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These Projects Are Shaping The Future Roadmap of DeFi

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The decentralized finance industry has undergone significant growth since its inception. Whereas initial efforts focus on one particular blockchain, the landscape has become a lot more competitive. Numerous projects are pushing the boundaries of what is possible to unlock new products and services.


The Advent of Decentralized Finance

It is a daunting task to decentralize the financial sector. As an industry where intermediaries are customary and almost necessary, removing those middlemen seems nigh impossible. Thankfully, the reality is very different, as smart contracts can replace authority figures with relative ease. To do so, there is a growing need for blockchains with smart contract functionality.

It is not hard to see why Ethereum became the default DeFi blockchain from day one. As an ecosystem catering to developers, Ethereum has a solid reputation for building decentralized applications and services. Financial services are the next logical step in evolution. Dozens of DeFi projects exist on Ethereum today, ranging from lending to decentralized exchanges and synthetic asset creators to derivatives and asset management services.

The success of decentralized finance on Ethereum has spurred other blockchain ecosystems to pursue similar options. As Ethereum’s network is constrained by scaling issues and very high transaction fees at times, there is a need for competing solutions. Several blockchains try to put a different spin on decentralized finance today. More competition means more innovation and more versatile and innovative products and services.


Portfolio Management With Balancer

As one of the “older” Ethereum-based DeFi projects, there are many reasons to appreciate Balancer. The automated portfolio manager and liquidity provider is renowned for paying fees to portfolio managers who rebalance your portfolio. Users collect fees from traders who adjust your portfolio as new arbitrage opportunities become available. Rather than paying a person or company commission to manage your portfolio, Balancer turns that concept on its head.

Ultimately, the Balancer team aims to turn its solution into the primary source of DeFi liquidity. A major system upgrade is expected to roll out shortly, which will increase the appeal and potential of this automated portfolio management solution. Its programmable and customizable liquidity pools and market-making opportunities pave the way for more accessible financial solutions.


DeFi Hub Acala’s Karura

The Polkadot blockchain ecosystem is of great interest to developers and enthusiasts alike. Its upcoming launch of parachains will help establish sidechains capable of focusing on one project or task specifically. Acala, one of the many projects building on Polkadot’s technology, wants to position itself as the ‘DeFi hub’ or one-stop-shop for futuristic financiers. The project will encompass popular features one would find in Uniswap, Compound, Aave, and other projects today.

For now, the Acala team focuses on the Karura crowdloan auction. Karura will serve as a scalable network optimized for DeFi with a suite of financial applications ranging from trustless staking to a new stablecoin and an AMM DEX with low fees to be paid in any token. As the team will roll out a usable DeFi suite with proven use cases from day one, there is a lot to look forward to where Karura is concerned.


The Bridge-based Approach by Orbs

Interoperability between multiple blockchains is the next step to overcome for decentralized finance. Orbs is pushing the boundaries of this segment after recently extending its native token to the Binance Smart Chain. Creating a bridge between BCS and Ethereum opens up many possible DeFi opportunities. As both blockchains are prominent players in decentralized finance today, there will be a great interest in cross-chain bridge solutions like the one developed by Multichain.XYZ.

As BSC notes many new project and token launches and does much lower transaction fees than Ethereum, the bridge-based approach makes a lot of sense. Etheruem may be leading the decentralized finance industry for now, but BSC is home to many viable alternatives. Interoperability of tokens, services, and products will become more important over time.


DeFi On Bitcoin With Rootstock

One of the more intriguing projects in the decentralized finance space is Rootstock. Rather than focusing on Ethereum, the team wants to bring DeFi to Bitcoin. An understandable choice, as Bitcoin is the primary cryptocurrency blockchain in terms of decentralization and security. However, it has no native support for smart contracts, which is why the Rootstock smart contract platform is essential. With the help of the RSK Infrastructure Framework Open Standard – or RIF OS – and IOVlabs, the future of decentralized finance on Bitcoin looks bright.

Founded in 2016, Rootstock has proven to be an exciting infrastructure for developers. Several teams are now building DeFi solutions to benefit from the security of roughly 50% of Bitcoin’s hashrate. Current decentralized finance applications include Money on Chain, RSK Swap, TEX, and Sovryn.  A compelling selection of financial and exchange solutions for users to explore.


Closing Thoughts

With all of these different ecosystems and solutions coming to market, the decentralized finance industry will undergo significant growth and innovation over the coming months and years. It is evident that first-generation projects only focusing on one aspect of DeFi may eventually lose traction unless they decide to innovate and evolve.

Moreover, it is interesting to see the different blockchain ecosystems being used to build these new products and services. Competition in this industry is essential, as it will allow for more widespread adoption of these solutions. Ethereum may be the market leader today, but that will not necessarily remain the case forever. Exploring alternative options can prove beneficial for multiple reasons.

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