In this four minute reading article, you’ll learn about:
- DeFiChain’s goals to further increase its generalization and decentralization efforts throughout 2021
- The metrics and markers applied to achieve those goals
Last year was undoubtedly successful for DeFiChain on multiple fronts. Without the joint effort of the engineering team and the greater DeFiChain community, DeFiChain would not be where it is today. Therefore, it may come as no surprise that the focus in 2021 remains on developing DeFiChain’s narrative to enhance its value proposition amongst those two key stakeholders. To achieve this, it is essential to focus on further increasing DeFiChain’s decentralization as well as its generalization efforts.
Increase DeFiChain's generalization
Most of the development work is currently carried out by the DeFiChain team itself. Yet this should change in an attempt to convince more external developers to build their own dApps and programs on top of the DeFiChain blockchain by encouraging them to apply for funding via the community development fund.
This fund, holding roughly 10m DFI and growing, is held by the DeFiChain foundation (as a custodian) and is reserved for community purposes only. Its sole objective is to incentivize developers and the greater DeFiChain community to participate in activities that are beneficial and supportive to DeFiChain’s long term goals. All these locked up coins are controlled by masternode owners and cannot be moved or withdrawn without prior voting approval. This essentially means that DeFiChain does not have access to or control over these coins, and is also unable to sell any of these coins.
We are in the midst of formalizing processes to allow community members to put up proposals to request for funds and be voted on by masternodes for approvals — this is done via on-chain consensus.
The very first community funding proposal (CFP #1) has already been accepted and granted to Daniel Zirkel for actively developing and maintaining the DeFiChain dashboard at http://www.cakedefi-review.com/DefiChain. (For full details on CFP #1 please go to: https://github.com/DeFiCh/dfips/issues/9)
Increase DeFiChain's decentralization
Reduction of Masternode Collateral
DeFiChain is a Proof of Stake (PoS) blockchain with masternode staking support. Masternodes on DeFiChain are nodes with special privileges and duties. Each masternode (staking node) participates in active transaction validations and block creations. Besides that, running a masternode also entitles the user to actively participate in governance.
Users who decide to hold their coins in a masternode, receive a certain percentage share of the block reward for their consensus algorithm duties — this entry barrier for masternode staking currently stands at 1m DFI tokens.
DeFiChain seeks to incentivize its users to help to secure the network and to get rewarded for doing so. Hence, the collateral required to operate a masternode is being reduced from 1 million to just 20,000 DFI tokens, in an attempt to further decentralize the network. This reduction in masternode collateral was part of the DFIP #4 proposal and has been approved by 14-1 masternode votes. (For full details on DFIP #4 please go to: https://github.com/DeFiCh/dfips/issues/6)
The DeFiChain app remains an innovator in the crypto space by continuously releasing new and exciting functionalities. In a further iteration, the DeFiChain app will support the hosting of multiple masternodes — making staking and masternode management easily accessible to DeFiChain users in a truly decentralized way.
New Liquidity Mining Pool Pairs
Liquidity mining is booming and DeFiChain wants to make it more accessible to an even wider audience by introducing new liquidity mining pairs. Two new pool pairs — LTC-DFI and BCH-DFI — are complementing the liquidity mining offer on DeFiChain. The LTC-DFI pool has already been integrated due to the successful approval of the DFIP #6 proposal. The proposal on the BCH-DFI pool introduction (DFIP #7 proposal) has already been accepted by the masternodes and will be implemented in the upcoming weeks. (For full details on DFIP #7 and DFIP #8 please go to: https://github.com/DeFiCh/dfips/issues/7 and https://github.com/DeFiCh/dfips/issues/8)
Simultaneously, liquidity mining remains incentivized with a total of 103 DFI per block, allocated to all five pools — except the Dogecoin pool, which is directly incentivized by community members — and split roughly proportionally according to each coins’ total market capitalization. As a result, the LTC-DFI pool is incentivized by 2 DFI per block and the BCH-DFI pool by 1 DFI, respectively.
Loan Contract Rollout
DeFiChain’s loan contracts are designed to allow the owner of the contract to take a loan against collateral, which is locked in the contract. Each loan contract is unique to every owner (address) on DeFiChain, and any user can open a loan contract on DeFiChain — free of charge. The user who opens a loan contract owns the specific contract. This ownership, however, is transferable. Due to the volatile nature of cryptocurrencies, the initial implementation of these loan contracts will be designed in a way that they are over-collateralized, meaning that you have to give more value in the form of DFI tokens into the contract than you receive from it.
Once a loan contract is opened, DFI can be sent to fund the loan collateral. Once a loan contract is funded, it allows the owner to take out a loan by minting DATs up to a certain collateralization ratio. The minimum collateralization ratio can be adjusted by DeFiChain DAO and starts at 150%.
Implementation of Interchain Exchange (ICX) & Atomic Swap
Atomic Swaps are smart contracts that facilitate a trustless and decentralized exchange of cryptocurrencies between two distinct blockchains without having to rely on any intermediaries.
DeFiChain users are then able to exchange bitcoins, sitting on the DeFiChain blockchain in the form of DBTC (DeFi Asset Token backed by bitcoin), for bitcoins, sitting on the Bitcoin blockchain, without relying on any middlemen or centralized institution. Instead, users will be able to intuitively transfer coins to and from the Bitcoin blockchain, directly in the DeFiChain app.
This opens up the possibility of allowing all assets on DeFiChain to be easily moved into and out from DeFiChain blockchain and the Bitcoin blockchain with high liquidity.
Implementing Ledger Hardware Wallet Support
Safety and security continues to be a top priority for DeFiChain and all its stakeholders. Hence, DeFiChain will be implementing a ledger hardware wallet integration to provide easier access and to safely store DFI tokens later this quarter.
DFI on the Ethereum Blockchain
Ethereum is still the biggest blockchain for DeFi applications at the moment. DeFiChain aims to dip into the lucrative Ethereum pond as well and is therefore introducing an ERC20 token of its native DFI token on the Ethereum blockchain. This logical next step not only increases DFI’s accessibility to Ethereum users, but also its exposure to ETH based decentralized exchanges. It will then be theoretically possible to use DFI on many more DeFi blockbuster projects, opening new opportunities to the DFI community.
Release of Technical Paper
Alluding to DeFiChain’s brand colors, a ‘pink paper’ is being developed, which essentially deals with technical questions about future use cases like decentralized tokenization, atomic swaps and decentralized stocks.
The first part of the paper on Interchain Exchange and Atomic Swaps can now be seen on our YouTube live video. An actual paper, covering various other topics such as price oracles, loan contract, futures, etc. will be released this quarter.
Collaborations and Partnerships
From a business development perspective, DeFiChain aims to be listed on more leading exchanges, and will keep pushing for a Binance and Coinbase listing. Continuous effort is also being put into strengthening network effects by intensifying collaborations with external partners and releasing joint announcements with other chains. Increased exposure to more DeFi and Yield Farming related media outlets remains a high priority in Q1.
All these numerous organizational goals can be broken down into the following three quantifiable goals, which shall ultimately guide all actions set by DeFiChain’s stakeholders in Q1 of 2021:
- Achieve 10% of Uniswap’s TVL, which currently is around US$4.29b,
- End the quarter with 25,000 active addresses and
- Have a larger market cap than Uniswap, which currently is around US$6.11b.
For further information and discussions, please feel free to visit our Reddit channel.
Your DeFiChain Team