DeFi Blue Chips are the largest tokens on Ethereum, mostly with a market cap of over $1 billion. The term “blue chip” in traditional finance describes large cash flow producing companies.
DeFi Blue Chips Explained
The term “DeFi Blue Chip” has its origins in traditional finance. Blue Chips are companies with a nationwide reputation. They are publicly listed companies with stable cash flows; we can trust them, even during uncertain times and recessions. The term is derived from the game of poker. Blue chips usually have the highest value there.
Therefore, blue chips are high-value companies that investors usually consider as “afe bets.”
During DeFi summer 2020, investors have quickly found the term “DeFi Blue Chip,” which describes the equivalent in the DeFi space. Therefore, DeFi Blue Chips are high-value tokens. They usually have a market capitalization of $1 billion or higher.
After DeFi summer 2020, these tokens proved to survive the first DeFi winter. The underlying protocols turned out to produce consistent cash flows. This was the first time tokens represented a security-like asset. The term “DeFi Blue Chips” should remind investors of the value of stocks: The right to claim a profit.
DeFi Blue Chips are a meme to make fun of the traditional financial industry; however, the meme also tries to legitimize these tokens. Blue Chips are perceived as safe and stable companies, whereas DeFi Blue Chips have similar properties. For the first time in history, Ethereum based tokens have actual cash flows and profitability. When the word DeFi Blue Chip emerged, people tried to express this fact.
How the Term Emerged
The term DeFi Blue Chip emerged on Crypto Twitter. Crypto Twitter is a specific niche inside the social media platform Twitter. The crypto community connects and exchanges information there. Nobody knows who exactly invented the term. It probably emerged by chance and by creating memes; however, the term stuck and has become part of the crypto culture.
DeFi Blue Chip 1: Aave
One of the best-known DeFi Blue Chips is Aave. Aave is a decentralized money market, which lets users lend and borrow money. By eliminating middlemen, Aave has created a bank without bankers. In fact, Aave is an open-source and non-custodial protocol for users to earn interest on crypto assets. Therefore, it could potentially change the way people save and invest money.
Like most crypto projects, Aave has its own cryptocurrency: AAVE. AAVE is primarily used to control governance over the protocol. One AAVE token is equivalent to one vote on protocol changes. So, the voting rights are equivalent to the number of tokens held. The tokens are normally freely tradable and transferable. In addition, it is possible to stake AAVE.
By incentivizing token holders to stake, AAVE tries to stimulate demand for the token. AAVE is one of the best-known blue chips in DeFi. With a current market cap of over $3 billion dollars, it’s also one of the largest tokens in DeFi. Aave’s success was due to the protocol’s long history. It started as “Eth Lend” in 2017 and stayed until this day.
That’s why Aave is one of the most notable DeFi Blue Chips people are taking an eye on.
DeFi Blue Chip 2: UNI
UNI is another famous DeFi Blue Chip token. It’s the native token of the largest DEX in the world: Uniswap. Uniswap is an Automated Market Maker that lets people exchange tokens without middlemen. It’s non-custodial and instant. Therefore, anyone can swap tokens without permission!
UNI is the native governance token of the protocol. Token holders can vote on governance proposals and upgrades. Today, UNI has become a multi-billion dollar asset. With a market cap of over $10 billion, the token is probably the largest DeFi Blue Chip on the market.
DeFi Blue Chip 3: SNX
Another DeFi Blue Chip is SNX. SNX is the native token of the popular Synthetix protocol, which focuses on minting synthetic assets. These assets range from synthetic crypto tokens to real-world assets (stocks, etc.).
SNX’s main use case is to provide collateral for those synthetic assets. SNX holders can also vote on important governance polls and thus influence the future of the protocol.
Today, SNX is one of the most successful DeFi Blue Chips; with a market capitalization of over $2 billion, it’s also one of the most valuable assets in DeFi.
DeFi Blue Chips are a core part of the DeFi ecosystem. They are the largest and most established tokens with the biggest communities. Most DeFi Blue Chips have been around for a long time and established themselves.
The term “DeFi Blue Chip” emerged on Crypto Twitter referring to the popular term “Blue Chips.” This refers to the publicly listed companies with stable cash flows – even in uncertain times and recessions.