In the full year 2022, the crypto market capitalization dropped by 66.9%, that’s approximately $1.5 trillion wiped from the market. And the total crypto market capitalization excluding BTC and ETH dropped 68.3%, approximately $634.9 billion. Much of this was propagated by the implosion of LUNA and FTX.
If you are building a long-term crypto portfolio, then HODLing BTC and ETH is a no-brainer. But you must also be sufficiently diversified to withstand seasonal fluctuations and the occasional market crashes. In the crypto market, the growth of a project often dictates its long-term prospects. Here are the four best long-term cryptocurrencies to watch in 2023.
The EOS Network is a 3rd generation open-source layer 1 blockchain built to enable the development and support of the operation of dApps and smart contracts. It is a direct competitor of Ethereum but offers higher transaction throughput and scalability. In comparison, EOS has a peak transaction speed of around 4,000 TPS while that of Ethereum is only 15 TPS.
In December 2022, EOS launched Yield+, a Liquidity Incentive Program, and Recover+, an Insurance Layer, to make EOS a more vibrant DeFi ecosystem. It also has Binance Tether support – native Tether support is key for arbitrage traders, liquidity providers, and anyone looking to move USDT on-chain.
It also recently launched EOS EVM to allow Ethereum-like transactions on the EOS Network. The EOS EVM is by far the most performant EVM with 800+ swaps per second, about 4x faster than Solana. This will allow devs to build Ethereum-based applications on EOS utilizing the network’s performance, reliability, and liquidity.
Uniswap is an Ethereum-based decentralized exchange utilizing an automated market-making system (AMM) as opposed to the traditional order book. As the largest decentralized crypto exchange, with the unique AMM model, we expect Uniswap to play the most significant role in the crypto market this year. Not just because it guarantees absolute anonymity in crypto transactions, but because of its true decentralized nature.
It is the recent and most consequential DEX whose AMM model has solved the challenges that plagued centralized crypto exchanges and most DEXs such as the threat of hacking, inconsistent fees, and low liquidity. Uniswap offers a thriving network of DeFi apps for devs, traders, and liquidity providers – with more than 300 integrated dApps. If the implosion of FTX taught us anything, it’s the vulnerabilities of centralized exchanges – even Binance, the largest CEX, came under pressure.
Polygon is the largest layer-2 scaling solution for the Ethereum network. It’s designed to facilitate the scaling of the Ethereum Network and support infrastructure development. It goes without saying that Ethereum is the king of DeFi, but it’s plagued with low transaction throughput and high fees. This is where Polygon comes in. It has a suite of Ethereum-scaling solutions enabling developers to build scalable user-friendly dApps with low transaction fees without ever sacrificing security.
So far, more than 37,000 dApps have scaled their operations using Polygon. Consequently, the growth of Polygon is tied to the growth of Ethereum. And this by far explains MATIC’s resilient previous price action. It has gained more than 5000% over the past two years. It’s currently ranked 11th with a fully diluted market capitalization of $10.13 billion.
Frax Finance (FXS)
Frax Finance offers the first-ever fractional stablecoin and a crypto-native consumer price index. The protocol is the pioneer of the concept of crypto being partially backed by collateral and partially stabilized algorithmically. It comprises a two-token system – the stablecoin (FRAX) and Frax Shares (FXS).
If the FRAX stablecoin is above $1, the collateral ratio is automatically reduced by the protocol. And if the price drops below $1 the protocol increases the collateral ratio. FXS is the protocol’s governance token which accrues fees, seigniorage revenue, and excess collateral value. As of this publication, FXS is already up more than 155% during the first three weeks of 2023.
Our interest in Frax Finance isn’t entirely because of its revolutionary features. Frax’s staked-ETH derivative (sfrxETH) is rivalling Lido’s stETH in terms of percentage market share. It offers the highest-yielding derivative and has the capacity to incentivize liquidity.
The bottom line
Our pick of the four best long-term cryptocurrencies to watch in 2023 is informed by the perceived role they’ll play in the continued growth of Web3 and DeFi. However, if the events of the past few years have taught us anything, no one has a crystal ball of exactly how the crypto market will unfold. Always conduct thorough due diligence before investing.