4 DeFi Cryptos to Watch in 2022 - Deepstash
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  • Decentralized finance can cut the middleman out of traditional financial transactions, but it is in its infancy and carries additional risks.
  • Terra, Aave, Chainlink, and Clover Finance are good coins to watch.

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1. Terra (LUNA)

It's a DeFi ecosystem that's underpinned by algorithmic stablecoins. Terra's Chai payment platform is accepted by thousands of merchants in Korea and its Anchor savings platform is proving popular.

A stablecoin's value is pegged to a non-crypto commodity like gold or a fiat currency like the U.S. dollar. And unlike a fiat-backed stablecoin which is backed 1:1 by a traditional currency, an algorithmic stablecoin keeps its peg by using a smart contract to issue or buy coins. Terra does this using the LUNA token to increase or reduce the supply.

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2. Aave (AAVE)

It is a decentralized lending platform where people can borrow, lend, and earn interest on their crypto assets.

It's similar to what a traditional bank does with money you deposit, but since there's no middleman, you earn a higher percentage of the loan interest.

Aave remains top of DeFi Llama's list of lenders in terms of total value locked. It upgraded to Aave v2 at the end of 2020 and now operates on Ethereum (ETH) , Avalanche (AVAX), and Polygon (MATIC) networks -- which means users don't have to pay Ethereum's huge gas fees for each transaction.

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3. Chainlink (LINK)

To understand Chainlink, we need to know about oracles and smart contracts. Smart contracts are tiny pieces of code that execute automatically when in certain circumstances. Oracles collect the data that feeds smart contracts -- without them, the smart contract wouldn't know when it should trigger. And Chainlink is the market leader in oracles.

Many leading DeFi platforms use Chainlink's oracle data.

Even though several well-known analysts have pointed to its potential, LINK only gained about 70% in 2021. That's a solid increase but not as much as many others.

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4. Clover Finance (CLV)

Clover is all about interoperability. As various Ethereum alternatives take market share, it becomes more important for them to communicate with each other. Clover's blockchain can support applications and assets from other top networks, including Ethereum, Solana (SOL) and Binance Smart Chain.

It also aims to solve another common DeFi problem: Accessibility. Right now, it is hard for new investors to use many of the DeFi products on the market -- they are not easy to understand, transaction fees can be prohibitive, and the risks are difficult to evaluate.

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CURATED BY

decebaldobrica

#engineering, #machinelearning and #crypto

CURATOR'S NOTE

Interesting piece on building a portofolio for 2022.

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