Why cross-chain is the future of DeFi industry?

C.S. Lewis once said,

“Two heads are better than one, not because either is infallible, butbecause they are unlikely to go wrong in the same direction.” This idea applies not only tohuman heads but also to investment and business growth strategies.

Most surely, you have heard that a smart investor diversifies his portfolio to reduce riskexposure. Well, the same principle also works for companies and even crypto projects. Whydo you think Google, Amazon, Tesla, and Microsoft invest in so many things? It allowsbusinesses to expand, at the same time creating new revenue streams.

A similar approach works for crypto companies. For example, let’s take a look at Binanceand try to understand what made the “CZ” creation so successful. First thing first, theexchange took full advantage of the cyclical nature of the cryptocurrency market and its ebbsand flows. Secondly, Binance has never stopped developing and seeking ways to increaseits market share. In particular, the launch of BSC, an Ethereum Virtual Machine-compatibleblockchain, greatly increased the utility of both the Binance Chain and BNB.

What about DeFi projects? Is there any other way to grow rather than offering additionalproducts and services? Actually yes. By implementing so-called cross-chain technology,thus enhancing interoperability between different blockchains. Until recently, mostblockchain networks, including Ripple, Bitcoin, and Ethereum, operated on isolatedecosystems what undoubtedly limited their functionality. As a result, users couldn’t enjoy thefull potential of the ledger technology.

Cross-chain technology, on the other hand, will allow placing independent businessoperations on a separate chain and then link information, transactions, and interactions. Allof that without losing the speed of operations. Some of the most famous cross-chainplatforms could be Polkadot, Lightning Labs, Wanchain, Fusion, Cosmos, Ink LabsFoundation. Curiously, all of them have been working on the implementation of the space ofinterconnected decentralized networks even before the DeFi boom.

Already aware of the issue, new DeFi ecosystems were built with the idea to unifyblockchains. For instance, some projects enabled the interaction of assets from variousblockchains. In other words, users were granted the ability to deposit and borrow assetsfrom various systems.

One of the most recent examples was Nimbus - an automated DeFi platform that offers 16earning strategies for users based on IPO participation, P2P Lending, and more - which hasjust become a cross-chain platform. Considering the fact that Nimbus already boasts 50,000active users, integration of the cross-chain solution is an expected step in the development.This was achieved by expanding to the Binance Smart Chain. Now, all Nimbus dAppsbecome accessible with 15 times lower gas fees. It will also open up many otheropportunities and use cases for Nimbus users and liquidity providers - or even provide newrevenue channels for GNBU token holders.

As more and more projects follow Nimbus’s footprints, DeFi is likely to become trulyaccessible worldwide - and finally bank the unbanked. Read more about why DeFi has agreat potential here.

 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

 

Publication date: 
06/11/2021 - 21:45
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