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PolkaDeFi and Why It Is the Future of DeFi

MANTRA DAO, 12/4/2020, 7:43:31 PM

Every day people interact with technologies that are controlled by a tiny number of large companies – Google, Facebook, Amazon, and other giants. While we enjoy the convenience of having these innovations at hand, these tech titans do not always have our best interests at heart.

In fact, often, we are forced into some conditions or terms of using a particular app, and we don’t even read them! We, ourselves, are permitting those companies to control our personal data. In addition, they collect an enormous amount of information about us as we interact with their applications.

This issue has been lingering in the webspace for a long time, but it seems that the world has finally found the solution. It lies in the open-source, decentralized technologies that eliminate the need for a third party’s involvement. With these technologies, like blockchain, we can build financial systems that will allow us to regain control over our individual information.

Is Blockchain An Answer to Our Personal Finance & Data Woes?

The question is, “why are we still not deploying blockchain for these purposes worldwide?” The answer is simple: blockchain technology in its current state is not perfect, as it has its flaws. Besides, the world is still not ready for the wide adoption of blockchain because of these drawbacks; this also applies to Decentralized Finance.

This is where the next-generation blockchains are coming into the picture. These kinds of blockchains are seen as an ultimate solution to our data privacy troubles, since they are essentially created to improve the scalability, security and speed issues associated with the “traditional” blockchain.

One of such innovations is Polkadot – a scalable heterogeneous multi-chain. This protocol is designed to offer a foundation of “relay-chain” upon which developers can host their dynamic data-structures side-by-side.

One of the key differences between the conventional blockchain and Polkadot is that the former is focused on providing a single chain to be utilized by potential applications, while Polkadot is not aiming to provide an application functionality per se. In fact, Polkadot allows for various data-structures to be hosted on its protocol, and those data-structures, referred to as “parachains” are not necessarily built on blockchain.

This next-generation blockchain protocol is sharded, which implies that it ties several chains together in a single network, thus eliminating security, speed, and scalability  issues that are present in the traditional blockchain.

Polkadot strives to offer a robust foundation for the next wave of consensus systems, starting from those that are at the very beginning of their journey to the ones that are ready for production. By combining the best features from multiple specialized blockchains, Polkadot is poised to emerge as a new way for decentralized marketplaces to develop.

What is Polkadot?

Polkadot is a next-generation blockchain protocol that serves as a multi-bridge for a network of numerous purpose-built blockchains, enabling them to interact and transact faultlessly at scale.

In simple words, Polkadot is a revolutionary network protocol that is designed to connect different blockchains. The protocol facilitates an internet where independent blockchains can interact, exchange information, and execute transactions between each other in a safe and fast way.

Blockchain technologies have achieved excellent results when it comes to financing, governance, the Internet Of Things, web decentralization, and more. However, a number of limitations of conventional blockchain have hindered the prospects of large-scale adoption. Polkadot overcomes these challenges by offering several innovative features, such as improved scalability, transparent governance, cross-chain interoperability, and heterogeneous sharding.

The project aims to create an entirely decentralized web, where users are in charge. Polkadot is used to easily create and connect decentralized apps, organizations, and services. The protocol creates a true multi-chain environment, which allows for cross-chain transactions and computations. Thanks to Polkadot’s unique decentralized architecture, users can transfer data across numerous public, private, open, permissioned, and permissionless blockchains. For instance, with Polkadot, users are able to build the applications that get their data from a private blockchain and then utilize them on a public blockchain. Web3 Foundation is the mastermind behind this innovative project. Their mission is to “nurture cutting-edge applications for decentralized web software protocols,” according to their official website. By providing means to design better solutions, Polkadot creators believe they can free society from the limitations of relying on a “broken web”. According to Polkadot, in an ideal internet, large organizations currently controlling the web will not be able to violate our privacy.

Polkadot Mechanisms

To be able to “connect the dots”, Polkadot designed several technologies to help deliver on its promises. One of the key concepts is Relay Chain, which facilitates the shared security, cross-chain interoperability, and consensus within the network.

At the core of Polkadot’s protocol stands the concept of “parachains.” Parachains (short for “parallel blockchains”) are unique blockchains that can deliver higher transaction amount when compared to Ethereum thanks to their sophisticated structure.

“Parathreads” are similar to parachains, but are deployed with a pay-as-you-go version. These are perfect for blockchains that don’t need a constant connection to the network.

Lastly, Polkadot utilizes “bridges” that allow parachains and parathreads to communicate with external networks.

Rio DeFi’s Rio Chain is an example of a Polkadot parachain that will be developed using Substrate. It aims to provide an easy-to-use software for decentralized finance DApp developers. RioDeFi bridges centralized and decentralized financial systems and can facilitate cross-chain transactions. Rio Generic Asset Bridge is one of the tools offered by Rio DeFi and it supports synchronized cross-chain transfers of multiple assets.

MANTRA DAO Polkadot

At MANTRA DAO, we want to take full advantage of Polkadot’s potential. The project will be built on RioChain, which aims to be a parachain of Polkadot’s protocol. MANTRA DAO is a community-governed decentralized finance platform for lending, staking, and governance. At the core of the network is the OM token that grants voting rights to users. Users can influence the network’s parameters within the platform, among many other factors.

At MANTRA DAO, we believe that interoperability and scalability are crucial factors when it comes to the advancement of blockchain technologies. Being one of the blockchain technology drawbacks right now, interoperability can certainly play a significant role in ensuring the smooth adoption of DeFi technologies at a global level.

Besides, Polkadot is forkless  - which implies that it is future-proof and the network does not need hard forks to upgrade, which makes it flexible and easily adaptable to changes. In addition, Polkadot is secure on each level: the innovative data availability and validation structure enable chains within the network to safely interact with each other while staying independent in their governance.

Polkadot’s features emerge as the key deciding factor when we at MANTRA DAO considered our network’s future’s foundation besides Ethereum’s network. Once we integrate with Polkadot, thanks to the solid foundation of its protocol, unique architecture, and a mix of next-generation features, we firmly believe that Polkadot will play a revolutionary role in developing the decentralized finance industry.

What’s Next for Polkadot DeFi?

The popularity of decentralized finance has spiked in the course of the current year, pushing the price of Ethereum to double. Now, it seems that crypto enthusiasts are anticipating the growth in the price of Polkadot’s native token (DOT). In general, things are looking very promising for the DeFi world and for Polkadot DeFi, as several projects are starting to take advantage of unique features offered by this protocol. In the meantime, Polkadot is also looking into utilizing developers’ potential from other platforms.

Nevertheless, it looks like we are ahead of the long road to embrace all the advantages provided by the Polkadot DeFi fully. Yet, once the general public is ready to understand and accept the sophisticated nature of next-generation DeFi, the global economy’s applications will be virtually endless. MANTRA DAO’s mission is to bring DeFi to everyone through Polkadot DeFi and fully utilize its endless possibilities.