The best DeFi stocks have economic moats, competitive advantages and strong outlooks for the future. These companies are part of the larger societal shift toward being your own bank, which resonates with those who prioritize privacy, liberty and self-determination alike.
Even if you are not ideologically motivated, there are still good reasons to add the best DeFi stocks to your portfolio. These companies are innovators in their fields with popular products. Their shares will likely soar in the future, particularly as society’s newest generation of investors begins saving and building wealth for their tomorrow.
So, if you are after the best DeFi stocks, read on. This article lifts the lid on three of today’s best opportunities.
Coinbase Global (COIN)
Coinbase Global (NASDAQ:COIN) is one of the largest cryptocurrency exchanges in the world. While not a DeFi platform per se, it serves as a critical gateway for retail and institutional investors to access various DeFi assets and protocols. COIN has also started to integrate DeFi services directly, offering a more seamless experience for users who want to explore decentralized finance.
The criticism of COIN comes from the majority of its revenue stemming from its high transaction fees. These fees are said to be supported by a weak economic moat. It’s kind of similar to PayPal (NASDAQ:PYPL) in that regard, but this criticism overlooks something important. Both companies maintain their first-mover advantage in their respective fields, giving them a leg up in taking market share away from rivals. And since users for both platforms have continued to grow, perhaps they are better at retaining users than we give them credit for.
Case in point, COIN exceeded market expectations in its Q2 2023 earnings report, generating $707.9 million in total revenues despite a $97 million net loss. COIN also reported having $92 billion in quarterly volume traded and $128 billion in assets on its platform.
It is short-term results like these that help make COIN one of the best DeFi stocks to buy today.
Block (SQ)
Block (NYSE:SQ) showed interest in integrating more decentralized finance features into its platforms. Block’s existing financial ecosystem and large customer base provide a fertile ground for rapid DeFi adoption once integrated.
SQ was hit hard this year with a report from the contentious short-seller Hindenburg Research. The report alleges poor compliance protocols and claims that Block has “taken advantage of the demographics” it purports to help. Analyst Dan Dolev acknowledges some valid points in the report but argues that some claims may not be as strong, emphasizing that the long-term bull case for Block remains its “unique B2B2C closed-loop payments network.”
As a short seller, it’s advantageous for Hindenburg to frame SQ stock in the worst possible light. They may stick to the facts, but rhetorical techniques can make the worst out of any good situation. Chief Executive Officer (CEO) Jack Dorsey denied the allegations in the report.
Its latest quarterly report might be a more credible analysis. The company beat Q1 revenue expectations with $4.99 billion, up 26% year-over-year (YoY), driven by its Cash App platform. It also has a great growth outlook with rising user and engagement numbers, painting a contrast to the allegations flung at it.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) might seem like an unconventional choice, but hear me out. The company’s GPUs (graphics processing units) are essential for crypto mining, including that of Ethereum (USD-ETH) — the blockchain where most DeFi projects are built. As DeFi grows, the demand for Ethereum will likely increase, driving up the need for powerful GPUs.
Despite many networks opting to take away ETH’s crown as the kingmaker of DeFi apps, it has proven remarkably resilient. Many crypto investors, for instance, still hold on to a thesis that ETH one will day surpass Bitcoin (USD-BTC) in market capitalization. They argue that ETH has greater practical value than BTC. Thus, as DeFi rises, so too will the demand and price of ETH until it overtakes BTC.
NVDA stock is pursuing other growth tailwinds, such as through AI and gaming — neither of which are going away any time soon. Its graphics cards are still some of the best money can buy, and its foray into cloud gaming has unlocked the AAA gaming experience for even those on budget Chromebooks if you have a low enough ping.
For all these reasons and more, NVDA is one of the best DeFi stocks.
On the date of publication, Matthew Farley did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
