What Is the Next Cryptocurrency to Explode in 2022? – The Motley Fool

The most exciting thing about cryptocurrency investments is that when they explode, they skyrocket in value. In 2021, we saw Solana (CRYPTO:SOL) increase by more than 10,000%. Terra (CRYPTO:LUNA) gained more than 12,000%. Meme token Shiba Inu (CRYPTO:SHIB) shot up more than 40,000,000%.

What will be the next cryptocurrency to explode? It's obviously impossible to know for sure, especially since there's no guarantee of whether crypto is here to stay. However, we can pick out some possible candidates that are capitalizing on current trends that include the metaverse, decentralized finance, and artificial intelligence.

Image source: Getty Images.

Here are the cryptocurrencies that could be due for a significant bull run:

1inch Network (CRYPTO:1INCH) is a decentralized exchange (DEX) aggregator. Decentralized exchanges allow users to swap different cryptocurrencies just by connecting a crypto wallet. There's no central authority managing the exchange, and, with many DEXs, there's no need to register for an account either.

Decentralized finance (DeFi) was huge in 2021 as many crypto enthusiasts used DEXs to trade cryptocurrencies. 1inch is a simple way to get the most for your crypto when using DEXs. It instantly compares prices on hundreds of different platforms to find the best rate for you.

While the aggregation protocol is extremely useful, it's not all that 1inch offers. Other 1inch products include a limit order protocol that lets you set specific trade conditions and 1inch Earn, which offers annual yields of 5% to 10% on stablecoins.

Metaverse tokens have been popular lately due to growing interest in virtual reality and digital worlds. Many of these tokens are digital currencies used within the metaverse, but Render Token (CRYPTO:RNDR) is much different.

Render is a decentralized GPU rendering network. It's designed to connect digital creators such as artists and studios who need GPU computing with partners who are willing to rent out their unused GPU computing power. Digital creators pay GPU providers using Render tokens.

Its metaverse applications could make Render a good cryptocurrency investment this year. It's also worth noting that Coinbase Global (NASDAQ:COIN), one of the top cryptocurrency exchanges, began listing Render in February. Any time a cryptocurrency becomes available on Coinbase, it's exposed to a much wider audience of potential buyers.

Aave (CRYPTO:AAVE) is one of the most popular and user-friendly lending protocols. Users can borrow and lend many different types of cryptocurrency. If you deposit your cryptocurrency to Aave, you'll receive interest payments for lending your funds.

One of the reasons Aave has been outdoing other lending protocols is its unique features. Borrowers can switch from fixed to variable interest rates and vice versa. Aave is also known for its FlashLoans, which are loans that don't require collateral. They do, however, need to be repaid in the same transaction.

Aave is a governance token, which means holders can vote on the future of the protocol. They also get fee discounts when using Aave's services.

Automated market makers (AMMs), which are decentralized exchanges that run on smart contracts, grew quite a bit in 2021. While there are many AMMs out there, SushiSwap (CRYPTO:SUSHI) could be the one that's most poised for a big run.

SushiSwap supports more than a dozen different blockchains, which allows it to offer some of the most competitive rates. It's also one of the top options for staking crypto. It offers a huge variety of liquidity pools and makes it easy to see the annual percentage yield you can earn with each one.

What makes SushiSwap a better choice over other AMMs such as Uniswap (CRYPTO:UNI) and PancakeSwap (CRYPTO:CAKE)? The SushiSwap app arguably offers the most user-friendly experience, but its market cap is still just a fraction of the other two.

Fetch.ai (CRYPTO:FET) is a cryptocurrency project that promises artificial intelligence for everyone. The developers have built a blockchain platform that uses artificial intelligence and machine learning to provide users with digital twins.

These digital twins are designed to make the user's life easier. For example, your digital twin could:

Entrepreneurs could also use digital twins to save time and run their businesses more efficiently. A digital twin could handle contracts, payments, scheduling events, and much more.

Illuvium (CRYPTO:ILV) is an open-world RPG adventure game. Players can explore the world of Illuvium, progress through a story mode, and capture creatures called Illuvials. Each Illuvial is a non-fungible token (NFT) that is stored in your wallet when you capture it.

There's a lot of hype around blockchain games right now, especially after the success of Axie Infinity (CRYPTO:AXS). The challenge when investing in gaming coins is finding quality projects. Illuvium is still in development, and while there's no guarantee it will be a hit, it looks like it could catch on with gamers.

An Illuvium trailer released in 2021 looks much better than the typical blockchain game. The large roster of unique creatures is also something that could attract players and keep them coming back.

Most of us wouldn't mind getting paid to browse the internet. With Basic Attention Token (CRYPTO:BAT), you can.

All you need to do is install the company's Brave browser. This browser replaces the usual internet ads with ads that pay you in rewards, specifically in BAT. By using Brave, you're the one getting paid for your internet ad views instead of other companies.

Brave has a long way to go before it's competitive with the biggest web browsers, but it does have more than 50 million monthly active users, making it one of the most successful crypto projects to date.

XRP (CRYPTO:XRP) is the native cryptocurrency for Ripple, a payment protocol that uses blockchain technology for fast, inexpensive transactions. Ripple was designed to facilitate international transfers, and it has partnered with hundreds of financial institutions that use its technology.

Ripple has been around since 2012, but it became embroiled in a Securities and Exchange Commission lawsuit at the end of 2020. That prompted most of the major U.S. crypto exchanges to delist XRP.

The biggest problem for Ripple has been the lawsuit, but XRP is still one of the largest cryptocurrencies. As Ripple's legal troubles come to an end, there's a good chance that exchanges will start to carry it again and it will pick up more investors.

It's tempting to try and find that next big cryptocurrency. Even though you could potentially make incredible returns this way, it's also difficult, time-consuming, and extremely risky.

For starters, you'll need to look for cryptocurrencies outside the market leaders. Smaller cryptocurrencies have greater growth potential, but they're also more likely to fold, so there's a bigger chance of losing your entire investment. To balance that out, you might want to put some of your money in cryptocurrency stocks or large-cap coins.

Researching those smaller cryptocurrencies takes time. And even if a project looks like a sure-fire winner, anything can happen in the crypto market. Your carefully researched investment could go nowhere, while a practically useless cryptocurrency goes to the moon just because it has "Shib" or "Doge" in the name.

Following the cryptocurrency trends, or trying to predict them, isn't a good investment strategy. There's nothing wrong with giving it a shot, but keep your expectations and the amount you invest very low.

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What Is the Next Cryptocurrency to Explode in 2022? - The Motley Fool