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Technology

Best DeFi cryptos for 2022: Aave, Balancer, PancakeSwap, more


2021 has been a huge year for the broader crypto market, including sectors like Web3, non-fungible tokens (NFTs), and much more. But the year was also important for decentralized finance – an umbrella term for financial services on public blockchains, which removes the control that banks and institutions have over money and financial products. DeFi is based on blockchain technology, which allows fund transfers between digital wallets to take place almost instantly.

This five-part series will help you better understand the growing crypto space and its many elements.

For 2022, I am optimistic about 5 crypto sectors:

  1. Internet 3.0
  2. Games and metaverse
  3. Public blockchains
  4. Decentralized Finance (DeFi)
  5. Medium of exchange

In previous editions, we covered the best Web3 cryptos, the best gaming and metaverse cryptos, and the top 5 public blockchains.

Today, let’s talk about the best decentralized finance (DeFi) cryptos for 2022.

My list of the best DeFi cryptos is:

  1. Aave (AAVE)
  2. Balancer (BAL)
  3. Pancake Swap (CAKE)
  4. Compound (COMP)
  5. DAO Curve Token (CRV)
  6. Manufacturer (MKR)
  7. SushiSwap (SUSHI)
  8. Uniswap (UNI)

Let’s start with a comparison of the basic metrics of these blockchains as of January 14, 2022:

Name Symbol Market capitalization (billions of dollars) TVL (billion dollars) MCap/TVL
Aave AAVE 2.5 12.4 0.2
Pendulum BALL 0.1 3.1 0.03
Pancake swap CAKE 2.7 4.8 0.55
Compound COMP 1 7.4 0.13
Curved DAO token CRV 1.8 22 0.08
Maker MKR 1.8 16 0.12
SushiSwap SUSHI 0.7 5 0.15
Uniswap United 9 8 1.12

Note:

  • Market capitalization = Current price x Circulating supply
  • Total Value Locked (TVL) represents the total of all assets deposited into the protocol that earn rewards, interest, new coins/tokens, fixed income, etc.

Sources: CoinMarketCap, Future Money Wallet, DefiLlama (rounded)

Aave (AAVE)

Aave (AAVE) is two things: a decentralized financial protocol and a cryptographic token. As a protocol, it allows lending and borrowing of crypto. Lenders deposit digital assets into liquidity pools. Borrowers provide crypto collateral and take out “flash loans” using the liquidity pools. As a token, it offers holders reduced fees and also serves as a governance token by giving holders a vote in the development of the protocol.

BAL RN balancer

Balancer (BAL)

Balancer (BAL) is an automated portfolio manager and non-custodial trading platform. In a conventional index fund, the investor pays a fee to a portfolio manager to rebalance the portfolio. In Balancer, the investor earns fees from traders who rebalance their portfolio by following arbitrage opportunities.

CAKE RN Pancakeswap

Pancake Swap (CAKE)

PancakeSwap (CAKE) is an automated market maker and yield farm on the Binance Smart Chain (BSC). Although PancakeSwap is a fork of SushiSwap, it allows cheaper and faster transactions because it runs on BSC. PancakeSwap also offers yield farming, lotteries, and initial farming offers.

COMP RN compound

Compound (COMP)

Compound (COMP) allows users to deposit cryptocurrencies into pools and earn interest. Borrowers take out secured loans from the compound pools by posting collateral. If this guarantee falls below a threshold, the loan is automatically liquidated.

CRV RN Curve DAO Token

DAO Curve Token (CRV)

Curve (CRV) is a decentralized exchange liquidity pool on Ethereum. It is specifically designed for: highly efficient, low-slippage stablecoin trading, as well as low-risk fee income for liquidity providers. Slippage is the difference between the expected price of a trade and the price at which the trade is executed. Fees and other parameters are decided by the decentralized autonomous organization Curve (DAO). The fee on all pools is 0.04 percent. Half of the fees go to liquidity providers and the other half to DAO members.

Creator MKR RN

Manufacturer (MKR)

MakerDAO is a decentralized organization while Maker Protocol is a software platform that allows users to issue and manage the DAI stablecoin. Maker (MKR) is the governance token of MakerDAO and Maker Protocol. MakerDAO is a decentralized organization while Maker Protocol is a peer-to-contract lending platform. Maker Protocol enables over-collateralized lending by locking ETH in a smart contract and creating Dai, a USD-pegged stablecoin. Dai can be exchanged and used for payments. Maker (MKR) is the governance token of MakerDAO and Maker Protocol.

SUSHI RN SushiSwap

SushiSwap (SUSHI)

SushiSwap (SUSHI) is a decentralized protocol for providing automated liquidity on Ethereum. It is a decentralized exchange and a decentralized lending marketplace. It also allows for yield instruments and staking derivatives. In late 2020, Yearn.finance and SushiSwap announced a merger in which they would share development resources, but maintain separate tokens and governance systems.

UNI RN Uniswap

Uniswap (UNI)

Uniswap (UNI) is a decentralized automated liquidity provision protocol on Ethereum. One of the major problems with illiquid assets on regular exchanges is that of “high spreads”. Uniswap solves this problem by allowing everyone to become a market maker. Uniswap suffers from high slippage for large orders because the price paid increases with increasing quantity.

Next edition: The best way to exchange cryptos


Rohas Nagpal is the author of the Future Money Playbook and the chief blockchain architect of the Wrapped Asset Project. He is also an amateur boxer and retired hacker. You can follow him on LinkedIn.



Interested in cryptocurrency? We discuss all things crypto with Nischal Shetty, CEO of WazirX, and Alok Jain, founder of WeekendInvesting, on Orbital, the Gadgets 360 podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and everywhere you get your podcasts.
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