In the traditional investment world, ‘unicorn’ is a term used by venture capitalists to describe a private startup worth more than $ 1 billion.
Typically, these startups have strong fundamentals and often a first-mover advantage that helps them quickly increase in value to become valued investment opportunities for yield-oriented funds.
Some of the best-known unicorns include Elon Musk’s SpaceX, a privately-owned $ 46 billion rocket and spacecraft manufacturer, and Coinbase, the largest US-based cryptocurrency exchange with a current valuation of $ 8 billion.
While the world’s attention is focused on the Coronavirus pandemic, the outcome of the 2020 US presidential election and the recent r / Wallstreetbets social investment phenomenon, the crypto sector has quietly risen to a total valuation of more than $ 1.2 trillion.
In addition, there are currently more than 55 unicorn status projects with a market cap of over $ 1 billion.
Recent Bitcoin (BTC) evangelisms from the likes of Michael Saylor, Mark Cuban and Elon Musk are helping to showcase the emerging crypto industry, bringing the scrutiny of institutional investors looking to quickly look beyond BTC at what other promising opportunities exist in the space.
These projects are no longer just focused on making cryptocurrency a global medium of exchange. Some of the top projects include smart contract platforms, decentralized financial (DeFi) protocols, privacy tokens, oracle providers, and even humor-oriented meme coins.
With that in mind, here are some of the best crypto unicorn projects to keep an eye out for as institutions begin to make their presence felt 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 holds more than 61% of the total market value with a current market cap of $ 843 billion.
As the longest-running chain with the strongest mining network of all proof-of-work cryptocurrencies, BTC is probably the best choice for new money entering the industry, which will take a cautious approach to begin with.
Similar to how many of today’s crypto believers became involved in space, Bitcoin will be the “gateway currency” introducing the concept and leading 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 home to a majority of the best DeFi protocols that have grown in popularity in recent months.
Other legacy projects that have survived multiple bull-bear cycles and achieved unicorn status include Litecoin (LTC), which has emerged as a reliable value transfer alternative to the higher fees and longer block times of BTC, and the privacy-focused Monero (XMR) and Zcash (ZEC), which paved the way to bring anonymity to blockchain transactions.
These projects currently have market caps of $ 10.5 billion, $ 2.75 billion, and $ 1.07 billion, respectively.
Decentralized financing is central
Since early 2020, one of the main drivers of the cryptocurrency sector’s growth has been the emergence of decentralized finance.
Decentralized exchanges (DEX) like Uniswap have grown steadily from a simple exchange interface dApp to a sprawling trading platform that now averages a 7-day trading volume of $ 6.72 billion, a figure that rivals the volume of the most centralized exchanges.
Uniswap’s UNI governance token was initially broadcast to users of the interface who had a shot at the protocol while it was still under development, but now the token can be found on all major centralized and decentralized exchanges.
The protocol also received venture capital support to ensure further development. With a current market cap of $ 5.9 billion and a token price of $ 19.79, Uniswap is likely on the watch list for the smart money that keeps its eye on the space.
SushiSwap, Uniswap’s main competitor, has also achieved unicorn status with a current valuation of $ 1.8 billion. The platform provides a community-based system that allows token holders to deploy their SUSHI to participate in the board and earn passive income from trading fees generated by the protocol.
While DEXs have fueled DeFi’s growth, lending protocols have emerged as the top draw for total value locked (TVL) and higher token values.
Maker (MKR), AAVE and Compound (COMP) are the leading platforms, measured by the total value locked (TVL) in the protocol. Currently, a combined value of $ 15.63 billion has been deposited into smart contracts that interact with the protocols and their market cap ranges from $ 2.1 billion to $ 5.98 billion.
In addition to the high-yield opportunities offered by stakeout protocols, retail investors are also drawn to the governance features that give token holders a say in the protocol’s future development. These DeFi darlings are likely to pique the interest of long-term capital.
Ethereum congestion drives smart contract innovation
Ethereum’s dominance in DeFi has proven to be a double-edged sword as increasing network congestion resulted in an unsustainable rise in gas costs.
The recent record high gas fees have opened the door for other smart contract platforms to meet the need for layer 2 options, highlighting the need for Oracle providers who can securely communicate data across platforms.
Promising smart contract platforms that have emerged include Polkadot (DOT) and its sister chain Kusama (KSM), which are introducing interoperability with Ethereum and other top blockchains as the solution to the current isolated nature of separate networks.
DOT’s market cap has risen to $ 18.8 billion as its fame continues to grow and Kusama is new to the unicorn club as its market cap first crossed the $ 1 billion mark on February 6.
Interestingly, Cardano (ADA), one of the 2017 ICO-era projects, has also gained momentum in recent weeks following the addition of smart contracts to the protocol and hints for future DeFi-related efforts.
Currently, Cardano’s market capitalization is $ 19.8 billion and the integration of DeFi could increase its value as ADA does not yet have to take advantage of the liquidity provided on decentralized exchanges.
Theta captured the first-mover advantage when it comes to blockchain-based video streaming, and the project recently added smart contract functionality, the ability to create non-replaceable tokens, and launched the Thetaswap DEX on February 4.
Oracles join the party
As more participants enter the crypto space and new blockchains emerge that fit into specific niches, communication between separate networks will become essential to the overall health and continued growth of the industry.
This is where Oracle projects come in to provide reliable, secure ways to transfer data.
Chainlink (LINK) is the best oracle project in protocol integrations and its valuation. LINK currently has a market cap of $ 10.37 billion and the project’s recent integration with Kraken Exchange is expected to add further value to the project.
Meanwhile, up-starters like UMA and The Graph (GRT) have only recently achieved unicorn status as the 2021 bull market warms. Both projects have developed new ways to track, capture and transmit data and have reached valuations of $ 1.7 billion and $ 1.1 billion.
GRT has been mainly active in the growth department, announcing multiple partnerships and upcoming integrations, including bridges to DOT and Binance Coin (BNB).
The herd of ‘unicorn’ will expand
Bitcoin burst onto the financial scene more than a dozen years ago and has steadily forged a path to prominence that governments and the global financial system can no longer ignore.
With institutions finally starting to dip their toes into BTC and ETH, it’s time to take a closer look at what the emerging blockchain ecosystem has to offer.
The herd of unicorns is likely to grow and as the decentralized financial sector is still in a very early growth phase, there is a lot of value to be found in these unicorn projects.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade move carries risks, you should do your own research when making a decision.