DeFi, short for decentralized finance, is a breakthrough technology that allows users around the world to access financial services without the need for oversight or involvement from a third party. DeFi applications allow users to retain the value previously absorbed by a company, government, or regulating body, such as by redistributing transaction fees back to the end user that were previously taken as third party profits. The total value locked in DeFi has risen dramatically in the last 12 months, going from less than $1 billion to almost $23 billion, but there are still problems inherent to DeFi that prevent broader adoption, not least in terms of scalability and security. This is where Radix comes in.
What’s Holding DeFi Back?
DeFi applications provide immense value to their users, but current iterations are not able to process transactions fast enough to compete with traditional or mainstream solutions. Since most of the DeFi ecosystem is built on top of the Ethereum network, these applications are subject to the processing speed of the network, which is only about 10 transactions per second. This lack of transaction capacity has led to Ethereum transaction fees skyrocketing as more people use the platform, sometimes reaching close to $50 or higher to conduct a single transaction. This is unsustainable in the long term, as fees need to be much lower for users to actively participate in decentralized finance.
Increasing DeFi Application Usability
One of the best ways to expedite mainstream adoption of decentralized applications is through increased processing speeds, a factor Radix was specifically designed to enhance. As a protocol layer focusing on serving and building DeFi applications, Radix was engineered with the needs of DeFi application users in mind. With the launch of the first iteration of Radix’s mainnet in Q2 of this year, featuring hundreds of transaction per second capabilities, Radix will be able to provide transactions one order of magnitude faster than the Ethereum network. With Ethereum already reaching a level of mainstream usability and attention despite its extremely limited transactional capacities, the launch of a significantly faster platform should translate to rapid growth of the Radix network. Particularly when taking into account that Radix already demonstrated 1.4 million transactions per second in a 2018 test, a level of speed that could give any traditional or future payment system a run for its money.
Increased transaction speed is not the only DeFi problem that Radix is focusing on optimizing; the startup is also looking to eliminate the ability of hackers to exploit DeFi applications and steal funds from users. Hundreds of millions of dollars have been stolen through vulnerabilities and hacks against DeFi applications in recent years, and due to the decentralized nature of these apps, compensation for victims is virtually impossible.
One way Radix focuses on solving this problem is through the introduction of its Components Catalog, a development pathway created to increase the composability of decentralized applications. This platform allows developers to better DeFine application transaction outcomes, beefing up security compared to traditional blockchain developer models. Radix also offers pre-made, verifiably secure DeFi templates to its developer ecosystem, an extremely secure option based on previously proven and secure DeFi applications that are already running on the Radix network.
Is Mainstream Adoption Right Around the Corner?
With the innovative capacity for financial freedom and the redistribution of value that DeFi enables, it seems that it is only a matter of time before these applications reach mainstream acceptance and usability. At present, many pain points disincentivize users from taking advantage of these applications, but with Radix’s promise of greater scalability and security, these problems may soon be a relic of the past. Once DeFi’s bottlenecks are removed, a new era of financial freedom will be ushered in, allowing for control to be wrested away from centralized platforms and returned to the people.
Radix Listing on Bitfinex on January 21
Radix has today announced that it will list on Bitfinex, one of the top 5 global cryptocurrency exchanges. This marks a major step forward in Radix’s global expansion.