THE FLAWS OF DEFI 1.0 AND KEPLER SOLUTIONS
Cryptocurrencies arose as a response to the inequity and inefficiencies of existing financial institutions that characterized the global financial crisis of 2008. The use of blockchain technology in the financial industry has reinforced Bitcoin’s decentralization since its creation, resulting in a new world of decentralized financial services, also known as DeFi.
Despite its numerous advantages, there are a few factors that prevent DeFi from becoming more widely used. Decentralized finance is one of the many new innovations brought about by blockchain technology.
There are now more decentralized and peer-to-peer networks for financial banking and lending, as well as sophisticated financial products, thanks to DeFi ecosystems. Despite these ecosystems’ significant success, DeFi is still in its infancy.
Benefits of Decentralized Finance
The ability to fund an account indefinitely is one of the primary advantages of DeFi. DeFi applications provide practical answers to countries without a traditional financial infrastructure. DeFi Apps provide access to previously inaccessible financial services in African countries.
To authenticate consumers, banks still rely on IDs and credit scores. Users who utilize DeFi applications don’t require a bank ID or a credit score to use financial services.
Anyone may get financial services as a result of this. Given the present epidemic, DeFi solutions might be a far more efficient and effective way for governments to generate universal basic income. Millions of individuals may obtain government money in an instant if DeFi is implemented.
FLAWS AND CHALLENGES OF DEFI 1.0
Decentralized marketplaces offer their own set of benefits and drawbacks. While DeFi has a lot of potential benefits, it has a lot of drawbacks that prevent it from becoming widely used.
All of the difficulties listed below are preventing widespread adoption of the decentralized financial system, although some investors are unconcerned. Smart contracts, a lack of credit insurance, user error, and asset liquidity are all major concerns in the DeFi ecosystem.
Smart Contract Vulnerability
Because smart contracts operate as mediators between DeFi systems, their flaws can have an impact on the ecosystem’s overall performance. Smart contracts are programmable algorithms that mimic regular (actual) contracts.
After the criteria are placed into a smart contract, it regulates the execution of the contract between the two parties. The presence of a mistake or fault in the code, on the other hand, might result in the loss of cash held in the smart contract.
User mistakes are another important issue. If a user sends money to the wrong address, he may not be able to get it back. If a faulty smart contract is introduced into the DeFi ecosystem, it might result in a significant loss of cash and financial information, and this is a major flaw of DeFi 1.0.
Reentrancy attacks are common in the smart contract system, posing a substantial barrier to the automation of all financial transactions. DOS assaults, in addition to Reentrancy attacks, are quite prevalent. DOS assaults are very common on DeFi systems.
Regulatory Problems
In the globe, there is no exact regulation of the decentralized financial system. Most individuals do not trust the system since governments or central banks have no control over transactions. Furthermore, municipal governments in some countries may outlaw cryptocurrencies without warning. One of the primary issues with the DeFi technology is this.
The possibility of criminal behavior is also high due to the absence of regulation. Because the system is anonymous, anybody may send or receive money without disclosing their identities, giving crooks additional alternatives.
Loan problems
Obtaining loans is challenging due to the significant volatility of cryptocurrencies. In most situations, lenders are willing to make loans, but often want a large amount of collateral in exchange. When it comes to getting a loan, this puts the borrower in a tough situation. Another issue is that there is no credit insurance.
This threat has not been eliminated by DeFi ecosystems. The scarcity of urgent loans is a major issue. Using a loan, attackers can get hundreds of thousands of dollars in the United States. DeFi ecosystems put investors at risk of losing money from untrustworthy clients because there are no middlemen for any lending.
Liquidity Problems
There are dozens of different digital currencies in the bitcoin realm, which makes cashing out even more complicated. Due to limited liquidity, difficulties may develop when trading coins.
As a result, it’s possible that you won’t get your money on time, which is a major issue in a decentralized financial system. While many proponents of digital currencies claim that they are extremely liquid assets, this only applies to a few digital assets. As a result, you won’t be able to freely trade your assets, rendering the financial system useless.
THE KEPLER SOLUTION, DeFi 2.0
To leverage decentralized finance principles, traditional financial firms may be updated to incorporate blockchain technology. It may also be a brand-new financial company that transacts cryptocurrency alongside other financial transactions.
The usage of blockchain technology is becoming more widespread as worldwide acceptance grows. At the same time, the promotion of blockchain technology has boosted the usage of DeFi. DeFi is presently at version 1.0 and has certain restrictions which calls for development of Version 2.0 of DeFi. Though DeFi is still at its infancy, and the problems associated with DeFi 1.0 are quite numerous, the Introduction of DeFi 2.0 will help tackle quite a number of these problems.
The KeplerSwap-created DeFi 2.0 ecosystem offers numerous unique benefits over DeFi 1.0.
KeplerSwap is committed to disrupting the traditional DeFi 1.0 trading model by establishing a strong vertical relationship between users and a strong horizontal link between all ecosystem participants, establishing KeplerSwap as the standard dynamic trading platform.
To reward excellent liquidity pool producers, KeplerSwap provides a weekly Lucky Pool. It contributes to the maintenance of user liquidity contribution interest.
SPACE Contribution Award is given by KeplerSwap to recognize exceptional SPACE owners. A market maker who adds liquidity to the system is referred to as a SPACE owner. Members are surveyed to see who they think are the best SPACE owners. The reward is made up of contributions from a 30-day liquidity pool. At the adoption stage, KeplerSwap will provide community members complete governance and decision-making authority. The first step toward decentralized governance is to make polling functions available to all members.
As quickly as feasible, the founding team will pass governance rights and decision-making authority to community members. A decentralized governance model is established when all decisions are made collaboratively by members. Members that are motivated will want to participate in community activities in order to improve the platform’s development. Everyone in the community is a stakeholder.
Only DeFi services are supported by KeplerSwap’s smart and open cross-chain platform. Technologists and influencers may tap into this growing greenfield project for endless creative DeFi project ideas by implementing this technical breakthrough.
About KeplerSwap
As the explorer of Defi 2.0, KeplerSwap is a smart contract based on the Binance smart chain (BSC) that aims to achieve multi-chain and cross-chain aggregation. Meanwhile, KeplerSwap is the first DeFi2.0-based decentralized exchange. Apart from complete access to DeFi 1.0 services, KeplerSwap also offers a referral program, SPACE, Lucky Pool, and other features that address many of the concerns that DeFi 1.0 failed to address.
KeplerSwap is developing a revolutionary new platform that will disrupt the existing trading model. It’s inventing a new type of commerce, a new concept, and a new ecosystem. Kepler’s decentralized financial eco-system is enormous and unparalleled. It creates a new DeFi ecosystem.
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