Blockchain companies issue their tokens and often make them mandatory to interact with their platforms. If the platform increases value and people want to use it, they need to purchase the corresponding token, which will lead to an increase in the price of the asset. Some tokens pay dividends to investors from income generated through their smart contracts.
The DeFi cryptocurrency and coin market is known for its volatility. Stablecoins avoid price fluctuations. Their value is pegged to fiat currencies such as dollars and euros, which hypothetically support the value of one of these denominations. In terms of market capitalization, the top-ranking by capitalization includes stablecoins: Tether (USDT), USD Coin (USDC), Binance USD (BUSD), Dai (DAI).
Let’s take a closer look at decentralized tokens.
- Cardano (ADA) is a Proof-of-Stake (PoS) blockchain designed for the development of smart contracts, as well as the creation of full-fledged decentralized applications (dApps). During the ICO campaign (from 2015 to 2017), the project team raised $ 62 million. It is one of the fastest-growing blockchain assets in the cryptocurrency market. Since the beginning of 2021, it has already hit the top 3 cryptocurrencies in terms of capitalization twice.
- Solana (SOL) is a high-speed open-source blockchain platform for running decentralized applications (dApps) and smart contracts, one of the main competitors of Ethereum. Solana’s critical competitive advantage is high scalability and low fees. During the tests, it was found that the network bandwidth is from 50,000 to 191,000 transactions per second, the block generation time is from 400 ms, and the average transaction fee is $ 0.00025. In the future, the developers promise to achieve a speed of over 700,000 transactions per second. For comparison, in Ethereum, the throughput is 30 transactions per second, and the block generation time is 12.5 seconds.
- Uniswap (UNI). Launched in 2018, Uniswap is the leader in decentralized exchanges (DEXs) with increased exchange volumes. Uniswap invites users to instantly exchange Ethereum-based cryptocurrencies by connecting them to smart contract liquidity pools. These pools are populated by other users who receive an exchange commission for providing liquidity. Each member can also contribute to the liquidity pools with a token and receive exchange fees.
- Chainlink (LINK) is a platform that aims to make smart contracts available in the real world. The token transfers external data to smart contracts. Smart contracts filtered through Chainlink pay insurance premiums if their values do not meet a certain standard. Chainlink’s potential seems limitless, and the leading DeFi apps are paying big bucks for the LINK token to use their platform.
- FTX (FTT) is a cryptocurrency derivatives platform. Crypto derivatives exchanges are different from traditional crypto exchanges. In addition to the usual spot trading options (buying and selling the underlying asset), they allow you to leverage and trade futures, options, and perpetual contracts. FTT is a token on the FTX exchange. The team aimed to ensure the growth of the token in the future, making it the “backbone of the ecosystem,” and took steps to increase its appeal. It was decided to direct a third of all trading income to burn tokens, which will ensure that the deficit in the system is maintained until half of the total supply is burned. The exchange also offers privileges for users who own tokens. For those wishing to trade futures, there are discounts on trading fees. The token is used as collateral.
- Wrapped Bitcoin (WBTC) is an innovative service that efficiently transfers BTC to the Ethereum blockchain. One of the primary use cases is Decentralized Finance (DeFi). WBTC is an ERC-20 token that is backed by bitcoins in a 1: 1 ratio. The token was created to allow Bitcoin holders to participate in the DeFi applications popular on Ethereum. BTC backing WBTC is transparently verified using a “proof of reserve” system.
- PancakeSwap (CAKE) is a platform for exchanging ERC 20 tokens on Binance Smart Chain, a convenient and inexpensive alternative to Ethereum. Similar to Uniswap, it also uses the Automated Market Maker system to create liquidity pools. Users can place bets on CAKE in one of the many liquidity pools on offer to receive more tokens in return.
- Terra (LUNA) is a decentralized financial infrastructure and blockchain protocol. The network uses its token, stablecoin protocol, oracle system, and smart contracts. The LUNA token is the primary tool for stabilizing prices for stablecoins and functions as a blockchain governance method. The network wants to reduce the centralization of the market. Unlike the competition, the Terra protocol runs across multiple blockchains. It uses programmable infrastructure to provide self-stabilizing stablecoins and other unique features to the market. To accomplish this, the network relies on an elastic money supply mechanism. The platform automatically adjusts the supply of stablecoins to keep their value pegged to their underlying assets.
- Tezos (XTZ) is a blockchain network associated with a digital token known as Tezzie or Tez (XTZ). Tokens are not mined because the network uses the Proof of Stake consensus protocol. The web is an open-source, plug-and-play platform for building and hosting applications and resources. Stakeholders are responsible for managing updates to the underlying protocol, including changes to the management process. Governance rules have been created to approve or reject changes and updates to the network without resorting to hard forks if everyone disagrees. Stakeholders can participate in the development and update process by democratizing governance and decision-making at the blockchain level.
- Avalanche (AVAX) is a blockchain platform that is characterized by high performance, security, and scalability. It targets three use cases through the creation of: application-specific blockchains that cover private and public deployments; highly scalable and decentralized applications (dApps); arbitrarily complex digital assets with individual rules, agreements, and participants (smart assets). The native AVAX token allows for fees and is also used as governance on the network. The token was highly appreciated. The price of AVAX is expected to rise when the platform is fully operational.
In any case, altcoins are considered quite profitable in terms of investment. However, their situation may change dramatically in a few years. It is almost impossible to make a 100% forecast, so the investor must make an independent, informed decision about a reliable investment.