In the traditional investment world, “unicorn” is a term used by venture capitalists to describe a privately held startup valued at more than $ 1 billion.
Typically, these startups have solid fundamentals and often a first mover advantage that helps them grow in value quickly and create valuable investment opportunities for high yield funds.
Famous unicorns include SpaceX by Elon Musk, a privately held rocket and spacecraft maker valued at $ 46 billion, and Coinbase, the largest US-based cryptocurrency exchange, currently valued at $ 8 billion.
While the world’s attention has been focused on the coronavirus pandemic, the 2020 US presidential election result, and the recent r / Wallstreetbets social investment phenomenon, the crypto sector has quietly soared to an overall valuation of over $ 1.2 trillion.
In addition, more than 55 projects with unicorn status currently have a market capitalization of over 1 billion US dollars.
Top 18 projects by market capitalization. Source: Messari
The recent Bitcoin (BTC) evangelization by Michael Saylor, Mark Cuban, and Elon Musk is helping to bring the emerging crypto industry into the spotlight, and with it the discerning eye of institutional investors who want to quickly look beyond BTC, there are promising opportunities in the room .
These projects no longer focus solely on making cryptocurrency a global medium of exchange. The top projects include intelligent contract platforms, DeFi protocols (decentralized finance), data protection tokens, oracle providers and even humorous meme coins.
With that in mind, here are some of the top crypto unicorn projects to watch out for as institutions begin to showcase themselves in the cryptocurrency markets.
Blue chip projects
Bitcoin is the ultimate first mover in the crypto space as it paved the way for the rest and, with a current market cap of $ 843 billion, holds more than 61% of the total market value.
As the longest running chain with the strongest mining network of any cryptocurrency to prove the work, BTC is likely to be the first choice for new money entering the sector and proceeding cautiously at first.
Percentage of total market capitalization. Source: CoinMarketCap
Much like many of the current crypto-believers have been involved in space, Bitcoin will be the “gateway coin” that introduces the concept and leads to further exploration.
Ethereum (ETH), with a current market cap of $ 196 billion, is the obvious second choice as it is the most widely used smart contract platform and houses the majority of the top DeFi protocols that have become increasingly popular in recent months.
Other legacy projects that have weathered multiple bull bear cycles and achieved unicorn status include Litecoin (LTC), which has proven to be a reliable alternative to transferring value to BTC’s higher fees and longer block times, and privacy-conscious Monero (XMR). and Zcash (ZEC), which paved the way for blockchain transaction anonymity.
These projects currently have market caps of $ 10.5 billion, $ 2.75 billion and $ 1.07 billion, respectively.
The focus is on decentralized financing
Since the beginning of 2020, the emergence of decentralized financing has been one of the main driving forces behind the growth of the cryptocurrency sector.
Decentralized exchanges (DEX) like Uniswap have steadily evolved from a simple exchange interface to a sprawling trading platform that now has an average 7-day trading volume of $ 6.72 billion. This corresponds to the volume of the main centralized exchanges.
Uniswap 7-day trading volume. Source: Uniswap
Uniswap’s UNI governance token was originally sent to users of the interface who took a chance on the protocol during the development of the protocol. Now the token can be found on all major centralized and decentralized exchanges.
The protocol also received venture capital to ensure further development. With a current market cap of $ 5.9 billion and a token price of $ 19.79, Uniswap should be on the watch list for the smart money keeping an eye on the space.
SushiSwap, Uniswap’s main competitor, has also achieved unicorn status with a current value of $ 1.8 billion. The platform offers a community-oriented system that allows token holders to use their SUSHI to participate in governance and generate passive income from the trading fees generated by the protocol.
Total value locked in DeFi. Source: Defi Pulse
While DEXs have helped fuel DeFi’s growth, credit logs have emerged as the main attraction for TVL (Total Value Locked) and higher token values.
Maker (MKR), AAVE and Compound (COMP) are the leading platforms as measured by Total Value Locked (TVL) in the protocol. Currently, there is a total of $ 15.63 billion in value on smart contracts that interact with the logs, and their market caps range from $ 2.1 billion to $ 5.98 billion.
In addition to the high-yield opportunities that arise from participation protocols, retail investors are also drawn to the governance functions that give token holders a say in the future development of the protocol. These DeFi darlings should pique the interest of long-term capital.
The congestion of Ethereum is driving smart contract innovations
Ethereum’s dominance in DeFi has proven to be a double-edged sword as increasing congestion on the network resulted in unsustainable spikes in gas charges.
Average Ethereum gas price. Source: Etherscan
The recent record high gas tariffs have opened the door to other smart contract platforms to meet the need for Layer 2 options and highlighted the need for oracle providers that can securely communicate data across platforms.
Promising smart contract platforms include Polkadot (DOT) and its sister chain Kusama (KSM), which are introducing interoperability with Ethereum and other top blockchains as a solution to the current ensiling of separate networks.
DOT’s market cap has risen to $ 18.8 billion as its notoriety continues to expand. Kusama is new to the Unicorn Club as its market capitalization topped the $ 1 billion mark for the first time on February 6th.
Interestingly, Cardano (ADA), one of the 2017 ICO-era projects, has also gained momentum in recent weeks after adding smart contracts to the protocol and giving hints of future DeFi-related efforts.
Cardano’s market cap is currently $ 19.8 billion, and the DeFi integration could help add value as ADA has not yet exhausted the liquidity offered on decentralized exchanges.
Theta took advantage of the first mover advantage in blockchain-based video streaming. The project recently added smart contract features, the ability to create non-fungible tokens, and launched the Thetaswap DEX on February 4th.
Oracle join the party
As more participants enter the crypto space and new blockchains emerge for specific niches, communication between separate networks will be vital to the overall health and further growth of the sector.
This is where oracle projects come into play to provide reliable and secure options for data transmission.
Top oracle projects. Source: CoinGecko
Chainlink (LINK) is the top oracle project in terms of protocol integrations and their evaluation. LINK currently has a market capitalization of $ 10.37 billion and the recent integration of the project with Kraken Exchange is expected to add further value to the project.
Meanwhile, rising stars like UMA and The Graph (GRT) have only recently reached unicorn status as the bull market warms up in 2021. Both projects have developed new ways to track, record, and transmit data, and have achieved valuations of $ 1.7 billion and $ 1.1 billion, respectively.
GRT has been particularly active in the growth department, announcing several partnerships and upcoming integrations, including bridges to DOT and Binance Coin (BNB).
The ‘unicorn’ herd will expand
Bitcoin entered the financial scene more than twelve years ago and has found a path to notoriety that governments and the global financial system can no longer ignore.
Now that institutions are finally starting to dig into BTC and ETH, it’s time to take a closer look at what’s on offer from the emerging blockchain ecosystem.
The herd of unicorns is likely to grow and given that the decentralized financial sector is still in the very early stages of growth, there is a lot of value in these unicorn projects.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading step is associated with risks. You should do your own research when making a decision.