Dot.Finance: The New DeFi Aggregator for Polkadot
Dot.Finance is a new DeFi platform designed to incentivize the growth of the Polkadot ecosystem. By providing access to a variety of battle-tested high-performing financial instruments, Dot.Finance is designed to bring DeFi to a wide range of users and will help increase user exposure to the many benefits of the Polkadot ecosystem. This will help grow the adoption of not just the Polkadot framework but the many new DeFi products and services that Dot.Finance is building on top of Polkadot’s safe, secure, and resilient architecture.
Background to Polkadot and Dot.Finance
Polkadot is a highly successful blockchain protocol that was designed to connect multiple specialized blockchains into a unified network. Isolated blockchains can only process a finite amount of traffic, and all blockchains make tradeoffs to support a variety of features and use cases. For example, one blockchain might optimize for security, while another might optimize for speed.
These are the real-life challenges that Polkadot was designed to address. With a sharded multichain network, Polkadot can process many transactions on several chains in parallel. This eliminates bottlenecks. Also, the platform supports blockchains of different designs that are optimized for specific use cases. In this way, Polkadot overcomes the interoperability problem by uniting isolated blockchains, thereby enabling its user base to access and harness all of its advantages in one holistic protocol, making it a real contender for the next generation of blockchains.
Because of these features, Polkadot has grown significantly over the last year and DOT, the native token of Polkadot, is currently a top-10 crypto-asset based on market capitalization.
At present, several ecosystem platforms exist that incentivize activity on — smart contract blockchains such as Binance Chain and Ethereum. Despite its recent growth and promise, however, DeFi is still somewhat in its infancy stage on the Polkadot network. Dot.Finance was developed to fill this gap. With a specific focus on Polkadot, Dot.Finance will combine powerful DeFi solutions with the superior architecture of Polkadot to open the gates for financial services innovations that can benefit everyone.
So where does Dot.Finance comes in?
Recent events and the maturity of the cryptocurrency space have led to an explosion of DeFi (decentralized finance) projects. This has, in turn, led to the development of new blockchain-based financial services solutions, such as yield farming and staking. These are high-growth industries in which private investors can lend their tokens and assets to investment pools and earn rewards on them.
PancakeSwap, which works with the BEP-20 standard (a token standard on the Binance Smart Chain), and Uniswap (which works with the Ethereum blockchain) are two decentralized exchanges that provide some liquidity pooling, staking, and related DeFi services that Dot.Finance is building around the Polkadot network.
Projects such as Pancakeswap have been highly successful because BSC — the Binance Smart Chain — offered better fundamentals to DeFi than Ethereum, such as lower gas prices. These fundamentals induced a fertile ground for many other popular projects on BSC such as Pancakebunny that were designed to grow the Binance ecosystem via the BUNNY token, the native token of Pancakebunny, which can be earned via staking and providing liquidity to various Pancakebunny pools.
Dot.Finance follows a similar investment strategy but is focused on growing the Polkadot ecosystem. At present, Dot.Finance supports DOT ecosystem tokens that are currently operating on BSC.
However, there are stark differences between Polkadot, BSC, and the Ethereum network that must be noted, and we predict a massive wave of new users and projects joining the Polkadot network for the same reasons that many users and projects migrated to BSC from Ethereum: for better, faster, lower-cost, and more performant services and architecture. We discuss these differences below.
Polkadot is a superior alternative to existing blockchains and represents the next generation of blockchain infrastructure. It has grown substantially over the last year and numerous projects have committed to building on it. Because it is blockchain-agnostic and can process data in parallel, it overcomes challenges faced by systems that only allow for serial data processing or that follow specific protocols. Polkadot’s speed, flexibility, and interoperability with chains, services, and systems of different types are its defining characteristics, and these are the reasons why Polkadot has enjoyed significant community adoption which is expected to lead to a surge of new DeFi projects and innovations.
Dot.Finance was developed to spur Polkadot’s growth trajectory by reducing barriers to participation while maximizing the performance and efficiency of assets and tokens that are deployed to different DeFi products such as liquidity pooling or staking.