Speedy, Secure, and Fee-less: Maturity Found in DeFi
Decentralized finance is everywhere. Fees, privacy concerns, and a need for instant transactions have made DeFi exceptionally attractive. DeFi will soon begin providing the same services as centralized institutions, like loans, insurance (think FDIC), exchanges, derivatives, and oracles.
In DeFi no single entity has total control. This might sound frightening, as it’s not what we’re used to, but centralized institutions are vulnerable to security breaches. DeFi solutions have no single point of failure. This means even a determined attacker cannot take down the network.
Centralized financial institutions make the rules. This might sound painfully obvious, but it matters more than it might seem at first. There are clear applications for DeFi. Take loans, for example. People with imperfect credit scores are penalized or unceremoniously denied. A person from a foreign country may not have a credit score or the opportunity to get one. DeFi lets anyone become a borrower or lender.
DeFi looks like a great idea. People are talking about it, but it’s not a household name. It’s still in its beginning stages, where blueprints are beginning to leap into the world. This might be because most attempts to deliver DeFi have been built with Ethereum, a platform that, for the most part, is not up to the task.
There are several reasons. The first is Ethereum’s network is not cost-effective. The high transaction fees make it impractical for a decentralized exchange, for example. Bluntly stated, it’s not fast or scalable enough for serious applications. While Ethereum is good at tracking the movements of an asset, it’s not particularly good for implementing features needed by said asset. Lastly, there is no bridge between real world data and third party data needed for advanced algorithmic trading.
Currently DeFi traders incur fees from three sources: deposits, trade settlements, and withdrawals. With all these fees, why bother switching from a conventional exchange?
Platforms like Constellation have the bandwidth to support complex financial ecosystems, with all the buttons and levers seasoned traders expect. Lattice Exchange, a DeFi trading solution built with Constellation, is exactly what long-time crypto enthusiasts and investors from established markets have needed for years. Some centralized crypto exchanges offer them, but their transaction fees can scare off traders who prefer a more active approach.
No one likes to lose money.
This is precisely why FDIC-backed bank accounts let us sleep soundly. This is also why liquid markets, ones where we can readily enter and exit positions, buy or sell whatever might interest us, are preferred. Buying a token before it takes off can make the difference between a dismal day and a fantastic one. Small exchanges can experience periods of light or nonexistent flow and, at this time, most DeFi exchanges use an AMM algorithm that only allows for market orders, severely limiting the toolkits of the traders on their exchanges.
Lattice’s liquidity pools are backed by a plethora of AMMs on Constellation’s Hypergraph infrastructure.
The first ICO craze wasn’t irrational, just premature. The right timing and infrastructure are key. This is why Lattice puts a priority on time. By delivering faster transactions and keeping assets liquid so you don’t miss the perfect trade, Lattice is positioning itself to be the major player in the space. It is an answer to the prayers of thousands of crypto traders.
References and Further Reading
Hertig, Alyssa. “What Is DeFi?” CoinDesk, CoinDesk, 30 Sept. 2020, www.coindesk.com/what-is-defi.
Jorgensen, Benjamin, et al. “Lattice Exchange Official Whitepaper.” Lattice Exchange, Sept. 2020, lattice.exchange/Lattice-Exchange-Official-Whitepaper.pdf.
Park”, “Carlos. “Delivering the Promise of DeFi with Lattice.” The Daily Chain, “”, 22 Sept. 2020, thedailychain.com/constellation-and-lattice-deliver/
Park”, “Carlos. “How Lattice Fixes the Trouble with Exchanges.” The Daily Chain, “”, 29 Sept. 2020, thedailychain.com/lattice-to-fix-crypto-exchanges/.
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Authored by Adam Alonzi
Adam is a writer, biotechnologist, documentary maker, futurist, inventor, programmer, and author of two novels. He is a Marketing Director for Lattice Exchange, Head of New Media for BioViva Sciences, interdisciplinary analyst for EthicsNet, a reviewer for the Millennium Project.