- Picking up some decentralized finance (DeFi) cryptos is not a bad idea as the technology could go mainstream.
- Ethereum (ETH-USD): The Ethereum blockchain is the hotbed for Web 3.0 development and most Metaverse and non fungible token projects are on it.
- Avalanche (AVAX-USD): Low fees can make this coin a future alternative to Ethereum and the recent crash has likely left it undervalued.
- Uniswap (UNI-USD): The Ethereum-based anonymous crypto exchange is back to prices seen before the bull run. It is set to be boosted by Ethereum’s “Merge” upgrade.
Decentralized finance (DeFi) refers to all sorts of DeFi services that are based on blockchain technology using smart contracts. The current market capitalization of DeFi is around $109.9 billion, compared to just $500,000 at the end of 2018. If the adoption of crypto continues, DeFi is likely to gain mainstream usage among regular people in the near future, thus being very profitable as an early investment.
However, the recent crash triggered by a bearish stock market and the drama with the Terra USD (LUNA-USD) stablecoin has dragged down many DeFi tokens. As a result, the crypto market is now likely oversold and these DeFi tokens are signaling a recovery.
Moreover, Bitcoin (BTC-USD) has closed its first daily green candle after the crash and the Relative Strength Index is nearing oversold territories. If Bitcoin manages to bounce off of its 30,000 support line, it is likely that DeFi tokens will also follow suit. Therefore, I have found three undervalued DeFi tokens to take advantage of in the current dip.
Here are my three top picks for DeFi crypto to buy now:
DeFi Crypto to Buy: Ethereum (ETH-USD)
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Although Ethereum’s (ETH-USD) native token is not directly associated with DeFi, the Ethereum ecosystem is home to many DeFi tokens. If these tokens start to take off, Ethereum directly profits from them due to the fees on its blockchain.
Moreover, Ethereum arguably has the most utility, especially with almost all Web 3.0 development happening on the Ethereum blockchain. Thus, I expect Ethereum to be a profitable and sustainable token due to the blockchain generating revenue from various projects.
In addition, Ethereum is also preparing to shift to a proof-of-stake (PoS) model with “Merge.” Once the upgrade is implemented, it is likely to increase its value.
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Avalanche (AVAX-USD) was hit hard by the recent crash. The cryptocurrency has been in a long-term decline since 2021 due to network issues. Unfortunately, a bearish broader market only exacerbated the fall.
Less than two months ago, AVAX had a market capitalization of over $25 billion. However, it is now just $7.5 billion. However, the crypto is likely to bounce short-term due to the severe crash. Avalanche is already showing some signs of recovery and I expect more upward momentum once the broader market cools down.
Nonetheless, I would advise against a lump sum investment. The crypto market is highly volatile and AVAX could still decline more if the broader market turns worse.
DeFi Crypto to Buy: Uniswap (UNI-USD)
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Uniswap (UNI-USD) is a leading decentralized crypto exchange. It is one of the most popular crypto exchanges as it serves as an alternative to centralized exchanges. However, despite being well known and widely used, the token has a market cap far lower than its centralized competitors, standing at $3.68 billion.
Furthermore, the primary reason for Uniswap falling behind its centralized competitors is its fees. Centralized exchanges have meager fees and have a wide range of tokens for swaps. In contrast, Uniswap has a flat 0.3% fee and only supports ERC20 tokens. Additionally, Uniswap runs on the Ethereum blockchain instead of a server. Thus, anyone willing to swap tokens must pay gas fees to the Ethereum blockchain.
All of this might make Uniswap unattractive for now. However, the fees will likely be far lower with the Ethereum upgrade. The Merge will automatically make transactions cheaper due to the higher capacity of the Ethereum blockchain and it will directly benefit Uniswap.
Besides, UNI is already down to prices seen before the 2020 crypto bull run. Therefore, I believe that Uniswap is likely to be very profitable in the long-term due to its connection with the Ethereum blockchain.