5 DeFi Tokens to Watch in 2022

BitKong explorers holding DeFi tokens
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Updated on July 13, 2023

Decentralized finance has been thriving since 2020 and it doesn't seem like the love for the no master market is going to fade. The main reason for the growth of these apps and protocols lies in the potential of this technology. The defining word for this potential is independence. See DeFi developers create apps based on code-based contracts (Smart Contracts). Later they hand over the ownership of this technology to the users, making the transactions ungoverned. With this in mind, it is easy to see why decentralized coins and tokens have grown so much in the past couple of years. Now, let's take a closer look at the decentralized altcoins that will surely create hype in the near future.

Terra (LUNA)

The developers behind Terra set out to create a decentralized smart contract management system, or a blockchain operating system, as they like to call it. The terra protocol consists of two main tokens, Terra and Luna. Terra is a stablecoins linked to the price of fiat currencies. Luna (LUNA) is Terra’s native token, which can be used as collateral on margin trading or staked in a rewards pool to generate compound interest income. This governance token is used to absorb the price volatility of terra by burning either Terra or Luna according to the supply and demand of the moment.  In other words, users burn Terra to produce Luna and burn Luna to produce Terra. As a dynamic supply native token, Luna has seen incredible growth since its inception and offers unique functionality within the emerging decentralized finance (DeFi) space.

Uniswap (UNI)

Uniswap is a protocol for decentralized ERC-20 token trading. This means users can swap between different ERC-20 tokens without needing a centralized exchange. In other words, it’s an open protocol anyone can plug into, which allows anyone to build a better exchange that connects with Uniswap and makes cross-chain swaps possible. Uniswap's governance token is UNI, which is given as an incentive to users to maintain the liquidity of the exchange. In 2021, Uniswap’s grew had in hand with the Decentralized Finance boom and became the leading exchange on Ethreum’s blockchain.

Avalanche (AVAX)

The Avalanche Network is an emerging technology that attempts to solve Ethereum’s scaling issue by creating a layer-2 scaling solution on top of Ethereum. The network is able to achieve significant throughput, processing thousands of transactions per second and serving as a suitable infrastructure for widespread, mainstream use cases. Avalanche’s native token is AVAX which is used as a payment and reward unit for users. Market experts are betting on the bright future of the Avalanche platform for a number of reasons. One of them is that the Avalanche Foundation announced incentive programs to burst the growth of the network. Another motive for hope has to do with the custom possibilities the platform offers for decentralized applications.

Chainlink is a tokenized decentralized network that provides a solution to a gap left by Ethereum: off-chain data supply. With Chainlink you get an oracle solution that is meant to provide external data for smart contracts. It also serves as a decentralized oracle network. The LINK token was originally issued on Ethereum’s blockchain but was later migrated over to its own chain. This altcoin allows for data-driven smart contracts through different blockchains.

BitKong standing in front of a scale that is weighing Uniswap and Polkadot, and wondering which one is heavier.

Polkadot (DOT)

Polkadot is a platform meant to connect different blockchains together and make it easier for developers to build DApps. Polkadot is one of many potential game-changers for Ethereum’s scaling. Fully implemented, Polkadot can host up to 100K transactions per second, making it by far one of the most scalable public blockchains on Earth. But scalability is not the only promising feature of this multichain network. Polkadot also opens up new possibilities with off-chain and side-chain interoperability. These open new avenues for Decentralized Finance (DeFi) projects on Ethereum and other private and public platforms. Polkadot’s native token is DOT which serves as bonding to add new parachains, and it provides governance to the holders.

In only a few years, tokenization and decentralized applications have already made a significant impact on how people invest and interact financially with others on a global scale. Next year won’t be the exception since the entire market predicts this incredible growth of DeFi to continue!

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