Wrapped Ether (WETH), Chainlink (LINK), and Compound (COMP).
Upon its June 2020 launch, investors were able to purchase each COMP for $65. Within a matter of two months, it exploded to a value of $172.20. COMP has a total supply of 10 million.
MKR is a utility and governance token utilized on the Maker system. All MKR token holders are able to vote on protocol decisions through the Maker voting dashboard. Throughout 2019 and 2020, MKR token has made modest gains in USD, BTC, and ETH.
MKR is one of the DeFi tokens that have performed well in 2020. Meanwhile, the token is part of Binance’s DeFi index. Notably, Maker Foundation has transferred control of the MKR token to the Maker governance community. MKR holders are now in complete control of the token.
Crypto.com recently announced the listing of MKR on The Syndicate platform. Crypto.com exchange users will be able to subscribe for MKR by contributing an amount of CRO tokens not exceeding their respective maximum allocation.
Which DeFi Will Survive?
DeFi aims to bring innovation to the current financial services and products using blockchain technology. The concept around the open finance ecosystem has its merits and demerits. Aside from the demerits, most DeFi tokens have performed really well in the year 2020.
Much of the top 10 DeFi tokens by market capitalization have experienced increased growth in value. DeFi tokens also incorporate several important advantages such as incentives and interest for long term holders.
DeFi is an exciting ecosystem that is full of promises and potentials. Due to its decentralized nature, the platform intends to create an open-source and transparent financial service system for everyone.