Although the open finance initiative is largely agnostic for blockchain, it thrives on more versatile blockchains (i.e., programmable smart contracts) as well as a healthy developer base. Today, Ethereum is based on almost all DeFi ventures, making it the standard default blockchain for many decentralized applications. Looking at the November average results, Ethereum dominates the current data in the number of applications, application operation, user activity and also in the volume traded/locked, blockchains (with limitations). The high transaction volume on EOS is a year-round phenomenon that is often attributed to the advantage of zero transaction costs, potentially inflating transactions. Nonetheless, it appears that zero transaction costs are an appealing target to help the creation of DeFi on the blockchain.
In a nutshell, other DeFi rivals are actually miles behind since they still ignore a stable developer base (IOST) or real decentralization and hence the blockchain's key advantages (EOS). Any people just do not have both. This begs the question of whether DeFi can be reproduced on the world's most well-known blockchain protocol. Decentralized applications are possible on Bitcoin, contrary to common opinion, but programming them is much more complicated.
Bitcoin is designed with encryption in mind, which is crucial in financial infrastructure. Bitcoin may also be ideal for a stable DeFi ecosystem, though considerably smaller. The Lightning Network is Bitcoin's most powerful DeFi program so far. The second layer protocol has been in progress for many years and is focused on state channels technologies. The Lightning Network, which supports ultrafast and low-cost payments, has seen strong development in 2019, with over 6000 active users and USD 6.2 million in the network. Decentralized exchanges like MDEX and Uniswap (V2) are other notable Bitcoin decentralized applications.
Although it may be difficult to decide which protocols and implementations can get the most long-term use, Ethereum is leading through advanced decentralization, programmatic simplicity, and the passionate base of developers. Therefore, the focus of this report will be Ethereum-based decentralized applications. DeFi ventures currently make up a large part of Ethereum's vast ecosystem. In specific, with regard to Ethereum (ETH), which is locked in smart contracts and is frequently used as a development indicator in the DeFi market. The overall valuation of the ETH locked is over USD 680 million (roughly 2.5 million ETH). MakerDAO has the most volume locked across all major applications, followed by Synthetix, Compound, InstaDapp, Uniswap, and dYdX. Over the past few months, though, the domination of MakerDAO has begun to decline and volumes have been collected by other sites. When decentralized applications merge layer 2 services with one another, the DeFi technology stack has become increasingly interconnected (e.g. InstaDapp).
It is very important to remember that both ETH and DAI are the fuel that keeps DeFi going. To pay for blockchain transaction fees, the Ethereum-native Ether is needed, and it is also the easiest crypto currency to convert into other currencies. DAI is a layer 2 development on the blockchain of Ethereum and provides the advantages of a stablecoin: becoming completely decentralized, synthetically pegged to the USD and hence less unpredictable automatically. The ability to circulate DAI between various DeFi protocols and use it as a unit of account on these decentralized applications has been a major factor in its performance.
