Opinion: DeFi should not be limited to a single Ethereum framework

Editor's Note: This article comes fromMengyan Finance (ID: Meng-eyes), reprinted by Odaily with authorization.

Editor's Note: This article comes from

Mengyan Finance (ID: Meng-eyes)

Mengyan Finance (ID: Meng-eyes)

The booming world of decentralized finance (DeFi) has reached new heights in recent weeks, with the total value of assets locked in the DeFi ecosystem surpassing $13 billion. DeFi is arguably the fastest growing sector in the crypto industry today, having seen an explosion of capital and market participants in just a few months. Amid this meteoric rise, Ethereum continues to dominate the DeFi space, accounting for 96% of total transaction volume.

While recent growth has accelerated the pace of innovation and experimentation in the DeFi space, it has also raised legitimate concerns about its long-term sustainability, particularly Ethereum’s scalability challenges and high gas fees. It is undeniable that DeFi based on Ethereum is flawed, and critics believe that the complexity and risk of DeFi are the main obstacles. Considering the re-entrancy attacks on Uniswap and Lendf.me and Yam Finance smart contract vulnerabilities, these high-profile security incidents in the first half of 2020 alone show that the explosive growth of the industry may be at the expense of security and stability. costly.

At the same time, the integration of DeFi protocols on the Ethereum platform has also raised some existing problems: In addition to technical challenges such as network congestion or security issues, should DeFi with decentralization as its core be controlled by a single network (Ethereum)? )definition?

And just on Wednesday, the service crash of Infura, a major ethereum infrastructure provider, made the issue more acute.

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There are more than 100 projects and applications in the DeFi ecosystem, including decentralized trading, lending and insurance platforms. DeFi has the potential to unlock a parallel financial system by democratizing money, payments, and other financial services. However, as an industry we should remember that trial and error can only go so far when it comes to digital assets with real-world value.

If the method of traditional financial institutions is adopted, DeFi projects should invest sufficient time to implement strict security audits and code reviews. In addition to implementing bug bounty programs to catch bugs before users lose them, projects should also be more transparent about exposing their network vulnerabilities by publishing open post-mortem reports to the public so that other applications in the ecosystem can learn from these incidents , and prevent them from happening again in the future. And this transparency will help build trust among users and chart a safer path for mainstream adoption.

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Smart contract development is still a relatively new field, and as with the growing process of any emerging technology, security breaches and compromises have been part of the pain, and it was predictable. Therefore, it becomes critical for smart contract developers to keep abreast of new security developments and keep up with best practices in the industry.

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Deploying measures such as testnets, bug bounties, or phased rollout programs allows developers to reduce risk and catch bugs before a full product launch. In addition, developers who build smart contracts on Ethereum also need to understand the characteristics of the EVM (Ethereum Virtual Machine) and work around them accordingly.

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Diversified development

After all, the ongoing debate about interoperability should not only apply to blockchains in general, but must equally extend to the most prominent use case in the industry — DeFi. In the traditional financial system, most payment infrastructures are interoperable, which means that cardholders can make payments anywhere in the world, regardless of what the local currency is.

On the other hand, today's various chains are monolithic and still unable to communicate with each other or exchange value. If cross-chain interoperability is not established, DeFi will remain in the shadow of traditional finance. To address this, the DeFi development community has devised several different approaches to provide new forms of interoperability, including atomic swaps, tokenized tokens, and cross-chain communication platforms.

Addressing these issues is critical to the development of DeFi as a whole, and the industry also needs to take a more collaborative approach to build a more diverse, DeFi-centric application ecosystem on different platforms, rather than Stick to one network (Ethereum).

Outside of Ethereum, other smart contract protocols are also developing their own DeFi ecosystems. These candidate projects will play a vital role in the DeFi field, and may also open a new chapter in the development of DeFi. As the pioneer smart contract platform with the largest number of token holders, Ethereum has a first-mover advantage, but also needs further experimentation and diversification to encourage innovation and allow for greater technical optimization over time.