- While many investors are piling on to popular DeFi tokens that have blown up, Davis believes that there’s more value in the smaller undiscovered coins.
- He pointed to DeFi on other networks, token sales and Ethereum scaling solutions as interesting fields to find altcoins with a 100x potential.
Investors are always on the hunt for the next big thing, with DeFi recently offering the best chance to find 100x potential. Given the high gas fees, DeFi may no longer be the best target area for savvy investors, according to analyst Lark Davis. As a result, Davis revealed the top five alternative areas investors should explore if they want to find the next altcoin that can deliver 100x returns.
DeFi, but not on Ethereum
DeFi was the standout sector in the cryptocurrency industry currently. Platforms like Aave, Uniswap and Compound have become some of today’s most valuable projects by market cap. However, with the rise in popularity has come a rise in transaction fees on these Ethereum-based platforms. Davis predicts that this will lead to the hyper-growth of DeFi on other blockchain networks.
The YouTuber named Cosmos SDK-based DeFi as one of the platforms that will most likely produce the best projects in the near future. He named KAVA, Hard Protocol and Injective Protocol as the standouts on this platform. Moreover, Binance’s Smart Chain is also one to keep an eye on as projects start migrating to it from Ethereum.
They are out there chasing these smaller fees. You can use all those DeFi protocols that I just mentioned and pay a fraction of the fees that you’d end up paying on Ethereum. So you can be paying pennies to get in and out of a yield farm instead of $50 or $100. They may lack the depth of options and liquidity that Ethereum-based DeFi does, but they are growing at a good rate.
While DeFi is growing on other chains such as Cardano and Elrond, Davis is mostly excited about DeFi on Polkadot. He believes that they have a bigger upside for investors who get in early.
There’s not a single Polkadot DeFi protocol in the top 100 right now. The highest market cap at this point for Polkadot DeFi coins is like $120 million for Polkastarter. The highest market cap DeFi on Ethereum is around $6 billion. This means that if any of these new DeFi protocols coming to Polkadot can reach similar levels in the future, it’s a 60x gains…
He pointed to Reef Finance as the best Polkadot-based DeFi protocol.
Layer 2 scaling for Ethereum
A lack of scaling has been one of Ethereum’s biggest bottlenecks over the years. As a result, Davis believes that layer 2 scaling solutions for Ethereum are one of the best areas to invest in right now. He cited Matic Network as the leader in this field.
Matic is the leader here when it comes to Layer 2 scaling. They have an actual working product and ecosystem which is being used by lots of people. It’s getting noticed by some of the very big players too. They also have their own native applications and decentralized exchanges, things like Quickswap and the lending market EasyFi. I think we’re going to see a lot of growth for the Matic ecosystem as a useful Layer 2 scaling solution for Ethereum-based DeFi.
For the biggest gains, however, investors must explore token sales. Davis told his 201,000 subscribers that the number of investors participating in token sales is still low.
One thing is for certain, token sales are making big returns for investors.
In 2021, there have already been over a dozen token sales that have done 50x or more. There have also been a few that have done 100x or more. The biggest number have done a 20x, even though we are just in the second month of the year, as Davis noted. Furthermore, he stated:
Most of the people in the market are not getting involved in these, or are sleeping on these. They are afraid of getting in during sales. They get in much later when these projects list on Uniswap.
In regard of token sales, Davis cited Umbrella Network as his top token project to watch. The network is a community-focused oracle provider that’s expanding the total amount of assets in DeFi. Umbrella is set apart from the sea of other oracle projects in that it runs on layer 2 and will be able to provide data “in a way that other oracles can’t”.