Integrating DeFi with Bitcoin, Why Is DeFiChain So Special?

Integrating DeFi with Bitcoin, Why Is DeFiChain So Special?


When it comes to DeFi, most people first think of DeFi protocols based on Ethereum, but there are very few based on Bitcoin. The DeFiChain (DFI), which was listed on KuCoin recently, is committed to bringing DeFi into the Bitcoin ecosystem. What exactly is DeFiChain? Why is DeFiChian so special? And what benefits will it bring to DeFi?

In this article, KuCoin Blog will take you on a dive into the dedicated blockchain for DeFi——DeFiChain.

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01 Fast-Growing DeFi

2020 was the year of DeFi. DeFi saw explosive growth this past year. According to the data from DeFi Pulse, there is an unprecedented upward trend in total value locked in DeFi, which skyrocketed from the year-opening’s $650 million to $22 billion, an astounding increase of over 2,000% year-on-year. With the rise of DeFi, although a new round of bull market has started, more and more problems have followed.

 

02 Existing Problems in DeFi

For a long time, many DeFi protocols were based on the Ethereum blockchain, which is growingly overloaded right now. The low TPS and high gas fees make it difficult to support business-level decentralized financial applications and hinder the further development of DeFi.

Secondly, Turing-complete brings greater flexibility to Ethereum, while also reducing security. A research institution once audited 1 million smart contracts on the market and found that 34,000 smart contracts are at risk. Due to less security, Turing-complete blockchains like ETH and EOS are not friendly for all DeFi applications.

 

03 The Solution of DeFiChain

DeFiChain was designed specifically for DeFi applications. It does not support any function other than those needed for decentralized finance. The network operates on a PoS consensus mechanism and further leverages Bitcoin’s security protocols by anchoring to the Bitcoin blockchain (via Merkle root) every few minutes.

Moreover, being non-Turing complete, DeFi transactions on DeFiChain flow quickly and smoothly at low gas rates. Offering a significantly reduced risk of smart contract errors, DeFiChain is a more robust financial-based blockchain providing higher levels of immutability and security for users.

Put simply, the goal of the DeFiChain was to bring full DeFi capabilities to the Bitcoin ecosystem.

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The DFI is the governance and utility token of the DeFiChain ecosystem. It is used primarily as gas for transactions (adding to liquidity pools, performing swaps on DEX, and coin transfers), but also for governance/voting on improvement proposals on the chain. DFI is also used for creation of new tokens on DeFiChain and for submitting community proposals. In the near future, DFI will be used for cross-chain exchanges and loan interest payments.

 

04 The Team

The chairman, Dr. Julian Hosp, is a serial entrepreneur, ex-pro athlete, medical doctor (now non-practicing), blockchain expert, and the largest crypto influencer in the German-speaking world. The CTO of DeFiChain, U-Zyn Chua, is an early contributor to Bitcoin and Dash, as well as blockchain consultant to the Singapore Government. He was co-founder of NZIA – which launched the world’s first central bank digital currency (CBDC) in the Bahamas.

 

05 Closing Thoughts

The great advantage of the DeFiChain is that it is non-Turing complete and keeps the same high level of security as the Bitcoin protocol. In addition, it supported only the functions required by the DeFi application so that it allows faster processing and lower transaction fees. According to the roadmap of DeFiChain, its product line covers nearly all the DeFi field, which also brings great challenges to the DeFiChain teams.


KuCoin Blog
KuCoin Blog

KuCoin is a global crypto exchange that supports multiple crypto asset transactions. Established in September 2017, KuCoin has grown into one of the most popular crypto exchanges in the world.


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