In the last year, decentralized finance (DeFi) has gone from being a relatively unexplored crypto niche to a bustling industry filled with a diverse array of protocols and tools that offer new services and opportunities to users.
Because of this, a large number of developers are now opting to build their DeFi applications on Polkadot, and are looking to take advantage of its unique properties to offer experiences that haven’t yet been possible on other blockchains.
Here’s a look at why it’s got DeFi developers’ hopes soaring in 2021.
As a result, it has already exploded into the top five cryptocurrencies by market capitalization, and recently achieved a peak market capitalization of over $17 billion — leapfrogging XRP to secure the position of 4th largest cryptocurrency.
The potential and capabilities of the Polkadot blockchain have already been recognized by almost 350 projects which are already building on the platform — including dozens of DeFi solutions.
Polkadot is now home to several of the most promising DeFi platforms, including:
Backed by leading exchange platform Bithumb Global, Clover Finance is set to provide an open, modular framework developers can easily use for building their applications on Polkadot, drastically lowering the barrier to entry to building on the platform.
It can be used to incorporate powerful blockchain and DeFi elements — such as NFTs, CDPs, and yield-farming — into gaming applications, and features a unique reward token known as Crowns which is used to reward those who interact with the Seascape ecosystem.
While Acala is still in its early development stage, it will provide more functionality than most stablecoins once the project is officially on the mainnet. The platform will offer tools for borrowing, lending, earning interest, and of course governance voting power.
In the meantime, Acala’s ‘bizarro’ counterpart Karura, is inching towards a launch on the Kusama canary network. Experts are hopeful that Acala will officially go live on the Polkadot mainnet in 2021.
WHY IT’S SO POPULAR
It uses a combination of the relay chain (Polkadot’s main chain), parachains, and bridges to connect the blockchain ecosystem into a cohesive, interoperable unit.
Substrate imbues Polkadot with a range of features that make it the ideal platform for building DeFi solutions on, including:
Scalability: Polkadot can currently handle more than 1,000 transactions per second (tps), compared to just ~25 tps for Ethereum at its peak under ideal conditions. According to Polkadot’s founder Gavin Wood, this could eventually reach as high as 1 million tps, with the use of sharding and optimized parachains.
Taken together, these features, and the breakneck pace of Polkadot’s development have positioned it as a potential launchpad for the future of not just DeFi — but potentially the crypto industry as a whole.