The Internet Computer Is Taking Over Defi

Defi

Decentralized finance is a trustless financial tool known as a smart contract that allows you to borrow, lend and repay all in a smart contract running on a blockchain. In the traditional market, banks act as the financial intermediaries and lend money to individuals and businesses and require a fee for doing so. Well Defi changes this and brings the power literally to those borrowing or even lending your own money out for extra money(which banks don’t share but lend your money out) and doing it all without the need to trust a 3rd party or the risk of being denied. There is alot more to defi such as liquidity pools, staking pools and decentralized exchanges to make sure you can run everything completely on chain and in a safe way.

What’s wrong with traditional Defi

The Leader in Defi is definitely Ethereum as it was the original smart contract platform and therefore is the industry leader at this point in history. There are several reasons why the Ether Defi cannot get much bigger than it is now for several reasons that the Internet Computer Fixes. 1st of all the gas fees are the biggest barrier for entry as if you’re entering a liquidity pool and only make $10 and $8 goes to gas on the way in and out you actually lose $6. The other part of the transactions on Ethereum and Defi is going to be the time it takes for these transactions to confirm on the blockchain(unless paying MORE gas fees) and become finalized. This right here limits the amount of transactions and money you can make just by limiting the time you can spend using those resources and ties them up in transactions and paying high gas fees.

The biggest problem of traditional Defi is the need for using bridges to connect blockchains together that leave vulnerabilities behind that can be hacked and therefore are not safe for us to have peace of mind with our money invested in defi. There have been Billions of Dollars in Hacks On; Ethereum, Solana, Near, Ren and Many others.

How the Internet Computer Fixes Traditional Defi

Gas Fees

So as I mentioned above Ethereum has some crazy high gas fees and between Jan 2021 and May 2022 the average gas fee was around $40 and the highest recorded gas fee on Eth was $196. That right there stops 90% of the people from getting involved in Defi on the Ethereum Blockchain. Now how exactly does the Internet Computer fix this problem? That is the easiest answer and the biggest reason why defi will be successful on the internet computer and that is simply this, there are little to no gas fees involved with there reverse gas fee model. So this right here breaks the biggest barrier for entry to most people when interacting with defi, and that is their profit margin.

With gas fees not being an issue the profit margin for each transaction will be higher and therefore they can sell when they want instead of being trapped by gas fees. As if you had $40 in Eth and a $40 gas fee you can’t move that eth without losing everything. So the Internet Computer is going to take over defi. They are just now building Dapps and Dex’s for Defi that are already awesome!

Transaction Speed

The Best part of Defi on the Internet Computer is definitely the amazing fast transaction speed. It is the fastest blockchain I have ever interacted with in crypto and I have been trading since 2020 and have sent over 200 different Cryptocurrencies and each and every one of them took longer than the Internet Computer’s transcation speed. It says it moves at internet speed and if you disagree then just check out a transaction and time it then send any other crypto and Internet computer is going to beat it. Some would say it’s not just Eth in Defi you also have Solana which has low gas fees and not as fast as the Ic but semi fast why not just use Solana. That leads us into our next category.

Defi Bridge Hacks

With the Internet Computer running Canister smart contracts it is very safe just as Eth smart contracts except I believe much more secure as it uses Chain Key Cryptography, but this isn’t the issue it isn’t the smart contract getting hacked directly it’s the bridges that connect these blockchains together that leave the vulnerabilities for hackers to exploit. This is where the Internet Computer Stands out above the crowd and brings safety and security to defi with Direct integration with other Cryptocurrencies like Bitcoin and Ethereum. With the direct integration it removes the need for bridges which are the area of concern for money being stolen. So as defi just gets started on the Internet Computer there are 3 main places to keep your eye on for this up and coming Btc and Eth integration.

Sonic

A Defi/AMM protocol on the Internet Computer leveraging the IC’s unlimited scalability to provide a collection of Defi products, including swaps, liquidity pools and in the forefront of Defi on the internet computer

Icp Swap

Icp Swap is a hub that provides a wide range of financial, market and Dao services. It utilizes IC technology while establishing an ecosystem of genuinely decentralized finance by refactoring the way users and developers build projects jointly. They Also have an ICS token that is going to be released soon!

Infinity Swap

Infinity Swap (ISWAP) adopts a deflationary system where the more ISWAP that is used the more tokens are burned. IT is a revolutionary new platform allowing it’s users to stake and swap Tokens on the internet computer in a decentralized way. They are helping to develop the Defi Ecosytem on the Internet Computer as well as Sonic and IcpSwap

Conclusion

Defi is about to have some serious engine work done and the Internet Computer led by 3 incredible DEX’s at the forefront of IC Tech and Defi. The Bitcoin and Ethereum Integration will be a major milestone for Defi as this is the 1st time such integrations have happened and the Internet Computer ventures out into uncharted territory with us watching eagerly and documenting this ground breaking Technology with an amazing community! The Internet Computer has reverse gas fees, Internet speed, Safe and Secure Chain Key Cryptography and Canister Smart Contracts, Tons of developers working on Defi on the Internet Computer in the form of Sonic, IcpSwap and Infinity Swap. So even in a bear market people can make a bit of extra money interacting with defi on the Internet Computer as fast and as cheap as can be. This also allows more users to be able to use it and Eth will stall with too many users or Solana will have a blackout as the Internet Computer will keep Moving like Lightning!