Defi Scaling Roadmap and Strategy (Last updated as of Sept 15/2020)

Defi Scaling Roadmap and Strategy (Last updated as of Sept 15/2020)

By fblauer | Yield Hacking with Defi | 5 Sep 2020


Introduction

These are my thoughts on the current situation with scalability. No one can predict the future with certainty. But I feel that we need some kind of strategy if we want to continue to operate in the Defi space. I am a huge fan of Defi on ethereum, and I hope that I will be able to go back to it when things settle down. In the mean time, I am making some small tweaks when gas fees are low, spending more time testing and exploring Tron, and researching various alternatives so that I can have an idea where we are headed with Decentralised finance. 

Current - Eth 1.0

  • Current home of composable Defi products and network effects - See my other blog postings
    • Best apps
    • Most reliable and battle tested
    • Good returns
    • Innovation
    • Developer support
    • Large, diverse Community
    • Good enough decentralisation and transparency 
  • BUT, The eth network is currently overloaded, very slow and expensive. A victim of its own success. 

53fa95b39939966f217ce7b53cbbac5a358baeb627cba94355836695d6ebe70c.png

  • It is becoming unusable for practical purposes. I can't execute any of my investing strategies
  • Lack of scalability could be a liquidity risk, so its more than just inconvenience. This is serious, and urgent
  • I need to do something, but what is the best approach for short, medium and long term? 
  • I/we need a strategy for when gas prices are high, and when gas prices are reasonable
  • I am invested in eth, and don't want to abandon it 

6 months -1 year - Eth L2 solutions and sidechains

  • Tons of different options - L2 Zksnarks, Optimistic Rollups etc. etc.
  • Tons of compatible side chains emerging such as:
    • xDai
    • Solana
    • Elrond
    • Binance smart chain
    • Phantom
    • Fusion
  • Too many options, and landscape is too complicated. 
  • There is no clear strategy yet for how composable Defi projects will move, and how long it will take
  • Will take a co-ordinated effort, which is hard with a decentralised community, multiple approaches and opinions and vested interests
  • No idea yet when the network will be usable again, what do we do in the mean time?

Now - 6 months - Tron chain, Binance Smart Chain (think of them as Eth 1.5 - (will be the subject of next blog posts)

Virtual copy of eth 1.0 with Proof Of Stake, but much faster and cheaper, for now

Tronfi.io ecosystem

  • pearl.finance, jackpool.finance etc. 
  • sun.io
  • Math wallet - Multichain swapping and staking - very useful for swapping assets from Eth/Erc20 to TRX/Trc20, USDT (and other chains also), as well as easy to use staking for TRX, Dot etc.
  • I stay away from the projects that don't seem to be vetted and audited (see my article on Defi risk - still applies no matter what chain)

Binance Smart Chain Ecosystem (just went live last week, and growing quickly)

  • Cream
  • Burger Swap
  • Swaptuna
  • Binance.org, Binance.com

Other Defi ecosystems (coming)

6 months - 2 years - Interoperability layers and chains

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  • In the mean time, I am staking Dot on Math wallet at 30% APR, and following the various parachains/projects/community

(1-2 years) Outside (remote) Chances for Defi eco system - Ontology, Eos, etc. 

  • Other interoperability types of solutions - Cosmos/Tendermint, Rampdefi, Radix/stakehound etc. 
  • Will all require interoperability and compatibility with Eth 1.0, and live products to even be considered

2-4 years - Eth 2.0 (Maybe something else by then, who knows?)

  • Won't even try to guess that far out. We'll cross that bridge when we come to it.
  • I may be retired by then. Hopefully, I will  have enough funds to last

Conclusion

These are my best guesses with the information that is currently available to me. This is subject to change as I get new info. In the mean time, I am exploring and testing the Tron Defi ecosystem. There are advantages and disadvantages, and I will probably write an article about it. But it is refreshing to have fast transactions, and very low network fees again. It is quite easy to learn if you already know Ethereum, since everything is almost a virtual copy, which can be a good thing in this case. It is not very innovative,  and may not even be the best long term solution, but they have definitely made some needed improvements. (That's why I called it like Eth 1.5 above). Its quite possible that it will also slow down and get more congested if a lot of people move over, so it will probably be a temporary solution, but we will see how it performs in the next few months. And I am not sure about things like reliability, security and governance etc. which I am still researching. In the longer term, I am hopeful for something like Polkadot, and eventually Eth 2.0. 

You may or may not agree with me, but I would really like to hear from you and what you are doing about the current situation


fblauer
fblauer

Self styled crypto enthusiast. Unbank yourself


Yield Hacking with Defi
Yield Hacking with Defi

This is a blog about the intersection between crypto currency and finance. I have been testing and evaluating various defi (decentralised finance) and opfi (open finance) projects. This includes lending and borrowing markets, decentralised exchanges, automated market making, smart contract wallets, and tools for measuring and monitoring return on investment. All enabled by blockchain technology, with decentralised, opensource and audited smart contracts. These systems are interoperable and composable.

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