The blockchain world has seen its popularity grow in recent years, especially considering the instability of centralized currencies and the constant financial market crises. However, despite all the advantages, decentralized finance is still restricted to some specific audiences, which is not good. Connext Network promises to be the next definitive connection that will make DeFi accessible for as many people as possible.
How Does Connext Network Work?
Connext Network can be defined as an open-source platform for easily setting up state channel hubs. It enables Ethereum-based projects to have a low cost and quick transactions for their users.
First, it is a scalability solution for EVM-compatible (EVM stands for Ethereum Virtual Machines) blockchains.
The company has built an open-source technology infrastructure for Ethereum applications, aiming to make operations involving encrypted values within the ecosystem freer and faster, always with a view to a lower cost.
Learn More: Ethereum IRAs
It is also a non-custodial batching layer on the top of Ethereum, which retains both security and self-sovereignty, foundational aspects of the blockchain philosophy.
The platform does not take custody of user funds, as it does not run the code directly, being the users responsible for that specific (and remarkably important) job.
Dig Into It
The platform does not work as a custodial wallet (it does not have custody over anything), an exchange or financial service, neither as a blockchain on its’ own.
The main goal here is to enable users to build scalable decentralized applications (DApps) on Ethereum blockchain.
Although Ethereum blockchain enables trust-minimized transactions between different peers, these transactions have slow confirmation times (which is inconvenient), as well as expensive fees (which is even more inconvenient).
Ethereum blockchain is very suitable as a settlement layer, but when we analyze those facts, we realize it is not suitable for daily use-cases (which turns out a problem when the main purpose is to popularize DeFi).
To solve this problem, Connext decreases the number of transactions that need to be put onto Ethereum, doing this without needing to change the core decentralized aspect and trust-minimization properties.
Why Is It Interesting For DeFi Users?
The platform today is supported by many apps, wallets, and stakeholders as well as being considered the industry standard.
Although Connext did not develop its native token (as the team states that there are no plans to do an ICO/IEO neither in the short or long run), it allows users to do transactions using any Ethereum ERC-20 token.
We also must highlight that Connext does not get any fees from the network, which reinforces the company’s commitment to the blockchain philosophy of use.
Is It Fully Decentralized Or Not?
The version available so far is centralized, and the team has been transparent about it.
Both users and personnel share high expectations of the network to become more and more decentralized every day.
We must notice that centralization here is the opposite of being custodial. Being centralized means that only Connext responsible personnel are currently routing and processing packets, which does not mean the platform holds any user funds in any way.
Despite this, Connext Network is a fully open-source platform and is following the right path to be completely decentralized one day.
What Is Next For Connext Network?
Long-term plans are a great concern for Connext Network. For the team behind the idea, the ideal future is a completely tokenized world where anyone can take part in the blockchain solutions.
It is well-known that the Ethereum ecosystem has barriers on its own, like the fact that it only processes 20 transactions per second, while many Web 2.0 major apps process colossal numbers per second.
Besides, there is also an accessibility issue, which remains an open question. It would be highly interesting if future developers of decentralized marketplaces and exchanges could have more interest in underlying protocol infrastructure, but unfortunately, it is unlikely.
Connext Network is an infrastructure layer on top of Ethereum blockchain, which enables Ethereum wallets, apps, and protocols to perform instant transactions with complex conditions for settlement.
Although the project still has a centralized governance model, it was built as an open-source infrastructure for Ethereum applications, allowing complete freedom for users who do not want to have their funds held by entities or middlemen.