With over 13,500 cryptocurrencies to choose from, new users are always overwhelmed by the sheer number of cryptocurrencies.
Which cryptocurrency will go to the moon and which will crash and burn?
If you want to know why I didn’t include Bitcoin ($BTC) you can check out this article here: Why I Currently Do Not Hold Any Bitcoins In My Crypto Portfolio
These 5 cryptos are selected based on a few macro and micro criteria:
- Market Cap
- Active users
- Unique selling point
A high TVL shows that the community has confidence in the network and is willing to invest their funds in it. Tokens with high Market Cap are less volatile and this also indirectly portrays confidence within the community.
Even the best network would fail if it is unable to gain transactions and the number of active users is a great metric to track it.
A unique selling point refers to how is it different from the other crypto network or what issue it is able to solve. It could be things like solving the scaling issues of blockchain to solving the interoperability of blockchain.
The 5 cryptos chosen have the potential to explode and are a long term hold for me. Without further ado, here are my personal top five cryptocurrency recommendations for 2022:
Many would agree with me that Ethereum is a blue-chip cryptocurrency. The OG survived the harshest of winter and never failed to bounce back to see higher highs.
Despite high gas prices, the Ethereum blockchain is very secure and has been battle-tested for at least seven years.
The most important DeFi (decentralized finance) dApps (decentralized applications) are all built on top of the Ethereum blockchain. These include Uniswap, Aave, Curve, Lido, Maker, just to name a few.
The upcoming Ethereum 2.0 upgrade that sees a shift from the current proof-of-work model to a more energy-efficient proof-of-stake model, will turn Ethereum into a deflationary asset. It is projected to see yearly net deflation of 2.2% rather than the current net inflation of 3.5%.
Instead of increasing the number of tokens as it use to before, it would instead burn more tokens and reduce the current pool of tokens. Ceteris paribus, the reduction in supply would naturally drive up the token price.
Furthermore, Ethereum staking rewards are expected to increase as transaction fees that were once earned by miners will now be distributed to stakers.
This would inevitably drive prices of Ethereum up as there will be a supply crunch with more Ethereum locked for staking and combined with the fact that Ethereum will be deflationary.
There are many things you can do with Ethereum other than holding it in your wallet. If you want to earn some yield, you can check out Lido, an Ethereum liquid staking protocol.
Even with the Ethereum 2.0 upgrade, gas net prices are still going to be expensive. Ethereum scaling will still be reliant on Layer 2 scaling solutions.
MetisDAO is a Layer 2 scaling solution that uses Optimistic Rollups. This rollup solution frees up more space on Ethereum as the computation transaction are moved off-chain.
The Optimistic Rollups allows MetisDAO to be highly scalable, process transaction faster and at a lower fee. At the same time, it doesn’t compromise the blockchain’s security.
Compared to the other Layer 1 and Layer 2 blockchains, MetisDAO is relatively undervalued in terms of Marketcap/TVL ratio.
Avalanche was founded in 2018 by Emin Gün Sirer — a computer science professor at Cornell University. It is a Layer 1 blockchain that is able to solve the scaling and gas fee issues by introducing subnets.
Subnets are basically ‘mini’ blockchains that are under the Avalanche blockchain. It allows dApps and Games to run their own chain without affecting the main chain.
This helps to free up traffic on the main chain without the use of a Layer 2 scaling solution.
Currently, there are about 2.3 million unique addresses with over 800,000 daily transactions on the chain.
Avalanche is growing rapidly with many new dApps and protocols launching every other day. The ecosystem is set to take off in the near future.
Cosmos AKA the internet of blockchains was founded back in 2014 by OG developers Jae Kwon and Ethan Buchman. The goal was to tackle some of blockchain’s most pressing issues like interoperability.
Cosmos itself is classified as a Layer 0 and it is not a blockchain but rather a decentralized network that allows for an entire blockchain to be built on top of it. Blockchains on top of Cosmos are able to exchange tokens and information with each other.
There are hundreds of blockchains already built on top of Cosmos, including Terra, Binance Smart Chain and Crypto.com.
Cosmos is definitely something you should keep a lookout for as it is so complex and advanced that it enables endless opportunities.
Fantom had a rocky start this year. From the brief network outage to its star developer Andre Cronje leaving the DeFi space, the price dropped from an ATH of US$3.03 to as low as US$1.08.
While Fantom has its own fair share of drama, it is still one of the most utilized and loved decentralized blockchains.
Fantom is a unique network that utilizes directed acyclic graph (DAG) technology that is able to solve the blockchain trilemma.
At the time of writing, Fantom is currently the most undervalued layer 1 based on Marketcap/TVL ratio and it is also the 6th largest chain with over US$6.5 billion in TVL.
Clearly, there are more upsides to Fantom than downsides as it is extremely undervalued compared to the other layer 1 blockchain.
These five cryptocurrencies that I recommended are considered relatively safe plays with mid to high market cap. It is a good starting point for crypto newbies but it is not a degen play so don’t expect to be an overnight millionaire.
The key is to always diversify your portfolio so that a strong dip on one token would not wipe out your whole portfolio. Always DYOR and stay up to date as the current narrative can change overnight.
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image Credit: Chain Debrief