Market Crash: 2 Top Cryptocurrencies to Buy Right Now and Hold

The past 12 months have taken cryptocurrency investors on a wild ride. The market plunged in May, shedding 50% of its value in a matter of weeks. Then the frenetic enthusiasm returned, sending the crypto market to new heights in November. Unfortunately, the tide turned again. The total value of all cryptocurrencies is currently $2 trillion, less than a third from its all-time high.

However, there is a silver lining for long-term investors. Decentralized finance (DeFi) applications—products that feature programmable money, which makes it possible to borrow, lend, and earn interest without going through a bank—make financial services more efficient. Investors are pumping money into these platforms. Over the past year, DeFi investment has gone up 1,000% to $242 billion.

More importantly, given its value proposition, I believe DeFi will continue to gain traction in the coming years. and both Avalanche (CRYPTO: AVAX) And Tera (CRYPTO: LUNA) They are becoming major players in this emerging industry, a quality that makes both cryptocurrencies a smart long-term investment. Here’s what you should know.

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1. avalanche

Avalanche is a smart contract platform designed to support scalable decentralized applications (dApps), including DeFi products. The blockchain is secured through so-called snow protocols, a type of proof-of-stake consensus in which validators verify transactions by sampling a small subset of nodes (computers), rather than waiting for each node to reach an agreement with every other node. This makes the avalanche avalanche fast.

In fact, Avalanche is the fastest smart contract platform in the blockchain industry in terms of time to finish. The network is clocked at 4,500 transactions per second (TPS), but the development team believes that number could be as high as 20,000 TPS. And these transactions are completed in less than two seconds (i.e. irrevocably added to the blockchain).

Furthermore, Avalanche is compatible with Solidity, the programming language used to build dApps on the Ethereum blockchain. In other words, developers can easily deploy Ethereum dApps on Avalanche as well. This interoperability has already been an important driver of growth. In fact, Avalanche is the fourth most popular DeFi ecosystem, with $11.2 billion invested on the platform.

In short, avalanche is fast, scalable, and interoperable. And in the coming years, these three traits should make it more popular among dApp developers and users, as well as DeFi investors. As this trend continues, the demand for the AVAX token should rise, causing its price to rise.

A crypto investor watching the market on his tablet.

Image source: Getty Images.

2. Tera

Terra is a smart contract platform that aims to make financial services and payments more efficient. To that end, it features a set of stablecoins, which are cryptocurrencies designed to track fiat prices. For example, the TerraUSD token is pegged to the price of the US dollar, and the TerraKRW token is pegged to the Korean won. Most importantly, the entire ecosystem is powered by LUNA, another token found on the Terra blockchain.

The price of the stablecoin is determined by supply and demand. This means that higher demand could push the price of TerraUSD above $1. In this scenario, the network will incentivize investors to switch LUNA to TerraUSD to increase supply and lower the price. Alternatively, lower demand would drag the price of TerraUSD below $1, at which time the system would act in the opposite direction, incentivizing token holders to convert TerraUSD to LUNA.

It should be noted that Terra is built using Cosmos framework, a blockchain protocol secured by the tender consensus mechanism, which is designed for interoperability and speed. Terra can theoretically scale it up to 10,000 TPS, and these transactions are completed in six seconds. Likewise, since Terra stablecoins are built on blockchain technology, the financial services backed by the platform are more efficient than traditional options.

The catch for coin holders is that they can earn interest by lending stablecoins to the Anchor Protocol, a popular DeFi platform on Terra. In fact, Anchor currently pays 19.8% of annual return for TerraUSD, which is more interest than you would get from a savings account at a traditional bank. Likewise, the Chai mobile payments app is built on Terra, and its blockchain core makes e-commerce transactions (including cross-border transactions) faster and cheaper.

Why is this important? Terra is currently the third largest DeFi ecosystem, with $16.2 billion invested in the platform. As more money moves through products like Anchor and Chai, the demand for Terra stablecoins will rise, driving demand for LUNA and driving its price higher. Simply put, as products on the Terra blockchain become more popular, the LUNA token should become more valuable. That’s why this cryptocurrency seems like a smart buy right now.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.