It is virtually impossible to talk about the future of finance without mentioning decentralized finance (DeFi). This much-welcome phenomenon refers to a blockchain-based financial software that leverages the power of crypto, decentralization, and next-level fintech. Each passing that, new DeFi tools come to the fray, aiming to change decentralized finance.
To build a new financial system, DeFi provides countless possibilities based on cryptography and blockchain to encompass a wide array of different services, such as lending markets, payments, and trading – all done with utter efficiency and no centralized control whatsoever.
In this article, you will find out projects providing DeFi tools and upgrades that promise to change the landscape of decentralized finance.
Infrastructure is King
DeFi is efficient by nature. All decentralized blockchain-based operations are settled in no time, regardless of whether the parties involved are in completely different geographical locations, with a gap of inconsistent laws and local regulations between them.
Currently, most DeFi protocols and tools operate with minimal to no human involvement, given the infrastructure they operate upon. In this sense, it is impossible to estimate the real impact of smart contract technology, which was the ground block of DeFi revolution.
Nonetheless, innovation does not stop, and there are several projects in the course that are developing new manners to look at data infrastructure, layering, scalability, and interoperability on decentralized networks.
The concept of web3 redefines the way people interact with the internet and the endless possibilities brought by web2. Unfortunately, users still have no control of their data online, and centralized companies are still deciding what can and what cannot be done online.
However, it is gradually changing with the ever-growing adoption of web3, which has functionalities that permit people to store data in multiple copies of a peer-to-peer (P2P) network.
Hence, each network’s rules are formalized in its protocol’s smart contracts and safeguarded by a consensus between the participants, who can deliberate and decide on several aspects.
In this sense, Textile provides a set of open-source tools that permit users to have a decentralized database for several use cases, such as IPFS-based storage, content hosting, and a wide array of applications using IPFS, Libp2p, and Filecoin.
Aiming to provide the definite data infrastructure for the decentralized web, Textile created a solution for development teams who need dynamic content management within a web3 environment.
Through Textile, web3 developers can build decentralized applications using a distributed database solution that aggregates the much-needed scalability and flexibility they seek.
Plus, Textile offers next-level security, with features such as detailed monitoring, stack alerting, advanced security settings, and backups/disaster recovery.
If interested, sign up to Textile now!
Undeniably, one of the core aspects of web3 is expedited and optimal communication. Nowadays, many users are still having a hard time interacting with decentralized applications, either in or out of the Ethereum ecosystem.
For example, during the CryptoKitties frenzy, it became virtually impossible to interact in the Ethereum network due to the enormous number of users clogging data transfer.
Marlin is an open-source project that aims to deliver scalability and accelerate decentralized communication between distinct protocols and networks. Their protocol provides a high-level programmable network infrastructure that web3 developers can rely on.
In essence, Marlin is scaling different blockchain-based platforms by optimizing communication between nodes, which they explain as an “incentivized libp2p.”
The project wants to provide a real-world solution for the issue, as most blockchains today are not scalable in the sense of being distributed systems in which optimizations are done in terms of block time and size.
Accordingly, they believe that building permissionless networks secured by well-designed tokens is the most viable approach to scale a blockchain at the network layer without compromising its security and decentralization.
If interested in more information, check out the Marlin website.
Decentralized Autonomous Organizations (DAOs) represent the pinnacle in terms of active cooperative structures based on blockchain technology and decentralization.
Essentially, DAOs are member-owned communities without centralized leadership, in which decision-making processes involve all members involved.
In such a trustless environment, it is safer to collaborate with strangers and commit money to a cause, as the structure of a DAO involves built-in treasuries that no one has authority to access without the approval of the whole group.
To accelerate the mass adoption of such a unique governance model, DAOstack created a full software stack that users can utilize to build and run decentralized autonomous organizations.
Looking at the project’s viewpoint, DAOs must have three qualities:
The more a DAO grows, the more efficient it has to be, on the contrary of virtually all centralized organizations.
Much more than designing a protocol, the DAOstack team believes in a unique and complex solution, a framework for a whole of new DAOs that will emerge as the concept spreads around the globe.
DAOstack is one of valuable DeFi tools built on top of Ethereum by which DAO builders can access several layers (e.g., Infra, Arc, ArcHive, ArcGraph, DApps, DAOs) to organize their projects and companies in the way they please.
Launch your first DAO with DAOstack!
Structuring and building a blockchain from scratch is certainly not an easy task. First, developers have to identify a suitable use case before choosing the best consensus mechanism and the platform to start designing the nodes.
In mid-2019, there was an estimate of more than 860 blockchains running actively. Currently, there may be thousands of them, especially after the rise of decentralized finance and the growing popularity of digital assets in the mainstream media.
Designed as the blockchain for open worlds, Flow is a decentralized and developer-friendly blockchain that permits the creation of games, DeFi tools, and digital assets.
Flow’s foundation is built upon a unique multi-role architecture. Hence, developers have the possibility of infinite scalability without facing sharding, which permits massive improvements in terms of speed and throughput.
The blockchain grants plenty of tools that developers can utilize to build crypto-based businesses and projects. As decentralization is law, any applications built on Flow can keep consumers in control of their own data.
Flow utilizes resource-oriented programming, in which smart contracts are written in Cadence, a much safer programming language for crypto-related purposes. Also, the blockchain has upgradeable smart contracts and is designed to reach mainstream consumers.
Pro-Level DeFi Tools for Further Decentralization
In terms of programming, the key to understand decentralized finance is smart contract technology. There is no need for a centralized leadership when immutable contracts are running the process, especially when it has to obey specific parameters.
Currently, most DeFi tools are still being built and operated on the Ethereum Network, which means most developers use Solidity’s coding language. Even though it is not hard for developers to catch up with it, the more tools someone has, the better.
Further reading: dForce – a Chinese endeavor at building a DeFi juggernaut
Data structures, cryptography, and networking are just three of the many elements developers need to work their way on DeFi.
Crust is one of the DeFi tools built on Polkadot that implements the incentive layer protocol for decentralized storage. Three main points make Crust a league on its own:
- The project provides a layered protocol that adapts to multiple storage layer protocols (including IPFS)
- It provides support for the application layer
- The project’s architecture provides support for a decentralized computing layer to enable a distributed cloud ecosystem
On the contrary of centralized endeavors, in which files are stored in a controlled host database, decentralized storage permits files to be stored in distinct hosts by distributing them across an entire network.
As a result, users are free to flexibly manage their data, which enhances data security and reliability through means that include data encryption, secure backup, authorized access, etc.
Simultaneously, decentralized storage enables a space-sharing model that can effectively reduce costs associated with storage.
The project is built on Substrate, which is part of the Polkadot blockchain. Its native token, Crust (CRU), can be found on several exchanges, including Huobi Global, CoinTiger, Hotcoin Global, Bitmart, and AOFEX.
Check out more information on the Crust Network website!
Aiming to build the foundation for the new age of the internet, Fleek is a project that facilitates website/app making with a permissionless and trustless manner, allowing people to developers to bypass censorship and centralized gatekeepers.
The platform reunites the best of several underlying protocols (e.g., IPFS, Filecoin, Ethereum) to allow developers to have the ultimate combo in terms of performance, resilience, and stability for virtually any use case.
In essence, the platform has a user-friendly low-code approach, with many different use cases that include IPFS hosting, IC hosting, storage, and gateway.
Fleek orchestrates different protocols such as IPFS, Dfinity, Textile, Filecoin, Ethereum, and others to permit developers to do what they please with further decentralization.
In terms of domain management, Fleek permits website builders to point their creations to an ENS (Ethereum Name Service) or HNS (Handshake) decentralized domain name, which automatically updates the content hash and abstracts fees.
Plus, the platform automatically archives and backups all IPFS/internet computer-hosted websites and apps to Filecoin, ensuring users a solid backup layer within a decentralized storage network out of Fleek.
Pangolin is one of the innovative DeFi tools that’s essentially a decentralized exchange (RUN). It runs on Avalanche, an open-source platform that bridges decentralized apps and new interoperable blockchains.
In essence, it has the same automated market-making (AMM) model utilized by Uniswap.
The platform has a native token called PNG, used for governance purposes. It is fully community distributed, and holders can trade their tokens both on Ethereum and Avalanche.
The difference between Pangolin and other exchanges is their further-decentralization approach on the market, including fast and inexpensive trading experience, community-driven development, and open token distribution in a fair manner.
Given that Pangolin bridges Ethereum and Avalanche, users can seek yield opportunities across different blockchains, maximizing their exposure to gains and leveraging their chances of winning with the same asset.
While trading on Pangolin, traders are exposed to fees as low as a few cents. In this sense, Avalanche powers the platform to function as a decentralized exchange while allowing users to enjoy the same advantages in a centralized exchange.
In terms of token distribution, Pangolin follows a fair launch model in which 95% of the total supply of PNG is distributed to the community. In comparison, the remaining 5% is distributed via airdrops.
Each Step Towards DeFi Mass Adoption Counts
It is impossible to deny the recent impact of the crypto industry, especially after the all-time highs beat by Bitcoin, Ethereum, and several other digital assets that followed the 2020-2021 bull run.
Consequently, talking about the mass adoption of cryptocurrencies and decentralized finance is not a utopia any longer. Instead, it represents a slow but steady transition that is already in course.
Nowadays, there is still a type of reluctance among many players in the DeFi sector regarding building solutions that are acceptable to TradFi, as there is a fear that it would corrupt the segment.
However, this type of approach could not be more wrong, as bridging DeFi and TradFi is an essential step to achieving the necessary scalability to replace the current financial system eventually.
Interoperability is still a concern that precludes DeFi mass adoption. Even though the industry has advanced a lot in this sense, there is still plenty of room left for solutions that bring different ecosystems together.
Gravity is a project that plays an essential role in this process by providing a blockchain-agnostic oracle system that supports cross-chain communication.
This way, it is possible to bring real-world data to the blockchain while interacting with different blockchains and sidechains within a unified structure.
The project is driven by the concept of an oracle consensus and its implementation in the protocol, which is denominated Pulse Consensus Algorithm.
This unique design of consensus is what permits Gravity to function as a singular blockchain-agnostic oracle. Their vision is to create a protocol that fulfills the existing gaps in the blockchain space in terms of interoperability, permitting developers to expand their landscape vision and leverage the power of a multi-place ecosystem at once.
Hashed is a project that has the potential to fully unlock the “unleashed power” within the crypto industry. Founded by a team based out of South Korea, Hashed reunites expert personnel, including several blockchain experts and developers in Asia and Silicon Valley.
Their viewpoint is that decentralization is not only a matter of leveraging productivity and efficiency in the global market, but it has the power to transform the core of the internet by bridging ecosystems to accelerate DeFi mass adoption.
The project has a significant portfolio that reunites companies and endeavors from separate continents to create a unified network with the much-needed resources they need to achieve their vision.
In December 2020, the Seoul-based company managed to raise $120 million in a venture fund for crypto deals, even though none of the investors were publicly identified due to legal requirements.
Currently, Hashed’s portfolio reunites several blockchain platforms (e.g., Dfinity, ICON, Cosmos, Ethereum, EOS, etc.), DeFi essentials (e.g., MakerDAO, Kyber Network, Syntethix, BzX, dYdX, etc.), and tens of other projects in the field.
Visit Hashed website to learn more about this ambitious project!
Nowadays, users are asked to login in and provide information on virtually every website they visit online. Hence, the passwords and other provided data are not secret; but instead, they are kept by the companies that run the services.
Consequently, the companies who run the internet keep all the information from users in huge “silos”, making it easy prey for hacking activities. Plus, the more data these companies gather, the more powerful and centralized they become.
To solve this annoying and persisting problem, Kilt has created a simple protocol for creating, claiming, issuing, presenting, and verifying digital credentials.
Kilt aims to provide a protocol in which users can claim any characteristics about themselves to a trusted entity (attester). If the attester considers the claim as true, it will certify it and hand a certificate (claimer) to the user.
Plus, a hash value of the certificate will be stored at the blockchain. If a certificate becomes invalid, the attesters can revoke them at any time directly in the Kilt blockchain.
This way, users can present their certificates to services they want to use online. If the verifier of the services trusts the attester, they will check the certificate’s validity in the blockchain.
Ultimately, all the users’ sensitive data remains unknown to any third party, as none of it is necessary during the process of verification.
Visit the Kilt Protocol website to learn more about the project!
The growing popularity of decentralized finance is reaching the masses, but only a few individuals (in comparison with the world’s population) are using it daily, which means something has to change.
In this sense, developers must focus on DeFi tools that bridge TradFi and DeFi, bringing the best of both worlds together to create unique solutions to impact the lives of everyday people.
Plus, with the growing number of protocols, tools, and software stacks that enable the development of the infrastructure of projects that would be impossible not a while ago, developers have what they need to materialize their ideas.