The search for must-buy cryptos is on.
Indeed, the crypto space is one that has provided incredible returns in the past. However, the high-volatility nature of this sector has prevented many investors from diving in.
Simply put, many projects are far too speculative to consider, even with their apparent utility in cross border value transfer and as stores of value.
That said, the rise of decentralized finance has changed the perspectives of many investors. The DeFi revolution involves certain crypto projects looking to use the innovation and efficiencies of blockchain technology to improve traditional finance.
Whether that means transferring money, buying or selling assets, borrowing, insurance, or even sectors such as healthcare and law, there are plenty of applications being built out right now to handle real-world challenges.
Expectations are that if blockchain technology can do things better, usage will pick up. And if that happens, the crypto tokens supporting this DeFi revolution will take off. Those are the sort of must-buy cryptos investors ought to keep on their watch list.
Here are the top three cryptocurrencies I’d put in the must-buy cryptos bucket in the DeFi space right now.
The blockchain is an effective means of conducting trades because it uses a unique spin on proof-of-stake consensus.
Solana’s proof-of-history consensus mechanism incorporates time stamps to order transactions, and effectively cut down on the processing time (and cost), which is a big win for users.
This has led to massive relative transaction processing capacity, relative to incumbents such as Ethereum (ETH-USD). Solana can handle up to 50,000 transactions per second compared to Ethereum’s 10-30 transactions.
Solana also has significantly lower transaction fees, costing only fractions of a penny per transaction.
Despite being a smaller and less mature network compared to Ethereum, Solana’s developers are actively working on expanding the platform. They have introduced Solana Pay, which aims to create a direct transaction link between consumers and merchants.
Solana Pay allows users to transact without requiring a bank or credit union, and the token has no transaction fees. Over 600 merchants registered on the site shortly after it launched.
Since the beginning of the year, Solana has more than doubled, and I think this momentum could continue, given the growth potential of DeFi.
According the crypto market capitalization rankings, Ethereum is now the second-largest cryptocurrency. However, in terms of DeFi size, Ethereum is the big dog in this sector.
That’s why I like it. Ethereum has always been at the forefront of DeFi cryptocurrency. Its network is the backbone of pretty much anything DeFi, making Ethereum the incumbent others are trying to take market share from.
Sometimes, as investors, it’s easiest (and most profitable) to invest in the largest company in a sector. In DeFi, that’s Ethereum.
That said, Ethereum’s recent Shanghai hard fork has only strengthened its position in decentralized finance. The Shapella upgrade is widely seen as the next step in developing the Ethereum network, with the Ethereum Merge being the only more anticipated upgrade.
This upgrade will allow Ethereum’s Proof-of-Stake network validators to release ETH previously locked in a smart contract on the Ethereum Beacon Chain.
Investing in cryptocurrencies requires careful timing. While Ethereum has performed well, increasing by over 50% from the start of the year, its price has dropped nearly ten percent during the last week.
Thus, Ethereum isn’t immune to the volatility of this sector. All tokens will see surges and declines like this, but over the long-term, this is one I’d certainly put in the must-buy cryptos bucket for sure.
The Graph (GRT-USD)
The Graph (GRT-USD) is among the more speculative must-buy cryptos on this list. That’s partly because of this project’s overall model.
The Graph combines artificial intelligence and blockchain technology to query and index blockchain networks, making them easily searchable. The project aims to create a vast indexed repository of blockchain data, similar to what Google did for internet searches.
The Graph protocol is becoming increasingly important in the crypto economy, mainly as DeFi grows.
It allows developers and network participants to build subgraphs for dApps using open APIs and index, query, and collect data. The Graph’s hosted service processed a whopping 20 billion queries in April 2021 alone.
The Graph network is a unique blockchain project, the first decentralized market for querying and indexing data for dApps. This makes it an exciting project in the crypto sector, with potential price implications.
While The Graph’s utility is clear, it still needs to be clarified why its value should skyrocket immediately. The Graph has already experienced a three-fold price increase in 2023, gaining a lot of attention, which could drive its price higher in the short-term.
On the date of publication, Chris MacDonald had a position in SOL,ETH,GRT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.