Decentralized finance or DeFi was at its early stage in 2017. It grew considerably in 2019 but the pandemic changed the game. DeFi TVL (total value locked) is growing exponentially post-pandemic and the astronomical rate of growth is unforeseen in the financial history. Blockchain technology is truly revolutionary in nature and it has empowered DeFi to challenge legacy financial system. Lending-borrowing activity without the intervention of any middleman or third party has exited common people and the hottest buzzword of the crypto world is ‘DeFi’ at present. The decentralized apps or DAPPs of DeFi are giving control back to the masses. Not only lending-borrowing but also, we can see decentralized insurance and innovative yield generation methods on DeFi. The smart contracts of DeFi are the financial robots managing the asset expansion. The next-generation fintech evolution is happening at a rapid pace.
DeFi – Other blockchains are catching up
The complete DeFi ecosystem grew on Ethereum and till now maximum DeFi activity is happening on Ethereum only. Ethereum is a robust blockchain to develop DAPPs but scalability has remained a problem. The arbitrary and high gas fee of Ethereum is a big barrier to DeFi mass adoption. To bring more traders into DeFi, we need lightning-fast transactions without choking the system and that’s why many other blockchains can be good alternatives to Ethereum. EOS is one of them and the DeFi ecosystem has grown significantly on EOS.
Top 3 markets of Defibox
Defibox – one-stop DeFi shop on EOS
Defibox is an AMM (Automated Market Maker) based DEX on EOS. The success of Uniswap paved the roadmap for AMM based DEXs for permissionless swaps and Defibox was one of the first DEXs on EOS which bagged very good TVL. EOS transactions are feeless and it helped the DEX to grow very fast. The unique AMM of Defibox allows settlement of trades quickly and all the transactions are verifiable on the blockchain. The liquidity of the trades come from the on-chain pools and anybody can provide liquidity to the pools and earn trading fees. Defibox is ambitious and it projects itself as the one-stop DeFi application platform on EOS. Defibox should be seen as a combination of Uniswap+MakerDAO+AAVE. The swap feature is just like Uniswap but it has a liquidity mining mechanism also. BOX is the governance token of Defibox and BOX can be obtained by providing liquidity to the platform. You can also generate USN, a stablecoin, by staking EOS on Defibox. This mechanism is quite similar to the generation of DAI on MakerDao.
USN (a stablecoin) generation window on Defibox
An evolving organization
Defibox has lived up to its promise. Within a very short time, the project has delivered permissionless listings, on-chain transparent transactions and on-chain oracles. Decentralization of the project was debated earlier but now the project has implemented the concept of ‘Same Right with Same Token’. From being an anonymous organization, the project is moving towards building a biological evolving organization. Defibox was initiated by Defibox Foundation and they got funding from Newdex, a leading EOS DEX but now the final goal is to achieve true decentralization.
Swap, USN stablecoin and decentralized lending – these are the three basic ‘Lego Blocks’ of Defibox. The recently released Defibox Whitepaper V3.1 states that they want to develop a ‘satellite protocol’ to fully integrate the openness and composability of the three basic protocols. It’ll finally bring innovation to the protocol and enrich the diversity of the Defibox ecosystem. Satellite protocol will solve the impermanent loss problem of liquidity providing. USN exchange rate pegging has been an issue and the satellite protocol will aim to solve that too. The application scenario of USN must be expanded properly to bring more users. USN is presently single-collateral based. A multi-collateral based USN can definitely be more attractive. Lending-borrowing activity on a small scale is never profitable for such a platform. The satellite protocol will also increase the scale of lending-borrowing. How will these be achieved? The whitepaper doesn’t really say anything in detail and we need to wait to see how they implement it.
As..only the innovators win here
Newdex, the leading EOS exchange, moved towards DEX aggregation some months back. They are fetching liquidity from Defibox to solve the order book depth issue. This is basically a win-win situation for both Newdex and Defibox. EOS DeFi’s main problem has been liquidity. We need more novel approaches to solve the liquidity issue. EOS is the main asset of EOS DeFi but Defibox can’t sustain only with EOS. pNetwork, a cross-chain wrapping company, has already brought wrapped Bitcoin (PBTC) on EOS but we need more wrapped tokens on EOS. Defibox made a strategic collaboration with Organix sometimes back. Organix mints synthetic assets with excess collateral backup and it brings cryptocurrencies, commodities, fiat currencies, indexes and inverse assets to EOS by over-collateralization of OGX tokens. It is really possible to use Organix’s non-slippage trading mode within Defibox if two selected tokens are oTokens during a swap process.
Success is not final, failure is not fatal; it is the courage to continue that counts. – Winston Churchill
Defibox needs to embrace complete decentralization of governance for getting more user acceptance. It is a truth that no project becomes decentralized from day one and the virtue of decentralization is achieved through a long journey. The road trip has started for Defibox. Composability is a common problem of DeFi and Defibox is trying to address it meticulously. A DAPP must be freely combined with others to bring maximum users. Defibox recently surpassed 200 million USD TVL and that’s really significant achievement. Stablecoins are needed to supercharge DeFi and Tether is increasing USDT issuance on EOS. Undoubtedly, Defibox is going to benefit heavily from this. The market is ready for various experiments and continuous experimentation is the key to innovation. Defibox is pivoting to a promising direction with its unrelenting drive to break the status quo. Let’s keep a close watch.
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