Why Multi-Chain Protocols Are Better For DeFi – See Case Study -Breaking
Why Multi-Chain Protocols Are Better For DeFi – See Case StudyDespite the deluge of competition in the DeFi space, Ethereum is still the most popular network for smart contract. But it hasn’t adequately addressed its scaling crisis. This is most apparent in high gas costs on many Ethereum-based protocol.
For this reason, many up-and-coming DeFi protocols—running on or not—adopt features or smart contracts that seek to solve at least 2 out of the 3 scalability trilemma experienced in DeFi.
These challenges in DeFi have prompted developers to create a masterplan that could end the current situation at the root, the multi-chain DeFi protocol.
We will be covering the fundamentals of multi-chain DeFi protocols and introducing you to CashFi (CFI), which is a multichain solution.
What’s a multi-chain DeFi protocol and what does it mean?
Multi-chain DeFi protocols can be used to support other blockchain networks in addition to the one it was built on. Aave Protocol is an example of a DEX/liquidity pool which supports approximately 7 tokens from the blockchain and more than 13 markets.
Aave often serves as an example of the benefits multi-chain protocols offer. In a short span, it has amassed insane figures — becoming the second-largest DeFi protocol behind MakerDAO, according to DeFi Pulse, at the time of writing.
Users can join multi-chain protocol to get liquidity without worrying about competition. They don’t need to spend discouraging fees or swap coins over bridges.
These are the benefits of multi-chain DEX
Modular one-way transaction
You don’t have to switch between networks to do transactions. Multi-chain protocols allow for one-way transactions that retain investors and users.
Comparing, for instance, shops that offer a wide range of products to one shop that only offers one product. All things being equal, the shop with more options will retain customers for longer because they don’t have to go around looking for the items that they need.
You have more liquidity.
Based on the above, users will be more willing to use alternative currencies if they have access to liquidity. There are many uncertainties in the crypto market. One crypto may fall and cause permanent losses. Other cryptos could continue to perform well. Multi-chain protocols will attract liquidity more quickly than normal protocols, particularly in this DeFi market with so much competition.
Transaction costs are lower
Think about trying to exchange your crypto assets over bridges, or to swap from bitcoin (BTC), altcoin or wrapped cryptocurrency on multiple platforms. Add to that the costs of crypto transactions over multiple networks. Transactions in a single platform can help you reduce expenses related to gas.
Solid liquidity pool
The flexibility to build liquidity pools over protocol layers 2 and 3 is a common feature of layer-2 as well as layer-3 protocols. Multi-chain DeFi protocol will have twice as many pools and markets than a standard liquidity protocol. Multi-chain protocols are more robust and will bring in higher investment returns and greater yields.
Introducing CashFi — A Multi-Chain DeFi Solution
CashFi, a multi-chain platform, includes an NFT marketplace and launchpad, liquidity staking protocol CashFi Synths and the $CFI token.
This is how we created the NFT launchpad, where anybody can trade and mint crypto arts across multiple chain marketplaces inside and outside CashFi NFT.
Liquidity staking DEX provides traders the opportunity to either stake $CFI tokens or exchange liquidity with cryptos. CashFi Rewards are also available for holders of $CFI tokens or stakers.
CashFi Synths will offer synthetic assets, also known as derivatives. The synthetic asset trading system will serve as insurance to maintain an equilibrium level of liquidity in case there is a shortfall in the Swap Pool.
CashFi generally will offer a simple transfer method at low costs to facilitate users’ navigation from one platform to the next. CashFi Liquidity Scoring will provide another navigation option. This allows users to invest in CashFi Synth, while also locking their assets into the pool.
Get more details on the CashFi website and Telegram. Find out more information about the presale.
