There is no doubt that DeFi is booming, every project which announces that they are going to build something on DeFi, their prices go up, exchanges start listing them even exchanges like binace list them. But in this limelight we forgot that almost every DeFi project is built on Ethereum and we are all aware of how scalable, fast & cost efficient Ethereum is nowadays. This is really a big obstacle for DeFi if they are going in the mainstream world without solving these problems. There are so many blockchain projects coming out in this crisis to help DeFi solve these problems but none of them are able to attract those projects, except Algorand because of recent developments. Now Algorand is one of the best choices to build DeFi. So in this post we will find Why does DeFi need a platform like Algorand ??
DeFi isn’t Scalable
DeFi have scalability issues, If you have used any DeFi project being built on Ethereum then you have noticed that DeFi have scalability issues, as they build on ethereum they have to rely on Ethereum’s scalability and we are all aware how scalable ethereum is at this time on the other hand when it comes to Algorand it’s being build keep scalability in the mind it’s build to create free frictionless dapps on the blockchain but when it comes about Ethereum then it’s to old that’s why they are moving in Ethereum 2.0 and Analysts says that Ethereum 2.0 won’t solves the scalability problem so it will better if DeFi founds a new home like Algorand also read an article about scalability of Algorand
DeFi needs Speed
Nowadays transaction speed of DeFi is becoming really annoying because of so many transactions executed at the same time on ethereum blockchain it’s really hard for that blockchain to give speed when it’s peak speed is only 32 TPS so you can’t expect Speed with DeFi when they need millions of transactions per day. One the other hand Alogrand has a transaction speed of 1000 TPS which is really high when we compare it with Ethereum. It can handle 86 million+ transactions per day. Although Ethereum 2.0 developers say that transaction speed will be increased, but continues delayed and the four phases raise the concern and alongside with this algorand is also in testnet which will improve speed which is already great when we compare with other blockchains. So projects which are building DeFi should consider the speed of Algorand.
Smart contracts are isn’t that smart for DeFi
We can’t imagine DeFi without Smart contracts or there will be no DeFi if there is no smart contracts, but there is always concern about how smart actually smart contracts are, even though smart contracts are there but for external data (weather report, match scores etc.) they need Oracles like Chainlink & Band protocol. That’s why so many DeFi projects are making strategic partnerships with oracles. But what if the parent platform start offering oracles till now only one platform is going to offer the oracles inbuilt is Algorand read the power full article on this by Algorand developer TEAL ALGO Oracle in Algorand Layer-1 this feature makes smart contracts more smart which removes the need of outside oracles, so this can also be cost effective for projects.
DeFi is so costly
People are spending 100’s of dollars as fees only to trade DeFi projects. In some cases people go crazy and spend 1000’s of dollars as fees to farm and trade some DeFi projects. It’s common nowadays as DeFi is on the boom they are giving 10x 100x in a few days but think about the long term when the DeFi boom will cool down then it all will go down so people won’t buy those DeFi products they won’t use it only because of high fees. This needs a solution which can give buyers and traders a fair chance of participating in the revolution of DeFi. There are so many competitors which are offering an alternative option of ethereum they aren’t as good as Algorand there are almost negligible fees which is around 0.001 Algos which is almost zero.
Conclusion
DeFi needs to scalable, it needs more speed, it should be more smart all with low entry barriers means low fees and there is only one platform which offers all of these features to DeFi makers and that’s Algorand if you still thinking about Ethereum then you should read an great article about Upcoming Ethereum 2.0 compared with live algorand 2.0.