Some of the top Defi Tokens by Market Capitalization are Dai, Uniswap (UNI), Avalanche (AVAX), Wrapped Bitcoin (WBTC), Chainlink (LINK), Terra Classic (LUNC), Aave, Tezos (XTZ), Theta Network (Theta), Fantom (FTM), Pancakeswap (CAKE), Maker (MKR), The Graph (GRT), ThorChain (RUNE), Fei USD (FEI), Neutrino USD (USDN), Syntheix (SNX) and lot more.
Defi Protocols and Exchange Liquidity
Decentralised Finance (DeFi) a blockchain-based protocol is a competition to banks and financial institutions in the lending and borrowing process. The focus of DeFi is to be disruptive towards banks and financial institutions. There are several DeFi coins available in the market. There are several thousands of DeFi coins trading in the cryptocurrency space.
When choosing the top DeFi to buy it is important to consider the current coin price, market capitalization, long-term growth, and the available exchanges for the DeFi coins. Not all coins in DeFi experience an exponential price rise. Every DeFi coin is focused to achieve a decentralization goal. Those who have DeFi coins sell their coins and cash out when the value of the coin they have invested in goes high. Anytime a user sells or exchanges a DeFi coin a crypto tax is levied to promote long-term investment.
The tax which is thus received is mostly used to provide for the purpose of exchange liquidity or to support P2P transactions. The remaining tax earned by the Defi pool is distributed across all the DeFi coin holders in a proportionate basis suiting their investment.
DeFi Liquidity Pool
A Defi liquidity pool is a collection of digital assets which are accumulated to enable trading on a DEX. Despite the risks around Defi liquidity pools, they are still considered to be very safe. Impermanent loss is very common in high volatility situations. However, when the volatility is low the chances for impermanent loss are less.
Defi Protocols on blockchains with highly efficient transaction speeds provide for efficient decentralized trading and lending. DeFi liquidity determines the ability for tokens, or cryptocurrency, to be swapped for other tokens. Without Defi Liquidity there is no decentralized finance.
Top liquidity pools simplify data transfer between various blockchain networks and different altcoin networks. Some DeFi pools have a fixed exchanging fee, and some have a percentage charged in transaction fees.
Defi became popular around those who are interested in the idea of passive income. Also, the idea of not having to make active investment decisions along the way makes things interesting.
Ways To Loose Money In Defi
There are several ways by which one can lose money in Defi like failed transactions, lack of slippage tolerance, high gas fee, sending over the counter transaction, partial fills and negative price impact.
Just like any other investment option, there are risks and there are benefits too. The higher the risk, the higher the benefit.
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