If you're fascinated by Blockchain-related issues you may have heard the rumors that Blockchain could do to financial systems the way that the Internet did to the Media. The idea was originally presented in an article by Harvard Business Review magazine.
Could Blockchain revolutionize the financial industry with a storm? The excitement of fintech-focused investors demonstrates that Blockchain is not just a trendy trend. We should expect more clarity about this within the next few years because Blockchain and its various layers as with the Internet will require time to revolutionize the global financial systems the way we all hope for.
The financial system in place today is complicated, and that complexity increases the risk. Fintech thinkers believe that allowing financial services to be incorporated into a public blockchain that an intermediary or central bank is not regulating can lessen the risks inherent in our current system of financial transactions. In essence, they want the concept of a decentralized finance system unregulated by any central body.
Decentralized finance can be utilized in a variety of ways with the help of innovations such as P2P lending, crypto-based loans as well as decentralized exchanges. Most of the DeFi dApps that are currently in use are built upon the base of Ethereum the second-largest cryptocurrency blockchain. But it is becoming increasingly apparent that, due to DeFi becoming a popular choice for shaping what the future holds for the financial industry, every new blockchain protocol is expanding the DeFi ecosystem. The new blockchain architecture protocols such as Solana, Cardano, Polygon allow the creation of new kinds of decentralized and automated financial dApps and services that are driven by a smart contract. They can eliminate traditional intermediaries like banks.
A brief overview of DeFi
Decentralized finance, also known as DeFi, is among the most used uses of blockchain technology within the ecosystem. Simply put, DeFi applications are financial software decentralized that has been developed using blockchain technology. DeFi has been praised due to its ability to make financial apps and services more accessible and accessible to everyone, including those who aren't banked. Find out further about DeFi.
DeFi developers are currently building or planning to develop a variety of financial products, including stablecoins, money markets oracles that are not custodial, and non-custodial exchange. As time goes on we are likely to discover a new array of DeFi products, including insurance platforms, Yield aggregaters, DEX aggregators, No-loss lotteries, Permissionless Options Trading, and the credit risk guidelines for loan as well as borrowing as well as Fixed interest rates loans.
The DeFi development utilizes technology stacks to combine and mix projects to develop high-value applications. To understand the DeFi tech stack it is that the DeFi tech stack is comprised of three layers:
1. This is what's known as the Application Layer. It's the part that is visible to users
2. Protocol Layer - The Protocol Layer - The application protocol that defines the specific rules
3. The Base Layer Blockchain Protocol allows data and value to be recorded and transferred through the chain.
Five top Blockchain protocols to use for DeFi
Solana
Solana is another significant blockchain network that is aiming to offer blazing speed scalability and low charges in Decentralized Finance. Numerous emerging DeFi projects have been able to establish themselves on Solana and are exploding the DeFi ecosystem. However, due to the expense associated with making use of DeFi on Ethereum large DeFi marketplace share moved onto layer-1 chains, such as Solana.
Solana fulfills all the requirements for a chain that is DeFi-focused. It stops front running by using rapid block times as well as the consensus mechanism of Proof-of-History. It reduces congestion and keeps costs for transactions minimal through its node scalability. Solana is on the right path to fostering its flourishing DeFi ecosystem. Asset Management Tools, Decentralized exchanges, Margin Trading, and Decentralized Lending, and all kinds of DeFi projects are being created on Solana and are aspiring to be Solana's DeFi blue chip. Learn More on Solana here.
Potential Blue chip DeFi projects on Solana
Port Finance and Solend
The two projects based on Solana are created to function as banks that are decentralized, like the incredibly popular Ethereum initiatives Compound as well as Aave. In 2021, Port Finance is the 19th most popular dApp in Solana with a total secured (TVL) of $122 million, according to DeFi L lama. Port has a program for the mining of liquidity which allows its users to collect the governance token of the protocol (PORT) in addition to interest on their deposits.
Sound is another of Solana's DeFi banks that allow customers to take out loans against a wide variety of assets.
Saber
Similar to Ethereums stablecoin-focused decentralized exchange Curve Finance, Saber is the Solana DeFi protocol where users can join assets like stablecoins and wrapped assets with minimal slippage. Contrary to Ethereum liquidity pools Saber pool does not require that users deposit the same amount from both types of assets.
Parrot Finance
The equivalent of the Ethereum Marker DAO, Solana's Parrot Finance is a platform that allows users to secure their assets and create an unstablecoin (PAI) as a reward. While Parrot is currently able to place a limit for the quantity of PAI that can be produced but these restrictions will likely be lifted once the platform expands and demand improves.
To read more - https://www.leewayhertz.com/top-five-blockchains-for-defi/
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