5 Crypto Projects Mark Cuban Loves

These crypto ventures give a taste of what blockchain technology might achieve.

Entrepreneur Mark Cuban may have arrived relatively late to the crypto party, but he's certainly made his presence felt.

Cuban is a big fan of non-fungible tokens (NFTs) and decentralized finance (DeFi) applications. Both are powered by smart contracts -- small pieces of self-executing code that live on the blockchain.

NFTs are a type of digital collectable that uses smart contracts to store authorship and copyright information. DeFi encompasses a host of financial service applications. These applications use smart contracts to, for example, issue loans or insurance policies without involving a bank or other third party.

The billionaire and Dallas Mavericks owner spends three to four hours a day looking through crypto projects, but only selects a few to invest in. Here are some of his favorite projects.

1. Polygon

Polygon (MATIC) is a blockchain that sits on top of the Ethereum (ETH) network to improve its scalability and network performance. Ethereum is a popular programmable blockchain, but it has struggled recently with network congestion and high fees.

In a recent blog post, Cuban explains why he likes Polygon. He thinks the way crypto projects use third parties to provide the necessary computing power is brilliant. Where non-crypto businesses might need a lot of capital to host servers and pay for computing costs, projects like Polygon use token holders who earn rewards for participating -- requiring minimal capital.

"If Polygon, or any of their competitors, took a traditional, centralized business path where they controlled and owned everything," says Cuban on his blog, "they would have had to raise not just millions but potentially much, much more."

2. Aave

Aave (AAVE) is a DeFi lender that's controlled by smart contracts. Cuban explains on his blog, "Aave is a completely automated, permissionless platform where there are no bankers, no buildings, no toasters, no vaults, no cash, no holding your money, no forms to fill out, no credit ratings involved."

Aave borrowers need to put down crypto collateral to take out a loan. And crypto investors deposit money, which is then lent out. By doing this, they'll earn higher returns than they'd get with a traditional savings account. (Though there are also increased risks.) The industry is still in its infancy, but Cuban is convinced it's the way forward. "Banks should be scared," he says.

3. Zapper.fi

Cuban invested in Zapper this May when the company held a $15 million funding round. It's a digital management tool that lets investors manage all of their crypto assets in one place. Let's say you've deposited crypto with Aave or have tokens staked with multiple cryptocurrency exchanges. (Staking is when you tie up your coins to earn interest.) It can be hard to keep track of your overall portfolio and know what coins are earning interest on which exchange. Zapper lets you see everything in one place.

Moreover, you can use it to manage your investments. For example, you might own Ethereum and see that you could earn 15% APR on an ETH-MATIC pair with SushiSwap (a popular decentralized crypto exchange). With Zapper, you wouldn't need to go to the SushiSwap site or convert some of your ETH to MATIC. Zapper will do everything for you.

4. Lazy.com

Lazy.com plays to Cuban's other crypto passion: NFTs. It's a digital gallery where users can show off the NFTs they own. Cuban launched the project -- which is still in beta -- for digital art collectors earlier this year.

If you own NFTs, it's easy to create an account and connect your wallet. You can then post a link to your art collection on social media or share it with friends.

5. dClimate

This is one of Cuban's most recent investments. The billionaire announced in June that he'd gotten involved in the project both as an investor and advisor.

For smart contracts to work, they need information. For example, a farmer might get an insurance policy that pays out automatically in the event of certain weather conditions. The smart contract would need reliable data to trigger a payout. That's where data providers like dClimate (also called oracles) come in.

dClimate collates and standardizes climate data, making a decentralized platform for businesses that need accurate weather forecasts and information.

Do your own research

Mark Cuban's investments give some insight into the range of cryptocurrency projects available right now as well as the specific areas he's excited about. But Cuban is also a strong believer in the importance of doing your own research -- and investing in projects that interest you.

Cryptocurrencies can be risky and volatile investments, and only you know your financial situation, interests, and tolerance to risk. So don't buy into these projects just because Mark Cuban has. Follow his lead and make sure you fully understand any project before you invest in it.