Decentralized finance (DeFi) has taken the world by storm. People are looking DeFi as the solution for many archaic issues in the global financial services landscape. The demand for the best DeFi coins has been increasing profoundly in recent times due to the radical spurt in the popularity of decentralized finance. Even if they take away the burden of centralized control over financial services, there is a lot to wonder about DeFi tokens. Are they worth it? The following discussion helps you find the important reasons for which you should go for DeFi tokens right now.
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What are DeFi Tokens?
Before diving into an outline of the reasons for looking into the best DeFi crypto options, let us understand what are DeFi tokens. DeFi tokens are the foundation of the decentralized ecosystem. They are used primarily in decentralized applications running on smart contracts for facilitating different transactions. You can think of DeFi tokens as a unique form of currency for decentralized platforms only. DeFi tokens could serve various roles in the native blockchain network alongside the financial ecosystem.
DeFi token price is one of the notable concerns of investors looking for opportunities with DeFi. The price can fluctuate depending on the design of the token. If it is designed as a stablecoin, then it would not fluctuate in pricing. DeFi tokens serve helpful for various use cases, including exchange, investment, exercising voting rights, trading and payment. The tokens feature financial or economic value. DeFi users can get trading discounts or reduced interest rates as incentives for using native DeFi tokens.
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Contrary to popular assumptions, there are various answers to ‘are DeFi tokens worth buying.’ One of the first things that you should understand before finding out reasons to go for DeFi tokens is the difference between DeFi tokens and coins. Here are the important points which separate DeFi tokens and coins.
- Tokens are non-fungible assets due to their uniqueness to DeFi platforms, while coins have fungible value.
- Coins serve as value-based currency only, while tokens could address a wide range of functions.
- It is easy to recover tokens, although the same is not applicable for tokens.
- Tokens have the support of security through cryptography with high levels of accountability. On the contrary, coins feature constant supply alongside reliable durability.
Reasons to Choose DeFi Tokens – Why Choose Best DeFi Coins
Now that you know what a DeFi token is actually, it is important to find answers to ‘are DeFi tokens worth buying.’ Here are the top five reasons for which you should consider DeFi tokens right now.
Improved Access to Broad Range of Financial Services
The foremost value advantage with DeFi tokens basically points out to accessibility of financial services. Decentralized platforms have promoted the role of DeFi tokens in improving the accessibility of investment and commerce opportunities to all individuals. Therefore, the best DeFi coins are actually establishing the foundations for a new economic paradigm shift.
Users can leverage them for various use cases such as network staking, savings, gaming, and synthetic assets, insurance, and loans. DeFi tokens bring financial services within reach of people with the functionalities of blockchain. This is definitely a promising reason to go for DeFi tokens.
DeFi Tokens Can Spell New Future of Finance
The second important factor in favor of DeFi tokens refers to its potential for disrupting finance as we know it. For example, DeFi coins could help people in borrowing and lending easily within a peer-to-peer network. DeFi tokens can also help in claiming insurance amounts directly without the intervention of institutions like governments and banks.
Therefore, DeFi tokens can help users of DeFi platforms and token holders in accessing the same services presented by traditional financial service providers. You can think of DeFi tokens as the next stage of evolution in finance, especially after the cryptocurrency revolution and the relative stability of DeFi token price.
Also Read: How Does Decentralized Finance Work?
Capitalize on the New and Profitable Technology Trend
The next critical reason for choosing DeFi coins refers to the need for capitalizing on a new technological trend. Nobody wants to miss out on DeFi, which is showcasing the potential for explosive growth. There is no possible way for you to ignore the radical developments in the world of decentralized finance. Interestingly, DeFi tokens are actually the tip of the iceberg, even with so many promising alternatives in development.
The most renowned DeFi token UNI or the oldest decentralized governance protocol, Maker MKR, shows how it is easy to diversify a crypto portfolio with ease. Many DeFi projects are in the early stage, and top industry players are jumping on the DeFi bandwagon. So, it would not be fair to miss out on an exciting trend like DeFi tokens.
Stability of Price at Par with Ethereum
Another prominent reason to choose DeFi tokens right now is more than just the DeFi token price stability. If you are apprehensive about investing in DeFi tokens, then you can invest directly in ETH. Most of the DeFi tokens operate with smart contracts on Ethereum blockchain. Therefore, DeFi has formidable capabilities for scaling up the value of ETH through corresponding price improvements. As a matter of fact, DeFi can be the differentiator in the competition between Ethereum and Bitcoin for the top rank in market capitalization.
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Set the New Standards for the Potential of Blockchain
Finally, and most importantly, DeFi tokens could create new standards of transparency and access. At the same time, they reduce costs of financial services alongside delivering the advantages of automation. DeFi tokens basically serve as a crucially important use case of blockchain. Built on blockchain networks like Ethereum, DeFi tokens actually redefine the true potential of blockchain. In the long run, DeFi tokens can matter more than just tools for facilitating transactions on DeFi platforms.
On a concluding note, it is quite clear that DeFi coins are gaining momentum. The prolific opportunities associated with DeFi tokens, primarily for transforming financial services, are the foremost reason to choose them. DeFi tokens have the capability to bring out the true potential of blockchain for the financial services sector and other applications.
At the same time, stability of DeFi token price with different value advantages makes them a top choice for investors right now. Decentralized finance is slowly looking forward to dominating the future of finance. If you want to capitalize on the prospects with DeFi tokens, then you should start learning more about them. We recommend you to enroll in the DeFi Fundamentals course to learn more about DeFi coins!
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. Do your own research!
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Author: 101 Blockchains