Hi everybody. I have been away from hive blog for a while. I have learned more things about blockchain technology and financial system in this period.
We are at the edge of paradigm-shifting about money, the consensus of people, and trust notions. We were convinced that information can be global without trustee middlemen such as governments, banks, and institutions through blockchain technology. In the first step, Bitcoin made it possible to store and transfer financial value and between peer to peer. Decentralization has become a key concept and buzzword. It has huge potential to save us from big, expensive, cumbersome institutions to proceed our daily public services and financial issues.
Then, We met smart contracts and Ethereum. This was the next step in crypto ecosystem. Smart contracts made it possible to create dapps (decentralized applications) that could have generated new use-cases and solutions for financial needs. Today, We can produce new tokens and projects such as decentralized exchanges, lending-borrowing platforms, and nft marketplaces on different blockchains. Especially I should thank Uniswap developers for introducing us to the automated market maker (AMM) algorithm. Hereby, the Defi concept was born.
Decentralized exchanges have provided able to swap our tokens without transferring your ownership of assets to centralized exchanges. You don't need to worry about such as hacks or lags and fraud of centralized exchanges. It also prevents paying more fees for trade too. But, there is still something missing. With Dex, you can swap tokens with your non-custodial wallet on just one specific blockchain such as ethereum, bsc or solana. But, we need to trade coins that belong to different blockchains. This is not an issue when using centralized exchanges. You can place limit-market orders and use stop-loss function. And you can also withdraw crypto assets which versions you want such as erc-20, bep-20, or trc-20. However, while using decentralized exchanges, you are not able to use limit orders and stop-loss function. And cross-chain swap is not possible. I mean, you can't swap eth to bnb for example.
There are some solutions such as bridges between different blockchains. However, bridges create a reflection of the native asset on the target blockchain. Assets burnt in native blockchain are minted in target blockchain. But, this is not a real solution.
The next big step will be using the full functions of centralized exchanges in a decentralized structure. So, we can trade with our wallet, our private key as with Satoshi's vision. Without transferring ownership of assets to anybody. And trading coins on different blockchains on decentralized exchanges. That is Defi 2.0!
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