2020 has been an unprecedented year in many ways but it also emerged as a breakthrough year for the DeFi industry. Several ambitious DeFi projects popped up out of the blue during this year. Also, an emerging blockchain Polkadot has grabbed the attention of the entire crypto industry during this period. With a remarkable surge in the DeFi sector, comparisons and anticipations among the new promising platforms such as Polkadot and the established player Ethereum are doing rounds. While Ethereum is a highly popular and established platform among developers and users, the sudden surge in DeFi applications (dApps) on the blockchain, strained its capacity. Resultantly the slowdown in transaction speed and increase in fees pushed it out of reach for the common users in recent times. Polkadot is trying to trap this space by positioning itself as an interoperable blockchain platform with its versatility and programmability. It has been resolving the challenges of the developers and common users offering them viable yet promising solutions with a new array of services and opportunities. Speculations are now heating up if Polkadot can grab the market share of Ethereum or not? Let’s explore the possibility. A quick look at the DeFi Boom DeFi concept is turning eyeballs of the entire world with a growing number of high street financial institutions involving in this arena. While 75 % of the world’s largest financial institutions are exploring blockchain in one way or another, the concept of DeFi is getting a legitimate acceptance as well. In the last six months, DeFi has witnessed a steep rise in Total value lock (TVL) from $1billion to $25 billion which has unlocked a whole new platter of opportunities for the investors and to the developers. The Pandemic climate has decelerated the global economic progress and eventually has lowered down the rates of interests across the borders, but on the other hand, the disruptive DeFi ecosystem is promising higher returns than the traditional financial institutions. Unlike the traditional lending process, where the lender assesses the borrower’s capacity to repay the loans and legal formalities are involved, DeFi comes up with benefits functioning largely on privacy and mutual trust. Trends Prevailing in the DeFi Sector Ethereum Still on the forefront: Despite the economic slowdown, new platforms including Binance, Polkadot, Tron, Neo, etc. are dictating the DeFi scenario and have grabbed a significant chunk of market share from Ethereum, but it still continues to lead the market. Innovative Products Launch: A whole new spectrum of innovatively built financial products has been launched in recent months. Products in Insurance (Nexus, Mutual), Lending protocols (Aave, InstaDApp, Compound, etc.), Prediction markets(Augur Gnosis, etc. ), Synthetic assets such as UMA, etc. decentralized leverage trading (dYdX) to name a few. Rising Interest in Stable Coins: A growing interest in stablecoins can be witnessed among the traders who are exploring ways to hedge and store value. The Stablecoins dominating the markets include Tether (USDT), Dai (DAI), Paxos Standard, Gemini Dollars, and USDC, etc. Among these coins, Tether (centralized stablecoin) with a market cap surpassing $16 billion and USDC (centralized token with a market cap of $2.74 billion) DAI (Decentralized coin with a market cap of $608 million) leads the market. And the majority of these stablecoins including the centralized and decentralized ones are hosted on the Ethereum platform. Now Dot from Polkadot is also emerging as a strong contender in this space. Evolving Exchanges: A new set of exchanges are evolving in the global economic landscape which amalgamates the decentralized and the centralized services at their platforms. The complexities in Peer-to-Peer (P2P) contracts are addressed at Peer-to-Contract (P2C) platforms such as Uniswap, which are emerging as an alternative. Also, some of these exchanges are offering additional services such as swapping the cryptos immediately after acquiring them. Kyber, Oasis offers unified services such as to generate Dai and exchange it on the DEX platforms or acquire Dai on the DEX and lock it on Dai Savings Rate (DSR) Decentralized Lending Protocols: This another new concept in the DeFi space that is gaining popularity. It simply implies borrowing the money by keeping crypto collateral on the blockchains. The Ethereum blockchain continues to dominate the DeFi landscape despite the loss of some market share to other DeFi and smart contract platforms (including Tron, Binance Chain, Neo, Waves, and others). What Is Polkadot All About? Soon after its entry in the market with its DOT token in August 2020, Polkadot has established itself as the strong contender in blockchain technology applications and decentralized finance in a very short duration. The parent organization behind Polkadot is Web3 Foundation from Switzerland. Aiming to build a decentralized ecosystem, this foundation facilitates the development of decentralized projects by offering grants to viable projects. Polkadot, as the development frontier came up with its advantages, which makes it a strong competitor … Continued
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