Analysis & Opinions

The Biggest Barrier to Building in DeFi

DeFi services have the potential to make managing finances easier than ever before: We’ve entered the era of programmable financial instruments. DeFi promises us complete control over our funds, stronger security infrastructure, seamless payment functionality, and investment options previously only available to banks.

To bring these advancements to the market, DeFi developers are faced with numerous technological obstacles. The biggest of all being the task of building the full functionality of a cryptocurrency exchange into their project. This obstacle is further complicated by the matter of liquidity.

Liquidity Networks

Alice wants to send Bob Ethereum to pay for his product. Bob wants to receive Bitcoin as compensation. For a DeFi tool to handle converting Ethereum to Bitcoin so that both Alice and Bob are satisfied, there needs to be someone willing to sell Bitcoin for Ethereum. If there isn’t enough Bitcoin being sold at the initial agreed upon price, it will cost more Ethereum than originally anticipated. This negatively impacts Alice’s buying power incentivizing her to avoid making conversions in the future.

To solve this problem, developers use cryptocurrency liquidity networks like Radar Relay, Bancor, UniSwap, and Kyber Network. These services guarantee customers the necessary liquidity to facilitate a stable transaction while still being fully decentralized, ensuring that customer’s funds are never in anyone else’s possession.

Gaming Liquidity Networks

Each liquidity service has its own microeconomy where prices are regulated by the protocol the decentralized exchange operates on. This creates price differences between exchanges. To attain the best price, developers are tasked with building additional infrastructure to manage this process.

The extensive amount of work required by developers to accomplish getting the best price from decentralized liquidity networks is a threat to the success of many projects.

The solution: Totle

By integrating with the multiple liquidity networks Totle is able to leverage a suite smart contracts that seamlessly compare prices and routes transactions through the top liquidity networks.

Totle offers developers the infrastructure they need to overcome the enormous barrier of efficiently exchanging users’ funds.

You can be an early investor in Totle by joining the crowdfunding campaign here.

For projects that can benefit from using Totle, get API access here. To get updates on Totle, follow them on Twitter, join their Telegram group, or reach out to Totle directly.

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