The 5 Most Exciting Cryptos That Launched in 2021

Here are five new cryptocurrency projects that should be on your radar.

The cryptocurrency industry made huge strides toward the mainstream in 2021. The total crypto market cap increased from around $770 billion to $2.2 trillion in just 12 months, according to CoinMarketCap data. And the number of cryptocurrencies increased from around 10,000 at the start of the year to over 16,000 as I write.

Given how quickly the crypto industry moves, it is very difficult to look at those new coins and pick the next Solana (SOL) or Axie Infinity (AXS). But it is possible to identify trends and pick out some interesting projects.

So, which of those 6,000 new coins stand out? We've picked a few that might be worth watching.

1. Star Atlas (ATLAS)

The play-to-earn gaming sector is on fire right now, and metaverse tokens are all the rage. This could be another passing trend. But games that offer rewards with real world value for time spent in the game combined with improved gaming technology could mean we're on the cusp of real changes for the gaming industry.

Built on the Solana network, Star Atlas is a gaming metaverse with realistic graphics in which players fly spaceships to explore new planets. Players can join in-game factions, customize their characters, mine resources, and build homes in space.

2. Only 1 (LIKE)

There's a lot of talk about Web 3, which is essentially the next generation of the internet. Web 3 is about taking the middleman out of many of the activities you do online, whether it's social media or browsing.

A number of interesting Web 3 projects that launched before 2021 such as Helium (HNT) and Livepeer (LPT) are starting to gain traction. But as yet, it isn't clear whether any projects can actually replace existing industry giants. Only 1 is one of a couple of emerging decentralized social platforms. It is based on the premise that content creators should be rewarded for being active on social media -- as should users who give their attention to that content.

3. Clover Finance (CLV)

Decentralized finance (DeFi) -- a host of applications that take the middleman out of all kinds of financial transactions -- took off last year. Increased regulation could be a problem in 2022, as some kind of a crackdown on bank-like operations is almost inevitable. But at the same time, many of the people who invested in crypto for the first time in 2021 may be ready to explore DeFi.

Clover Finance is an intriguing project that makes DeFi more accessible. Some of the barriers to entry are overly technical interfaces, a lack of interoperability between blockchains, and high gas fees -- especially on Ethereum (ETH). Clover tackles these challenges with a multi-chain wallet and no gas fees for end users.

4. Ardana (DANA)

Ardana is a DeFi platform based on the Cardano (ADA) ecosystem. Cardano has taken a slow-and-steady approach to development, which has frustrated some investors. However, the hope is that in the long run, Cardano's platform will be more dependable and secure. This is why Cardano's DeFi platform is particularly exciting.

The project is based around Ardana's stablecoins and also has a decentralized exchange and offers various yield-generating options. Security is a big concern for DeFi users -- we've already seen several large scale DeFi hacks and various DeFi scams. As such, one of the big attractions of Ardana is Cardano's reputation which may well help to set the platform apart.

5. Flow (FLOW)

Several smart contract cryptocurrency platforms produced extraordinary gains in 2021. These are essentially programmable ecosystems, and the ones that made big leaps were general purpose platforms that processed transactions quickly and cheaply. One thing that's likely to happen in the coming years is that more specialized smart contract platforms emerge, aimed at specific sectors such as DeFi, gaming, or non-fungible tokens (NFTs).

Flow was founded by the people behind NFT trailblazers, CryptoKitties. NFTs are essentially certificates of ownership that are coded into digital items. The huge popularity of NFTs is one of the reasons for heavy network congestion on Ethereum -- and one of the driving forces behind Flow. It's a purpose-built blockchain for NFTs, and is designed to eliminate bottlenecks on the blockchain. The coin has been in development for several years, but its mainnet became fully operational in 2021.

Small-cap cryptos carry more risk

All cryptocurrency investing is risky, but buying newer, smaller-cap cryptos is riskier still. Not only do these newer coins have a bigger chance of failure, they also have less liquidity. Prices will be more volatile and may be harder to sell your tokens. Plus, many are not available on major cryptocurrency exchanges.

If you're keen to get in on the bottom floor and buy cryptos before they make it big, tread carefully. There's a higher chance of scams or rug pulls like the Squid Game (SQUID) token where the developers pulled out after just a week, taking over $3 million in investor funds.

I've bought a very small amount of a couple of the cryptos above. I've also earned some by providing liquidity early on, which can be a good way to get exposure to new projects. It also carries risks, but if you're considering branching out into less common coins and tokens, this is worth investigating.

Even so, the bulk of my portfolio is in more established cryptocurrencies because they can still offer significant gains with much lower risk. Ultimately, the two golden rules of crypto investing apply: Do your own research and only invest money you can afford to lose.