Jay is CEO at OKEx, the world's leading cryptocurrency spot and derivatives exchange
The Bitcoin blockchain was revolutionary and still is. It changed the way we look at money. With the rise of decentralized finance, new blockchains are being built around it, but users should tread carefully because what to look for in a blockchain is changing.
Bitcoin’s blockchain brought in several innovations: it solved the double-spend problem, it solved the Byzantine Generals problem, and allowed anyone to be their own bank. Bitcoin gave us the potential to bank the unbanked, and via the Ethereum blockchain, decentralized finance is bringing complex financial services to everyone.
Using DeFi it isn’t just possible to farm yield – also known as liquidity mining – but it’s also possible to take out a loan, earn interest on your holdings, get insurance, trade, and more. The Ethereum blockchain was overwhelmed with demand for transactions from DeFi projects. Some of these are complex transactions that take up more space on each block.
The network is now at capacity. Etherscan data shows Ethereum’s network utilization is at 97.4% and earlier this summer transaction fees hit a new all-time high of $15 on average. While crypto whales aren’t bothered by these fees, some are now effectively being left out of DeFi because of its costs: the unbanked got locked out of CeFi and DeFi.
To bring the decentralized finance space back on track new blockchains are being developed. OKEx itself has recently upgraded OKExChain – formerly OKChain – to help crypto be one step closer to bank the unbanked. We weren’t alone, however, and it’s important for users to tread carefully navigating the new world of Ethereum Virtual Machine (EVM)-compatible blockchains.
After the Bitcoin blockchain was up and running, its creator Satoshi Nakamoto handed the project to other developers who worked with him, and simply disappeared. The result was what some would call “pure” decentralization, as Bitcoin was now in the hands of the community.
Time and time again, the community has proven it’s there to defend Bitcoin. One famous case was that of the User Activated Soft Fork (UASF) to activate Segregated Witness (SegWit) on the BTC network. The UASF would be enforced by the full nodes, and came as a response to perceived power from miners who, in the community’s eyes, were blocking beneficial updates to the Bitcoin blockchain.
Decentralization ensures no single entity can control the blockchain and use it for its own benefit. If a single entity has control over any aspect of the network, it can censor, manipulate, and more. Decentralization, in the blockchain space, is a synonym of security.
Characteristics of decentralization include its code being open source and community-driven governance. Without these users are essentially trusting an entity with their money.
This is problematic as even Google, whose slogan was “don’t be evil,” has done quite a few things most would find evil. The only way to avoid an entity going rogue – even if only on a few specific occasions - is to devoid it of that power.
Most decentralized finance applications are currently built on top of the Ethereum blockchain. If a DeFi-centric blockchain isn’t compatible with the Ethereum Virtual Machine, chances are it will be hard for developers to launch their protocols on other blockchains – in some cases, it may also not be worth it.
An EVM-compatible blockchain makes it easier for users to interact with protocols on the Ethereum network, providing them with hundreds of different options to take advantage of complex financial services through the crypto space.
If the Ethereum blockchain wasn’t clogged, most users would likely not even look at potential alternatives. Since it’s becoming expensive to transact on Ethereum, any other blockchain giving you access to the DeFi space should be able to handle at the very least hundreds of transactions per second (TPS).
Needless to say, none of the above features should come at the expense of security. If a network is compromised by an entity, everyone interacting in it is vulnerable to an attack.
The development of the decentralized finance space is crucial for financial inclusion, and OKExChain takes the lead among other exchange-developed public blockchains when it comes to supporting its development.
OKExChain is a fully open-source blockchain. Its source code is irreversible and efficient, which means no participants – including OKEx itself – can alter it or manipulate the blockchain. It’s what some would call a “fundamentalist” public blockchain.
Every individual has the right to become a validator node, and if OKEx wants to become one of the nodes, it will have to compete with other participants on the OKExChain. A total of 100 supernodes will manage the community’s governance.
The blockchain also allows users to build their own liquidity pools and digital asset trading pairs with ease. OKExDEX is the OKExChain ecosystem’s first cross-platform software, that allows users to seamlessly issue their own digital assets, create trading pairs, and free trade either through automated market makers (AMM) or an order book.
As I’ve said in the past, we are confident in the technical strength of OKEx, and on the extensive tests we’ve done to OKExChain, in which it has shown very high performance.
At its height, OKExChain generated over 10 million blocks with a total trading volume above 100 million, indicating its operating stability. Theoretically, its performance could see it handle 1,000 transactions per second.
The blockchain will soon introduce its Oracle, as a secure signed price feed for the liquidity pool and order book transactions created on the blockchain. Its cross-chain mechanism will allow for the migration of all mainstream digital assets onto OKExChain.
OKExChain’s high compatibility has seen it cooperate with more than 60 ecosystem partners, covering explorers, wallets, PoS mining pools, and more.
In order to uphold the promise of DeFi and the billions of people that it can potentially serve, it is imperative that we develop the ecosystem with caution. We can't build an alternative global financial system overnight and neither should we, for we risk falling prey to centralization, security threats, and other issues. It is through collaboration and meticulous attention to detail in development, as we are showing with OKExChain, that together we will grow and one day #FinanceAll.
(Disclaimer: The author is the CEO at OKEx Exchange)
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