I want to take a look at decentralized finance in the bitcoin ecosystem and, for perspective, most of us know about DeFi in the thriving Ethereum ecosystem. There’s also decentralized finance being built on Cardano, Solana, Polkadot, etc. Bitcoin has always been the strongest chain, the most secure chain, and when it comes to dApps, when it comes to financial products, you do want a chain that prioritizes that security. We’re going to take a look at the DeFiChain, what makes them different, what exactly it is, as well as some examples of the building taking place and much more.
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What Is DefiChain?
In a nutshell, the DeFiChain is what enables advanced DeFi applications on bitcoin, It was launched as a hard fork on the bitcoin network over two years ago. Defy Chain is a completely decentralized platform that provides a variety of DeFi services such as token wrapping, lending, borrowing, decentralized exchanges, asset tokenization, yield farming, price oracles, and much more. This is basically all the DeFi we know and love on other chains like ethereum. This means that on bitcoin, all transactions on DeFiChain are non-turn complete, which makes them faster while lowering the gas costs and reducing the chances of smart contract errors.
Although constructed atop a bitcoin blockchain, the DeFiChain employs a hybrid version of proof-of-stake and proof-of-work consensus mechanisms to facilitate transactions and incentivize network participation. All these things are how they’re able to keep the security of the bitcoin network while also increasing the scalability. Although we’ve mentioned a few of these, these are some of the dApps / functionality that are now able to be built on the bitcoin ecosystem. We can have:
- decentralized lending, borrowing,
- decentralized wrapping of tokens,
- price oracles,
- DEXes asset tokenization and much more.
Main Benefits and Technical Details
Now let’s check out some of their main benefits and technical details. So what are the technical? The DeFiChain, including its coin, is built on top of bitcoin as a fork of bitcoin, like I said, but what makes them different than many other protocols is that DFI was never sold as an ICO. Instead, everything was and is distributed via staking. This also means that the price has never been set by any centralized company. It is completely independent and the result of just demand and supply.
The main net has been live since the day of the bitcoin genesis back in May 2020 and has been up and running since. This means that even though the DeFiChain is over two years old now, there is no waiting on a mainnet staking anything like that. Everything is already live and working now.
Basically, since DeFiChain is built on top of Bitcoin, which is by far the number one coin in the industry, it benefits from Bitcoin’s extremely strong security and high hash power. I’m not a coder, I don’t come from a technical background, but if they are piggybacking off bitcoin security, that’s awesome, but how are they able to have lower transaction fees because bitcoin’s always been the most secure network, but the trade-off is it’s not as fast. How does DeFiChain address this well?
As they say, compared to ETH or even BTC, DeFiChain is orders of magnitude lower in fees and super fast. This is in part possible by being a non-turn complete blockchain, making DeFiChain drastically less prone to smart contract errors, which is incredibly important for financial transactions. What do you think?
But one of the other benefits of non-turing also means that there will be no games or casinos to clog the system and jack up gas prices, like ethereum. In short, DeFiChain combines the best of two worlds, meaning bitcoin’s high security and hash power, as well as live and working proof-of-stake, making extremely fast and inexpensive transactions possible.
DFI Coin Utility
What is the utility of the DFi token? Well, it’s used to pay for transaction fees, for smart contracts and other DeFi activities. Loan collateral for lending and borrowing using crypto assets as collateral. That’s where the finance of decentralized finance comes in with the borrowing and lending. You can run a node with 20 000 DFi and support the network. A big part of the utility is used for governance, so community fund proposals, meaning with a token you can submit a community fund proposal for 10 DFI. By the way, the DeFiChain is because they transitioned into a decentralized autonomous organization back in 2021. The people are truly in control.
And last but not least, for the DFI coin utility, you can create a custom DeFi token, a non-refundable personalized DCT DeFi custom token, and slash or liquidity pools provide liquidity for the decentralized exchange between crypto assets, much like Uniswap has UniD, DeFiChain has DFI token, and here are some of the liquidity pools in APRs offered:
That is the token in a nutshell. Let’s keep moving. What about the node distribution?
They say decentralized and distributed, and here is that visual of the nodes across the globe:
DeFiChain nodes are distributed globally across data centers in the US, Canada, Europe, India, Singapore, and Australia. My thoughts on this: personally, I would like to see them increase the distribution of these nodes or just increase the nodes in general, so we will have to keep tabs on this. We will see if they keep building, keeping growing and moving forward.
DeFiChain Adds dTokens for Disney, Microstrategy, & MORE!
One of the cool things about DeFi on bitcoin is that all the elements of traditional finance that aren’t really accessible to everybody are now open in this decentralized world. For example, the DeFiChain adds new dtokens corresponding to Disney, Intel Microstrategy, and a China ETF. The four new decentralized tokens will give users price exposure, not ownership, to the underlying stocks and ETFs without any restrictions, meaning you can buy them, sell them, trade them, and have exposure to all these blue-chip traditional assets now in the Web3 world without having to go through these centralized middlemen.
In the DeFiChain ecosystem, the community decides which dtokens will be added next. Going further, what else is the significance of this? The addition of new dtokens marks a major step towards enabling DeFi users to benefit from the price appreciation of traditional assets such as stocks, bonds, commodities, ETFs, etc.
And it’s not just those four mentioned above; DeFiChain already offers dtokens corresponding to the S&P 500, Tesla, Apple, Alibaba, GameStock, the Nasdaq, Amazon, Microsoft, Netflix, and so on. In a direct quote from the lead engineer at DeFiChain,
“DeFiChain is constantly expanding the dToken universe to provide users with a serious alternative to traditional financial brokers, all while providing the flexibility and benefits of decentralization.”
The final thing I’ll say on this sort of mention above. The dTokens are not securities issued by a company or a large institution, meaning they give users price exposure but not ownership, voting rights, dividends, or other benefits available for stockholders. Would you want to trade some Microstrategy for some Disney?
Finally, looking at the roadmap, we can see they are on track for 2022. Some things in the pipeline are Q2 browser extension wallet, making it easier for individuals to offer derivatives, i.e., futures and options, on their platform. That’ll be huge.
Then, of course, in Q3 to Q4 EVM support on DeFiChain, ethereum virtual machine support. That’s huge, NFT support as well as Ledger support for light wallet, so things to keep on the radar. We will have to keep tabs on this and see how they implement it.
[This article is a transcription of a video made by Altcoin Daily]
Original video: https://youtu.be/CHTaUJz5rnk ]