DeFipedia Blog

Our DeFi experts demystify and explain decentralized finance, how it works, and how to capitalize on its growth potential.
Explaining Optimism—One of the Biggest Layer-2 Ethereum Protocols

General Discussions About Decentralized Finance

Explaining Optimism—One of the Biggest Layer-2 Ethereum Protocols
Ethereum has been rapidly growing over the last couple of years—in fact, it's currently the second largest blockchain, only after Bitcoin. As a project, Ethereum is absolutely massive as it's the backbone of the DeFi industry and is paving the way for emerging technologies like NFTs, smart contracts, and virtual environments like the Metaverse. However, Ethereum has some problems that haven't been solved yet like gas fees, efficiency problems, and scalability issues. To solve this, new blockchains called layer-2 (L2) solutions have been appearing. One of the biggest L2 protocols is Optimism—a blockchain designed to extend Ethereum's current limitations and make working with it easier. Users can enjoy benefits like lower gas fees, faster transactions, and overall improved scalability. Now let's dive deeper and discover how Optimism might improve Ethereum. What is Optimism? Taking its first steps in the world of blockchain in June 2019, the Optimism protocol has one goal—to make Ethereum more scalable while promoting a faster, cheaper, and safer experience for the users. Optimism is an L2 solution, meaning its entire network is built on top of the existing one of Ethereum. Therefore as a protocol, Optimism doesn't seek to replace Ethereum but just to improve its already-existing features. In addition to Arbitrum and Polygon, Optimism is among the largest L2 solutions with a protocol valued at over $200 million. But Optimism isn't just a protocol built for improving Ethereum—it's also a cryptocurrency project, as it has a native token under the label OP. So, how does the protocol work exactly? Let's find out. How Does the Optimism Protocol Work? If you've ever done research about L2 solutions, you've probably heard that these networks use rollups i.e., bundles of data that contain all of the details about hundreds of transactions. There are two types of rollups: optimistic rollups and zero-knowledge rollups (ZK rollups). As you can already guess by the name, the Optimism protocol uses optimistic rollups, which assume that the transactions are always valid and only runs a security check if something looks incorrect. Within the Optimism protocol, this approach is called "valid until proven false"—or better known as innocent until proven guilty. The OP Token The OP token was launched in late April 2022 with an airdrop, where the project leaders sent free tokens to encourage wider adoption. So, what is the OP token used for? Well, in addition to being used for securing the network, OP tokens are also used for governance. Optimism is a decentralized protocol, so the users (i.e., the holders of the token) have the right to vote and choose how the protocol will work in the future. The protocol's governance is done through a two-level governance system that consists of the Token House and the Citizens' House. As of September 2022, the Citizens House still hasn't launched, but its future role will consist of managing public funding. The Token House was launched together with the OP token and is primarily used for determining the future state of the protocol i.e., the direction it will go in through updates and upgrades. OP's Last Airdrop Regarding the specifics of the token's launch, it had the following allocation ratios on its last airdrop: 25% for the ecosystem20% for funding public goods19% for user airdrops19% for the contributors to the project17% for investors Still, it's worth mentioning that the OP token had a somewhat problematic launch. On the day of the airdrop, the Optimism protocol was briefly shut down because of too much activity, while the token experienced massive sell pressure. Unfortunately, this sell pressure pushed the price down from $4.50 at launch to nearly $0.50 in a week. Eventually, the token rebounded and stabilized at around $1. Despite this unsteady start, the blockchain behind the token didn't suffer from any security issues, so the protocol is now functional and thriving. Moreover, Optimism is set to have more airdrops in the future, and they'll likely be much more cautious regarding how they handle the situation. The project's first airdrop only gave away 5% of the total supply. Final Thoughts All in all, Optimism seems to be a great L2 solution that might just fix most of Ethereum's problems. Despite the protocol's difficult token launch, the project is still one of the largest protocols designed to make Ethereum better for users. The only problem is that, with L2 solutions, the competition is truly fierce. Projects like Polygon, Arbitrum, and Loopring are promising to solve the same problems as Optimism—only their launches were more stable. Nevertheless, we'll see what the future holds for the Optimism Protocol. It's safe to say that the project has great fundamentals, with simplicity, pragmatism, sustainability, and optimism as its main pillars. Only time will tell how the Optimism Project will unfold, and we'll see whether or not the protocol is stable on its next airdrop.
ShapeShift: Convenient DEX Aggregation Platform

DEXs (Decentralized Exchanges)

ShapeShift: Convenient DEX Aggregation Platform
Established in 2014, ShapeShift is a cryptocurrency exchange that has been growing in popularity over the last couple of years. The platform allows users to buy, sell, and trade a variety of cryptocurrencies like BTC, ETH, and BNB, in addition to stablecoins like USDT and USDC. However, ShapeShift has evolved to become much more than just an exchange since its inception. Now, it's a full-scale DeFi platform that also acts as a decentralized exchange (DEX) aggregator and a portfolio management tool. ShapeShift has successfully partnered with many protocols, allowing it to put together the features of many DEXs and offer their trading pairs. Now, let's dive deeper into what features the platform offers and why it has become so popular. What Features Does ShapeShift Offer? Some of ShapeShift's key features are as follows: Liquidity Providing and Staking These two features are core pillars of DeFi, and thanks to them, anyone can earn a solid passive income as long as they have some crypto. ShapeShift allows users to earn revenue through its liquidity provider program. Investors can stake their assets on the platform in exchange for a share of the trading fees. As you can already guess, users who provide liquidity earn rewards in the form of FOX, the platform's native token. Multi-DEX Support One of the things that makes ShapeShift unique is that it supports multiple DEXs simultaneously. This means that users can trade on many different exchanges through the platform without having to create accounts on each one. This isn't just a convenient solution—it can also be a great earning opportunity. For example, if the price of an asset is different on two platforms, you can use ShapeShift to perform arbitrage and earn money on the price difference. Instant Swap ShapeShift also offers an instant swap feature, which allows users to trade one cryptocurrency for another without having to wait for an order to be filled. Namely, ShapeShift has partnered with 0x and THORChain, implementing a cross-chain swapping protocol between cryptos. If you want to buy ETH with BTC without a cross-chain solution, for example, you'd have to sell your ETH for USD and then fill an order for your new BTC purchase. However, with ShapeShift, you can directly swap your ETH for BTC, thanks to the cross-chain protocol. How Does ShapeShift Work? Although ShapeShift started as a centralized exchange, it became a decentralized protocol run by a decentralized autonomous organization (DAO). This means that the holders of the protocol's native token (FOX) get to vote on how the project is run and how its future will unfold. Every token is worth exactly one vote, so the more tokens you have, the more impactful you can be on the protocol. In terms of the actual platform, ShapeShift is pretty straightforward to use. After connecting your wallet, you can start buying, selling, and trading cryptocurrencies immediately. You'll also have instant access to all the DeFi features, like lending, borrowing, and staking. In addition to being available through a website, the platform also has a mobile app for both Android and iOS devices. The FOX Token The FOX token is built on the Ethereum blockchain, meaning it's an ERC-20 token. We briefly mentioned that the token is primarily used for governance on the protocol, but it also has a utility use case. Namely, the FOX token can be used to perform DeFi operations like trading, staking, and yield farming on the platform. Currently, as of September 2022, the FOX token trades at $0.06, with an all-time high of $1.67 reached in April 2021. So, if the token somehow manages to reach its all-time high, there's a potential to earn a 2,600% profit with just one position. Final Thoughts All in all, ShapeShift ended up being quite a promising project, despite changing from a centralized exchange (CEX) to a DeFi platform. As a platform, ShapeShift simply offers too many features to be ignored—it's a DEX where you can buy and sell crypto, as well as a platform for DeFi operations like staking, lending, and borrowing. However, it's worth mentioning that ShapeShift had a small incident in the past. Namely, the platform had a massive security breach in its first couple of years, causing users to lose around $200,000 due to the attack. Nevertheless, the platform has come a long way since then, and in the last six years, they've operating impeccably.
Orca: A Solana-Based AMM DEX for the People

DEXs (Decentralized Exchanges)

Orca: A Solana-Based AMM DEX for the People
Decentralized exchanges (DEXs) have flooded the market in the last few years. Unlike centralized exchanges (CEXs), which have a central authority leading them (usually in the form of a company), decentralized exchanges are fully autonomous protocols built on top of the blockchain. This means that no central body has any view over your activity, guaranteeing complete privacy for all its users. What Is Orca? One of the most user-friendly decentralized exchanges is Orca, a protocol built on Solana's blockchain. Although the protocol is not as popular as other DEXs, Orca can still be regarded as a great project. Orca's primary focus is to provide a permissionless experience to all its users when buying and selling crypto. To do this, they have built a unique Automated Market Maker (AMM) system that does not require any order books or liquidity pools. As a result, all positions opened on Orca are entirely decentralized. Now with the basics out of the way, let's dive deeper into how Orca works as a protocol. How Does Orca Work? Orca works as a decentralized protocol that is built on top of the Solana blockchain. The mainnet for Orca was launched in March 2020. We briefly mentioned that Orca uses an Automated Market Maker (AMM), but how exactly does that work? Users who want to buy or sell crypto on Orca will have to deposit their crypto into the Orca smart contract. After the user has deposited their crypto, they will be able to trade on the Orca platform. When a trade is initiated, the Orca protocol automatically matches the trade with another user who wants to buy or sell the same asset. This means that as long as there's a market for the cryptocurrency in question, your order is almost guaranteed to execute. It's also worth mentioning that the team behind Orca has built a native token for their protocol, which goes under the label ORCA. The main use case for the ORCA token is to provide liquidity to the platform. When a user provides liquidity to the Orca platform, they will receive staking rewards. The rewards coming in the form of the ORCA token can then be used to trade on the Orca platform, or they can be sold on other exchanges. How Does Orca Compete With Other DEXs? Of course, Orca isn't the only DEX to use such a system. Its protocol for buying and selling crypto is very similar to how other AMM DEXs work, such as Uniswap. The main difference between Orca and other AMM DEXs is that Orca uses the Solana blockchain instead of Ethereum. Consequently, trades on Orca are much faster and cheaper than they would be on other protocols since Solana's fees are significantly lower than Ethereum's. What Benefits Does Orca Offer? Focus on User Experience The team behind Orca has made it their mission to provide a seamless and permissionless experience for all their users. This means anyone can use the Orca protocol without going through a KYC process. Focus on Security The Orca protocol is built on top of the Solana blockchain, which is known for prioritizing scalability and security. In addition, the Orca team has also built a number of security features into their protocol, such as 2-factor authentication and multisig wallets. Focus on Flexibility The Orca protocol is designed to be easily integrated into other platforms and protocols. This allows developers to easily build on the Orca protocol and create new applications and services. Should I Invest in the Orca Protocol? If you want to invest in a decentralized exchange primarily focused on user experience and security, then Orca is an excellent option for you. There is a vast use case for the ORCA token, as anyone can use it to transact. Moreover, stakers can provide liquidity to the protocol and receive their rewards in ORCA tokens, so the future for it seems bright. Still, it is essential to note that Orca is a relatively new project and is not yet available on any major exchanges. It may be difficult to buy ORCA tokens if you are not already familiar with the cryptocurrency space. Promising Project for the People Overall, Orca seems to be a promising project. It's a fully decentralized protocol built on the Solana blockchain, meaning that all of the transactions executed on the platform will have minimal fees and lightning-fast execution. However, the Orca platform has some drawbacks too. It's a relatively new project, and although Solana is known for being fast and efficient with transactions, it's also known to have occasional network outages. Make sure to do your own research to see whether or not Orca is the right investment for you.
Navigating Urbit: Your Digital Homestead

DApps (Decentralized Applications)

Navigating Urbit: Your Digital Homestead
In recent years, digital homesteading has been slowly increasing in popularity as a new approach to living. Fewer people now live in rural areas than ever, effectively drying up the communities that once flourished. This is exactly what digital homesteading is trying to do—provide residents of rural places equal opportunities and connections as those living in urban places. People have been consistently moving to bigger and more urban areas for more possibilities, but now, with digital homesteading, people from all communities can have access to the same privileges—regardless of their location. This means solving issues of equal market opportunities, social connections, and acquiring knowledge—which is exactly what Urbit, a Web3 project, seeks to solve. How Does Urbit Work? Urbit is a digital homestead that offers cloud and community-based services that are available on all devices—including phones, tablets, laptops, and desktop PCs. It's a full-service solution that offers useful functionalities for both communication and commerce. Urbit is built on blockchain technology. It intends to give all of its users full digital autonomy which will allow users to keep their data and digital assets securely stored without requiring any third parties. This is a big move in the direction of privacy, decentralization, and security. So, what is the technology behind this digital homestead? Urbit runs on a peer-to-peer network where every user has a specific identity key for authentication. However, unlike many similar services, Urbit does not give the user's data away to a third party. Thanks to blockchain technology, Urbit's infrastructure allows for a fully decentralized way of operating, ensuring that all users have a right to privacy of their data. Why Use Urbit? As a digital homestead, Urbit seeks to solve many of the issues that the modern Internet has. In simple terms, Urbit's primary goal is to create a digital environment where discussion and collaboration are the norm. However, one might ask, why use Urbit when you can use the Internet for the exact same thing? Urbit solves the privacy and centralization issues that the Internet currently has. This includes: Reducing spam data. Minimizing cybersecurity attacks like data breaches. Solving the issue of malware fully. Giving users the right to control where their data goes. Therefore, the system behind Urbit is incredibly secure. Everyone's connection on the network is fully encrypted, with both public and private keys to safeguard the user's personal data. Once a user becomes a part of Urbit, they get an Urbit ID, which acts as their login information. These IDs are created on the Ethereum non-fungible token standard (named ERC721) and are stored as non-fungible tokens (NFTs), meaning that no one (except the users themselves) can see, access, or modify the data. Explaining Urbit's Infrastructure Urbit has a unique and somewhat complex network infrastructure called Azimuth, and it's divided into distinct network nodes with unique names: stars, galaxies, and planets. Each has specific responsibilities, making the network run seamlessly. For example, the planet nodes are for everyday use and simple tasks, like handling user requests. Since there are over 4 billion planet nodes, the network isn't likely to have any latency issues or outages. On the other hand, stars and galaxies serve as the building blocks of Urbit's network infrastructure. Whenever new updates are made, these nodes adequately redistribute to every other node through an encrypted connection. Stars and galaxies also handle user routing i.e. directing the user to the node they need. So, how can you join Urbit as a user and become a part of the network? There are two main ways to get an identity to join Urbit: Join the Urbit community and ask for one to be generated for you. Go to an NFT exchange that's part of the ERC-721 standard and purchase one. After getting it, you can store your ID in the form of an NFT on your Ethereum address and use Urbit's client interface, Bridge, to directly interact with the entire network. Conclusion Urbit is an incredibly ambitious project that has the potential to revolutionize the way networks work—as long as it remains consistent. Currently, it's the only large-scale project that seeks to revolutionize digital homesteading by implementing a Web 3.0 infrastructure with a peer-to-peer network. The project is quite promising and viable, as it seeks to solve many of the issues that the Internet faces today. Only time will tell how the Urbit project will be executed, though we're confident the team behind it will find a scalable and efficient way to make the project thrive into mass adoption.
How Alethea Is Enabling the Integration of NFTs and AI

DApps (Decentralized Applications)

How Alethea Is Enabling the Integration of NFTs and AI
It's no secret that non-fungible tokens (NFTs) have taken the crypto world by storm in recent years. These tokens are financial securities stored on the blockchain, and unlike other types of securities, the ownership of an NFT is public and can be easily proven. Although an NFT usually comes in the form of art, these tokens can be anything that's digitally stored. Thanks to the revolutionary technology of storing ownership on a public ledger such as the blockchain, the NFT industry's value is nearing $20 billion as of August 2022. Blockchain technology has now become more scalable than ever, allowing teams of developers to create and distribute intelligent NFTs (named iNFTs) and store them on a blockchain. The first iNFT sold for nearly $500,000 in July 2021, and the popularity of such NFTs is only set to rise. What Is Alethea AI? Alethea AI is a massive, first-of-its-kind project that's building a fully decentralized protocol with an Intelligent Metaverse. This Metaverse is set to be inhabited by iNFTs, where everyone can join and interact with them. Moreover, users who join this Metaverse can use the intelligent protocol to create and earn from their iNFTs in a virtual world known as Noah's Ark. How Does Alethea AI Work? As mentioned previously, Alethea AI is a decentralized protocol that uses the power of artificial intelligence (AI) to create and trade intelligent iNFTs. The protocol comprises two parts: the Metaverse and Noah's Ark. The Metaverse is a virtual world where users can create, own, and interact with iNFTs. This is done through smart contracts, which are contracts stored on the blockchain and automatically execute when certain conditions are met. For example, when two users agree to trade their iNFTs, the smart contract will automatically execute the trade and transfer ownership of the iNFTs accordingly. Noah's Ark is a virtual world that coexists with the Metaverse but is specifically designed for iNFTs. In other words, Noah's Ark is a virtual universe only for artificially intelligent life. In this world, iNFTs can be bought, sold, or traded in the Metaverse. The only difference is that Noah's Ark uses a different set of rules and regulations specifically for iNFTs. What Can You Do With Alethea AI? There are endless possibilities of what you can do with Alethea AI. Below are some of the most popular use cases: For Users Create your own iNFT With Alethea AI, anyone can create their own iNFT. All you need is an Ethereum wallet, and your NFT will be stored on the blockchain forever. Sell your iNFT Once you've created your iNFT, you can put it up for sale at any NFT marketplace (like OpenSea, for example). Normally, the price of your iNFT will be determined by the market. Trade your iNFT If you don't want to sell your iNFT, you can trade it with another user in the Metaverse or Noah's Ark. Interact with iNFTs Alethea AI also allows you to interact with iNFTs in the Metaverse. For example, you can leave comments on an iNFT or even give it a "like." For Developers Build on top of the protocol Alethea AI's protocol is open-source, which means that developers can build on top of it. This is a great way to create new and innovative applications that use iNFTs. Earn revenue Developers can also earn revenue by creating dApps that use iNFTs. This is done using Alethea AI's "Developer Reward" system. How Can I Invest in Alethea AI? Anyone can invest in Alethea AI's token as long as they have an Ethereum wallet. The token goes under the name Alethea Artificial Liquid Intelligence Token (ALI) and, as of August 2022, is currently trading at $0.018. You can buy the ALI token at multiple centralized and decentralized exchanges, including Gemini, Uniswap, Crypto.com, and CoinEx. The token reached its all-time high of $0.14 on the 4th of February 2022, so investors are looking at a potential 670% rise in profits if it reaches its all-time high again. Conclusion Alethea AI is a revolutionary project set to change the landscape of the NFT industry. With its intelligent protocol, anyone can create and trade iNFTs in the Metaverse or Noah's Ark. If you're looking to invest in a promising project with high potential, then Alethea AI is a project you should keep an eye on.
Pangolin: Avalanche's Innovative Cross-Chain DEX

DEXs (Decentralized Exchanges)

Pangolin: Avalanche's Innovative Cross-Chain DEX
As of late 2022, decentralized finance (DeFi) is growing at a rapid pace. More DeFi applications are being released, each one offering new and unique features. Blockchain users are attracted to this, so it's apparent why DeFi is growing accordingly. However, there's one inherent problem. The majority of DeFi apps are built on top of Ethereum, which has a notorious gas fee problem. Many teams of developers have been discouraged to build an app on Ethereum simply because the gas fees of the ecosystem would make their project unsustainable. So, developers have started to build their apps on other blockchains—which is where networks like Avalanche came onto the scene. What Is Avalanche? Originally launched in September 2020, Avalanche promised to offer the same features as Ethereum—smart contracts, decentralized apps (Dapp), and automated protocols—only operating on the network would be faster, cheaper, and ultimately more scalable than on Ethereum. Also keep in mind that, unlike Ethereum, Avalanche is a cross-chain protocol. This means it's designed to interact directly with other blockchains and exchange data with them. For example, you could use Avalanche to launch an ERC20 token on the Ethereum network. Then, you could use the Avalanche network to trade that same token with other ERC20 tokens or even Bitcoin. However, with the current way DeFi is built, you would have a difficult time trading your token for another. You would have to use "bridges" to make the transaction possible. However, bridges have occasional security flows and are known to delay transactions, which is why a cross-chain blockchain will do the job with ease. Pangolin: An Avalanche-Based DEX with a Cross-Chain Vision One of the most popular DeFi applications built on the Avalanche blockchain is Pangolin. Pangolin is a decentralized exchange (DEX) that enables users to trade cryptocurrency assets in a secure manner without having any third party oversee them. In other words, you don't have to worry about entrusting your funds to any single entity or centralized exchange like Binance or Coinbase. Pangolin's Features Perhaps the most attractive feature about Pangolin is that it's a cross-chain DEX. This means that you can trade assets from different blockchains on the same platform. For example, you could trade a token on Ethereum's network (ERC20) for Bitcoin all within the same DEX. Moreover, Pangolin is also one of the most user-friendly DEXs on the market. Once you visit its website, you'll notice that it has a clean and intuitive interface that even beginners will have an easy time navigating. All you need to do is connect your wallet to the platform, which can be done via platforms such as MetaMask, Ledger, and Trezor. Drawbacks of the Pangolin DEX So far, we've only talked about the advantages of using Pangolin. However, no DEX is perfect and there are a few drawbacks worth mentioning. Firstly, Pangolin is still a young project that's in its early stages of development as it was only launched in February 2021. This means that there's still a lot of room for improvement and that some features are still missing. For example, the platform doesn't currently support stop-loss orders or limit orders. This means that you can only trade assets at the current market price, which isn't ideal for everyone. Another thing worth mentioning is that Pangolin is primarily focused on trading Bitcoin and Ethereum assets. This might change in the future, but for now, you might have a hard time finding some lesser-known altcoins that you're looking for. Finally, Pangolin currently doesn't have that much trading volume. This is to be expected given that the platform is still relatively new. However, it's something worth considering if you're looking for a DEX with high liquidity. Should I Invest In Pangolin? Pangolin has its native token going under the symbol PNG, with a current market cap of around $8 million and a price per token of $0.06. The token is primarily used in the blockchain's governance model, allowing the community to shape the way the protocol is developing. We believe that Pangolin is a solid investment, as the token is 100% community-focused, with no institutional investors having a part of the circulating supply. Still, keep in mind that Pangolin is a relatively new project, and it might need some time to prove its authenticity to the public. Thankfully, the project hasn't had any security issues thus far, and it has successfully delivered in all departments. Nevertheless, only time will tell what the future holds for Pangolin as a project.
Polygon: Scaling Ethereum with ZK Technologies

General Discussions About Decentralized Finance

Polygon: Scaling Ethereum with ZK Technologies
Originally named the "Matic Network", Polygon is a blockchain solution on Ethereum, allowing both users and developers to connect and scale. The project was launched in 2017 and its primary goal is to increase the scalability, flexibility, and efficiency of projects built on the Ethereum blockchain. The creators of the network believe that Ethereum has a big scalability issue because the executions of transactions are too slow and too expensive. As a blockchain, Polygon seeks to resolve this issue by handling all transactions on a separate network that's compatible with Ethereum. How Does Polygon Work? To understand how Polygon works, you need to know a bit about Ethereum's architecture. The Ethereum blockchain has two layers: The first layer is the "base layer", which consists of the actual blockchain and its transaction historyThe second layer is the "application layer", where users can create decentralized apps (dApps) The base layer is responsible for handling all the transactions and smart contracts on the Ethereum network. The problem is that this layer can only handle 15 transactions per second (TPS). This might not seem like a big issue, but when you compare it to other payment processors like Visa (which can handle up to 24,000 TPS), it's clear that there's a big scalability issue on Ethereum. This is where the Polygon network comes in. It consists of a series of "side chains" that are connected to the Ethereum blockchain. These side chains are responsible for handling all the transactions that take place on the Polygon network. So instead of having all the transactions go through the Ethereum blockchain, the transactions are routed through the Polygon network (which can handle up to 65,000 TPS). Moreover, the network uses zero-knowledge (ZK) scaling to prove the validity of transactions by batching them together, improving the overall capacity of the network. Polygon: A Multi-Sided Approach to ZK Scaling ZK technologies, also known as ZK rollups, are scaling solutions that lessen the congestion of the Ethereum main network by moving some transactions and data off the chain. These so-called "Layer 2 solutions" can handle data by processing it in batches, so the validator can verify the validity of a transaction without having to run through and know about each one—which is where the term "zero-knowledge" comes in. ZK rollups are automatically managed and executed with the use of smart contracts. Executing a transaction on the Ethereum mainnet will be slower and more expensive, and would have to be validated by other network nodes. On the other hand, ZK rollups move some data off the chain and occasionally commit the data on the chain—but only when congestion is low. With Polygon's ZK rollups, the validators verify transactions in bundles on the rollup chain, where the process is a lot quicker and cheaper. Why Use Polygon and ZK Scaling? In addition to increasing scalability with ZK technologies, the Polygon network also offers a number of other benefits. Reusability of Existing Smart Contracts Since the network is built on top of Ethereum, it's compatible with all the existing dApps and smart contracts that are already on the blockchain. Therefore users and developers don't need to utilize new dApps or smart contracts specifically for the Polygon network—they can continue using the existing ones. Cost-Efficiency The Polygon network is much cheaper to use than Ethereum, which is partly thanks to ZK rollups. With Polygon, transaction fees are paid on the side chains instead of the Ethereum blockchain, resulting in a network significantly cheaper than Ethereum. However, keep in mind that Ethereum might fix this issue with the upcoming "Ethereum Merge" to transition to ETH 2.0, where the network might switch from a proof of work (PoW) consensus to a proof of stake (PoS). If the Ethereum merge is successful, there would rarely be a need for ZK scaling. Flexibility The Polygon network is more flexible than Ethereum. This is because the side chains can be customized to meet the specific needs of each project. For example, a project might require the use of a side chain that's optimized for speed or one that's optimized for security. Downsides of Polygon and ZK Scaling Although Polygon seems like a quite promising project, it has some downsides too. The Network Is Dependent on Ethereum The truth is that Polygon won't reach a higher level of adoption unless Ethereum evolves with it. There's an inherent problem with this. If Ethereum fixes its current scalability issues, there would rarely be a use-case for Polygon and its ZK scaling feature. ZK Scaling Could Still Be Improved Although ZK scaling seems to be quite promising, it still has some flaws. Many blockchain experts believe that ZK scaling doesn't fully prove the validity of transactions, making room for fraudulent ones. Still, this is a fixable issue, which is why additional fraud proofs have been implemented to properly filter transactions. Conclusion It seems like Polygon has a bright future ahead of it. Even though the project is relatively young, it has successfully fulfilled everything it has promised so far, and has even managed to implement ZK technologies on its main chain. Although the project has plenty of competition regarding Ethereum scalability, most blockchain experts would say that it's successfully executed in almost every department. However, ZK scaling has a questionable future and might need further improvements.
Is THORSwap the Solution to Cross-Chain's Centralization Dilemma?

General Discussions About Decentralized Finance

Is THORSwap the Solution to Cross-Chain's Centralization Dilemma?
As blockchain technology evolves, teams of developers are building different projects that are seeking to solve different problems. However, with this abundance of projects, users occasionally face issues regarding cross-chain operations. If you move the assets you have on one network to another, you will definitely encounter some difficulties. Build a Bridge One of the most popular ways to manage this is bridging. A bridge is a network connecting two different blockchains to enable them to interact. If you have some Ethereum and would like to engage in some activity on another network, you can use a bridge without having to sell your assets on the ETH network. However, bridges aren't a one-stop solution, as they have inherent limitations. When using bridges, the safety of your assets depends on the safety of the bridge—and many bridges have had security exploits. Bridges also have a limited capacity, so if a bridge is overloaded, your assets are stuck between networks. One of the most popular solutions to connect different blockchains is the THORChain aggregator, commonly known as THORSwap. This aggregator connects various networks without requiring bridges, in addition to having other features. Now, let's dive deeper into what THORSwap is and undercover how it works. What Is THORSwap? So, THORSwap is a decentralized liquidity aggregator that uses the THORChain protocol to power its features across multiple chains. Unlike other protocols, this protocol was designed with security and user-friendliness in mind, as it doesn't require any custodians or third parties to hold your assets. The goal of THORSwap is simple—it allows you to trade your assets on different blockchains without having to first convert them into another asset. For example, if you have some BTC and would like to buy some ETH, you can do so directly through THORSwap. This is made possible by the aggregator connecting different liquidity pools and providing users with the best price from them. In addition, THORSwap doesn't have any limit on the amount you can trade, so you can use it to move large sums of money between blockchains effectively. THORSwap: Solving Cross-Chain's Centralization Problem THORSwap connects different liquidity pools and allows users to trade their assets directly between them. For example, if there is a liquidity pool that offers the ETH/USDT pair at a 1:2,000 ratio and another pool that offers the same pair at a 1:2,050, THORSwap will automatically execute the trade from the pool with the best returns for the user. To further complement this, the protocol features a built-in loss protection mechanism. This means that if for some reason the price of the asset you're trying to buy drops below the price when you initiated the trade, your transaction will automatically be canceled and your funds refunded. This ensures that you don't have to worry about the market crashing while you're in the middle of a trade, as you'll always get the best possible price from the best liquidity pool. Moreover, THORSwap is also relatively user-friendly, as it doesn't require any registration or KYC. This means that you can start using the protocol immediately after installation without having to go through any lengthy verification process. The protocol is also quite fast and usually executes trades in under a minute. This is made possible by the fact that THORSwap uses the Binance Chain for its transactions, which is currently one of the fastest blockchains available. How Can I Invest in THORSwap? Currently, the protocol's native token (THOR) isn't available on too many centralized exchanges, but you can still buy it at some decentralized exchanges. The THOR token's current available markets are CoinEx, SushiSwap, and the THORChain—the token's native protocol. As of August 2022, the token is trading at around $0.30, with an all-time high of $3. So, if THORSwap ever reaches its all-time high again, you're looking at a 1,000% return on your investment. Nevertheless, keep in mind that THORSwap is a great project, but it has a long road to go. Conclusion Overall, the team behind THORSwap has made an incredibly ambitious project real. Cross-chain operability has always been a problem for users of multiple blockchains, and THORSwap has the potential to solve this issue once and for all without using bridges. However, keep in mind that THORSwap is not perfect either. The majority of experienced crypto users still prefer using bridges, as the security of the THORChain network hasn't been fully proven yet. Still, the project has a bright future ahead of it as long as its team continues working persistently.
Everything You Need to Know About Hedera Hashgraph

General Discussions About Decentralized Finance

Everything You Need to Know About Hedera Hashgraph
Hedera Hashgraph is a crypto network with the ultimate goal of providing a safe platform for anyone to make transactions and deploy applications. At the same time, a group of businesses oversees the software. What Is Hedera Hashgraph? Hedera Hashgraph is a distributed ledger technology that is an alternative to the typical blockchain technology. The technology is patented, and the only authorized ledger is Hedera. The native token is known as HBAR. The fully open-source public distributed ledger uses fair, quick, and safe hashgraph consensus. Network services include Solidirty-based smart contracts, native tokenization, and consensus services. All of these helpful service features are used to create decentralized applications (DApps). Hedera Hashgraph separates itself from blockchains in multiple ways. Firstly, Hedera can effortlessly handle hundreds of thousands of transactions each second. Secondly, the network is fairer than a blockchain, as miners can choose the order of transactions, delay them, or stop them from entering the block. Finally, transaction fees are low. This trifecta of safety, speed, and affordability appeals to many members of the community. Hedera Hashgraph's combination of low costs and high speeds is building quite the reputation for this technology, and it could even be considered a potential competitor of Ethereum by some. Hedera Hashgraph's future appears to be bright, and growth is expected. Ongoing developments happening in the HBAR ecosystem during 2022 and onward may push HBAR to new heights. Only time will tell. Hedera Hashgraph Consensus Hedera uses the hashgraph consensus mechanism, which is powered by two varieties of nodes. Consensus nodes determine ordering and history, while mirror nodes relay this information to stakeholders within the network. Using a limited number of nodes to determine transaction history ensures that transactions will not be undone or removed later. This model is different from standard blockchains. Hedera Hashgraph Governance The Hedera Hashgraph network is governed by the "Hedera Governing Council". This council is responsible for running consensus nodes that determine transaction ordering. The Hedera website states that "up to 39" enormously diverse organizations lead the network. Some names are highly regarded, such as Google and IBM. The council manages the software, votes on updates and changes to the network, ensures all funds are appropriately allocated, and guards the network's legal status. Each member is allowed two consecutive, three-year maximum terms. This means that the space isn’t permanent for these council members, and they’ll only have power over decisions and votes during the time they serve. Hedera Hashgraph Key Features Beneficial Services and Features Hedera offers various services at affordable prices and lightning-fast speeds including: Consensus serviceToken serviceFile serviceSmart contract service Hedera makes it easy, fast, and cheap to cross tasks off your to-do list, such as deploying smart contracts in popular languages, filing important data, minting and managing NFTs, and recording or tracking information. In addition, users have access to extra features like multi-sig transactions, atomic swaps, scheduled transactions, and token-level KYC. Functional use-cases for Hedera Hashgraph include: PaymentFraud mitigationData complianceTokenized assetsPermissioned blockchainIdentity and credentials Hedera Hashgraph is truly a leader in the future, growth, and development of public ledgers. The combination of high throughput, remarkably fast speeds, and low transaction fees are groundbreaking for the crypto space. Hedera also claims to be much more sustainable and energy-efficient than Ethereum 1.0 or Bitcoin. For example, BTC uses 885 kWh, Ethereum uses 120 kWh, while Hedera only uses a meager 0.00017 kWh. The network has also made environmental sustainability a priority, going as far as committing to carbon-negative operations. Concerns Regarding Operation The above positives seem to capture the innovation and outside-of-the-box thinking that Hedera is built upon. However, there are still a few concerns: Not decentralized enough for some Queued transactionsThe signature size is too largeShort history, not as established as other networksRelatively similar services compared to other public ledger networksIsn’t incredibly compelling Hedera will likely see growth as time moves forward, but it may not be rampant enough to attract larger investments. The strong aspects of the network are indisputable, although some claim Hedera suffers from poor economics in general. Hedera may not be able to exceed Bitcoin or Ethereum in the long run because of these shortcomings. On the other hand, Hashgraph's efficiency in handling thousands of transactions and verifying millions of signatures per second is remarkably valuable. Some call Hashgraph the new generation of blockchain technology. If Hedera Hashgraph is able to prove its value and worth over the next few years, it may have the opportunity to surpass blockchain technology.