The need for multichain DeFi
To be competitive, a DeFi platform needs to be multichain, says Chandler Song. He writes, “Whether you’re building a wallet, a lending service or a DeFi game, your target audience knows that there is more to the crypto space than Ethereum. And they expect you to provide the best of all worlds.”
The focus has been on Ethereum since DeFi arrived in 2019, and has been the blockchain of choice for the majority of DeFi projects. But developers are looking for chains that offer enhanced security, low transaction costs and formidable speed, hence the search for an ‘Ethereum killer’. However, Song says, a new multichain reality is forming that has a less stark competitive implication. He believes that instead DeFi will favour those products that mesh into a cooperative multichain user solution.
The multichain trend is partly fuelled by the Polkadot and Kusama ecosystem, which was built with a multichain philosophy at its core. In this system parachains connected to the relay chain easily communicate with one another, and are setting a multichain industry standard. .
Projects that make it easier for the average user to connect more systems are raising millions of dollars to simplify this new multichain reality for users, who are turning to blockchains that better serve them — and to the platforms that offer access to them. As a result, projects that support multiple chains gain larger audiences and more liquidity. Basically, this means a DeFi product needs to support Ethereum and a ‘niche’ blockchain, such as the ones for trading, staking, nonfungible tokens (NFTs) and more. The more chains a DeFi product can interact with, the better it will be for users and platform developers.
To achieve this, Song says, we need to provide developers with easy and affordable access to nodes, APIs and support for an ever-growing number of blockchains. If there are more ways to build, then DeFi developers can break down the barriers to entry and begin contributing to the next generations of blockchain and finance. And the faster mass adoption will happen.