Hi, Ethereum once held the promise of bringing decentralized finance to the masses, yet DeFi suffered a baptism of fire, as insane fees, smart contract exploits and huge user losses determined that DeFi is in no means a mature market and needs improvements regarding transparency, decentralization, assurance, and low fees.

Despite these setbacks, DeFi is still intrinsically linked with Ethereum, which continues on its strong upwards trajectory and has remained its nr 2 spot with a market capitalization of $212,575,360,532 and a price tag of $1,841.81 ETH. For new crypto investors, there might be a second chance to invest in a similar project that is in an earlier phase of its roadmap, yet holds promising future use-cases. So, let's have a closer look at Cardano's DeFi solutions.

Cardano and DeFi.

Mary hardfork.

Most people acquainted with Cardano already knew that the recent Mary hardfork was the first breakthrough towards supporting DeFi services on the Cardano blockchain. The hardfork allows entrepreneurs to develop dApps and use smart contracts as well as other features needed for decentralized financial services.

Improving on other blockchain's shortcomings.

DeFi was 'the' buzzword of 2020 and 2021 won't be any different. Several blockchains aim to implement DeFi services, yet Ethereum was by far the biggest winner, as developers trusted its smart contracts to create their DeFi platforms. Despite its mass adoption, Ethereum DeFi protocols suffer from the high fees, leaving lots of room for improvements.

Cardano has a unique position since it can learn from Ethereum's shortcomings and mistakes and make significant improvements such as:

• Cardano aims to offer much lower transaction fees;
• Cardano guarantees better security in token and smart contracts;
• Cardano has an excellent community that offers support.

Lower transaction fees.

Cardano will support native token swaps with no execution fees (!) to attract more developers. In its attempt to bank the unbanked, Cardano wants to avoid high fees in an effort to disrupt old legacy systems and pioneer with new financial infrastructure that doesn't exploit poor people with sky high costs.

In short, Cardano's lower transaction fees, compared to Ethereum, minimize the entry for new developers and users. Exit gas fees when processing a single transaction. Exit execution fees when swapping two tokens. Can you see the locomotive I'm trying to show you?

Better security in token and smart contracts.

Cardano's DeFi protocols will be more secure as they are not based on smart contracts like with Ethereum. Cardano tokens will run directly on Cardano's ledger, like ADA does, instead of using smart contracts. This removes the costly burden of high gas costs when interacting with a token or smart contract. Instead, Cardano is already working with Bondly Finance, the project behind Polkadot platform, to integrate support for the BONDLY token on the Cardano network.

Creating a native token on Cardano requires minimal custom code versus Ethereum's code, as Cardano removed a layer of complexity, allowing for transactions directly on the Cardano blockchain.

While Ethereum bets on optimistic ZK-rollups and sharding technology for scaling to Ethereum 2.0, Charles Hoskinson expects a series of attacks on these fragile technologies, technologies not needed by Cardano.

An excellent community that offers support.

Cardano can rely on a massive and near fully decentralized ecosystem, with community stake pools, a staking and delegation ecosystem, and many community channels.

Cardano' Project Catalyst is the biggest community-led funding initiative in the crypto industry, financing Liqwid Finance, the first DeFi application on Cardano. Interest in Cardano is at all-time high and a clear harbinger of what's to come: a new wave of DeFi applications and other services on the low-cost and nearly fully decentralized Cardano crypto ecosystem.

Version 1 of the Liqwid Finance protocol will go live along with the full activation of Goguen and users will be able to earn its token, LQ, by providing liquidity.

More of our Cardano articles:

• Why Cardano is the right investment right now! PART 1. A fundamental look at Bitcoin, Ethereum and Cardano.
• Why Cardano is the right investment right now! PART 2. A comparison with Ethereum.
• Why Cardano is the right investment right now! PART 3. An ambitious roadmap for Africa's unbanked.

Disclaimer: This is not financial advice, yet a good starting point for your own research!