The past year has been buzzing with increasing activities in decentralized finance (DeFi) and the blockchain ecosystem as a whole. From a total value locked (TVL) of $500 million on March 12 (the much talked about Black Thursday), DeFi has grown tremendously to become one of the most significant forces behind the cryptocurrency bull run of 2020/21. At the time of writing this piece, TVL in DeFi stands at over $50B.
DeFi and the Promise of a Fair Financial System
DeFi’s growth can largely be attributed to several reasons: COMP’S distribution of governance tokens, crypto awareness in general, and improved DeFi ecosystems over the past couple of months. However, many experts agree that growth in the sector can be mainly attributed to an understanding of it and its future potentials. The concept of decentralized finance is mainly hinged on the possibility of an autonomous, free, and fair financial system independent of the control of the governments.
By eliminating third parties and financial intermediaries, DeFi brings the whole spectrum of lending, borrowing, saving, investing and a host of other financial functions to the unbanked and banked. Besides eliminating financial intermediation, Yield Farming, arguably the most famous aspect of DeFi, paves the way for maximum profitability when users keep and move their crypto assets in decentralized protocols.
Challenges with DeFi
While DeFi has thrived magnificently over the past couple of months, there are significant questions still being raised over the profit, structure and ultimately, longevity of DeFi protocols and the ecosystem as a whole. Indeed, some of the raised questions are a non-issue if you have a robust understanding of decentralized finance.
However, as exciting as DeFi is, many questions are still yet to be answered. Rug pulls, smart contract bugs, complexity, and most importantly network congestion and unreasonable gas fees on the Ethereum network are standouts.
As the DeFi ecosystem continues to grow as a whole, several solutions have been proposed and some executed. The emergence of decentralized finance can be primarily attributed to smart contracts, automated programs on blockchain networks that execute when predetermined conditions are met. The Ethereum network pioneered smart contracts in blockchain and ultimately, they opened up many use cases, including decentralized finance.
New Layer Solutions or the Perfect Ecosystem?
However, the increasing number of use cases, applications, and users joining the network has ultimately culminated in excessive gas (transaction) fees. To solve this problem, many developers are coming up with layer two solutions for the network. Essentially, a layer two solution is run on the main Ethereum network layer; layer two solutions work by taking most transactions off the main chain to a new layer (layer two). Some notable ones include Channels, Plasma, Rollups, and Sidechains. Ultimately there’s one goal, decongest the main layer while maintaining the existing network.
Alternatively, several alternative solutions in decentralized finance are known as layer one solutions; these solutions are natural alternatives to the Ethereum network. By building new ecosystems from scratch, projects like Solana, Fantom and Cosmos have built entirely new ecosystems (layer one solutions) to explore the same fundamentals of DeFi.
While layer two solutions and the prospect of Ethereum 2.0 seems enticing, DeFi enthusiasts are seeking possible alternatives to rising gas fees as quickly as they can. However, the blockchain ecosystem is actively growing and multiple layer one alternatives are out there. Selecting an Ethereum alternative becomes another challenging quest.
ERGO Platform and its Bitcoin-like Layer One Mainnet
With multiple-layer one solutions offering their protocols for the furtherance of decentralized finance, Ergo stands out as a research-based protocol and a much-improved design still similar to the Bitcoin network. Using the Proof-of-Work (PoW) model of mining, Ergo prioritizes security across the network while maintaining scalability.
Unlike the constant uprising layer one solutions that are practically copycat models of existing networks, Ergo is the pioneer of the extended UTXO smart contract model. This is a smart contract model where crypto assets are recorded on a network in the form of a direct acyclic graph and users are guaranteed more scalability and privacy.
Marking Ergo’s Milestones in ErgoVersary
Two years after the Ergo mainnet was launched in July 2019, Ergo is organizing an anniversary event on July 1, 2021 to mark the milestone. The event will educate DeFi enthusiasts, developers, and participants generally about the platform, current trends and the blockchain ecosystem as a whole.
Experienced blockchain developer, educator and co-founder of Chainlink (then smartcontract.com) and founder of the Ergo platform, Alex Chepurnoy, will be speaking on core background features, blockchain career, the UTXO model, Proof of Work, Layer two solutions, and a host of other features.
ErgoVersary will feature significant announcements, including bounty programs, exchange listings and an NFT competition. Other features in the event will be propositions about a local exchange trading system on Ergo (LETS) and Ergo Meta, “a cookbook” for side-chain solutions.
Ergo: Redefining Layer One Solutions
Since its launch, Ergo has continued to show a commitment to improving the user experience on its platform and the blockchain network as a whole. ErgoVersary will educate, improve and unveil exciting packages that will ultimately drive growth in decentralized finance.
Contact information:
Website: https://ergoplatform.org/
Whitepaper: https://ergoplatform.org/en/documents/
Ergonaut Handbook: https://ergonaut.space/en/home
Block Explorer: https://explorer.ergoplatform.com/
Github: https://github.com/ergoplatform/ergo
Exchanges: https://ergoplatform.org/en/exchanges/
Twitter: https://twitter.com/ergoplatformorg
Reddit: https://www.reddit.com/r/ergonauts/
Telegram: https://t.me/ergoplatform
Discord: https://discord.com/invite/kj7s7nb
BitcoinTalk: https://bitcointalk.org/index.php?topic=5150971
