Trending
Crypto
  • BTC
    17021.94 0.67%
  • ETH
    1260.38 1.34%
  • SOL
    13.44 1.28%
  • ADA
    0.32 0.28%
  • AVAX
    13.71 2.39%
  • DOT
    5.57 1.58%
  • LTC
    76.3 0.05%
  • BCH
    110.86 1.3%
  • CRO
    0.06 0.47%
  • MATIC
    0.91 1.04%
  • LINK
    7.36 1.57%
  • XLM
    0.09 0.53%
  • UNI
    6.16 1.49%
  • SHIB
    0 1.2%

DeFi Sunday: Communication between blockchains is key for the industry

Financial markets are experiencing a really turbulent period, marked by a number of innovations in the form of cryptocurrencies, blockchain and the entire DeFi industry. However, the fact that cryptocurrencies operate on different blockchains is a challenge that needs to be solved.

Technologies are gradually changing the world's financial markets for better

Many may not realize this, but we are living in a time full of changes and innovations in global finances. Traditional finances, with their cumbersome and outdated systems, can hardly compete with ultra-modern technologies. It is cryptocurrencies that represent one of the most developed ecosystems in the financial market, despite the fact that the global economy has so far made very little use of their potential.

However, the level of involvement of cryptocurrencies and blockchain solutions is growing at a tremendous pace, and according to analysts, it is only a matter of time before the industry shows its true potential. Thousands of different cryptocurrencies compete for market share with their solutions, on various blockchains. This also brings a problem in the form that individual blockchains cannot communicate with each other. This highlights the need for projects and companies that build cross-chain bridges . These bring links between the individual chains and are especially important for the dynamic DeFi industry.

The DeFi industry is an accelerator in the development of cross-chain solutions worldwide

It is important to note that various cross-chain solutions have started to appear on the market mainly due to decentralized finances, and these are the main drivers of this development. DeFi largely challenges the functioning of traditional finances with a centralized nature and creates ecosystems in which everyone has access to decentralized financial services. In addition, it ideally completely eliminates interactions with third parties - such as banks.

Global DeFi network - Cryptocurrency, blockchain and IoT Global DeFi network - Cryptocurrency, blockchain and IoT, Source: shutterstock.com

Decentralized crypto exchanges (DEX) are definitely one of the most well-known DeFi solutions. Leading decentralized exchanges such as Uniswap and PancakeSwap are already competing for the largest centralized exchanges. This massive adoption of decentralized technologies clearly shows us the future development of the market.

Most DeFi protocols initially worked on the Ethereum blockchain, which meant that users were limited to the capabilities of this platform. Cross-chain solutions significantly change this situation and allow DeFi projects to interact with multiple blockchain ecosystems through bridges. For example, a project based on the Ethereum blockchain can also provide its services at Binance Smart Chain. This significantly reduces costs and increases the possibilities of use for DeFi users.

Thanks to DeFi, the possibilities of using cryptocurrencies are growing exponentially

The cryptocurrency market can still be considered relatively young, but in a few years of its operation, it has moved significantly forward. From building systems for fast and secure transactions, we have moved to a whole new type of decentralized financial services. In addition, the degree of innovation of these projects attracts more and more investors to DeFi and also huge amounts of capital, which are further supporting the industry and development.

Thanks to a number of new investments, the DeFi industry has grown more than 50 times in the last two years, and its total market capitalization is approaching $ 80 billion. This currently represents around 5% of the total market capitalization of cryptocurrencies, and many believe that this growth will continue. The assumption also confirms that investors and retail are beginning to understand the potential of the DeFi industry and, in particular, the huge added value it brings to its users.

Slavomír is working in the field of cryptocurrencies since 2018. As a Co-Founder and Chief Marketing Officer of Dollero Technology, which is currently developing a crypto exchange ...

Comments

Comments are closed.