The Next Generation of Blockchain Infrastructure is Here
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Today, decentralized finance is widely regarded as one of the most popular use cases for blockchain technology — with over $76 billion locked up in DeFi protocols on the Ethereum network alone.
The dramatic growth in DeFi seen in recent months has been largely catalyzed by a wave of innovation and the rapid iteration of novel protocols and tools that allow users to do more with their assets. Nonetheless, while DeFi is still very much in its earliest days, a new generation of DeFi products is beginning to paint a clear picture of where the industry is going.
Yield Farms Have Evolved
Though the DeFi landscape is remarkably diverse, one particular subset of DeFi products has emerged as particularly promising — we’re talking about yield farms. With many yield farms offering massive APYs that eclipse the returns offered by regular savings products and even crypto savings accounts, they have the potential to help cryptocurrencies and decentralized technologies appeal to even mainstream investors.
Despite the fact that yield farms are a relatively new phenomenon that is being used by an increasing proportion of DeFi users, they’re also one of the fastest evolving niches — with new yield farm products, cross-chain farms, and unique takes on the yield farm structure appearing each day.
Take Prophecy’s Prophet Pools beta as an example. These yield farms run on a custom blockchain and allow users to earn substantial rewards within an extremely short period of time through an accelerated yield pool solution. Likewise, it also offers a standard yield pool, where users earn a flat 25% APY for staking their Prophecy (PRY) / Ethereum (ETH) Uniswap LP tokens.
This rapid development is further highlighted by platforms like KIRA Network, which allows users to stake a variety of cross-chain assets to help secure its blockchain and earn staking rewards. By staking their assets on KIRA, users also receive an equal number of KIRA derivative tokens which can then be staked across the broader DeFi landscape (including in yield pools) — helping users extract the maximum value from their assets.
Cross-Chain DeFi is Ramping Up
Polkadot, an infrastructure platform designed to act as a base layer for all other blockchains, has exploded in popularity in recent months — largely due to its potential to make cross-chain DeFi a reality.
Though Polkadot launched its mainnet one year ago, several major features are not yet available to use, including its bridges or parachains, which are still yet to be launched. Nonetheless, there are dozens of promising projects building on the technology, many of which will form Polkadot’s DeFi hub.
Parastate is one such platform vying to become the basis for DeFi in the Polkadot ecosystem. As a substrate-based platform, Parastate benefits from impressive throughput and compute performance — two key features necessary when producing decentralized applications designed for mass adoption.
But most importantly, it offers an array of built-in DeFi features, such as lending protocols, stablecoins, oracles, and more — many of which are ported directly from Ethereum thanks to its Ewasm VM, which can directly run Ethereum code with zero changes.
Clover represents another major push to bring DeFi to the masses — by using EVM compatibility, gasless transactions, and cross-chain dApps to make DeFi both more accessible and easier to build on. Like Parastate, Clover will support practically any conceivable DeFi protocol and will provide example templates for many popular DeFi legos — ensuring developers can get up and running on its parachain quickly.
While Polkadot and substrate-based chains may be stealing much of the spotlight, they’re not the only non-Ethereum platforms going heavy on DeFi. Solana, NEAR, TRON, Qtum, Fantom, and several other smart contract capable blockchains are now beginning to build out their DeFi foundations — and some now have many of the basic elements in place.
With yield farms, automated market makers, token bridges, stablecoins, and other crucial DeFi infrastructure now available on more than half a dozen blockchains, the race is on to see which platform will become dominant in the months and years ahead. But for now, Ethereum and Binance Smart Chain remain the front runners.