How KeplerSwap Wants to Correct DeFi 1.0 Defects With DeFi 2.0
DeFi is an influential vector for creating value in the blockchain industry. It’s now the catalyst for tangible capital allocation on the blockchain.
DeFi’s TVL (Total Value Locked) has increased from 700 million at the beginning of 2020 to more than 50 billion at the Q2 2021.
Despite the DeFi importance becoming more popular, users still witness challenges that prevent the adoption of mass DeFi.
New platforms are attempting to solve these challenges by making the DeFi ecosystem more accessible to bigger audiences. KeplerSwap is spearheading this move with the creation of an innovative DeFi 2.0.
DeFi 1.0 Issues
DeFi 1.0 has a scalability problem on Ethereum, its biggest Layer 1. It also has UX and capital inefficiency challenges. Some problems of DeFi 1.0 include:
- The Use of DeFi Platform
The DeFi 1.0 platform isn’t often easy to use, especially for newcomers. This makes most users not fully utilize DeFi potential. The UX and security problems prevalent in DeFi’s present form often worsen user-friendliness.
- Inefficient Capital
The inefficient capital often plagues the DeFi platform verse and disrupts projects, traders, and liquidity providers.
This problem hinders the platform’s growth and adoption since it discourages users with fewer funds to invest and fully participate. DeFi 1.0 often focuses on users with huge assets.
In particular, Liquidity providers need to deposit several tokens to the liquidity pools. Often trades would swap between the several pools; every swap trade attracts associated fees.
This makes the process costly for many users. It even affects projects that aim to launch tokens but lack the fund’s requirement to set up markets on AMMs.
Also, it can discourage projects from putting funds in other aspects of development.
More so, lending and borrowing models depend on the over-collateralized debt positions. This restricts users with no big assets from participating in DeFi fully.
Generally, capital inefficiency isn’t encouraging in creating a true DeFi system open to everyone.
- Limitations on Ethereum
Many DeFi products are created on the Ethereum network. However, as the cryptocurrency industry grows, Ethereum network traffic becomes more congested. This causes long delays and higher transaction costs.
This limitation makes DeFi product’s use unprofitable, especially for users with fewer assets.
The Layer 1 Ethereum limitations make most present governance mechanisms incompetent and complex for DeFi to cope with.
- The Current DeFi Projects Haven’t Generated New Innovations
Most DeFi projects are currently associated with token issuance aiming to increase token minting. The projects haven’t generated fresh innovations to Crypto, community, and distribution management.
It became unsustainable when it started rolling out mining infrastructure by participants. Users don’t participate or engage in community governance.
The lack of governance made many miners focus on some highly rewarding tokens at the early stage. This has negatively affected the DeFi development and platform’s liquidity.
KeplerSwap Innovative DeFi 2.0
DeFi is an influential vector for creating value in the blockchain industry. It’s now the catalyst for tangible capital allocation on the blockchain.
DeFi’s TVL (Total Value Locked) has increased from 700 million at the beginning of 2020 to more than 50 billion at the Q2 2021.
Despite the DeFi importance becoming more popular, users still witness challenges that prevent the adoption of mass DeFi.
New platforms are attempting to solve these challenges by making the DeFi ecosystem more accessible to bigger audiences. KeplerSwap is spearheading this move with the creation of an innovative DeFi 2.0.
DeFi 1.0 Issues
DeFi 1.0 has a scalability problem on Ethereum, its biggest Layer 1. It also has UX and capital inefficiency challenges. Some problems of DeFi 1.0 include:
- The Use of DeFi Platform
The DeFi 1.0 platform isn’t often easy to use, especially for newcomers. This makes most users not fully utilize DeFi potential. The UX and security problems prevalent in DeFi’s present form often worsen user-friendliness.
- Inefficient Capital
The inefficient capital often plagues the DeFi platform verse and disrupts projects, traders, and liquidity providers.
This problem hinders the platform’s growth and adoption since it discourages users with fewer funds to invest and fully participate. DeFi 1.0 often focuses on users with huge assets.
In particular, Liquidity providers need to deposit several tokens to the liquidity pools. Often trades would swap between the several pools; every swap trade attracts associated fees.
This makes the process costly for many users. It even affects projects that aim to launch tokens but lack the fund’s requirement to set up markets on AMMs.
Also, it can discourage projects from putting funds in other aspects of development.
More so, lending and borrowing models depend on the over-collateralized debt positions. This restricts users with no big assets from participating in DeFi fully.
Generally, capital inefficiency isn’t encouraging in creating a true DeFi system open to everyone.
- Limitations on Ethereum
Many DeFi products are created on the Ethereum network. However, as the cryptocurrency industry grows, Ethereum network traffic becomes more congested. This causes long delays and higher transaction costs.
This limitation makes DeFi product’s use unprofitable, especially for users with fewer assets.
The Layer 1 Ethereum limitations make most present governance mechanisms incompetent and complex for DeFi to cope with.
- The Current DeFi Projects Haven’t Generated New Innovations
Most DeFi projects are currently associated with token issuance aiming to increase token minting. The projects haven’t generated fresh innovations to Crypto, community, and distribution management.
It became unsustainable when it started rolling out mining infrastructure by participants. Users don’t participate or engage in community governance.
The lack of governance made many miners focus on some highly rewarding tokens at the early stage. This has negatively affected the DeFi development and platform’s liquidity.
KeplerSwap Innovative DeFi 2.0
KeplerSwap platform aims to overcome the present challenges in DeFi by creating a sustainable and effective cross-chain DeFi system with DeFi 2.0.
DeFi 2.0 would be a significant improvement from the DeFi 1.0. It will shift the concentration from gaining mining rewards to creating a sustainable and effective platform for long-term liquidity contribution.
In other words, KeplerSwap wants to create a DeFi 2.0 to solve the problems with the DeFi first generation, like UX and scalability problems. It aims to usher innovative DeFi services into the digital industry.
KeplerSwap’s DeFi 2.0 will be designed on a greater scalable and affordable infrastructure. It’ll be represented by Ethereum 2.0 and Layer 2 solutions.
More complex logic will be designed on the smart contract with Layer 2 support. The execution cost will be reduced to create new DeFi products.
Specifically, Layer 2 will reduce the derivative trader’s slippage and costs since they’re more in the short term.
KeplerSwap DeFi ecosystem will create advanced governance frameworks. It aims to design a DeFi 2.0 platform with a robust governance framework for the community’s power guide.
Conclusively, the KeplerSwap platform is revolutionary. It aims to solve DeFi 1.0 challenges by developing an encompassing DeFi 2.0.
It’s creating an innovative platform to disrupt the original trading approach and design a new DeFi ecosystem based on dependability and fairness.
KeplerSwap platform aims to overcome the present challenges in DeFi by creating a sustainable and effective cross-chain DeFi system with DeFi 2.0.
DeFi 2.0 would be a significant improvement from the DeFi 1.0. It will shift the concentration from gaining mining rewards to creating a sustainable and effective platform for long-term liquidity contribution.
In other words, KeplerSwap wants to create a DeFi 2.0 to solve the problems with the DeFi first generation, like UX and scalability problems. It aims to usher innovative DeFi services into the digital industry.
KeplerSwap’s DeFi 2.0 will be designed on a greater scalable and affordable infrastructure. It’ll be represented by Ethereum 2.0 and Layer 2 solutions.
More complex logic will be designed on the smart contract with Layer 2 support. The execution cost will be reduced to create new DeFi products.
Specifically, Layer 2 will reduce the derivative trader’s slippage and costs since they’re more in the short term.
KeplerSwap DeFi ecosystem will create advanced governance frameworks. It aims to design a DeFi 2.0 platform with a robust governance framework for the community’s power guide.
Conclusively, the KeplerSwap platform is revolutionary. It aims to solve DeFi 1.0 challenges by developing an encompassing DeFi 2.0.
It’s creating an innovative platform to disrupt the original trading approach and design a new DeFi ecosystem based on dependability and fairness.
