Overview of upcoming DeFi ecosystem but not on Ethereum
As you already know, 2019 was the year of DeFi. At the middle of 2018, in DeFi space, there were a few protocols like MakerDAO and compound, 0x and they were not used for developers and users and evaluated so much. And, at the application layer, there was no cool product ( if there was, it wasn’t enough good to use).
But, currently, some protocols and applications( e.g. Maker DAO and Uniswap, Instadapp) have grown much more than we expected, and also a lot of new financial protocols and applications(not only lending and DEX but also other kinds of financial products like derivatives and investing) have been developed rapidly.
According to DeFi pulse, the total value(USD) locked in DeFi services is $932.9M now(5th, Jan 2020). This is 4times more than this time last year($244M). And surprisingly, the dominance of MakerDAO(58%) gradually decreased. When I watched Defi pulse around this time last year, it was more than 85%.
Recently, even CB Insight used this term “DeFi” in their research report. I guess, in the next few years, DeFi would be a Buzzword just like “Blockchain” in Fintech space. It’s represented how ethereum blockchain has the potential to change the financial industry in the future.
But, besides ethereum, there are a few public blockchain platforms that are expected by developers to use them to build decentralized financial applications.
At the moment, nobody may compare other blockchain platforms with ethereum because there are big differences between them in terms of the market scale and the number of projects. However, recently, some projects started to leave ethereum and move on to another platform as its blockchain infrastructure.
So I think it’s important for all DeFi geeks and developers to keep in touch with them and all of them have the potential to overtake ethereum in the next few years. Then, in this article, I would like to introduce “DeFi not on ethereum”. 2019 might be the year of DeFi only on ethereum but 2020 will be truly the year of DeFi, and if so, I can be excited more.
※1 : some readers may think some of the platforms that I pick technically don’t have“Decentralized” architecture to build a trustless financial system. But, in this article, I don’t care about these differences. Instead, as long as it’s recognized as a public blockchain platform in crypto space so far, I’m willing to introduce it as a DeFi platform.
※2 : I won’t explain about every project in details. so this is just a snapshot of progress about DeFi on non-ethereum.
1- Bitcoin
From my perspective, Bitcoin(BTC) is the first implementation of decentralized finance. It proved that creating a decentralized payment system is not impossible. And in recent years, finally, a few kinds of ways to build a financial system on Bitcoin have been proposed and developed.
According to this article, The ways to build DeFi applications on Bitcoin Blockchain are divided into 4 parts.
① Cross-Chain Swap : Ex- Arwen, Summa
② Federated-Sidechain: Ex- RSK, Liquid
③ Using other blockchain : Ex- WBTC, Cosmos zones
④ Native or 2nd Layer : Ex- Lightning Network, Discreet Log Contracts, MAST, TradeLayer(on forked Omni),
As you know, the most representative projects of DeFi on Bitcoin is Lightning Network which is the 2nd layer payment solution. We found that it hasn’t grown so much in 2019 due to the low network capacity according to this chart but I think the breakthrough is just around the corner.
2- EOS
Since its centralized architecture, EOS might be not recognized as a suitable DeFi platform by developers. On EOS blockchain, developers can’t make a non-custodial contract, and also contract owner can change its contract anytime. But compared with bitcoin, there are a number of financial projects. So, anyway, let me check what kind of Defi projects there are on EOS.
・Stablecoin:
EOSDT（USD pegged, EOS backed stablecoin)
Carbon.Money(Multi-platform stablecoin)
・Lending:
EOSREX( lending and borrowing CPU & NET resources )
Chintai(Token Leasing Platform)
・Exchange:
Bancor DEX and relays( dex across both EOS and Ethereum)
pTokens( create pEOS, erc20 EOS)
・Others
Worbli (Compliant and regulated side chain)
TokenORO(Regulatory compliant gold-based Security token)
3- Cosmos
Cosmos is a decentralized network of independent several parallel blockchains, each powered by BFT consensus algorithms like Tendermint consensus. Anyone can build their own blockchain called cosmos zone connected cosmos hub.
One of the most remarkable DeFi use-cases of cosmos is Kava, which is a decentralized stablecoin system like MakerDAO on Ethereum built on cosmos zone. Users can apply any crypto-asset supported by Cosmos as collateral in Kava, so it makes DeFi ecosystem more inclusive for assets in entire crypto space.
In addition to Kava, Cosmos zone is used for Binance chain. Binance chain has offered only the function of exchange so far but I guess it may develop other functions, for example, BUSD(stablecoin) and derivatives protocols and with binance dex in the future. In addition to them, Terra money(seigniorage-share stablecoin) is also worthy of note, which tries to create a decentralized economy.
※Here, you can check projects list on cosmos blockchain.
4- Polkadot
Polkadot is a layer first blockchain network focused on interoperability and scalability, in a nutshell, it’s a network connects a number of different blockchains — so it’s often compared with cosmos. Even though Polkadot network hasn’t been launched, there are a few of upcoming financial projects. For instance, ChainX and Akropolis, Acala Network.
ChainX is building an interchain blockchian for decentralized finance based on Substrate(blockchian framework). It aims to break the barriers of assets between several blockchains, it means it’s going to bridge the gaps between ethereum-based DEX and other dapps in other blockchains. Right now, ChainX has built a BTC bridge and their own DEX.
Akropolis is building a protocol which allows developers and communities to make and operate their own FAO(financial autonomous organization), — e.g. digital co-ops, guilds, mutuals. these organizations are fully interoperable with not only internal but also external third party protocols and chains. it means every FAO is going to be able to leverage, for example, Bitcoin Lightning Network, compound finance, Zcash etc…
Laminar is open finance platform especially for margin trading, synthetic asset, money market. It seems like a protocol trying to put Synthetix and dydx, compound together on polkadot network. And like kava on cosmos, there is a decentralized stablecoin platform accelerating cross-chain network called Acala Network. Laminar and Acala are developed by the same team and both are going to launch Mainnet in Q1~Q2 this year.
And recently, Centrifuge(supply chain protocol) changed the first platform to launch its protocol from ethereum to polkadot. It seems rational because their business is more suitable for the enterprise relatively.
5- Celo
Celo is a first layer blockchain focused on creating a mobile-focused decentralized stablecoin platform. Unlike the MakerDAO and ethereum, Celo is trying to create and manage decentralized stablecoin at the protocol level.
it’s going to launch Mainnet soon and according to Celo Dapp Gallery, Saving Circle is the first project on Celo blockchain. It lets you deposit your funds to the liquidity pool for some of us to borrow money to buy something expensive.
At this point, Celo is not so famous in crypto space compared with the above platforms but I think celo is one of the coolest projects which have the potential to change the landscape of financial inclusion by using blockchain technology in the future.
Since their primary vision is “financial inclusion” and it tries to build stablecoin platform, it’s often said as a competitor of Facebook’s Libra.
6- Algorand
Algorand is a pure Proof os stake platform which is trying to build the next-generation public blockchain solves blockchain trilemma: security, scalability, and decentralization. Although Algorand hasn’t launched the mainnet yet, there are some existing DeFi projects wating this platform being alive, for example, IDEX and Securitize, AssetBlock.
References
・DeFi #3–2020: The Borderless State of DeFi
・The Promises and Perils of DeFi
・Five Layer-1 Blockchain Options for DeFi to Watch in 2020
・Pathways for DeFi on Bitcoin
・Defi on EOS
・Interoperable DeFi: Akropolis, ChainX and Polkadot broadening the spectrum of the new financial system
