Ethereum (ETH) is the second-largest cryptocurrency by market cap and is now back in the spotlight with increased institutional interest. As traditional finance money flows into the Ethereum ecosystem, Finbold selected two of the best ERC-20 tokens to consider investing.
The finance behemoth BlackRock (NYSE: BLK) has turned its eyes to the tokenization of real-world assets (RWA). For that, BlackRock has already reserved an initial investment of $100 million, currently held in USDC on Ethereum.
Meanwhile, an Ethereum spot ETF will start trading in Hong Kong on April 30 following higher regulatory clarity and approval.
This institutional activity could propel higher demand, not only for its native token, ETH, but also benefit the whole Web3 and decentralized finance (DeFi) ecosystem being built on Ethereum. As the market expects increased capital inflow for related cryptocurrencies, here are two of the best projects and most-capitalized Ethereum tokens to consider investing this year.
Aave (AAVE) for lending
First, Aave (AAVE) is the most used, capitalized, and liquid lending platform in Ethereum’s DeFi ecosystem. The platform supports 12 other blockchains, creating an active and demanded space for lending and borrowing ERC-20 tokens.
Notably, the protocol has $10.93 billion in total value locked (TVL), while AAVE has a $1.41 billion capitalization. This translates to a 0.15 MCap/TVL rate, which usually indicates an oversold asset with medium-to-long-term potential.
With the expected capital inflow to the Ethereum ecosystem, Aave could stand out as the preferred way for investors to receive yield from their ERC-20 tokens through lending or engage in margin trading through borrowing.
Uniswap (UNI) for trading
Second, Uniswap (UNI) was the first automated market maker (AMM) decentralized exchange, which remains the most popular. Uniswap leads with the highest exchange volume in decentralized finance and its swap pools are the most liquid to trade Ethereum tokens.
As of this writing, the protocol has the fifth-highest TVL in the Ethereum ecosystem, two positions behind Aave. Nevertheless, its governance token, UNI, has a $6.08 billion market cap, scoring a 1.05 MCap/TVL rate.
The indicator suggests UNI currently trades at a fair price based on the total number of tokens invested in its ecosystem. Therefore, this state suggests Uniswap’s price could proportionally follow a future TVL increase, which is likely to happen in a capital inflow to Ethereum tokens.
The Ethereum ecosystem is a wealth place with dynamic capital flow among a diversified landscape of protocols and tokens. Investors and traders can find different solutions in a permissionless and free market, although with relevant risks requiring advanced knowledge and expertise to navigate.
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Source: https://finbold.com/2-best-ethereum-tokens-to-invest-in-2024/