TOP BLOCKCHAINS FOR DEFI - DxMinds

TOP BLOCKCHAINS FOR DEFI

Recently emerging blockchain affairs are continuously disrupting the financial systems all across the globe. Blockchains are taking the financial world to the progressive level like a storm. The existing financial system is risky due to its complexities which may lead to a theft-prone financial ecosystem. Fintech visionaries predict that upgrading a financial product to the central public blockchain solutions can help the finance organizations to enforce their solutions reducing the risks, giving complete authority of the network to a central body. Further making betterment in the envisioned system, a decentralized finance system can make the solutions free from any and every type of central body and regulations.

Decentralized solutions are showing effective results with the widest array of applications offering various innovative options for blockchain solutions, such as decentralized exchanges, Peer-to-peer lending, crypto loans, and more. There are several Defi applications available in the financial market and most of those are based on Ethereum technology, which is the second most recommended blockchain by the top blockchain developers in Dubai and the second-largest crypto blockchain which is continuously reshaping the financial market and transforming the existing one.

Financial systems are continuously getting disrupted with the efficient blockchain affairs, and the major ones leaving great imprints on the financial systems are:

Ethereum:

Ethereum paves out a wide area of the Defi system and it is the second-largest blockchain solution. The very first blockchain that introduced the option to hold and control assets over the decentralized network was bitcoin. Using this blockchain network, a user can transact their digital assets anywhere in the world to anyone using the same network. Later, to enhance the usability of blockchain networks and give a wider option to the users leveraging the potential of decentralized networks, Ethereum was developed. It can be simply defined as a scaled-up version of a previous decentralized network.

Ethereum offers improved control over the assets and better transaction features with enhanced visibility over the entire decentralized channel. Blockchain is developed for digital assets trading using blockchain currencies, but Ethereum offers alternative options to use banking options and local currencies as well for the trading purpose to make the process more flexible and simpler.

Ethereum has empowered most of the Defi solutions by offering a wide spectrum of trading and other financial services which includes, money transaction, fund borrowing with/without collateral, trading with crypto tokens, and more. Ethereum is allowing the financial companies to develop a wide range of financial products, expanding the array of Defi market and allowing the users to use it more effectively as compared to the previous one. With the help of Ethereum, blockchain developers in Washington DC are capable of expanding the uses of Defi solution and making money programable. The benefits offered by Ethereum over bitcoin are investing in index funds, scheduling payments, borrowing, lending, etc. Ethereum has become the favorite blockchain network of blockchain developers all across the globe for developing the most effective dApps.

Defi projects powered by Ethereum:

Aave: Aave is a decentralized platform having a non-custodial liquidity protocol allowing users to trade easily with features like borrowing and depositing money. The deposition of money is in the form of liquid allowing the depositors to earn passive money. Aave is one of the most elaborated Defi applications powered by Ethereum and the open-source aspect of Aave makes it more preferable for borrowers and depositors.

Aave is directly compared with the bank of cryptocurrency version, unlike other blockchain platforms it allows the depositor to deposit their money as a liquid in a liquidity pool instead of making one to one match. Another aspect that has added prominence to the application is its robust security which is incorporated with the set of smart contracts that connects peer-to-peer removing the middleman from the transactions.

  1. Compound:

Another Defi application powered by Ethereum is a compound that has extended a wide world of open financial applications. The compound is a decentralized interest rate protocol in which users can use their collaterals to lend or borrow crypto.

Solana:

It is another prominent blockchain network that has gained prominence for serving better speed, comparatively lower fees, and better scalability for decentralized financial solutions. The Defi system of Solana has exploded with a plethora of Defi projects. The reason for choosing Solana over Ethereum is the cost-effectiveness offered by the Solana platform. It uses a proof-of-history consensus mechanism to keep the traction cost lower than Ethereum. 

Defi projects powered by Solana:

Two major projects which are based on the Solana blockchain network are listed below:

  1. Port finance and Solend:

Port finance and Solend are both curated as decentralized bank and it mostly represents similar features of Ethereum based Aave. Studies conducted over decentralized platforms in 2021 state that, port finance is the 19th largest dApp based on Solana holding a locked value of $122 million. The port finance works on a liquidity mining mechanism that allows users to earn PORT (token of Solana) along with the interest.

  • Saber:

Saber is a Solana Defi protocol that is very much similar to the decentralized exchange curve finance based on Ethereum. This platform allows the users to peg their assets in the form of stablecoins, and wrapped assets.

  • Parrot finance:

Parrot finance is an equivalent solution to Ethereum’s marker DAO that allows users to lock their assets and mint equivalent values in return. The only limitation with parrot finance is the cap that it keeps on the amount PAI for minting. 

Cardano:

Integration of smart contracts with Cardano has opened a new gateway for the widest range of dApps with the most promising features. The elite features of Cardano are tempting most of the blockchain developers in Abu Dhabi to develop the most exciting apps using latest functionalities of smart contracts. 

One of the most exciting features offered by Cardano is interoperability which is now taking a lead over Ethereum with limited operability. Cardano is developed to serve the most effective solutions for all the Ethereum limitations. Hence, it is one of the most secure platforms to develop dApps for real-world use. Cardano is effectively eradicating the shortcomings of 1st and 2nd generation blockchain solutions. It has added scalability, reliability, and of course interoperability to the developed applications. 

A few Cardano projects gaining prominence are:

  1. ERGO DEX:

It is a smart contract platform that can be used to develop the most efficient Defi dApps. This platform allows a non-custodial exchange allowing users to use their liquid assets and trade on different networks.

  • Empower:

Empower is based on the Cardano platform and is developed to enhance the potential of decentralized financial solutions. This protocol is giving a perfect solution for various financial industry problems, such as lack of funding, lack of fund supply, higher capital cost, and more. 

Polkadot:

Polkadot is one of the most prominent blockchain development protocols due to its layers. It contains a relay chain at the base layer whereas layer 1 holds a network of parachains which is a heterogeneous blockchain. Both, the native Polkadot chain and the parachains are used to develop the most elite Defi apps with the most eminent features and interoperability is one of the major and primary features among them. To make the interoperability more effective with flawless cross-chain communication between parachains, Polkadots uses XCMP (cross-chain message passing). Hence, Defi apps belonging to any of the blockchain networks (bitcoin, Ethereum, etc.) can use bridges to communicate easily with an app developed on the Polkadot ecosystem.

Polkadot is a layered network of chains that is mainly intended for effective interoperability. The rely chain which is integrated at the base is responsible for the governance of the consensus mechanism and the parachains are responsible for the shared security. 

Parachains possess characteristics of interoperability and hence it is independent of any third-party solution which makes it complete to have its native token. It also offers flexibility to the blockchain developers to develop the governance base on their development platform. 

Polkadot: A unique ecosystem for Defi

A sudden rise in the numbers of blockchain developers in San Francisco has been noticed and most of those are choosing Polkadot to develop a promising Defi solution. The reason for the strident gradient of Defi developers for the Polkadot is its easy development framework, called a Substrate. A few blockchain developers in UAE are choosing Polkadot to develop a new Defi app, whereas a few are now opting in to upgrade their existing one. It is more preferred to develop liquid staking solutions which is a category of DeFi solutions having an option to stake the liquidity into a tradable value without having any lock-in period. 

A few polkadot based Defi projects transforming the financial system are listed below:

  1. Acala: It is a Defi solution that can be used to transact USD between any blockchain networks build on Polkadot platform.
  2. Bifrost: It is developed on parachain and is designed specifically to stake liquidity with which user can easily stake their tokens and mint vtokens for equivalent values.
  3. Staff: This app allows the user to stake their staking tokens and get another token as a substitute to continue their trading. This has helped users to remain active with trading and exchanging activities on the network without waiting for their staked token to un-bond.
  4. Equilibrium: It is a cross-chain market that blends pooled lending options with the synthetic asset generation feature to make trading more effective.

Avalanche:

Another blockchain network that is ruling the industry is Avalanche. It is integrated with smart contracts and hence it offers the lowest cost with excellent transaction speed. Avalanche has considered one of the most promising blockchain platforms for Defi app development ads it is one of the fastest open programmable platforms. 

Another major reason that tempts Defi app developers in Dubai to choose Avalanche is its compatibility with Ethereum’s assets, tools, and apps that offer a greater throughput along with lower fees. Avalanche also offers a bridge that can easily connect with the Ethereum network. 

Avalanche comprises three different types of blockchains, and they are:

  • Exchange chain:

It is responsible for the transaction of avalanche assets.

  • Contract chain:

This chain represents the feature of smart contracts allowing the developers to develop a better Defi solution having better scalability and security. The C-chain is highly compatible with Ethereum virtual machine and it allows easy integration of the Ethereum smart contract on Avalanche. 

  • Platform chain:

The platform chain allows the development of apps into layers, such as L1 and L2 which are called subnets. P-chain manages all the subnets in the decentralized app by keeping detailed tracking of the validators. 

Polygon:

Polygon is emerging as one of the prominent blockchains in recent years and the year 2021 has shown a sharp rise in the graph of polygon usage. Now, this blockchain is competing with the leaders of the industry and as a result, exponential growth in the adoption of polygon has been noticed among the blockchain developers in New York.

Takeaway:

If you are seeking the list of top blockchains to develop an elite and effective Defi solution then definitely you might be wondering what Defi is and what is its scope. Defi offers a wide range of benefits and eradication of intermediaries is one among those. The top blockchains which are considered the best by the top blockchain developers in India are Ethereum, Avalanche, Polygon, Polkadot, Cardano, and Solana. With these blockchains, you can effectively develop decentralized applications to thrive in the Defi market. 



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