Why does DeFi drive Ethereum (Ethereum dex)?

08/10/2023 13:05 • Tech Ticker • 133 views

Why does DeFi drive Ethereum? In the past month, the popularity of decentralized finance (DeFi) has remained high, from Uniswap to MakerDAO to decentralized exchange Compound. As more and more investors join, the popularity of these projects continues to rise. However, why does DeFi drive Ethereum?

Currently, the locked asset value in the decentralized finance field has exceeded $1 billion. The top ten protocols in terms of locked value are Compound, Balancer, and dYdX. This is the driving force behind the entire ecosystem and also a problem that Ethereum faces. Why is DeFi said to be an important part of Ethereum? Why is DeFi expected to bring important foundations to Ethereum?

1. Ethereum 2.0 is coming: The development and maturity of decentralized applications are the biggest challenges for Ethereum. Due to the high threshold of smart contracts, developers can directly deploy code on Ethereum to achieve faster application implementation. However, because many DeFi projects on Ethereum are based on the Ethereum public chain, and the Ethereum blockchain is relatively closed, developer participation is extremely difficult.

2. Upgrade after Ethereum 1.0: The launch of ETH2.0 has already been tested. The following issues need to be focused on:

1) Can the deposit interest rate of Ethereum 2.0 meet user requirements, and how to manage the fund pool?

2) Can the “sharding” technology solve the scalability problem of blockchain?

3) The current congestion of the Ethereum network leads to low transaction fees and other problems.

3. After the EIP1559 proposal is passed, if Ethereum 2.0 can run smoothly and achieve the expected results, the mainnet launch time of Ethereum 2.0’s beacon chain may be advanced. The genesis block of Ethereum 2.0 phase 0 is expected to start on May 1, 2021.

4. Performance advantages of EOS: EOS, as an open-source platform, has high performance and easy maintenance, giving it an advantage in terms of TPS. However, EOS cannot support the rapid migration of smart contracts and consensus mechanisms.

In summary, the important foundation that DeFi brings to Ethereum lies in the convenience and security that smart contracts on the EOS network provide to users. Secondly, DApp development tools make Ethereum more efficient and convenient, and reduce gas costs. Of course, EOS performs much better than Bitcoin, but its network throughput is poor.

Regarding the updates of Ethereum 2.0, let’s first look at the “DApp development toolkit”.

Ethereum dex

According to ethnews, Ethereum dex is a decentralized trading platform based on the Ethereum smart contract language Solidity. Users can freely exchange ERC20 Tokens (ETH) on this platform, and they can also use smart contracts to automatically create, deploy, and manage their own DEX products. In addition, anyone can create their own unique DEX and provide liquidity mining incentives, thereby earning income sharing.

Ethereum dex consists of decentralized exchanges and wallets, which are completely open and accessible. They allow users to send tokens or other digital assets through a peer-to-peer network.

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Why does DeFi drive Ethereum (Ethereum dex)?

Ethereum dex

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