In this four minute reading article, you’ll learn:

  • How DeFiChain fits into the DeFi ecosystem
  • DeFiChain’s mission and vision
  • DeFiChain’s progress in the last 8 months since its mainnet launch
  • How to measure the success of DeFiChain
2020 Review in video form

DeFiChain’s Mission and Vision in the DeFi Ecosystem

Decentralized finance — or DeFi — refers to financial services using smart contracts, which are automated and enforceable agreements that don’t need a go-between like traditional central authorities such as governments, banks or lawyers. As such, it embraces the ecosystem of various financial applications which are built on top of blockchain networks without tapping into legacy financial infrastructure used by banks. From a social perspective, it can also be referred to as a movement which aims to create a non-custodial, open-source and transparent financial system, enabling frictionless access without relying on any central authority.

To democratize finance, DeFi has to find new decentralized solutions for those currently isolated from the financial system. In order to achieve this, DeFi needs to build upon a function set of six unique value propositions:

  • Creation of value
  • Transfer of value
  • Lending of value
  • Exchange of value
  • Investing in value
  • Prediction of value

Bitcoin was the first cryptocurrency that covered the first two functions in a novel and unique way, but is unable to perform all the other functions needed to create decentralized applications (dApps). Hence, new independent solutions have to be built to tackle the remaining four functions of the DeFi function set, either by focusing on a single issue or by creating a one-stop solution for everything.

The majority of DeFi projects are built upon the Ethereum blockchain — a Turing complete blockchain which is prone to attack vectors due to its dependence on smart contracts. When it comes to the safety and security concerns of decentralized financial transactions, a Turing complete blockchain, like Ethereum, is not only inferior to its non-Turing complete counterparts, it also (for the most part) excludes the vast Bitcoin community from its services.

DeFiChain wants to change that by becoming the number one DeFi project in the Bitcoin ecosystem. It aims to enable DeFi services to a potential user base which is ten times that of Ethereum.

Given Bitcoin’s reputation and market capitalization, DeFiChain does not want to compete with Bitcoin over the creation and transfer of value, but rather, wants to tap into the huge knowledge reservoir and user base of the Bitcoin community. It aims to bring full DeFi capabilities to Bitcoin by providing the missing four DeFi functions by utilizing its proprietary DeFi protocol on top of the Bitcoin blockchain. As a result, the DeFiChain blockchain is fully optimized to perform lending, investing, exchanging and predictive functions in a fully decentralized way.

DeFiChain's Progress in 2020 and how to Measure its Success

DeFiChain is a young blockchain; its first block was mined in May 2020, followed by an airdrop of its governance token ‘DFI’. Over the course of 2020, DFI was added to more leading global exchanges, like Bittrex.

With the introduction of DeFiChain’s decentralized exchange (DEX) in November 2020, the creation of the first task from the function set has been completed — it is now possible to send value in the form of DFI, BTC, ETH and other select coins in a fully decentralized way, peer-to-peer, between two individuals.

The success of any decentralized finance project is measured by three key metrics: Total Value Locked (TVL), number of active addresses, and market capitalization. DeFiChain did astonishingly well across all three metrics, outperforming all pre-set goals for 2020.

The most important metric for any decentralized blockchain is how much value is being lent, exchanged or invested on the blockchain – also known as Total Value Locked (TVL). In just one month, the TVL on the DeFiChain blockchain has increased twelvefold,  from $8m on 13 December 2020, to more than $96m on 16 January 2021 (see figure 1).

Figure 1: Total Value Locked (TVL), Source: https://www.cakedefi-review.com/DefiChain?tab=DEXTVL

Daily active addresses (DAA) also experienced a sharp rise, increasing by more than 1300%, from 910 active addresses on 1 August 2020 to more than 12,300 active addresses on 16 January 2021 (see figure 2). At the same time, market capitalization also ballooned from less than $60m to an impressive $1b. All three metrics undoubtedly justify DeFiChain’s ranking as the number one DeFi blockchain in the Bitcoin ecosystem.

Figure 2: Daily active addresses, Source: https://www.cakedefi-review.com/DefiChain?tab=addresses

Follow on here to see the Q1 2021 road map in detail

Your DeFiChain Team