Bitcoin Cash (BCH) is now home to an innovative exploit trading app

Decentralized finance (DeFi) is one of the largest sectors in crypto. The applications within the DeFi area consist of decentralized trading, borrowing and lending, and many more financial services. But even with its growing popularity, the sector has many hurdles to overcome before mass adoption is possible.

The rise of DeFi

The growth of DeFi’s popularity was fleeting and rapid, which follows with the general evolution of the crypto industry. During the peaks of 2021, the sector saw almost $180 billion in total value locked in the many protocols that still exist today. Of course, the DeFi space was also hit by the crypto winter.

Recently, DeFi stood out in the market rally during the first quarter of 2023. The DeFi space rose by $29.6 billion in value, making the sector stand out against the performance of major asset classes such as gold and oil.

The popularity of DeFi can be attributed, among other things, to the growing amount of decentralized applications (DApps) and the flow of users from centralized to decentralized exchanges. But while the growing popularity is a positive development, there are some caveats.

Increase in transaction costs

One of the caveats is the increasing transaction costs when more users start using a network. Investors experienced this during the 2021 bull market; The Ethereum (ETH) network saw a large influx of transactions, mainly within the DeFi space. The result was sharply increasing transaction costs on the network. Sending crypto became so expensive that users faced a significant barrier to interacting with DeFi DApps.

Another risk is vulnerabilities such as backdoor keys for smart contracts, massive centralization of individual contracts and counterparty risks when storing stable coins. With numerous bridge hiccups plaguing the space, and flaws in algorithmic protocols like Terra, using DeFi DApps is certainly not without risk. However, the industry continues to evolve, with many new platforms aiming to ameliorate the problems and challenges faced by today’s DApps.

DeFi on Bitcoin Cash

Thanks to its continuous development since its creation in 2017, Bitcoin Cash (BCH) can also act as a living environment for smart contract distribution and the creation of DeFi DApps on the UTXO main chain. A new project that has recently been launched is BCH Bull.

Using the AnyHedge protocol, BCH Bull allows users to create long or hedge positions on multiple assets, such as the US dollar, Bitcoin (BTC), and gold. Users can even add leverage to their on-chain trades. Roger Ver, a noted Bitcoin Cash supporter and early investor in AnyHedge, said of this use case: “Allowing people to permissionlessly lock the value of Bitcoin Cash to the price of external legacy currencies is an incredibly useful tool for people who don’t want to manage cryptocurrency price volatility. That’s why I chose to invest in AnyHedge.”

Source: BCH Bull

Scalable and no centralized smart contract risk

The main difference between comparable apps on Ethereum is that each trade has its own independent smart contract. Once two traders agree on the terms, the smart contract is started. This eliminates centralized security risks for smart contracts.

Furthermore, the UTXO-based protocol of Bitcoin Cash prevents high transaction fees and makes the chain scalable, meaning that fees do not increase even if the transaction volume on the network increases.

Since October 2022, BCH Bull has been in beta, where they have already created and redeemed over 3000 smart contracts. The project has now been released into full production mode this month. Its growing user base can now initiate up to 90-day contracts at 2~3 times the previous contract size, benefiting from the security and scalability offered by Bitcoin Cash.