A guide to cryptocurrencies and DeFi tokens
A guide to cryptocurrencies and DeFi tokens
Defi

A guide to cryptocurrencies and DeFi tokens

By Marco Cavicchioli - 6 Nov 2021

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There are now more than ten thousand cryptocurrencies, including tokens, and many of them have to do with DeFi

Altcoins, tokens and stablecoins

They are often referred to as “altcoins“, a very general term that includes all cryptocurrencies that are not Bitcoin. However, for some time now, the second-largest cryptocurrency, Ethereum, is no longer considered by many to be an altcoin, if only because of its market capitalization. 

In fact, only two cryptocurrencies in the world have a market capitalization of more than half a trillion dollars (ETH and BTC), while only one has a market capitalization of more than a trillion dollars (BTC). In third place is Binance Coin (BNB), which is the only one that exceeds $100 billion besides BTC and ETH. 

All other cryptocurrencies and tokens have market capitalizations below $100 billion, but these altcoins are very different from each other. 

First off, there are stablecoins such as USDt (Tether), which has a market capitalization of more than $70 billion. To be fair, stablecoins are not really cryptocurrencies in the strict sense, but tokens that represent low-volatility assets, such as dollars, euros or gold, on a blockchain. For this reason, they do not fall within the cases considered in this guide. 

Ethereum DeFi
Ethereum is widely used in DeFi sector

DeFi cryptocurrencies

Among the most important altcoins are those that are the basis of blockchain projects for decentralized finance, or for uses that are not necessarily financial. 

At the moment, the most important are Solana (SOL), Cardano (ADA), Terra (LUNA) and Avalanche (AVAX). Not to forget Polygon (MATIC), Tron (TRX) and EOS

The top ten altcoins by market capitalization also include XRP (Ripple), which is mainly used for financial purposes, Polkadot (DOT), which is used for the creation and management of the “blockchain of blockchains” project, Dogecoin (DOGE) and Shiba Inu (SHIB), which are theoretically used as means of payment, although in the case of SHIB it is also used for DeFi protocols. 

Thus, cryptocurrencies and tokens dedicated to DeFi dominate among altcoins. Ethereum itself dominates the world of decentralized finance, and even BNB is closely involved with DeFi.  

Much has already been said about Ethereum, so it is not necessary to go into more detail. 

Binance Coin is the utility token of the Binance Smart Chain, the fast blockchain created by Binance on which various decentralized finance protocols and tokens are based, most notably the DEX PancakeSwap

Solana (SOL) is now the third-largest DeFi platform in the world, after Ethereum and Binance Smart Chain. It has its own DEX, Serum, and in addition to DeFi it is also used extensively for the NFT market. 

Cardano is further behind, in the sense that only a few months ago it finally activated support for complex smart contracts, but it is not yet widely used in decentralized finance, although in theory, it could be an alternative to the three most used platforms at the moment. 

Terra and Avalanche are growing strongly this year, along with Solana, but have not yet managed to reach Solana’s usage levels. 

They are very close, however, as their TVL on DeFi protocols is not far behind Solana’s. 

In sixth position for TVL on DeFi protocols, we find Tron, a second-generation blockchain that is being used more and more, mainly due to its low transaction fees in USDt. 

Two interesting DeFi protocols are Polygon, which also helps make Ethereum transactions faster and cheaper, and Fantom, not far behind Tron in TVL. 

In the TVL ranking for the various DeFi blockchains, from position 9 down there are only projects that can be considered minor in this respect, at least for now. 

Among them, a special mention must go to EOS, because it was absolutely one of the first projects in the world with which dApps were created for DeFi. In the course of time, however, it has been overtaken by many other more successful projects in the world of decentralized finance, so that it has lost the important role it had at the beginning. 

Ethereum and BSC dominate DeFi

Although there are at least 50 blockchains with DeFi projects already in operation, only the top eight are in use enough to be called important, while only four of them manage more than $10 billion. 

Only Binance Smart Chain and Ethereum are already widely in use in the DeFi sector, although Ethereum continues to dominate unchallenged.

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".

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