The DeFi space is booming
Over the last year, DeFi has caused an extraordinary amount of hype in the crypto space. We have watched the number of assets locked in smart contracts grow from less than a billion USD during the first half of 2020 to exceed over 40+ billion USD during February 2021. This understandably attracted many new crypto fans to explore DeFi platforms. On the one hand, this attention is great for overall crypto adoption; however, the influx of users also creates new problems, including congestion on the Ethereum network and extremely high transaction fees for using their protocol.
How to avoid high fees? A Decentralized Application, the gateway to DeFi
To benefit from Decentralize Finance (DeFi) services, where you can easily lend, trade, and earn yield returns through liquidity pools, you need first to connect to a Decentralized Application (DApp).
One of the first protocols to use liquidity pools was Bancor, but the DeFi/DApp concepts gained more attention with the popularization of Uniswap. During the last year, Uniswap has swiftly become a leader among the decentralized cryptocurrency exchanges and is now also one of the largest overall cryptocurrency exchanges by daily trading volume on the market.
Uniswap provides an opportunity to add tokens to liquidity pools, which is one of the main foundational features of the current DeFi ecosystems. A liquidity pool is a collection of tokens locked in a smart contract. The Liquidity pools facilitate decentralized lending, trading, and many other features using smart contracts on the blockchain.
The equivalent to Uniswap on the Binance Smart Chain is PancakeSwap. The difference between UniSwap and PancakeSwap is that the liquidity pools on PancakeSwap contain BEP-20 tokens instead of ERC20 tokens. BEP-20 tokens are the tokens that run on the BSC network. Because BEP-20 is based on the BSC network, users can benefit from the BSC network’s forementioned perks (high transaction speeds and ultra-low fees).
PancaceSwap also allows users to both add assets to liquidity pools and trade between different BEP-20 tokens.
To conclude, DeFi is experiencing exponential growth, and this is only the beginning. The DeFi financial disruption begins a new era in the Financial Services industry.
The most notable drawback for BSC right now seems to be the lack of current tokens and DApps available on their network. Ethereum is still the most used blockchain for DeFi applications and will probably remain dominant for some time to come. However, as the BSC protocol allows for interoperability between various blockchains in combination with high transaction speeds and low fees, the number of DeFi projects that adopt the BSC technology, and the number of assets being locked on the network, will continue to grow rapidly.
How to avoid high fees?
High fees coupled with DeFi do not make for the best user experience. As many DeFi platforms facilitate advanced Smart Contracts, they often need to handle several interactions inside the contract for a transaction to complete. This means that when the Gas Fees are high, the smart contract becomes expensive. In other words, DeFi users who have small amounts of funds to add to a smart contract might experience fees that cost more than the amount they want to transact when using the Ethereum network.
As this protocol continues to experience high fees, the demand for alternative solutions increases, so other blockchains are starting to ramp up new options for DeFi operations. One of those is the Binance Smart Chain (BSC). This is a blockchain protocol from Binance that runs parallel with the Binance blockchain. Binance is one of the most prestigious traditional cryptocurrency exchanges with a global reach and some of the largest trading volume.
BSC is built with dual chain architecture, making it possible for users to enjoy the flexibility of transferring assets from one blockchain to another.
So how does EcoCelium come into all this?
In the current version, the EcoCelium DeFi Platform is using ERC-20 tokens and the Ethereum network. But there is currently ongoing work to allow EcoCelium to become one of the first multi-chain platforms in the DeFi space, where users can benefit from both the Ethereum Blockchain network as well as Binance Smart Chain.
EcoCelium offers users the most diverse experience. Giving users lightning-fast transactions with ultra-low gas fees, a connection to PancakeSwap, Uniswap, and 1inch for trading BEP-20 or ERC-20 tokens, and access to Liquidity Pools to offer the best selection of DeFi yield opportunities.
With these new features being added to the platform, EcoCelium will be one of the most exciting DeFi opportunities on the market.