The DeFi battlefield: who will win the fight?

DR VV ERMAC

DR VV ERMAC

DR VV ERMAC is a PhD in economics, Angel Investor (DEFI), visionary technology leader. Early adopter of Bitcoin. He has invested in different blockchain projects like Polkadot, Solana, Equilibrium etc.

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DeFi is a very hot topic nowadays. Big institutional investors, experienced crypto enthusiasts, governments from different countries, newcomers to the world of blockchain technology, and people who just observe – everybody is discussing DeFi.

But we can see how easy it is to lose the monopoly on this market, because new projects are starting to offer alternative solutions that can beat Ethereum in the race for DeFi dominance.

For example, the Binance Smart Chain (BSC) that was launched not so long ago, has already preceded ETH in terms of daily turnover. To be objective, it is a centralized blockchain, but it is a good indicator that we will see a lot of changes on the blockchain market soon.

What are the main problems facing ETH when a strong competitor emerges on the market? First of all, the price for gas. Secondly, transaction speeds. As a result – marketing and commercial initiatives become more expensive. BSC solved all of these issues, so teams using this new technology are much more motivated.

Of course, there are some problems too. Although the commissions are lower than on the Ethereum network, they are still high when compared with Tron and those stated on Solana and Polkadot. The smart contracts are imperfect, there are technical challenges, as numerous specialists have stated, a lack of decentralization, and few validators. These things bother the community. But it works and brings money to enthusiasts.

Considering all of these problems, new and ambitious projects have announced that they are coming soon to the battlefield of the two blockchain giants. Let us review 2 of them.

One of the most anticipated is the POLKADOT ecosystem. The community assumes that this product will successfully complement and compete with existing systems, but there are still a lot of questions for the team.

Let us appeal to the core team from the WEB3 Foundation and Dr. Gavin James Wood (co-founder of Ethereum and creator of Polkadot and Kusama). They did a really great job, but why is there limited information about the roadmap and project updates? For example, there is little info about the highly anticipated parachain auctions. Where is the transparency?

The community does not know when the auctions will be launched and how Rococo testing is going. Maybe there are problems, as projects have a lack of DOT tokens for parachain auctions or something wrong happens with the calculation deposits, or there are no strong projects to launch at the auctions, or there is something serious in the POLKADOT blockchain.

Why have there been no updates for several months? The parachain auctions were slated for launch in March-April, but now it is already May, and we have seen nothing, not even any testing in the KUSAMA network.

The interesting thing is that the DOT token still cannot be used as collateral in Lending & Borrowing in their original Polkadot Network, which is one of the main feature in DeFi ecosystem, but the Binance Smart Chain has created a solution by allowing them to be converted to their blockchain and giving users the opportunity to start working with them.

The next project, which I want to go over, is SOLANA. I address this message personally to Anatoly Yakovenko (founder and CEO of Solana), Kyle Samani (managing partner of Multicoin Capital, the major partner and investor of Solana), FTX and Alameda Research and personally to Sam Bankman-Fried (co-founder of Serum, one of the main projects in the Solana ecosystem).

The community is looking forward to launching a fast, effective and low-cost blockchain. The team has achieved a lot of success in its marketing campaign, the price of their tokens is increasing, but there is no product yet. Projects based on Solana hardly work, trading on DEX is very difficult, and Solstarter does not work. Already operating projects, like the aforementioned Serum with a huge TVL, hardly operate at all. ORCA, have no audit and the founders are unknown. The same relates to Raydium, where no audits have been made and the founders are anonymous. What is happening?

The marketing was amazing, but maybe the result is not what the team had expected and it is difficult to make smart contracts using the Solana blockchain? Why is there no lending? With such solid partners, it seems easy to launch it. The swaps barely work and the wallets are not user friendly. The community needs transparency, but we cannot find it here.

To sum up, the DeFi market is very promising to new technological products and we will soon witness a very tough fight between decentralized, centralized and hybrid ecosystems. Therefore, this sector will face a lot of legislative issues, so DeFi enthusiasts want to get good products for their efforts but face a lack of transparency and failures to meet deadlines. We can only hope that this situation will change soon and the DeFi market will become more open as it should be.

Here is an analysis of existing projects operating on the Solana blockchain.

*There is only staking, no lending yet.

Liquidity farming:

SERUM https://projectserum.com 

Key numbers: TVL (Total value locked) $409,82M, daily fees $?

Founders: Serum was co-founded by Sam Bankman-Fried. He is also the CEO of the FTX cryptocurrency derivatives exchange and a co-founder of the Alameda Research quantitative trading firm. Bankman-Fried also used to work as the director of development for The Centre for Effective Altruism and as a trader at Jane Street.

Has no audits

ORCA https://www.orca.so 

Key numbers: TVL (Total value locked) $25m, daily fees $13k

Founders: 2 anonymous members won a grant from the Solana Foundation to develop AMM https://medium.com/solana-labs/solana-foundation-grants-wave-one-14ae40338b59

Has no audits: https://orca-so.medium.com/orca-the-dex-for-people-not-programs-dc35b646feb9

Conclusion:  TVL is growing, if you become an early adopter, and when they release their governance token, there is a chance to receive it for a large sum (like it was with 1inch, Uniswap etc.)

RAYDIUM https://raydium.io/

Key numbers: TVL $320m, daily volume $50m, fee rate 0.25%

Founders: 5 anonymous members making AMM https://solana.com/ecosystem/raydium

Has no audits

Staking:

EXODUS https://www.exodus.com/blog/how-to-stake-solana-on-exodus/  

Founders: 2 members, a programmer and a designer. The programmer has written more than 200 open source libraries, the designer has worked for Apple, BMW, Disney, Louis Vuitton and Nike.

Raised $60m from $75m through IPO https://www.exodus.com/investors/

US-regulated

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