DeFi has pumped new life into crypto over the last 18 months. But the brightest days for decentralized finance (DeFi) still lie ahead, even in light of bitcoin likely to lead the charge once again.
Exciting blockchain projects like Chainlink continue to make Ethereum more useful than ever, while Maker is pushing stablecoins and smart contracts into exciting new spaces. Rising stars like Aave and SNX are carving their own niches while generating significant attention among investors.
Of the top 50 cryptocurrencies by market cap, a significant number are considered DeFi tokens. While bitcoin has surged in 2020, roughly doubling in price, some of the leading DeFi tokens have seen 5x to 10x gains.
What are the top DeFi tokens of 2020? Which coins have the biggest potential? Which coins have had the biggest 2020 to date? Today, we’re highlighting the top decentralized finance (DeFi) tokens of 2020, including the top cryptocurrencies changing the world of finance today.
Chainlink is a decentralized finance ecosystem best-known for powering oracles on the Ethereum blockchain. Chainlink’s protocol – including the LINK token – allows Ethereum smart contracts to securely connect to external data sources. Thanks to Chainlink and LINK, smart contracts can operate with no centralized information authority required. You can run a sports betting smart contract, for example, that uses an external oracle for sports scores. LINK has been a rising star in 2020, currently sitting among the top cryptocurrencies by market cap. Since starting the year at $2 in January 2020, LINK has already hit $10 in August 2020. Its brightest days could still lie ahead as DeFi coins take off across the community.
Maker is the second largest coin in the DeFi space by market cap, trailing only LINK. Maker stands out from the competition with its low total supply (just 1 million coins in circulation), leading to a higher price per token than most of its competitors. After hitting an all time high close to $1,700 in January 2018, MKR sunk to multi-year lows during the 2018-2019 ‘Crypto Winter’. 2020 has been a different story, with MKR rising to $600 as of August 2020. Maker and its MKR token power what could be the best stablecoin system in the world today: the collateralized debt position (CDP)-based Dai stablecoin, which tracks the USD using a combination of incentives and collateral. MKR is set to play an increasingly prominent role in the DeFi ecosystem in 2020 and beyond.
Aave is a rising star in the DeFi space. The open-source, non-custodial protocol allows users to create money markets, then earn interest on deposits and borrow assets via the LEND token. With a market cap nearing $500 million USD, LEND is well-known in the crypto space but under-recognized by mainstream investors. 2020 has been an incredible year for the LEND token, and it’s been one of the hottest risers of the year. In January 2020, you could buy a LEND token for just $0.009. In August 2020, each LEND token is worth around $0.36, which is a significant rise even in the crypto space.
Synthetix Network Token (SNX)
Synthetix’s 2020 has been nearly as good as Aave’s LEND. The platform’s token, the Synthetix Network Token (SNX), has surged to record highs in mid 2020 after months of obscurity. With a market cap just under half a billion USD, SNX is prepared to continue changing the world of decentralized finance moving forward. SNX is a derivatives liquidity protocol built on the Ethereum blockchain, allowing users to trade and issue synthetic assets. The blockchain hosts assets like the sUSD token that tracks the price of the USD. With a smart contract infrastructure and incentivization systems, Synthetix aims to change the world of decentralized finance.
Dai isn’t a token you buy for its investment potential, although it still deserves a mention as one of the most important DeFi tokens available today. Dai is arguably the best-designed stablecoin on the market. Built on the Maker protocol, Dai uses an ingenious incentivization and collateralization system to securely peg its value to the US Dollar. While other stablecoins track the USD in a clunky way (like by holding US Dollars in a bank account), Dai uses a more scalable and flexible system. As long as you have the collateral, you can create your own Dai. If you want to hedge your portfolio while remaining invested in crypto, then Dai is a leading option.
Compound’s COMP token isn’t as well-known as its larger competitors further up this list, although COMP remains one of the most exciting tokens in the DeFi space. Priced at $140 in August 2020 after launching at a price of $65 in June 2020, COMP is an ERC20 asset used to govern the Compound platform. As the Compound DeFi platform becomes more usable and powerful, the value of the COMP token should continue to grow – and that means we could see a significantly higher market cap than COMP’s current $350 million market cap at some point in the future.
Kyber Network (KNC)
Kyber Network and its KNC token are below their all time highs set in January 2018 when altcoins were surging, although KNC remains an exciting DeFi project today. KNC has grown significantly in 2020, starting the year at $0.20 before rising as high as $1.65 in August 2020. It’s one of the fastest-growing coins in the DeFi space. What makes Kyber Network different from competing options above is its on-chain liquidity protocol that allows decentralized token swaps. Developers can integrate this protocol into any application, changing the way we transfer value between tokens.
0x is an open source protocol supporting smart contracts and liquidity. ZRX has ‘only’ doubled in price in 2020, making it one of the slowest risers on this list (which shows how incredible DeFi growth has been this year). In January 2020, you could buy ZRX for around $0.20. As of August 2020, ZRX sits around $0.40. The big potential with 0x lies in its ability to provide on-chain, peer-to-peer exchange of Ethereum blockchain tokens. As a ZRX token holder, you can also vote on improvements and features on the 0x protocol, with the value of the token expected to rise as the protocol improves.
Ampleforth started 2020 at a price of around $1 USD, rising as high as $4 in July 2020 before drawing back sharply to under $1. It’s been a tumultuous year for one of DeFi’s rising superstars. Ampleforth describes itself as smart commodity money. As a chain-agnostic platform, Ampleforth has the potential to revolutionize decentralized finance across multiple ecosystems. While other DeFi coins on this list are roughly correlated with bitcoin, AMPL rises and falls to its own beat. It’s one of the least-correlated tokens on this list, which could help investors hedge their portfolios while getting a stake in one of DeFi’s most exciting projects.
Augur has steadily risen in value since the beginning of 2020, starting the year at a price of around $9 while sitting at a price around $21 in August 2020. Augur and its REP token aim to harness crowd wisdom through prediction markets. The Augur protocol is owned and operated by holders of REP, an Ethereum-based Reputation token. Using REP, users can bet on the outcomes of events – including everything from natural disasters to lection results to company earnings. User-created markets return fees to market participants, while smart contracts ensure automatic payouts to winning bettors. Augur continues to be one of the hottest picks in the DeFi space – particularly for its mainstream potential among ordinary users.
Bancor and its BNT token lie well below the all time high of $9 USD reached in January 2018. Since starting the year at just $0.25, however, BNT has risen to $2.50 in August 2020. Few other coins on this list have experienced 10x gains in that same timeframe. Bancor is an on-chain liquidity protocol that allows automatic exchanges on Ethereum and other blockchains via a decentralized system. Similar to other decentralized finance tokens on this list, BNT could revolutionize the way we transfer value in the future – and the revolution has already started with Bancor processing over $2 billion in trade volume across thousands of tokens.
Ren is an open protocol that allows the permissionless and private transfer of value between blockchains. Ren’s core product is the Ren virtual machine, RenVM, which aims to bring interoperability to the world of decentralized finance. REN started this year at a price of $0.03 and now sits at $0.23, one of many DeFi tokens on our list nearing 10x gains just over halfway through 2020 – and REN’s most exciting times may still lie ahead.
Wrapped Bitcoin (WBTC)
Wrapped Bitcoin is a unique DeFi coin best explains as “bitcoin on the Ethereum blockchain”. WBTC is pegged to the price of bitcoin and has an identical price, total supply, and circulating supply. What’s the point of WBTC? Well, WBTC gives you the power of bitcoin with the flexibility of an ERC20 token. It’s the first ERC20 token backed 1:1 with bitcoin. And, as a completely transparent, 100% verifiable, and community-led initiative, Wrapped Bitcoin should continue to make noise moving forward – especially as ERC20 tokens continue to become more usable than ever thanks to the hard work of other DeFi projects on this list.
Band Protocol (BAND)
The Band Protocol and its BAND token could be one of the hottest success stories of 2020. Since starting the year at a price of $0.22, BAND has skyrocketed to its current high of $7.65 in just eight months. The Band Protocol is a cross-chain data oracle network that aggregates and connects real-world data and APIs to smart contracts. The Band Protocol aims to improve blockchain technology by making it easier for different blockchain protocols to work with one another. Specifically, the Band Protocol enables smart contract applications like DeFi, prediction markets, and games to be built on-chain without he single point of failure behind a centralized oracle. IT allows blockchains to access data outside of their own blockchain networks with sacrificing their decentralization and security.
Loopring (LRC) is an open protocol that allows the creation of scalable, non-custodial exchanges on Ethereum. Using Loopring smart contracts and zero knowledge proof circuits, developers can create high-performance decentralized exchanges via a zkRollup construction. That’s a lot of fancy words to say Loopring allows for higher throughput and lower settlement costs without sacrificing Ethereum’s security. As an LRC token holder, you can stake your LRC tokens to earn protocol fees, giving LRC huge potential as the LRC protocol continues to become more popular. Since starting the year at a price of $0.02, LRC has risen to highs of $0.14 in August 2020, making it one of the biggest risers on our list of the best DeFi tokens of 2020.
Terra is a decentralized finance ecosystem that aims to increase financial access for everyone via the native token, LUNA. The long-term goal of the project is to ‘set money free’ by creating open financial infrastructure. 2 billion people worldwide remain unbanked, and Terra aims to connect those people to the modern financial world via a family of Terra stablecoins. These stablecoins allow users to earn mining rewards, giving users an incentive to stabilize the network and increase supply. Whether staking LUNA or trading LUNA as a normal cryptoasset, LUNA and its stablecoin family are one of the most intriguing alternatives to DAI on this list – and they could play a crucial role in expanding DeFi services outside of the developed world in the near future. Since starting 2020 at a price of around $0.24, LUNA has bounced wildly, nearly doubling in price in July 2020 before settling back down. It’s a tumultuous DeFi coin that provides intriguing potential for investors.
Yearn Finance (YFI)
Yearn Finance and its YFI token appeared on the market in July 2020. YFI is a cryptocurrency token on the Ethereum platform with a total supply of just 30,000, which is why YFI’s current price of $4,500 immediately distinguishes itself from competing tokens here. Year Finance is a decentralized financial ecosystem that lets you earn interest, transfer money, invest, and stake YFI tokens, among other features. Although the project is still in its very early stages, it has already garnered attention and sits among the top 220 cryptocurrencies by market cap.
Kava.io’s KAVA token sits at a price of around $3.50 in August 2020 after starting the year at around $1. Kava.io is a decentralized financial services platform primarily focused on lending and borrowing. Users can earn high returns on their cryptocurrency holdings. At the time of writing, users can stake tokens like BNB to earn returns of 62.93% per year – and interest rate you’ll never find in the traditional centralized finance world. Kava aims to support lending and borrowing of BTC and XRP in the near future, which means the brightest days for Kava and its KAVA token may still lie ahead. One thing that makes Kava stand out from its competition is that the Kava DeFi platform is backed by some of the industry’s biggest leaders, including Binance, Huobi, OKEx, and others, giving it a strong chance of succeeding against other DeFi lending platforms here.
THORChain is a decentralized liquidity network that allows users to swap assets instantly while being protected from market manipulation – something that remains an issue on many other platforms. THORChain swaps tokens using permissionless cross-chain liquidity pools, allowing users to stake their assets to earn trading fees. Traders can monitor pool prices and earn returns by arbitraging back to fair market prices, making THORChain (theoretically) resistant to manipulation. THORChain’s THOR protocol grew from a price or $0.08 in January 2020 to surprising highs of $0.60 in August 2020, making it another superstar DeFi coin of 2020 on our list.
Balancer is a non-custodial portfolio manager, liquidity provider, and price sensor launched in June 2020. Currently sitting in the top 100 cryptocurrencies by market cap, Balancer’s BAL token allows users to access programmable liquidity. Balancer features a trading ecosystem where users can access global liquidity, trading against all pools in the Balancer ecosystem for the best price execution. It’s an early project with unknown potential – but investors are jumping on early hoping for oversized returns from this exciting new DeFi project.
When bitcoin launched in 2009, its goal was to create a decentralized currency. 10 years later, we’re not just dreaming of a decentralized currency: we want to create an entire decentralized financial ecosystem.
The DeFi coins above represent some of the exciting projects taking place in the DeFi space today. From lending platforms to decentralized savings accounts and more, DeFi projects are surging in popularity – and DeFi tokens are surging along with them, with some coins rising 10x since January 2020.