DeFiChain is a decentralized exchange based on the DeFi Blockchain, which was created to empower cryptocurrencies with the same features as other forms of capital. Being a hard fork of Bitcoin, the DeFi Blockchain has become the largest DeFi protocol for Bitcoin bypassing even the Lightning Network. It is fueled by a native utility token DFI.
The mainnet was launched on the day of the Bitcoin halving that took place on May 11th, 2020. The facility targets cryptocurrency investors who want to use cryptocurrencies to get solid ROI (return-on-investment) on any market. Running on a proof-of-stake consensus mechanism, the platform comes with unparalleled high transaction throughput and trustworthy decentralized governance, both on and off-chain.
The DeFi blockchain employs a non-Turing-complete blockchain created to meet the demands of the decentralized industry. The functionality has been developed specifically for this segment of the DLT community with a focus on such features as high-speed throughput, security, and simplicity. What’s more, the community of DeFiChain is responsible for all decisions implemented on the platform as it is necessary to confirm new implementations via the Masternode voting.
The platform delivers such services as decentralized lending, decentralized pricing oracles, decentralized wrapping of tokens, decentralized exchanges, transferable debts, decentralized debts, non-collateralized debts, receivables, tokenization of assets, distribution of dividends, etc.
The system relies on mastermodes to perform staking activities. Those who want to run a masternode should hold at least 20,000 DFI. Masternodes are also used to validate transactions and create blocks on DeFiChain.
The staking feature has been introduced on DeFiChain to increase the stability and maturity of the network and to encourage its further decentralization. Thanks to liquidity mining launched on the platform, users can receive more than 90% yearly return on investment when they stake DFI and up to 100% when they provide liquidity.
The DFI wallet used by the members of the community undergoes continuous improvement thanks to the efforts of the DeFiChain team. The wallet represents a user-friendly application that is equipped with mnemonic seeds, liquidity mining ability, and direct DEX capability.
The platform also features proven security and immutability by means of anchoring its Merkle root to the Bitcoin blockchain every few minutes. In Q3 2020, the platform completed a security audit that was conducted by SlowMist.
Since DeFiChain is a non-Turing-complete blockchain, smart contract mistakes are very rare which contributes to the security and the reliability of financial transactions. The code of the platform is devoid of severe bugs that can ruin projects. For example, DeFiChain users don’t suffer from such a common problem in the decentralized industry as system clogging.
Having combined two different approaches, the system takes the best features from both of them. Thus, it is quite secure and has a high hash power as Bitcoin. At the same time, the blockchain uses a Stake Modifier SHA256 to avoid absolute predictability and influenceability of the future PoS kernel. The platform doesn’t employ the proof-of-work mechanism as Bitcoin does, though. Instead, it relies on the proof-of-stake protocol which improves the scalability of the network and enables really fast transactions at low gas prices.
The DeFi scripting language of DeFIChain is Recipe. To add smart contract functionality, the opcode support for a decentralized financial instruction set has been added. The DeFi opcode supplements and functions in line with the Script language and Bitcoin Core protocol. The platform uses Atomic Swaps, which are smart contracts created to alleviate the trustless and decentralized exchange of cryptocurrencies between the blockchains without the necessity of a third party. In this connection, the platform has come up with the new term ‘interchain exchange’ (ICX) the mechanism of which slightly differs from DEX. Unlike DEX, which is an automated feature, ICX is organized as a traditional exchange where users make bids and asks for assets.
DeFiChain employs Layer 1 for DeFi transactions in contrast to layer-2-dApps employed on Ethereum. Therefore, DeFiChain can provide the most efficient apps with the highest level of security and user-friendliness.
DeFiChain financial details
In addition to a high level of security and high hash power, the benefits of the platform also include high transaction speeds and relatively low fees, at least in comparison with Ethereum. The fees are also lower than those on the Bitcoin network.
Though the platform has issued a native token DFI, it has never organized an ICO. It hasn’t used any external funding and has never paid developers. It means that neither the foundation nor the founders have benefited from the distribution of a native asset, which is usually the case on decentralized blockchains where specific members of the community have the biggest sums on their addresses. Despite that, it regularly enters the list of the top 10 fastest and most actively developed projects on GitHub and maintains a healthy level of decentralization.
DFI is distributed through the staking procedure with the price of the asset being determined by common market mechanisms such as supply and demand. In October 2020, DFI was listed on Bittrex Global, which opened BTC-DFI and USDT-DFI markets for the asset. On January 20, 2021, it was listed on Kucoin.
The platform always tries to improve the interoperability of the DFI token to increase its exposure to more investors and attract liquidity to the project. With this purpose in mind, an ERC-20 version of DFI was created in March 2021. The minted assets were deployed across Uniswap pools. DFI assets should be wrapped into an ERC-token to get transferred to Ethereum which can be accomplished through a trusted partner Cake DeFi.
The annual burn rate of the platform is 5,000 USD. It also includes basic expenses on the platform such as website fees, domain fees, accounting fees, e-mail services, etc. It doesn’t include development work conducted by the team of Cake Pte Ltd (Cake DeFi) in partnership with DeFiChain. The platform doesn’t pay salaries to Cake Pte Ltd, but Cake is entitled to charge the foundation’s staking rewards as a fee.
Dr. Julian Hosp is DeFiChain Foundation’s Chairman. He is also the co-founder and CEO of Cake DeFi, a platform that delivers access to DeFi services allowing customers to earn on their cryptocurrency investments.