Connect with us

DeFi

Top DeFi Projects Outside Ethereum Ecosystem To Follow in 2021

Published

on

The decentralized finance (DeFi) market has been instrumental to the crypto bull run of 2021. In fact, the DeFi market is currently projected to be an $800 billion industry by 2022.  There has been an influx of DeFi projects into the market, and most of them rely on the Ethereum network. However, the issue of transaction fees and speed on the Ethereum network has not given these DeFi projects a foundation to fulfill their full market potential. For example, the average transaction fee on the network is between $15 to $50 and can be as high as $300 on busy days.

This situation led to some DeFi projects beginning to explore other blockchain protocols with less transaction fees and more transaction speed. Here, we will take a look at the emerging DeFi projects outside the Ethereum ecosystem.

The Emerging DeFi Projects Outside The Ethereum Blockchain

Sovryn:

The first on our list of emerging DeFi projects outside Ethereum’s ecosystem is the Sovryn platform. Sovryn is a decentralized finance (DeFi) protocol that is built on the Bitcoin network. The project started in 2020 with only 5 developers and was officially launched in April 2021. Today, Sovryn has a core of over 60 contributors working on the project. It allows users to trade, loan out, and borrow in a permissionless manner without personal data requirements. Sovryn is currently the only truly decentralized financial protocol built on the Bitcoin Network. Users also keep the keys to their assets; therefore, they have control of the protocol.

Advertisement

Since its launch in April, Sovryn has facilitated an estimated $568 million in transactions, $77 million Total Value Locked (TVL), and $551 million Assets Under Management (AUM). Savryn also allows its users to participate in margin trading, swaps and adding liquidity.

A decentralized cohort of different stakeholders governs the Sovryn protocol (Bitocracy). There is no single entity that controls the direction of the protocol. The project also offers gas fees that are 0.01% of what is obtainable on Ethereum. The privacy of users is protected due to the fact that the protocol is completely permissionless. Also, the Sovryn protocol is Ethereum Virtual Machine (EVM), meaning that it can be used on any blockchain platform. Some of its notable features include Origins Launchpad, FastBTC Relay, Fait on-ramp, and leveraged trades.

Clover Project:

Clover is a blockchain-based operating system with a decentralized finance protocol layer and other layers like storage, smart contract, and eApp. The system is built on the Polkadot blockchain network. The project supports various basic DeFi protocols like swaps, lending, borrowing, insurance, and so many more. According to the Clover Litepaper, the project builds a foundation layer for DeFi applications to operate seamlessly. The team also aims to facilitate a gasless transaction layer to give users a simplified and convenient experience.

The Clover team is currently working on joining as a parachain for Polkadot in order to achieve a high level of interoperability and become a renowned DeFi provider on the Polkadot blockchain. Clover is currently developing series of cross-chain implementations ranging from desktop to mobile, thus allowing users to interact with DeFi applications from multiple fronts ends seamlessly. Aside from bridging Ethereum and Polkadot in one unified space, Clover has developed an EVM-compatible infrastructure.

Advertisement

SORA Project:

SORA is a decentralized multiverse economic system that decentralizes the concept of a central bank. It is trying to develop a parachain blockchain connecting to the Polkadot relay chain and ecosystem using in-built tools focused on DeFi. The SORA Network thrives at creating tools for decentralized applications that utilize digital assets like atomic token swaps, bridging tokens to other blockchains, and developing programmatic rules involving digital assets.

The SORA project is completely decentralized and depends on its community members to run nodes. The validator nodes are responsible for making blocks in the SORA network. The SORA DeFi ecosystem utilizes three different tokens. The SOR token is used for the payment of transaction (gas) fees within the network. There is also the VAL token used to reward validators on the SORA network. Finally, the PSWAP is used to reward liquidity providers on Polkaswap via the SORA network. It utilizes the Polkadot protocol and Parity Substrate to improve scalability better than Ethereum, and it doesn’t deploy an expensive mining process for consensus.

xWin Finance:

xWin is a decentralized fund management platform built on the Binance Smart Chain (BSC). With xWin Finance, anyone with their trading or fund management skills can open their own funds. The users can then subscribe to those funds and earn profits in return. xWin aims to create a one-stop DeFi protocol that enables every beginner to benefit from the greatest wealth transfer in recent human history.

Advertisement

xWin Finance also serves as Sector Index, where it provides a series of sector index funds in the Binance Smart Chain. The platform makes it easier for beginner investors in the DeFi ecosystem in terms of diversification of portfolios. So far, there are three sector indexes in mainnet and they include the xWin BSC DeFi index (xWin-DeFi), xWin Binance-Peg Infra Index (xWin-XFI), xWin Collectibles & NFT Index (xWin-NFT), and Japan Crypto Index (JPI).

To make the investment easier than ever before, the team is aiming to launch a series of BSC ecosystem indexes based on the current landscape. They chose Binance Smart Chain over Ethereum because it is faster and cheaper. The superior transaction speed of BSC and its lower transaction fees ensured it was chosen over Ethereum. xWin certainly deserves its place on this list of emerging DeFi projects out of the Ethereum blockchain network.

Conclusion

As DeFi innovators continue to seek solutions for the shortcomings of the Ethereum blockchain, more emerging projects built outside will be launched outside the Ethereum ecosystem. However, these emerging projects have to need to spend ample time in the market before they can really rival the leading Ethereum projects.

Advertisement

News Source

DeFi

DeFi’s danger outweighs that of traditional finance, says association of central banks

Published

on

The Bank for International Settlements (or BIS) has warned that the crypto industry, as well as the broader non-banking financial sector, threatens financial stability and claims that “systemic regulations” are needed.

“In the crypto ecosystem, risks have arisen mainly from frequent and considerable price drops. It remains to be seen whether such weaknesses are limited to this ecosystem or could spread to the traditional ecosystem,” said the BIS.

“But the potential for spreads should not be underestimated.”

Advertisement

“As demonstrated by history, anything that grows exponentially is not likely to remain self-sufficient and thus deserves greater attention,” he added.

BIS, DeFi and stablecoins

The BIS has focused much of its alert on the growing Decentralized Finance (or DeFi) sector.

Although the DeFi system “seems to be operating heavily in its own ecosystem”, the BIS has identified a number of issues.

Advertisement

“In addition to provoking first-rate money laundering issues and investor projection, DeFi demonstrates significant financial vulnerabilities,” the group added.

These vulnerabilities, according to the BIS, “are equal to, but surpassing those of traditional finance”. In turn, BIS targets stablecoins, which “are subject to classic races [bancárias]”.

In another report, published in conjunction with the International Organization of Securities Commissions (or IOSCO), the BIS said that traditional payment rules should apply to stablecoins.

Advertisement

“This report marks significant progress in understanding the consequences of stablecoin deals for the financial system and providing clear, practical guidance on the standards they need to maintain their integrity,” said Ashley Adler, President of IOSCO at the time.

Bitcoin still raises concerns

DeFi and stablecoins aren’t the only aspects of the crypto industry that concern the BIS.

BIS also targeted bitcoin. In a report published in June, the bank criticized the famous cryptocurrency for its energy consumption and role in money laundering.

Advertisement

“Bitcoin, in particular, has few redeeming attributes for the public interest while also considering its waste of energy,” he said.

Bitcoin currently consumes approximately 121 terawatt hours of electricity per year, which is more than the amount of energy consumed by most countries in the world.

News Source

Advertisement
Continue Reading

DeFi

What is Decentralized Finance (DeFi)?

Published

on

Bitcoin (a payment system where anyone in the world can send money to anyone else) was just the beginning of the crypto revolution. People who develop decentralized applications (or dapps for short) seek to take accessibility one step further.

Decentralized Finance (or DeFi) was pointed out as a possible solution to lower the entry barrier for those who have difficulty gaining access to bank accounts.

More recently, DeFi are being used by cryptocurrency owners for other purposes: to make more money.

Advertisement

What are DeFi?

As a whole, DeFi applications are financial products that operate on a public blockchain such as Ethereum.

These products are enabled, that is, they do not need third parties. Instead of financial intermediaries such as brokers and banks, everything is automated in the protocol through standalone contracts.

Do you want to take out a loan? You don’t need the bank to lend you the money. You can get a loan directly from your peers.

Advertisement

Ready to bet on bitcoin futures and other derivatives? Give up finding a bettor. You can let the protocol do it all.

Want to convert one asset to another? Decentralized brokers (or DEXs) can facilitate a transaction without taking a large commission.

Who invented DeFi?

There isn’t a single creator of DeFi, but dapps appeared in Ethereum, invented by Vitalik Buterin. They have since expanded to other networks that use autonomous contracts to automate transactions, including Solana, Binance Smart Chain and Avalanche.

Advertisement

Andreessen-Horowitz (a16z), the major venture capital firm, has led multi-million investment rounds in both the Compound and MakerDAO, protocols that are the cornerstones of the current DeFi system.

What is so special about DeFi?

DeFi have several fundamental features.

First, they are “open”, meaning you can use the applications when creating a wallet (usually without showing any identifying information such as name and address). This is theoretically (if not technologically) simpler than having a bank account.

Advertisement

Second, you can move funds almost instantly via a blockchain, so you don’t have to wait for the bank transfer to take place.

Third, the fees (at least for now) are much better than in traditional banks, although transaction costs vary depending on the blockchain network.

Finally, dapps work together as “Legos of money”. This “composability” allows anyone to create, modify, mix and match, link or build on any existing DeFi product without permission.

Advertisement

Unfortunately, this feature can be one of DeFi’s biggest weaknesses, as if a fundamental element, such as the stablecoin DAI, becomes vulnerable or becomes corrupted, the entire ecosystem built around the DAI can collapse.

What can be done with DeFi?

Borrowing and lending

If you have cryptocurrencies, you can lend them to a protocol, such as Aave and Compound, in exchange for interest and/or rewards. It is also possible to borrow cryptoactives from a protocol, which can be very useful if you want to make a trade.

But be careful! Most DeFi protocols use over-guarantees, where more money is allocated than the amount you want to borrow; if the asset’s value drops too low, the protocol can take its warrant to avoid losses.

Advertisement

Many DeFi users use loans as a way to earn assets through “yield farming,” in which they lock funds in an asset pool to gain rewards.

Since rates vary depending on protocol and asset, experienced yield farmers move their assets and capitalize at the best rates.

Negotiation

At centralized brokers such as Coinbase and Binance, you are dependent on the broker to take custody of your assets on every trade. Decentralized brokers remove the middleman so that people can trade directly with each other.

Advertisement

Also, DEXs such as Uniswap and PancakeSwap allow people to list new tokens for trading. Lack of verification increases risk, but it also allows people to “get early” on new assets before they hit the markets.

Derivatives

Sometimes you don’t need to be limited to trading specific currencies or tokens. Derivatives platforms like dYdX and Synthetix allow people to do more than spot trading.

For example, users can engage in leveraged trades, where they bet more than they have or create “synthetic assets” that mimic traditional stocks and commodities.

Advertisement

How are dapps developed?

Anyone capable of writing standalone contract code is capable of creating dapps. There are several tools to test and/or implement standalone contracts, including Truffe and Ganache (on Ethereum).

After downloading the framework for creating autonomous contracts, you can create a token that allows a protocol to use the blockchain network. On Ethereum, the token default is ERC-20; at Solana, SLP; and in Binance Smart Chain, BEP20.

Having a token allows the protocol to interact directly with the currency of the first-tier blockchain. But projects also promote their tokens to drive decentralization.

Advertisement

The Compound Loans protocol, for example, uses COMP as its governance token; those who have it make decisions about the protocol’s code and treasury allocations.

How to use DeFi products?

Anyone can use DeFi products by going to a dapp’s website and connecting with a crypto wallet, like MetaMask on Ethereum or Phantom on Solana. Most dapps do not ask users to provide personal information or register.

However, since dapps are built on a blockchain, you must use that blockchain’s currencies to pay for transactions. Ether (ETH) is required to pay transactions on the Ethereum network, just as SOL is required on the Solana blockchain.

Advertisement

The future of DeFi

As of November 2020, less than $20 billion worth of locked-in value on various DeFi products, primarily on Ethereum. As early as November 2021, that number had risen to nearly $98 billion.

If the trend continues and the DeFi maximalists are right, this is just the beginning of a huge DeFi wave. True advocates argue that the advantages of an open and decentralized financial system are irresistible for not capturing trillions of dollars of value.

News Source

Advertisement
Continue Reading

DeFi

BadgerDAO: Hackers drain $10 million in latest DeFi breach

Published

on

  • BadgerDAO suffers $10 million hack
  • Traders were sent illicit permission notifications
  • BADGER loses 15% of its value

The decentralized finance industry of the crypto sector has now become one of the most sought-after industries. This is because it provides users with anonymity, and they can carry out their activities without the prying eyes of financial institutions. Furthermore, traders are open to making huge amounts of profits in the protocols in the sector by staking or farming. However, some illicit actors would rather exploit and steal from people instead of making their profits. In yet another hack case in the DeFi sector, hackers have exploited BadgerDAO, draining $10 million from the decentralized finance protocol.

Traders got illicit permission notifications

BadgerDAO is a protocol in the decentralized finance sector that allows traders access to various lending services and takes collateral in Bitcoin. According to the platform, upon calculating funds missing through the exploits, things are sitting around $10 million. In the reports that made the rounds today, users claimed that the hack was perpetrated through BadgerDAO’s interface and not its smart contracts like most hacks. Users claimed they were sent notifications about allowing new permissions while carrying out activities on the platform. With some users allowing the permissions, the hackers could cart away various amounts of digital assets going to a worth of $10 million.

BadgerDAO’s native token plummets

After the hack, the protocol developers said that users complained that they witnessed the unauthorized drawing of funds from their accounts. However, the protocol has moved into action swiftly, putting everything on the protocol on hold at the moment. The developers have also claimed that engineers are working tirelessly to fix the issue and ascertain the level of damage that the breach may have caused. However, BadgerDAO has refused to comment on the exact amount of missing funds on the platform and the level of damage that needs repair before operations can continue.

Some analysis websites have claimed that the amount exploited from the platform is $100 million. After the hack, the native token of the platform, BADGER, dipped in value, losing about 15% of its value, and is currently trading around $22. Hacks have now become predominant in the DeFi sector as the year draws to a close. Some days ago, MonoX, another DeFi protocol, got hacked with the illicit actors carting away more than $30 million in different digital assets.

Advertisement

News Source

Continue Reading