DeFi

Interoperability by design can help catalyze DeFi growth

Published

7 months ago

28 June, 2024

Decentralized finance has enormous potential to accelerate access to financial services, but for all its promise, it faces a major limitation in terms of interoperability. Most DeFi platforms today are “walled gardens,” limited to the blockchain network on which they were built. For DeFi to reach its disruptive potential, seamless interoperability is necessary.

By removing the barriers between blockchains, we can exponentially increase the utility of DeFi, allowing the sector to grow from the fragmented and limited capital pools that characterize the current ecosystem. Interoperability between DeFi protocols will create a more fluid, connected, and global alternative financial system that benefits all users.

Why is interoperability critical for DeFi?

Cross-chain interoperability is essential for DeFi because it leads to compounded network effects, multiplying collective value across chains through synergies between specialized protocols. Users will have access to a more diverse range of digital assets and applications, while leveraging the unique performance characteristics of each blockchain, while benefiting from reduced costs.

Interoperability will also help reduce competition and duplication of platforms, as new projects will need to innovate more and work together rather than simply copying functionality from protocols present on other chains. In addition, it will improve liquidity, as assets can move more freely across networks.

Finally, interoperability will help DeFi become more resilient to failures, as issues on one blockchain will have no impact on other networks.

If DeFi lacks interoperability, DeFi ecosystems will remain fragmented, limiting users’ access to liquidity and preventing them from interacting with a more diverse range of crypto assets and functionalities.

Connecting Fragmented Ecosystems

Blockchain bridges Bridges are the most common method of interoperability and can be constructed in several ways. For example, many bridges use atomic swaps, which can be compared to a decentralized escrow that allows value to flow across chains in a peer-to-peer manner, without the need for third parties. To move assets across the chain, parties create a smart contract with time constraints associated with it. Transaction parties can deposit their tokens into this smart contract, which is programmed to execute only when predetermined conditions are met. Atomic swaps rely on the hashed time lock contract (HTLC) technique, which ensures that if the specified conditions of the contract are not met, the assets will be returned to those who deposited them.

Another way to bridge funds across chains is through wrapped assets, which are 1:1 representations of assets hosted on other chains. For example, wBTC is wrapped Bitcoin that lives on the Ethereum blockchain. Since Bitcoin is not compatible with Ethereum, users cannot simply transfer BTC to an ETH wallet. Instead, they can deposit their BTC with a custodian who locks it in a smart contract, providing the user with wBTC at a 1:1 ratio to the amount of BTC deposited. wBTC assets are an ERC-20 token that resides on the Ethereum chain and provide a way to use BTC in various dApps built on that network.

Bridge Safety Compromise

Although cross-chain bridges have been adopted to some extent by DeFi protocols, their use is not without risks. On the one hand, many bridges introduce centralization by relying on third-party custodians, who hold funds locked in smart contracts on behalf of users.

Not all bridges are centralized and not all rely on deposits. For example, some bridges secure value transfers between chains using collateral from miners and stakers, but these models have shown that attracting sufficient liquidity is a challenge. Other blockchain bridges attempt to increase performance by relying on a more limited set of validators, but this increases the opportunity for malicious actors to compromise their protocols.

Blockchain bridges also have other problems, including vulnerabilities written into their underlying code and a relatively low level of maturity, with many being young products that have not yet demonstrated their robustness.

While blockchain bridges broaden the horizons of DeFi users, they also require rigorous testing and validation to ensure their security, and even then, many of the most trusted bridges have still fallen victim to hackers — the $325 million hacking on the wormhole bridge in 2022 is a perfect example.

Interoperability by design

The alternative to bridging assets across chains is to use specialized blockchain infrastructures designed with interoperability in mind. These blockchains introduce architectures that enable the creation of interoperable, yet independent chains with flexible sovereignty that operate in parallel to the main foundational chain.

One of the best-known examples is Cosmos, an autonomous blockchain ecosystem that uses the Inter-blockchain communication protocol to facilitate cross-chain interactions across the network.

The IBC protocol allows compatible blockchains to send and receive messages with each other, in the same way that the Internet allows instant messaging through WhatsApp, Messenger and other services. IBC is a blockchain-agnostic standard, meaning no single entity controls it and it relies on multiple consensus mechanisms, ensuring that each blockchain can maintain its diversity while communicating with others.

Welus provides a good example of how IBC works. Nolus is a DeFi protocol that aims to eliminate the over-collateralization requirements of traditional DeFi dApps via its concept of “DeFi Leases”, increasing capital efficiency while providing better terms for borrowers.

It uses IBC to exploit various liquidity poles across the entire Cosmos ecosystem, avoiding the asset fragmentation that persists across chains. It can trade multiple assets from different Cosmos chains on the fly, using any DEX platform it supports.

Nolus aims to eliminate the over-collateralization requirements of traditional DeFi dApps through its concept of “DeFi Leases,” improving capital efficiency while offering better terms to borrowers.

With its unique level of interoperability, Nolus can source capital from multiple liquidity sources without causing asset fragmentation across different networks. It is able to lend and trade assets from any DEX integrated into its platform. This helps streamline the lending process for users by eliminating the need for multiple liquidity pools for different assets.

Interoperability will catalyze DeFi

DeFi’s interoperability will be a catalyst for greater adoption. In some ways, this can be compared to how individual countries gain strength by joining forces with other nations to collectively overcome challenges that would be insurmountable if attempted alone.

By unifying blockchains in a similar way, DeFi will increase its resilience and be able to overcome greater obstacles than any dApp could overcome alone. Interoperability provides a platform for greater cooperation and innovation, fostering a more inclusive and just digital economy that harnesses the enormous potential of DeFi.

The subject matter and content of this article are solely those of the author. FinanceFeeds takes no legal responsibility for the contents of this article and they do not reflect the views of FinanceFeeds or its editorial staff.

Fuente

DeFi

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Published

6 months ago

29 July, 2024

CoinFlix Staff

If You Missed BONK and PEPE This Year, This Viral New Crypto Might Be Your Salvation

Bonk and Pepe appear set to net new investors 10x to 100x returns over the next 12 months. However, cryptocurrencies in the DeFi play-to-earn gaming sector could offer even greater returns. As August approaches, Rollblock is emerging as a standout DeFi play-to-earn gem with the potential to 100x-1000x gains in the fourth quarter and beyond.

The project features an innovative revenue sharing model and exceptional accessibility, attracting players and investors. Additionally, Rollblock’s extensive game library of over 150 titles and enhanced sports betting are further driving excitement for the platform. Cryptocurrency analysts are expecting a sudden surge in demand. 800% a push for Rollblock from the beginning of September.

Bonk remains strong despite market fluctuations

While most well-known cryptocurrencies struggled throughout July, Bonk remained strong. As one of the highest-grossing meme cryptocurrencies of 2024, Bonk rose over 24% in July, while most cryptocurrencies experienced negative fluctuations.

Investors looking to add a relatively safe memecoin to their portfolio should consider Bonk. While Bonk is unlikely to generate explosive gains of 250x to 1,000x from here on out, Bonk could still theoretically provide returns in the 20x to 100x range.

Pepe should see a big rise in the next bull run

Alongside Bonk, Pepe has yet to go through a bull run. This means that there are still substantial gains to be made from Pepe over the next 12 months.

Pepe is down 4% in 30 days, but that shouldn’t worry Pepe investors in 2024. Experts believe Pepe’s best days are still ahead, with crypto analysts predicting a 10x to 50x surge in the next election cycle around November.

In the long term, Pepe could surpass the 100x mark for today’s investors. However, Pepe is a memecoin, and one should exercise caution when investing in purely speculative assets that have no utility.

Rollblock’s Unprecedented Hype Potential Could Push It Past 100x Valuation in Q4

Rollblock is a GambleFi Play-to-Earn token that integrates centralized and decentralized gambling on a single platform. By allowing players to earn rewards through active participation and gameplay, the platform creates a compelling incentive structure that appeals to both casual and competitive players.

With its cutting-edge blockchain technology, Rollblock offers top-notch security that keeps bets and transactions on the platform secure. The platform’s lack of KYC mandates appeals to both users who value anonymity and security.

Rollblock’s revenue sharing model, which allocates up to 30% of casino revenue to RBLK token holders, is a major draw for investors. The model involves burning half of the repurchased tokens and distributing the other half to stakers, increasing the token’s value and encouraging long-term investment.

The platform is also constantly evolving thanks to user feedback which has enabled updates such as the upcoming sports betting feature within the platform’s casino. This addition will complement Rollblock’s extensive game library of over 150 titles, ranging from traditional poker to innovative blockchain-based games.

RBLK is expected to emerge as one of the leading DeFi tokens in 2024. With a price of $0.0172 with impressive growth potential and over 140 million tokens sold recently, Rollblock is on track to enter the top 100 cryptocurrencies by Q4, making today a lucrative time to buy RBLK tokens.

Discover the exciting opportunities of the Rollblock (RBLK) presale today!

Website: https://presale.rollblock.io/

Social networks: https://linktr.ee/rollblockcasino

No spam, no lies, only insights. You can unsubscribe at any time.

Fuente

DeFi

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Published

6 months ago

29 July, 2024

CoinFlix Staff

Cryptocurrency sector is experiencing ‘most misjudged moment’ since 2020, says venture capitalist Arthur Cheong

Veteran cryptocurrency investor Arthur Cheong believes the digital asset sector offers long-term holders a golden opportunity.

Cheong, the founder of DeFiance Capital, tell His 171,700 followers on social media platform X indicate that he believes decentralized finance (DeFi) is hugely undervalued.

According to Cheong, DeFi projects are innovating at a rapid pace and leaving traditional financial (TradFi) companies in the dust.

“It’s been a long time since I’ve been this excited about the risk/reward and potential upside of DeFi. This is probably the most misjudged moment since the pre-DeFi summer of 2020, with extremely promising prospects.

I see opportunities not only in OG (original) DeFi, but also in some newer projects that are evolving rapidly and growing at a pace that fintech startups will do anything to match.

The veteran investor also believes that crypto is now here to stay following recent launch from the Ethereum spot market (ETH) exchange-traded funds (ETFs) last week.

“Overall, the floodgates are open and there is no turning back. TradFi asset managers will continue to launch new crypto products because, guess what: there is huge demand for them!”

I expect them to launch actively managed crypto ETFs [in the] coming years. ”

Earlier this month, Cheong laid that it might be a bad strategy for cryptocurrencies to seek mass adoption, believing that digital assets are designed to disrupt several key financial sectors.

“I think we should accept that cryptocurrencies may not be suited for mass adoption like Web2, but rather are optimized for some narrow but very high-impact use cases like stateless global money, cross-border payments, and decentralized finance.

Chasing mass adoption of normies may be chasing the wrong Grail from the start.

Don’t miss a thing – Subscribe to receive email alerts directly to your inbox

Check Price action

follow us on X, Facebook And Telegram

Surf The Daily Hodl Mix

&nbsp

Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their own due diligence before making any high-risk investments in Bitcoin, cryptocurrencies or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured image: Shutterstock/ktsdesign