In the first half of 2020, with capital pouring in and technology making rapid progress, decentralized finance (DeFi) was developing at incredible speed. As early projects gave way to a new wave of more innovative projects, various new applications sprang up and many products which were unimaginable before emerged. In short, Defi is much like the DApp concept that went viral in 2018, except that DApps were mostly on public chains back then, whereas DeFi today is mostly on Ethereum. Data show that the total market value of DeFi tokens has exceeded 6.2 billion US dollars. After a period of evolution and integration by trial and error, DeFi has exhibited some specific trends and has become the star player in the blockchain market. Nevertheless, it has yet to create the most appealing use cases.
According to the latest data of August 11, Uniswap on Ethereum processes more than 100,000 transactions in 24 hours, and the daily trading volume has reached 167 million US dollars, a milestone in the development of DeFi on Ethereum. From the rising value locked in DeFi, to the emergence of liquidity mining, and the value discovery of Uniswap, Ethereum has garnered enough attention and capital before its 2.0 upgrade.
However, some problems that came up along the way cannot be ignored. For example, before adding Layer 2 or upgrading to 2.0, the performance bottleneck of Ethereum was its inability to handle a high transaction throughput, resulting in record-high transaction fees. As the volume increases, users need to pay a higher gas fee in order to have their transactions processed faster, while those with small gas fees are being processed ever slower, forcing everyone to raise the gas fee, thus the cycle repeats itself.
This presents an opportunity to other public chain projects. DeFi is repeating the way the exponential growth of DApp extended from Ethereum to other public chains. As a star public chain project, aelf certainly has a part to play in DeFi. aelf has a full range of DeFi infrastructure, including cross-chain assets, interoperability solution, and stablecoin.
Recently, with ease of use, scalability and security of the cross-chain solution in mind, the aelf tech team has carried out in-depth research on cross-chain transfer standards and officially released the cross-chain transfer protocol (CCTP), which can realize cross-chain transfer, asset transfer and existence proof between incompatible and independent blockchain systems, and defined a unified standard for cross-chain assets. The protocol also provides a standardized interface and data structure for the construction of decentralized services of cross-chain asset transfer, and provides a general solution for building decentralized services of cross-chain assets’ proof of existence.
Aelf’s cross-chain solution mainly focuses on performance and business application. As an infrastructure, blockchain provides basic solutions for all walks of life. Good performance is the basis of its implementation and the core. One of the indicators of project performance is TPS, which is the number of transactions processed per second. Aelf’s highest TPS so far was 14,968 per second, 149 times that of Ethereum EVM. At present, the efficiency of aelf’s cross-chain solution can be on a par with that of central servers. With its unique parallel processing, scalable cluster nodes and database separation technology, aelf can provide suitable performance support for enterprise-level business applications.
Clearly, the most obvious side effect of building DeFi on other public chains is the lack of assets in the new ecosystem. Ethereum has issued the most cryptocurrency assets, so the exchange’s value would be significantly reduced if it could not access these assets and the native ETH. Aelf also took this issue into account and will provide a set of interoperability solutions with ERC-20 tokens. It can directly access the ETH ecosystem, allowing applications and wallets based on ETH to access it and maintain the interoperability with ETH.
Someone vividly described that upgrading Ethereum to 2.0 is like changing the tires while driving, whereas other competitors are building cars in the garages, ready to hit the road.
As all eyes are fixed on Ethereum’s DeFi, aelf still focuses on developing its own technology. We believe as long as we do the right thing and keep the direction unchanged, eventually our day will come, whether in turbulent times or a frothy market.
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