{"id":104759,"date":"2020-11-04T17:34:58","date_gmt":"2020-11-04T14:34:58","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/"},"modified":"2020-11-04T17:34:58","modified_gmt":"2020-11-04T14:34:58","slug":"defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/","title":{"rendered":"# DeFi on Polkadot: An alt chain with interoperability on the horizon"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a348b257088c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a348b257088c\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/#A_complete_DeFi_platform\" >A complete DeFi platform<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/#Staking_and_lending\" >Staking and lending<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/#DEXs_and_liquidity\" >DEXs and liquidity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/#A_bridge_to_Ethereum_DeFi\" >A bridge to Ethereum DeFi<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/#DeFi_infrastructure\" >DeFi infrastructure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\/#A_long_road_still_ahead\" >A long road still ahead<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># DeFi on Polkadot: An alt chain with interoperability on the horizon <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTAvNzY0NjU0ODAtMGRhMi00Mjg4LTk2YTEtODcxYzE0N2YxYmQ3LmpwZw==.jpg\" \/><\/p>\n<div data-v-5a136f3a=\"\">The Polkadot blockchain platform only launched its mainnet in May, but it is already pushing to become a major competitive force in the sector. In late August, following a DOT token redenomination, Polkadot smashed into the top 10 cryptocurrencies, overtaking established altcoins such as EOS, Litecoin (LTC) and others.\u00a0<\/p>\n<p>Kelvin Koh from Asian crypto fund Spartan Black previously said that Polkadot could rank in the top three blockchains. Elsewhere, Dan Morehead from Pantera Capital Management also recently <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2020-10-17\/ethereum-blockchain-killer-goes-by-unassuming-name-of-polkadot\">shared<\/a> his sentiments with Bloomberg, highlighting that although Polkadot is currently trading at around 10% of Ethereum\u2019s value, his firm believes it has a \u201cmuch higher than 10% chance of being a competitor to Ethereum.\u201d<\/p>\n<p>Although there is endless speculation about which factors drive Ether\u2019s price, one trend has emerged over its lifetime: As more developers build <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lications with user appeal and value, the price outlook of Ether looks more bullish.<\/p>\n<p>If the same is true for Polkadot, then the analysts\u2019 predictions look promising. The popularity of decentralized finance caused the price of ETH to double this summer. Now, DeFi developers also appear to be looking toward Polkadot, keen to take advantage of fast throughput, the Substrate development framework and ultimately \u2014 interoperability. <\/p>\n<p>However, Peter Mauric, head of public affairs at Parity Technologies, told Cointelegraph that there is vast potential for Polkadot to expand the DeFi ecosystem beyond its current capabilities, saying that parachains are a different type of smart contract that will enable a different degree of implementation. He elaborated further: <\/p>\n<blockquote><p>\u201cOnce we have these turbo-charged DeFi primitives, the potential for new innovation is greatly expanded, and we see interesting new possibilities like decentralized Sovereign Wealth Funds and cross-chain money markets providing the basis for the next generation of DeFi protocols.\u201d<\/p><\/blockquote>\n<p>Many of these new DApps and parachains are also receiving the boost of <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/github.com\/w3f\/General-Grants-Program\/blob\/master\/grants\/accepted_grant_applications.md#wave-8\">grant funding<\/a> from Polkadot\u2019s main sponsor, the Web3 Foundation. Mauric confirmed that the Polkadot treasury is also disbursing funding trustlessly, on-chain, to projects looking to build on Polkadot. So, who\u2019s involved in Polkadot\u2019s DeFi ecosystem, and how do they compare to their Ethereum counterparts? <\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_complete_DeFi_platform\"><\/span>A complete DeFi platform<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Acala is a decentralized finance hub, billed as an \u201call-in-one DeFi service center.\u201d It offers some features comparable to Maker, allowing users to lend and borrow its aUSD stablecoins. However, it also operates a decentralized exchange under an economic model called a \u201cdecentralized sovereign wealth fund,\u201d designed to provide an ongoing means of sustaining the development ecosystem. Acala was also one of the first to participate in a new Polkadot-specific crowdfunding model known as the initial parachain offering.<\/p>\n<p>Acala is a classic example of a project leveraging the high customization capabilities of Substrate. Bette Chen, co-founder of Acala, told Cointelegraph: \u201cBy using Substrate to build Acala, we can, for example, customize the fee schedule and allow users to pay fees in any accepted tokens. The upside of innovation is uncapped, as we can add new features and fix issues without hard forks.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Staking_and_lending\"><\/span>Staking and lending<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Mantra DAO is a community-governed DeFi platform for staking, lending and governance. The platform\u2019s OM token confers voting rights that influence various factors such as inflation levels or interest rates. Mantra DAO will operate on the Rio Chain infrastructure and is on the path to becoming a fully decentralized DAO governed by its community.<\/p>\n<p>Mantra DAO sees scalability and interoperability as major selling points of being based on Polkadot, as Will Corkin, co-founder and council member, explained to Cointelegraph: \u201cInteroperability is a stride towards bringing DeFi mainstream and getting rid of the current network problems that platforms on Ethereum face.\u201d He further added: \u201cNot only can we bring Ethereum DeFi to Polkadot, but we can bring all of DeFi to all peers across all platforms.\u201d<\/p>\n<p>Another project, StaFi (short for Staking Finance) is a protocol that allows users to unlock the liquidity tied up in staked tokens. It works in a comparable way to Yearn.Finance or Compound, issuing synthetic tokens called rTokens that represent a stake in the pool and can be used in other protocols. Along with Web3 grants, the project has received backing from B-Tech, a tech accelerator affiliated with the Bitmax exchange.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"DEXs_and_liquidity\"><\/span>DEXs and liquidity<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Uniswap\u2019s Polkadot equivalent is Polkastarter, a decentralized exchange allowing users to launch interoperable token pools with cross-chain swaps. Projects can list their tokens and use the platform to crowdfund in a decentralized auction. The development team has created a proof-of-concept on Ethereum, with a roadmap including migration to Polkadot from early 2021. <\/p>\n<p>Equilibrium is another project migrating to Polkadot from a different blockchain \u2014 EOS. It started as a MakerDAO equivalent, but with the move to Polkadot, it plans to expand its range of products to include a decentralized exchange, a synthetic asset platform and a newly interoperable stablecoin. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_bridge_to_Ethereum_DeFi\"><\/span>A bridge to Ethereum DeFi<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Moonbeam is a Polkadot bridge parachain to Ethereum, enabling developers to build Ethereum-compatible smart contracts. Using Moonbeam, DApps can integrate with other blockchains, including Bitcoin. It also means that existing Ethereum-based front ends can connect to Moonbeam to interact with Polkadot-based DeFi applications. <\/p>\n<p>Speaking to Cointelegraph, Derek Yoo, CEO of Moonbeam developer PureStake, elaborated on the functionality: \u201cMoonbeam allows ERC-20 tokens to move between Ethereum and Polkadot, which is needed to power cross-chain deployments where you have an instance of the application on both platforms.\u201d<\/p>\n<p>Moonbeam is already finding traction with Ethereum-based DeFi projects wanting to expand into Polkadot. It has <a rel=\"nofollow noopener noreferrer\" target=\"_blank\" href=\"https:\/\/medium.com\/moonbeam-network\/moonbeam-monthly-dispatch-october-2020-7b12f7652da4\">announced<\/a> several partnerships with prominent DeFi projects, including SushiSwap, BetProtocol and Linear Finance, and Yoo indicated that there are more in the works.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"DeFi_infrastructure\"><\/span>DeFi infrastructure<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Ethereum DeFi has grown organically, with multiple innovators coming along and building upon the work of their predecessors. However, many projects on Polkadot are seeing an opportunity to put infrastructural layers in place using Polkadot parachains for cross-chain transfers of assets and transactions. <\/p>\n<p>Rio DeFi\u2019s Rio Chain is a Polkadot parachain built using Substrate and provides a ready-made suite of tools for DeFi DApp builders. These include the Rio Generic Asset Bridge, which supports simultaneous cross-chain transfers of multiple assets. All of Rio\u2019s core tools are accessible using the project\u2019s website interface, including the Rio Wallet and Rio Block Explorer. <\/p>\n<p>The team behind Rio Chain foresees several cross-chain DeFi use cases, including a Bitcoin lending platform, a Bitcoin saving account application, and instant stablecoin loans based on a crypto portfolio. Furthermore, Rio Chain believes that there is room to disrupt the global market for e-commerce payments by removing inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ries such as PayPal that earn significant revenue from taking a share of merchant payments. <\/p>\n<p><template data-name=\"subscription_form\" data-type=\"defi_newsletter\"\/><\/p>\n<p>Bithumb Global is also initiating its own parachain on Polkadot, called Clover. Aimed at stimulating DeFi development, Clover will seek to leverage cross-chain capabilities and include some of Bithumb Global\u2019s own in-house apps, including a decentralized exchange, wallets and lending protocols. Norelle Ng, managing partner at Bithumb Global, told Cointelegraph that the availability of infrastructural layers such as Clover will ultimately help drive improvements in the DeFi user experience: \u201cThe modules that are made available in Clover will greatly reduce the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> development threshold for upper-layer applications.\u201d<\/p>\n<p>Akropolis is an established project on Ethereum that provides open-source protocols for DeFi DApp developers \u2014 effectively an operating system for DeFi. In the context of Polkadot DeFi, it has received a Web3 Foundation grant to provide platform-as-a-service for Substrate nodes. It also offers a staking portal as a front end for the Polkadot chain. Akropolis is already integrated with Ethereum DeFi DApps, including Compound and Aave. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_long_road_still_ahead\"><\/span>A long road still ahead<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Based on the scale of development, things are looking promising for Polkadot DeFi. Many projects are already starting to take advantage of interoperability offered by the system. Polkadot is also attempting to make headway in attracting developers from other platforms.<\/p>\n<p>However, it will take some time for the vision of interoperability to fulfill its true potential, mainly due to the current lack of composability between Ethereum and Polkadot applications. For example, it\u2019s not yet possible to take out a flash loan on one platform to profit from arbitrage at different decentralized exchanges across other platforms. Mauric said that Polkadot is on a path to achieve composability and acknowledged that it\u2019s a critical development: <\/p>\n<blockquote><p>\u201cCross-chain composability is a must both for DeFi and Web 3.0 as a whole. We already see the thirst for trustless, wrapped Bitcoin in Ethereum to use in DeFi, this is a clear early indication that cross-chain connectivity and composability is coming. Solving cross-chain composability is a major milestone.\u201d<\/p><\/blockquote>\n<p>However, until cross-chain composability is a reality, there\u2019s a risk that many DeFi DApps on Polkadot will simply seek to replicate existing applications on Ethereum. After all, this has already happened with Binance Smart Chain, where DApps such as BurgerSwap or BakerySwap opted to copy Ethereum-based SushiSwap. <\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>BurgerSwap frying high \u2014 Binance offers up the latest dish on DeFi menu<\/em><\/strong><\/p>\n<p>The value of simply copying existing apps is arguably questionable. Therefore, Polkadot DeFi will need to up its offering to entice users away from Ethereum\u2019s composable and liquid DeFi ecosystem.<\/p>\n<p>Ultimately, it\u2019s still a matter of time to see whether Polkadot will steal the DeFi crown from Ethereum. However, perhaps a more pressing question is whether Polkadot can eventually improve upon DeFi to enhance adoption and make it more user-friendly and accessible to everyday investors and consumers. Beyond interoperability, that would seem to be the ultimate achievement.<\/p>\n<\/div>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener noreferrer\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/defi-on-polkadot-an-alt-chain-with-interoperability-on-the-horizon\" target=\"_blank\" rel=\"noopener noreferrer\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# DeFi on Polkadot: An alt chain with interoperability on the horizon &#8221; The Polkadot blockchain platform only launched its mainnet in May, but it is already pushing to become a major competitive force in the sector. In late August, following a DOT token redenomination, Polkadot smashed into the top 10 cryptocurrencies, overtaking established altcoins&#8230;<\/p>\n","protected":false},"author":1,"featured_media":104760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-10\/76465480-0da2-4288-96a1-871c147f1bd7.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74867,74894,75168],"class_list":["post-104759","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-altcoin","tag-blockchain","tag-polkadot"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/104759","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=104759"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/104759\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/104760"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=104759"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=104759"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=104759"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}