Cross-chain Defi Development: The New Big Thing for Future

Published by : Pankaj | Jun-17-2022

Cross-chain Defi

  • Blockchain development has made revolutionary transformations across many industries. Every emerging sector is an early adopter of blockchain functionality, whether the supply chain or any other industry. So financial sector has also considered blockchain as a crucial part of the development and is an early adopter of decentralization.

    As blockchain users are increasing,  the need for interoperability between blockchain users is crucial. For the financial institution, blockchain has empowered them to replace their centralized, legacy infrastructure. It is with a robust peer-to-peer ecosystem.

    Generally, blockchain and cryptography power decentralized finance(Defi), and nowadays, industry leaders are merging Defi and Crypto with Web3. It is to provide the power infrastructure to enterprises to support the Defi future.

    Moreover, the expansion in Defi, Crypto, and Web3 technology has somewhat impacted the Defi space, stimulating transformation for it. The cross-chain Defi is the trending buzz in the Defi world. Let us dive into the cross-chain Defi and how it supports the existing Defi infrastructure growth.

    What exactly is cross-chain technology?

    The siloed infrastructure of the blockchain system builds the communication gap between two non-naval blockchain networks. So, to address the problems of interoperability, the approach of cross-chain technology comes. It facilitates interoperability across independent blockchains. It builds a bridge between two diverse chains to exchange information and value for various purposes.

    In various industries, interoperability showed as an immense barrier to the mass adoption of blockchain. As a result, blockchain 3.0 empowers cross-border technology to support industry-specific use cases. Also, its ecosystem supports the development of novel dApps.

    The functionality that cross-chain Defi brings

    With an immense rise in crypto investment, Defi has mounting growth, and many industries determine the ability of decentralized technology. The basis of blockchain 2.0 was on a siloed decentralized infrastructure. It showed many challenges like high transaction cost, inadequate liquidity, and slow execution of transactions, interrupting the mass adoption of Defi.

    The cross-chain Defi mechanics is the result of the Defi ecosystem’s weakness. It allows multichain Smart contract transactions with interoperability elements powering the ecosystem. The optimization of Web 3.0 Blockchain projects like Polkadot is to facilitate interoperability. It is between non-interoperable blockchain networks through parachain.

    Moreover, it empowers quick token exchange across isolated and unique blockchains and provides inter-blockchain connectivity. Let’s take an example if you have enough Ether in your wallet, but we plan to invest these on the blockchain. Thus, Defi platform other than Ethereum, you use Web 3.0 bridges like Polkadot bridges.

    In the case of interoperable bridges, users do not need a centralized exchange to change their existing tokens into currency. It is for further use of any desired blockchain, and bridges allow instant swap that mint the token on other blockchains whenever required.

    Also, read: Web 3.0 vs Metaverse

    Why are the cross-chain Defi, and are they applicable?

    Presently the buzz is around cross-chain Defi, and regularly there is the launch of many interoperable and feature-rich Defi platforms. Take a look at some platforms that hold immense value across trade and finance.

    Lending Platform

    It allows users to manage their shaving and supply and lock them for interest earning across multiple chains. Also, the powering of cross-chain Defi lending platforms is with the latest technologies. The user can effectively manage their funds, lend loans to the interested users, and gain higher profit. It is after being able to access and interact with lending platforms.

    The integration of the cross-chain Defi platform with new age features like automated market maker (AMM) interoperable Smart contract and multichain Defi wallet makes it unique. Also, the integration with atomic swap, liquidity pools, unified dashboards, etc., makes the cross-chain Defi platform special. Also, the cross-chain Defi supports bulk adoption of Defi across industries such as gaming and e-commerce. It is the space where multichain transactions and trading are essential. Also, this makes it different from the non-interoperable Defi lending platform.

    Exchange Platform

    The Defi exchange platform enables the user to lend and borrow an immense range of crypto assets over many Defi platforms. It is by running on the independent chain, with cross-chain features. From the different platforms, the users get the finest of staking. It is with their digital assets to maximize interest and execute their duty as validators. It is after seamlessly borrowing or earning interest from different platforms.

    Staking Platform

    For the platform native tokens, Defi staking platform users make extra profit on their money by locking a unique part. Although, in a proof-of-stake (POS) blockchain platform, the meaning of Defi is to be a validator.

    Moreover, on various unique blockchain spaces, a cross-chain Defi staking platform supports staking, and power is with an interoperability element. For the multiple blockchains, it implies that the user becomes a validator and raises profit from their contribution to those staking.

    DAO-enabled cross-chain Defi platform

    The most recent launching of new and futuristic Defi projects is DAO-enabled. Also, regardless of cross-chain Defi platform purposes, it intends to serve staking, liquidity, and decentralized exchange. And the DAO facilitates autonomy across the enterprise launch and manages the Defi platform.

    Also, for DAO-based cross-chain, Defi platform users can invest, trade, and stake their digital assets.

    Also, read: Decoding DAO | Ethereum Smart Contracts at Work

    Some blockchain protocols supporting cross-chain Defi technology

    For the cross-chain Defi, the support is from third-generation blockchain protocols. Here is the listing of some high-class cross-chain technology powered network that is currently trending in the Defi space:

    Polkadot

    Near Protocol

    Avalanche

    Cardano

    Conclusion

    Cross-chain Defi platform is your next big thing for the future as it is a solution for Defi’s inability. It is by facilitating multichain Smart contracts. Also, an isolated and unique blockchain empowers quick token exchange and provides inter-blockchain connectivity.

    If you are planning to build a cross-chain Defi lending solution, then we are the right partner for you. Our core team of experts will guide you build your project. Please feel free to connect with our development experts.

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