How to Profit From Defi Blue Chips

Market Meditations | January 7, 2021

It’s that time of the year again: alt season is finally happening. People who are newer to crypto get lost in a sea of opportunities regarding which projects are fundamentally sound and worth having some exposure to.

Hundreds of cashtags get mentioned on Twitter every single day by people who believe that their position will be the next 100x. Will this time be different? ?

For today’s article, we take a look at the so-called ‘DeFi blue chips’.

Decentralized finance is a sector within the industry that exploded with interest this year and the blue chips are known as the market leaders within the DeFi category.

Given that most of these blue chips have already made new highs and are now in price discovery, I wanted to take a look at what these blue chips are and whether it makes sense to have exposure to them now that altcoins have shown bullish momentum and are breaking out one by one. 

Who Are The DeFi Blue Chips?

When people refer to DeFi blue chips they are talking about the current market leaders in DeFi, each within their own sector of DeFi.

Although subject to change, currently the blue chips are considered to be:

Uniswap (UNI), Yearn.Finance (YFI), Synthetic (SNX), Aave and potentially Sushiswap (SUSHI)

These assets combined are considered to be the ‘benchmark’ to beat for DeFi and given their current position, are expected to outperform most of the market.

Winning Coin vs. Basket of Coins

Just like with venture capital investments, believing you’re able to pick the long-term winner and betting your entire portfolio on it is generally not a good idea for the average person.

Early stage startups are risky and the vast majority of them ultimately fail. Although an alt season might make you think otherwise, the same is true for 95-99% of all crypto projects as well.

✅ TIP: Crypto and DeFi in particular move so fast that, unless you’re able to research full-time, it makes little sense to go out and try to pick out the winners on your own.

For most, the better choice is compiling a ‘basket of coins’ that give you wide exposure to the trend you’re betting on, without risking losing all your capital on one particular investment.

Like many have learned in the past, it’s very hard to out trade a market benchmark when crypto is in a bull market without taking unnecessary risks.

But… Am I Too Late?

Many of the coins I mentioned above broke their prior highs against USD this week.

Although this gives an impression that you’re too late and it’s better to wait for a dip, the opposite if often true.

Most people are scared to buy all-time highs and get left out as a result. From a technical perspective, a break off all-time highs is one of the highest probability trades you can take. 

It shows strength and that’s exactly the signal we are looking for when trading in a bull market. 

Coins that are lagging often seem the better choice, but having to wait comes with high opportunity costs when the market is as volatile as it is right now.


DeFi is currently the fastest growing sector in crypto and given its value proposition as building an alternative/better financial system, the potential upside of catching this industry early can be enormous.

Nobody knows who the winners will be in a few years, but projects that manage to succeed will be valued at many multiples higher as the space continues to mature and attract new capital.

For most, the better choice for exposure is compiling a ‘basket of coins’ that give you wide exposure to the trend you’re betting on, without risking losing all your capital on one particular investment.