What if you could improve MakerDAO with side chains and cross chains?
Needless to say, the impact of the ‘March 12 Crash’ on all sectors of the economy was devastating. Until today, a month later, there are still people who recover the market data before and after the crash, hoping to learn from 'the first historical one-day decline' event. Not only did the crash cause panic in the markets, but it also caused the collapse on some of the most promising areas, leading to unpredictable situations, such as Defi, which are really popular in 2019.
The collapse coincided with massive user demand for trading ETH and ERC20 Tokens, as well as quarterly demand for the USDT, leading to congestion on the Ethereum Network, where users needed much higher Gas service fees than usual to get confirmation from the miners as soon as possible. The data showed that a transaction had been confirmed for more than a day at the time of the worst congestion on the Ethereum network. And the Ethereum network congestion has brought the chain reaction for its prosperous ecosystem, especially Defi. Network congestion has completely disabled the oracle of top decentralized applications, including MakerDAO. and users have been unable to cash deposit or take out collateral. Even until March 13, the Ethernet network was still congested, making many users get Ethereum with 0dai in the liquidation auction of maker, because only one person's offer was packaged.
Network Congestion Solution
This is not the first time that Ethereum's network has become clogged, with traffic from the 2017 Cryptokitties and the 2018 Fomo3D. The main reason for this is that there is not yet a viable expansion plan for the Ethereum, and all applications are based on the ethereum chain, and all transactions can only pass through one ethereum chain, there's always a congestion in the case of limited capacity.
However, the congestion of Ethereal Square is not without solutions. On the contrary, there are a lot of alternatives. Several teams have provided solutions for Ethereum from Layer 0, Layer 1 and Layer 2. Side chains and cross chains are one of them.
There is only one application on a side chain, and all the resources on the chain are only used by this one application, without interference with other side chains and other applications. When a chain resource is full, a side chain can be added to interact under the cross chain, just like there are multiple servers in an online game.
The combination of cross chain and side chain was once the vision of EOS. EOS, known as one million TPS, used to rely on side chain to increase TPS. A large number of side chains combined with the EOS main chain to form a huge road for users to pass through. But, the side chain ecosystem of EOS has not yet taken shape, only a few side chains are almost silent now. All the APPS are still on the mainnet, leading to EIDOS which has been clogging the EOS mainnet for five months, and the updated Voice have to be tested on one side chain.
Which project still uses the direction that side chain and cross-chain combine now? We found that aelf, which had just released the latest testnet, had adopted this tactic.
aelf cross-chain, different from cross-chain’s star ‘Cosmos’ and ‘Polkadot’, which adopt centralized cross-chain. Each cross-chain of Cosmos needs to communicate with other chains through central hub, and each cross-chain of Polkadot needs to communicate with other chains through relay chain. However, aelf cross-chains do not need a center. In a sense, aelf is a kind of decentralized cross chain.
aelf implements inter-chain communication in a way called ‘index’, which refers to the transmission of data from one chain to another. The main chain first requests the data from the side chain which needs the index, and the side chain transmits the data information to the main chain, which is the side chain of the main chain index. Then the main chain will complete the information verification processing, the side chain then request the data index main chain, the main chain will transfer the data to the side chain, this step is the side chain index main chain. Cross-chain is realized by two-step Index.
At a time when Defi is still hot, we can imagine that if we build a Makerdao on aelf, what advantages would it have over Ethereum? Let's call this project MakerAELF.
First of all, MakerAELF is built on the aelf side-chain and does not take up resources of the main chain. All resources on this side chain are controlled by the MakerAELF, and unexpected events such as blockages on the main chain do not affect the running on the MakerAELF chain.
We assume that the stable coin on MakerAELF is called FAI, and it is made by overcollateralized ELF, which allows users to earn interest, borrow money and so on. Similarly, once a sharp fluctuation happened in Elf prices, a similar situation would arise with DAI in FAI, where users would need to supplement collateral or liquidate. On the resource-independent MakerAELF’s side chain, the user does not need to consider the main chain situation, as long as the MakerAELF’s side chain is not blocked, the user's action will not be interfered by the outside world.
The only congestion situation in makeraelf is that there are too many users in this side chain, resulting in network congestion. With the help of aelf cross chain, MakerAELF has no need to worry about this issue.
Let's take the game as an example. For a large-scale online game, it is impossible for tens of millions of users to play games in one server, otherwise the game fluency will be very bad. There must be multiple servers in the game for common users to choose. In the case of too many servers, users will choose another server to participate in the game. The same can be said of aelf's cross-chain.
After the side chain of makeraelf can no longer accommodate more users, another side chain can be created, which is equivalent to starting a new server. The linkage between the two servers depends on the aelf cross-chain technology. If the old users on the old chain want to run on the new side chain, they can still rely on aelf's cross-chain technology.
From the perspective of the aelf testnet effect, aelf cross chain transfer has been realized, which only needs two indexing processes to complete. Older users who have cross-chain assets in the MakerAELF old chain can use cross-chain to transfer assets to the new chain and continue to use MakerAELF on a new server.
Of course, these applications of aelf ecosystem have not yet been developed. Everything is waiting for the capable developers to join the ecosystem and develop the ecosystem.
aelf held a testnet DApp competition from 21st April to 9th June to attract developers. Developers can develop DApp on the aelf testnet, and the winners will be awarded 20,000 ELF or 12,000 ELF.
Just like the smartphone ecosystem, rich apps attract more developers and users, and so do blockchains, where apps, developers, and users converge in a technologically sophisticated network. Aelf realizes cross chain after Ethereum and EOS, but before cosmos and Polkadot. So, what kind of application ecosystem can aelf have?