Welcome to Cointelegraph Market’s Altcoin Roundup, an in-depth newsletter that focuses on investing from a fundamental analysis perspective and aims to identify emerging blockchain and token projects that cover demand niches in the growing cryptocurrency market.
The concept of multi-sector investing has long been advocated in the financial world as a conventional approach to building a balanced portfolio. Typical tasks include the representation of stocks, public and corporate bonds, commodities and real estate.
Now that the cryptocurrency market has grown into a multi-billion dollar ecosystem With numerous emerging assets, clear sectors are starting to develop. Cryptocurrency investors looking to apply portfolio diversification practices to their holdings should be careful.
By doing Altcoin Roundup Previous Edition We discussed some of the top Layer 1 solutions and coins, such as Polkadot (DOT), Cosmos (ATOM) Yes Solana (SOL) Â which have grown in prominence over the past year, but these projects could hit the threshold of investing in large-cap currencies in addition to high-profile assets, such as: Bitcoin (BTC), Ether (ETH) and Cardanos ADA tokens.
Once the investor has an adequate representation of first-line projects, they can consider other emerging sectors, such as decentralized finance (DeFi), oracles and stablecoins.
DeFi: Uniswap, Aave and PancakeSwap
Decentralized funding sprang up in DeFi summer 2020, and the sector helped kickstart the current bull market by adding a new excitement to the cryptocurrency ecosystem that needed the next big innovation.
One of the best metrics to demonstrate the growing success of the entire DeFi ecosystem is the ranking of the Total lockout value (TVL), which together reached an all-time high of $ 157.63 billion on May 14, according to Defi Llama, and stands at 116.62 billion US dollars at the time of writing.
The introduction of the decentralized exchange interface (DEX) from Uniswap, which enabled the immediate start of new projects and made the tokens available to the general public, helped trigger a wave of growth and innovation across the market that continues to expand to this day.
In less than a year, Uniswap became the leading DEX for the crypto community, hitting a historic record of $ 5.74 billion in daily trading volume and $ 5,370 million in total on the platform during the May 19th sell-off.
The wide variety of liquidity pools is the main attraction for investors looking to diversify their cryptocurrency portfolio. Through these pools, users have the ability to generate a return by providing liquidity to the exchange in exchange for part of the trading commissions. Different pools offer staking returns ranging from 25% to 2,000%, and traders can choose pools based on a number of factors, including their risk tolerance.
Though Uniswap pioneered DEXs, there are other options like Aave’s lending platform which has become with more than the largest DeFi protocol by total blocked value USD 14.1 billion TVL at press time.
Aave’s recent decision to offer Layer Two (L2) access to Polygon has revitalized the AAVE ecosystem as traders and liquidity have happily migrated to the lower commission environment from Polygon. This resulted in a significant increase in TVL for both AAVE and Polygon’s native token MATIC, which is now the second protocol in the TVL rankings, with $ 11.08 billion tied to the protocol.
Each balanced portfolio also has a small exemption between 1% and 5% reserved for higher risk assets, and the cryptocurrency market is not lacking in high risk and growth assets.
For token holders willing to take a little more risk in exchange for higher returns, PancakeSwap, based on the Binance Smart Chain, has a TVL of $ 7.67 billion and offers equivalent annual rates (APR) of up to 482.54%, according to the project website. with all rewards paid in the protocol’s native CAKE token.
Stablecoins are the new savings accounts
Although a token that remains tied to a fixed value doesn’t seem like the most attractive opportunity for investors, stablecoins have evolved to play a vital role in the functioning of the entire crypto ecosystem.
Stablecoins often serve as the backbone of trading pairs on centralized and decentralized exchanges, offering traders an easy way to secure their profits.
The two most popular stablecoins are Tether (USDT) Yes USD coin (USDC), the one round of $ 60.9 billion Yes 21.6 billion tokens, respectively. Tether is currently the most traded cryptocurrency with a daily trading volume between $ 100 billion and $ 290 billion.
Other popular stablecoins are Binance USD (BUSD), Created to be used within the Binance Smath Chain and Stablecoin ecosystem DAI, algorithmically controlled, which is characterized by the provision of guarantees in the protocol Manufacturer.
For those looking to get a little extra performance on the safe side of stablecoins, there are several options available, such as: Deposit tokens on a loan protocol like AAVE to earn up to 5% on deposits, or the Curve decentralized stablecoin exchange, which offers returns of up to 50% on some of the stablecoin pools on offer.
Other popular options are depositing liquidity with the various decentralized exchanges such as PancakeSwap, which offers 8.64% for its DAI-BUSD liquidity pool, or QuickSwap, which offers a reward plus an annual percentage return fee of 15.01% for its USDT-USDC pool and 26.75% for its DAI pool .
In a world increasingly dominated by digital data, no cryptocurrency portfolio would be complete without access to an oracle provider. These companies are the heavyweights of the sector enabling the secure exchange of data and information within the cryptocurrency ecosystem as well as financial markets in general.
At the moment, Chain link is one of the most dominant Oracle projects and a major player that includes a thriving open source community of data providers, node operators, smart contract developers, researchers and security auditors.
We have mid-May and $ LINK already has 35 integrations!
I see an integration all-time high shattered with ease this month.
With #Chain link You just win, in every way.
Check out all Chainlink integrations: https://t.co/vb2t14UStM pic.twitter.com/ERd2xgeDdc
to???? TheLinkMarine 2.0 (@ TheLinkMarine1) May 18, 2021
We are in the middle of May and LINK already has 35 integrations!
I believe that this month the all-time high is easily exceeded by integrations.
With Chainlink you simply win, in every respect.
While the Chainlink network does not currently offer a direct way to generate return through a simplified staking or governance mechanism, it is easy for token holders to leverage their holdings in DEX liquidity pools and DeFi protocols such as Aave.
For investors who are not ready, decentralized exchanges and Trust DeFi platforms Central return companies such as Nexo, Celsius and BlockFi are also available to crypto investors who want to generate a return on their holdings.
Centralized exchanges like Coinbase and Binance also offer staking services. For example, Investors can block BAND on the major stock exchanges at a corresponding annual rate of 11.7%.
Due to the autumn in May wiping more than $ 1.2 trillion in value from the cryptocurrency market Many of the top projects are now well below their all-time highs and trading at what some investors would call “Bargain prices.
Even if Market participants do not yet know opposite where prices develop in the short term, It would be wise to research these possibilities sooner rather than later, as the notoriously volatile cryptocurrency market can make significant moves in the blink of an eye.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you will need to do your own research when making a decision.