Which blockchain is the best for DeFi?

By Bfab | Good vibes | 10 Feb 2022

There are so many blockchains currently that you may be lost. To choose the right blockchain, you have first to think about what you want to do with it.

Blockchain developers are trying to overcome the blockchain trilemma, referring to the belief that decentralized networks can only provide two of three benefits with respect to decentralization, security and scalability.

If you want to invest your coins into DeFi protocols, the first option is to use layer-1 blockchains among the options below (not exhaustive):

Ethereum is secure and decentralized but its gas fees prevent it from being scalable. In short, Ethereum is affordable only for the whales.
Avalanche is a bit less decentralized and its gas fees are much lower. However, its gas fees are increasing as well as the transaction time.
Solana is theoretically secure and extremely scalable, but they have already suffered from several DDOS attacks and network outages.
Fantom is really secure and sufficiently scalable, with gas fees lower than on Avalanche. However, it is poorly decentralized.
Elrond seems to be secure, scalable and sufficiently decentralized. However, they do not have many dapps on their blockchain.
Tezos is secure, scalable and seems sufficiently decentralized. However, as they are only community-driven, any update takes time.
Cosmos is an efficient blockchain ecosystem, with many blockchains using their platform. However, it is not so much decentralized.

The trilemma is not fully solved by any layer-1 blockchain, although some of them like Fantom or Tezos are working pretty well without any major issue.

The key question for any layer-1 blockchain is: what will happen when they have as many users as Bitcoin or Ethereum? Only 3 years ago, everyone was moving from Bitcoin to Ethereum blockchain because Ethereum gas fees were much cheaper than on Bitcoin blockchain. Look at the result today...

If everybody moves to Avalanche, the result will be the same. Regarding Solana, large investors will not risk their assets on it, since it is too unstable. Elrond claim they do not have such issues. However, nobody knows how it will evolve once they have as many users as Solana, if it happens...

That's why another option is to use layer-2 blockchains built on top of a secure (but not scalable) layer-1 blockchain such as Ethereum:

Polygon is not a layer-2 solution but a separate sidechain. Staked tokens are locked in a smart contract deployed on the Ethereum blockchain.
Arbitrum and Optimism are both real layer-2 solutions benefiting from Ethereum security and providing high scalability at the same time.
Other ZK-rollups solutions are being developed, such as Starknet for instance. However, it is only the beginning and needs to be tested.

In summary, there is not one blockchain better than the other ones. It depends on what you want to do with it. You can use several blockchains, depending on the DeFi protocols you want to use. For instance, for Mai Finance, Polygon and Fantom are the best options. Look at LINK vault APY...

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