With an $11B Market Cap, DeFi Desperately Needs a Solution
Experts Say They Have One
Although some have considered the current DeFi craze to be a budding bubble that is already bursting- the reality is that the heat of major institutional interest has started to simmer.
Major interest in the cryptosphere has increased exponentially since the advent of DeFi. Indeed, Fidelity Investments, which manages over 2 trillion dollars in assets, and previously had no public dealings in any cryptocurrency, have announced access to cryptocurrency and crypto-related assets by the end of this year.
Fidelity also conducted a survey on the institutional appeal of crypto, discovering that nearly 80 percent of investors were interested in this asset class. Considering the same survey found that less than forty percent of institutions have invested in crypto, one can easily see the massive growth potential they have.
As one might imagine, major institutions have primarily invested in Bitcoin and Ethereum. It is no doubt because of the latter that DeFi, with its promise of mirroring the available kinds of transactions of traditional finance, has begun to flourish even at this embryonic stage of development.
Decentralized Finance has captured over 11 billion dollars in market cap, almost six times the money that was locked into the ecosystem in July. Yet if the child is to be born, and the qualitative leap is to be made, we must go beyond what the Ethereum Network has to offer, and savvy institutional investors know this.
It is true that the Ethereum Network is not totally bereft of virtues. If this was the case, even rudimentary DeFi could never have been built with it. Indeed, Ethereum’s utilization of smart contracts have allowed for creative developers to actuate a whole new domain of financial assets and services.
Yet Ethereum’s infrastructure was not built with the foresight necessary to fully realize a Decentralized Finance platform that could compete with the sophistication found in traditional securities markets. Fortunately, Ethereum is not the only option. The Constellation Network was built to have a level of scalability, security, and speed that Ethereum and other networks are intrinsically incapable of producing.
Because Constellation is above and beyond the others, facilitating an interoperable, scalable, and secure solution to Big Data, the United States Air Force has turned to them as a partner. The partnership was enacted in order to assist in securing and consolidating the extensive, multiple-data sources available to the USAF. This is something no other network in the world of blockchain is capable of effectuating.
Some of the innovations should be made intelligible to investors with an interest in Blockchain technology, Cryptocurrency, and Decentralized Finance. Constellation utilizes a technology that supersedes traditional blockchain, and indeed is something different altogether from blockchain.
On their official website it is stated: “Constellation is a distributed ledger technology known as a directed acyclic graph (DAG) protocol.” Yet to make sense of this, and why it represents a macroevolution in technology, it is best to explain in a way that most generally-educated people with a passing familiarity with blockchain can comprehend.
First, let us start by explaining the Directed Acyclic Graph. As in blockchain, it is a network of nodes. However, it allows cryptocurrencies to function without blocks or miners. The structure of the DAG is acyclic, practically signifying there is no path by which information can travel through nodes without reconnecting to nodes through which it has already passed.
The DAG is directed, meaning that the edges of the graph are given a path so that no node will link with another node which is in its series. With this structure, a multitude of blockchains can simultaneously exist and connect with one another, all while being scalable and secure.
Yet what grants the graph greater speed and efficiency than traditional blockchain technology? It eliminates the need to account for branched chains, which slow the process of chain-verification. How is the DAG more secure? It obviates the increasingly realistic scenario in cryptocurrency of a 51 percent attack. It is a truly decentralized and distributed peer-confirming system. As the number of nodes increase, there will be more transactions for confirmation of prior transactions. Granting the network not only increased security but limitless scalability.
The innovations of the Constellation Network have made it the only viable solution for the future of Decentralized Finance. Fortunately, this has been recognized, and those who have best understood the potential of Constellation for DeFi, have been the team at Lattice Exchange. What has astonished the savvy investors who have probed their project, is that they have remarkably succeeded on every front.
For this reason, it should not come as a surprise that major institutional investors in the cryptosphere have joined their orbit. Even at this stage, before the exchange or governance token has publicly launched, firms such as Alphabit Fund and FBG Capital are already in partnership with Lattice.
Yet, what are some of these solutions that destine Lattice Exchange as the choice in DeFi transactions, and consequently, imbue their governance token with the status of a premier asset? One major innovation of Lattice has been solving the liquidity problem in Decentralized Finance.
Slippage is an achilles heel in the ecosystem, and becomes inevitable as liquidity is dispersed in multiple Uniswap-like exchanges. The ability to pool liquidity from disparate dexes was devoid from DeFi before Lattice. Unlike Uniswap, and alternative exchanges in Decentralized Finance, Lattice employs a plethora of institutional-grade Automated Market Makers. Furthermore, they support the development of increasingly complex and specific AMMs.
As Lattice is built upon the Constellation Network, it utilizes the architecture to nearly eliminate transaction fees. Due to the seamless scalability of Constellation, with simultaneous transactions harmoniously taking place on the network, there is no need to privilege any one of them. Hence, little reason for higher fees.
What fees do occur will be less significant than a neglected penny on the ground. Because this minuscule fee will result in a benign, partial-burning of the native LTX token, this finite asset can only gain by the process.
Something that acute investors are discovering is how this exchange’s governance token will be a prime asset, predominantly due to the reduced fees and higher trading volume. Lattice Exchange’s governance token (LTX) will determine most of the aspects of value generation in the Lattice ecosystem, similar to YFI and UNI. Yet, unlike the aforementioned assets, all of which already capture hundreds of millions of dollars in market cap, Lattice will provide greater liquidity and fewer fees.
Extensive institutional investors wait to capitalize on cryptocurrency, once this asset class can deliver on its promised potential. Eager firms eye the world of Decentralized Finance, hoping for the day that it can deliver on the level of the traditional market. Thanks to Constellation Network and Lattice Exchange, that day has come.
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Article is the gifted work of John Ryan
John Ryan is an independent writer and an avid enthusiast of blockchain technology. He received his University education at Northern Michigan University, as a history major, where he was inducted into the Phi Beta Kappa Society for academic excellence. While in Michigan, he also trained as an athlete at the United States Olympic Education Center, where he achieved the status of a multiple-time University All-American in Greco-Roman wrestling. He has authored several plays and a collection of poetry. Some of his major areas of interests includes: Finance, Literature, and Religious Studies.
John Ryan is available via email: arete.aphthiton@gmail.com.
