An old chain with interoperability on the horizon


The Polkadot blockchain platform only launched its main network in May but is already pushing to become a major competitive force in the sector. In late August, after a DOT token changeover, Polkadot hit the top 10 cryptocurrencies, overtaking established altcoins like EOS, Litecoin (LTC) and others.

Kelvin Koh of the Asian crypto fund Spartan Black previously said that Polkadot could be in the top three blockchains. Dan Morehead of Pantera Capital Management recently shared his views with Bloomberg, emphasizing that while Polkadot is currently trading around 10% of the value of Ethereum, his company believes it has a “much higher than 10% chance of being a competitor to Ethereum. ”

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While there is endless speculation about what factors will affect the price of Ether, one trend has emerged over the course of its life: the more developers create applications with user appeal and value, the more optimistic the price outlook for Ether becomes.

If the same is true of Polkadot, then analysts’ forecasts are promising. The popularity of decentralized funding has resulted in the ETH price doubling this summer. Now, DeFi developers also seem to be looking to Polkadot for its fast throughput, substrate development framework, and ultimately interoperability.

However, Peter Mauric, director of public affairs at Parity Technologies, told Cointelegraph that Polkadot has tremendous potential to expand the DeFi ecosystem beyond its current capabilities. Parachutes are another type of smart contract that allows a different level of implementation. He went on to elaborate:

“Once we have these turbo-charged DeFi staples, the potential for new innovations will expand significantly, and we will see exciting new opportunities such as decentralized sovereign wealth funds and cross-chain money markets that will lay the foundation for the next generation of DeFi protocols.”

Many of these new DApps and parachutes also receive grant funding from Polkadot’s main sponsor, the Web3 Foundation. Mauric confirmed that the Polkadot Treasury is also trustingly and in the chain pays out funds for projects that want to build on Polkadot. So who is involved in Polkadot’s DeFi ecosystem and how do they compare to their counterparts in Ethereum?

A complete DeFi platform

Acala is a decentralized financial center known as an “All-in-One DeFi Service Center”. It offers some features comparable to Maker that allow users to borrow and borrow their aUSD stablecoins. However, it also operates a decentralized exchange within the framework of an economic model known as a “decentralized state fund”, which is intended to represent a continuous means of maintaining the development ecosystem. Acala was also one of the first to participate in a new Polkadot-specific crowdfunding model known as the first Parachain offering.

Acala is a classic example of a project that takes advantage of the high degree of customization that substrates offer. Acala co-founder Bette Chen told Cointelegraph, “For example, by using Substrates to create Acala, we can customize the fee schedule and allow users to pay fees in accepted tokens. The benefits of innovation are limitless as we can add new features and fix issues without the tough forks. “

Stake out and borrow

Mantra DAO is a community-driven DeFi platform for staking, lending and governance. The platform’s OM token confers voting rights that affect various factors such as inflation rates or interest rates. Mantra DAO will operate on the Rio chain infrastructure and is on its way to becoming a fully decentralized DAO ruled by its community.

Mantra DAO sees scalability and interoperability as the main selling points for the Polkadot base, as Will Corkin, co-founder and councilor, explained to Cointelegraph: “Interoperability is a step towards making DeFi mainstream and addressing the current networking problems these platforms face on Ethereum. “He added,” Not only can we bring Ethereum DeFi to Polkadot, we can bring all of the DeFi to all peers on all platforms. “

Another project, StaFi (short for Staking Finance), is a protocol that users can use to unlock the liquidity tied up in staked tokens. It works in a similar way to Yearn.Finance or Compound and issues synthetic tokens called rTokens, which represent a share of the pool and can be used in other protocols. Along with Web3 grants, the project was supported by B-Tech, a tech accelerator linked to the Bitmax exchange.

DEXs and Liquidity

Uniswap’s Polkadot equivalent is Polkastarter, a decentralized exchange that allows users to launch interoperable pools of tokens with cross-chain swaps. Projects can list their tokens and carry them out in a decentralized auction via the crowdfunding platform. The development team has created a proof-of-concept for Ethereum, with a roadmap that includes the migration to Polkadot from early 2021.

Equilibrium is another project migrating from another blockchain – EOS – to Polkadot. It started out as a MakerDAO equivalent, but plans to add a decentralized exchange, a synthetic asset platform and a newly interoperable stablecoin to its range of products as it moves to Polkadot.

A bridge to the Ethereum DeFi

Moonbeam is a polkadot bridge parachute to Ethereum that allows developers to create Ethereum-compatible smart contracts. With Moonbeam, DApps can be integrated with other blockchains, including Bitcoin. This also means that existing Ethereum-based front ends can connect to Moonbeam to interact with Polkadot-based DeFi applications.

Speaking to Cointelegraph, Derek Yoo, CEO of Moonbeam developer PureStake, explained the functionality: “Moonbeam allows ERC-20 tokens to be moved between Ethereum and Polkadot, which are required for the provision of cross-chain deployments in which an instance of the application is activated is both platforms. “

Moonbeam is already finding favor with DeFi projects based on Ethereum that want to expand in Polkadot. Several partnerships with prominent DeFi projects have been announced, including SushiSwap, BetProtocol, and Linear Finance, and Yoo said more are in the works.

DeFi infrastructure

Ethereum DeFi has grown organically, and several innovators are joining and building on the work of their predecessors. However, many projects on Polkadot see the possibility of building layers of infrastructure using Polkadot parachutes for the cross-chain transfer of assets and transactions.

Rio DeFis Rio Chain is a polkadot parachute chain made with substrates that provides a pre-built suite of tools for DeFi DApp manufacturers. This includes the Rio Generic Asset Bridge, which supports the simultaneous cross-chain transfer of multiple assets. All of Rio’s core tools are accessible through the project’s website interface, including the Rio Wallet and Rio Block Explorer.

The team behind Rio Chain envisions several cross-chain DeFi use cases including a Bitcoin lending platform, a Bitcoin savings account application, and Bitcoin instant stable loans based on a crypto portfolio. Additionally, Rio Chain believes that the global ecommerce payments market may be disrupted by removing intermediaries like PayPal who are generating significant revenue by taking on a stake in merchant payments.