CryptoPotato
CryptoPotato
  • Crypto News
  • Margin Trading
  • Guides
    • Bitcoin & Crypto Guides 101
    • Bitcoin For Beginners
    • Editorials
  • DeFi & NFT
  • Buy
  • Language
  • Crypto News
  • Bitcoin For Beginners
  • Cryptocurrency Guides 101
  • Editorials
  • Bitcoin & Crypto Margin Trading
  • DeFi & NFT News
  • Bitcoin Price Analysis
  • CryptoPotato Crypto Fund
  • Ethereum (ETH) Price Analysis
  • Ripple (XRP) Price Analysis
  • Market Updates
  • Interviews
  • Buy Bitcoin with Card
  • bitcoin
    BTC$22,856.00
  • ethereum
    ETH$1,569.44
    • Market Updates
    • BTC Analysis
    • ETH Analysis
    • XRP Analysis
    • Interviews
    • Opinions
    CryptoPotato
    CryptoPotato
    • Crypto News
    • Margin Trading
    • Guides
      • Bitcoin & Crypto Guides 101
      • Bitcoin For Beginners
      • Editorials
    • DeFi & NFT
    • Buy
    • Language
    • Crypto News
    • Bitcoin For Beginners
    • Cryptocurrency Guides 101
    • Editorials
    • Bitcoin & Crypto Margin Trading
    • DeFi & NFT News
    • Bitcoin Price Analysis
    • CryptoPotato Crypto Fund
    • Ethereum (ETH) Price Analysis
    • Ripple (XRP) Price Analysis
    • Market Updates
    • Interviews
    • Buy Bitcoin with Card
    Home » DeFi News » Polkadot Aims to Become The New Home for The $14 Billion DeFi Industry

    Polkadot Aims to Become The New Home for The $14 Billion DeFi Industry

    Author: George Georgiev

    Last Updated Nov 18, 2021 @ 12:08

    The decentralized finance (DeFi) ecosystem has seen a parabolic explosion in usage since the start of 2020.

    Data indicates that the total value locked in DeFi applications has just reached a new all-time high of $14.39 billion. At the start of 2020, this metric was closer to $500 million.

    Dune Analytics also reports that the total number of DeFi users has surpassed 800,000. At the start of 2020, this number had not even crossed 100,000. This growth has largely been a byproduct of Ethereum-based developers and applications.

    But increasingly, Polkadot has been seen as the platform for decentralized finance. Polkadot’s DOT cryptocurrency, founded by the CTO of Ethereum, is the eighth-largest digital asset by market capitalization, as of writing these lines.

    Due to technological breakthroughs, the Polkadot ecosystem has the capacity to process thousands of transactions per second at a relatively low cost compared to its competitors. Instead of hosting all transactions on a base chain, Polkadot uses a system of “parachains,” which are a series of customizable networks connected to a relay chain. This reduces strain off the main network and increases functionality.

    Developers are increasingly realizing the value of Polkadot. Bloomberg reported in October that “some  253 projects, ranging from so-called stablecoins to social networks, are being built on the network.” In September, this number was fewer than 200.

    So who is driving the growth of DeFi on Polkadot? And why are developers and users increasingly inclined to use it?

    A Full-Stack DeFi Experience

    Core to any financial ecosystem is loans, interest paid to creditors, and stablecoins.

    RioChain, a parachain built by RioDeFi, is attempting to become the foremost player in these financial services for Polkadot. RioChain is an audited parachain that provides developers with a pre-made and adaptive suite of tools that allows them to build a DeFi ecosystem from the ground up.

    RioChain is planning to offer tools for a number of decentralized financial services, including but not limited to and instant Bitcoin lending, savings accounts, and stablecoins collateralized in cryptocurrency.

    The project is also taking a focus on e-commerce and digital payments more broadly. Traditional payment systems today often charge extremely high fees, can be censored, and may take days. RioChain is looking to solve these shortcomings with decentralized infrastructure to cut out the middlemen, preserve user privacy, and lower costs for both consumers and retailers.

    Core to RioChain’s functionality is the concept of interoperability, which suggests that blockchains, applications, and different coins should be able to interact with one another to collectively build network effects.

    RioChain’s First App

    The first decentralized application built on RioChain’s infrastructure is MANTRA DAO, a community-led platform where users can stake, lend, borrow, and govern in a decentralized manner.

    MANTRA DAO has received investments from prominent crypto-asset venture companies like Kenetic Ventures, Genesis Block, and Plutus VC.

    MANTRA DAO currently has a focus on staking, where users can stake cryptocurrencies to earn yields paid in OM, the protocol’s native digital asset. For instance, users can stake OM to earn regular returns paid in the cryptocurrency, or they can stake RFUEL, the native coin of the RioChain ecosystem.

    The developers behind the protocol are currently working on applications for decentralized lending and borrowing using the infrastructure created by RioChain.

    Other Interesting DeFi Applications on Polkadot

    RioChain and MANTRA DAO are only one of many DeFi applications making an impact on Polkadot.

    Acala raised $7 million in the summer from funds such as Pantera Capital, ParaFi Capital, and Spartan Capital. Acala is a multi-faceted DeFi protocol that is looking to support a number of primitives.

    Its first focus is a decentralized stablecoin called Acala Dollar. Each aUSD coin is backed by a basket of a number of cryptocurrencies. The stablecoin can be transacted across the globe at low cost, across all connected blockchains.

    Acala is also working on a decentralized savings account, a decentralized exchange, and a governance portal that will allow holders of its native token ACA to choose in what direction they want the protocol to head.

    The Need for Faster and Cheaper Transactions: Yet To See

    Driving the growth of Polkadot’s DeFi ecosystem is the need for faster and cheaper transactions.

    During the DeFi craze of August and September earlier this year, users found themselves paying upwards of $30 per each interaction with DeFi applications on Ethereum. Those that paid below the market rate had to wait minutes or even hours for their transaction to be processed by miners.

    Polkadot solves this issue through its solution of parachains, which eliminates much of the bottlenecks that exist in using older blockchain architectures. However, it is yet to see whether or not Polkadot can become scalable and get widely used just like Ethereum did over the past years.

    Analysts in the space expect DeFi development to gain further traction on networks where there are no serious scaling concerns. Polkadot is one such network. And driving the DeFi ecosystem on Polkadot will be applications like MantraDAO, Rio Chain, and many more.

    The article was first published on: Nov 22, 2020

    SPECIAL OFFER (Sponsored)
    Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

    PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.

    Enjoy reading? Share with your friends
    Facebook Twitter LinkedIn Telegram

    About The Author

    George Georgiev
    More posts by this author

    Georgi Georgiev is CryptoPotato's editor-in-chief and a seasoned writer with over four years of experience writing about blockchain and cryptocurrencies. Georgi's passion for Bitcoin and cryptocurrencies bloomed in late 2016 and he hasn't looked back since. Crypto’s technological and economic implications are what interest him most, and he has one eye turned to the market whenever he’s not sleeping. Contact George: LinkedIn

  • bitcoin
    BTC$22,856.00
  • ethereum
    ETH$1,569.44
  • Join Our Community

    FacebookTwitter YouTubeTelegram


    Editorials
    How Long Will the Ethereum LSD Narrative Last? Talking 2023 Trends with Nansen’s Martin Lee

    How Long Will the Ethereum LSD Narrative Last? Talking 2023 Trends with Nansen’s Martin Lee

    Everything That’s Going on With Pi Network: From Start to Latest Controversial Listing

    Everything That’s Going on With Pi Network: From Start to Latest Controversial Listing

    What is Ethereum Liquid Staking and Why It Is Crucial As Shanghai Upgrade Approaches?

    What is Ethereum Liquid Staking and Why It Is Crucial As Shanghai Upgrade Approaches?

    The Lesson in Alameda-FTX About Government Regulation and Crypto (Opinion)

    The Lesson in Alameda-FTX About Government Regulation and Crypto (Opinion)

    5 Bullish and 2 Bearish Cases for DeFi Going Into 2023 (Opinion)

    5 Bullish and 2 Bearish Cases for DeFi Going Into 2023 (Opinion)

    From Google and Microsoft to Binance: Interview with Head of Product Mayur Kamat

    From Google and Microsoft to Binance: Interview with Head of Product Mayur Kamat

    13 Biggest Crypto Scandals and Controversial Stories of 2022

    13 Biggest Crypto Scandals and Controversial Stories of 2022

    Join Our Newsletter
    Become a CryptoPotato VIP
    One Weekly Email Can Change Your Crypto Life.
    Sign-up FREE to receive our extended weekly market update and coin analysis report
    We NEVER send spam. You can unsubscribe at any time.
    Invalid email address
    Thanks for subscribing!
    Footer Logo
    About
    Advertise on CryptoPotato
    About Us | Contact Us | Careers
    Editorial Policy
    Terms of service | Privacy Policy | GDPR
    More Sections
    IEO List | Evaluations
    Airdrops
    Scholarship
    Disclaimer
    Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. Full disclaimer
    © Copyright CryptoPotato 2016 - 2021
    Scroll to top