Investing in Micro Cap Altcoins in June 2020: Understanding and Selecting the Best DEFI Options

In the world of cryptocurrencies, micro cap altcoins present an intriguing investment opportunity. These smaller coins offer a unique space for investors seeking high-risk, high-reward opportunities. In this article, we will explore the best DEFI-based micro cap altcoins to invest in during June 2020. We will also delve into the essential factors to consider before making any investment decisions.

Understanding Micro Cap Altcoins

Micro cap altcoins refer to cryptocurrencies with a market capitalization below $50 million. These coins often appeal to early adopters and speculative investors due to their high volatility and potential for high returns. However, investing in micro cap altcoins comes with significant risks, as many of these coins lack extensive development and community support.

Why Invest in DEFI-Based Cryptocurrencies?

Decentralized finance (Defi) represents a revolutionary shift in how financial services are provided, leveraging blockchain technology to create transparent and accessible financial products. By investing in DEFI-based micro cap altcoins, you can tap into innovative smart contract-based platforms and protocols that offer unique functionalities, such as lending, borrowing, and decentralized exchanges.

Top DEFI Micro Cap Altcoins to Consider in June 2020

Chainlink

Chainlink is a decentralized oracle network that bridges traditional data sources to smart contracts. Its primary role is to provide reliable and secure data feeds for DeFi applications, ensuring that they can make informed decisions based on real-world information. Chainlink's ecosystem includes various oracle nodes, making it a diverse and robust platform for scalability and reliability. As of June 2020, it was one of the promising DEFI-related projects in terms of development and community engagement.

UMA

UMA (User Managed Autonomous Markets) is a protocol designed for creating and trading synthetic assets on blockchain networks. It allows users to create markets for any asset they want, enabling the creation of new financial instruments and markets. UMA’s decentralized approach ensures that these markets are immune to central points of failure and manipulation, providing a fair and transparent trading environment.

AAVE

Aave is a decentralized lending and borrowing platform that offers liquidity to users by minting Aave Power (Lv) tokens. The platform’s innovative model allows users to both lend and borrow assets using smart contracts, ensuring that transactions are transparent and efficient. Aave’s focus on security and user experience makes it a strong contender in the DEFI space, especially for those interested in decentralized finance and liquidity management.

Key Considerations for Investment

Market Competition: Be aware that the DEFI space is highly competitive, with numerous similar projects vying for attention. Thoroughly research and compare different DEFI platforms to understand their unique value propositions. Hype vs. Reality: Not all DEFI projects are created equal. Just because a project is widely hyped does not necessarily mean it is a solid investment. Conduct thorough due diligence (DYOR) to assess the underlying technology, development roadmap, and team background. Team and Community: The success of any cryptocurrency heavily relies on its development team and community support. Look for projects with experienced, dedicated teams and growing communities that actively contribute to the project's growth. Distribution and Issuance Mechanism: Understanding the distribution and issuance mechanisms is crucial. Some projects distribute coins through ICOs, airdrops, or staking rewards, which can significantly impact the value of the coin. Choose projects with transparent and fair distribution methods. Technical Readiness: Review the project’s technical readiness and roadmap. Projects that are well-developed and have a clear path forward are more likely to succeed in the long term.

Conclusion

June 2020 presented an exciting opportunity for investors to delve into the DEFI micro cap altcoin space. Projects like Chainlink, UMA, and Aave showcased innovative solutions and promising growth potential. However, it is essential to approach these investments with caution, considering the risks and conducting thorough research before making any decisions. By understanding the factors that contribute to a project's success, you can make more informed and strategic investments in this dynamic field.