Bitcoin as the foundation for DeFi

Despite all the progress that has been made in DeFi, the industry is currently at something of a crossroads. Since the peak last year, TVL in DeFi has shrunk from around $150 billion to where it is now, around $50 billion. The turmoil has coincided with global trends that have affected industries across the board, but the challenges facing DeFi are unique, especially given how young the sector is.

Few question that DeFi has the potential to transform finance in a way that is fairer for all involved. However, the big question is how exactly DeFi’s potential can be realized in sustainable and reliable platforms.

Our next AMA session will feature DeFiChain, a decentralized blockchain that branched off from Bitcoin and allows users to access a wide range of DeFi services while retaining the security of its predecessor. The AMA takes place at 16:00 UTC 9 November and will delve into the challenges facing the industry and explore potential ways forward.

A decentralized Bitcoin off-shoot

DeFiChain was originally launched for approx. 2 years ago by DeFiChain Foundation. Since its launch, the platform has been fully decentralized and is now controlled by over 10,000 masternodes distributed worldwide.

The blockchain itself is a fork of the original Bitcoin blockchain, meaning that while there have been significant changes, the network has carried over many of Bitcoin’s defining characteristics. Like Bitcoin, DeFiChain is a non-Turing complete blockchain, only it was built exclusively to provide DeFi services with no bloat and significant protection against bad actors.

Unlike Bitcoin, DeFiChain uses a proof-of-stake (POS) consensus mechanism. This is key to the DeFi opportunities presented by the network, as POS alleviates some of the disadvantages associated with Bitcoin, namely the long waiting times and high transaction fees.

One of DeFiChain’s defining features is that it engages in Bitcoin anchoring, where it periodically stores its data on the original blockchain. This means that, in the event of a 51 percent attack, the blockchain can revert to its last rooted form and also boosts network health.

Bitcoin as the ideal starting point for DeFi

By taking the original Bitcoin technology and adding key features on top of it, DeFiChain has created what they believe is an approach that will lead to a way forward for an industry that has been stuck in a rut.

There are a number of different issues at play in DeFi currently, the most important of which are a lack of transparency, security vulnerabilities, platforms with the wrong economics, and a level of complexity that can be overwhelming for newcomers. DeFiChain’s approach solves many of these problems by taking the industry back to basics to build something better.

A vibrant ecosystem is built around the network that has all the best of what DeFi has to offer, including staking and farming mechanisms where users can earn returns on the liquidity they provide. DeFiChain also has many opportunities for platform creators, given the flexibility offered by its decentralized governance. These opportunities include funding opportunities for projects that have just started.

AMA session set for Wednesday

Cointelegraph will host its upcoming AMA session with DeFiChain on Wednesday, November 9 at 16:00 UTC. The AMA is open to everyone, so be sure to tune in and ask all your questions about the future of the DeFi industry.