The Blockchain Problem

Blockchain ecosystems are often created to resolve a unique set of needs. They, therefore, tend to operate in complete isolation from one another.

This limitation has made it impossible for us to witness the full benefits of blockchain technology.

To put the issue in perspective, imagine struggling to send emails from your Outlook account to a friend who uses Gmail because the two services can't communicate with one another.

Similarly, users of one blockchain struggle to communicate with users on other blockchains unless they create separate accounts on each.

The problem, put simply, is that blockchains are individually smart but collectively dumb.

The Cosmos Solution

Launched only in March 2019, Cosmos is a project with cross-chain solutions currently hosting over $137 billion of digital assets in its umbrella portfolio.

And with over 260 blockchains operating within the Cosmos Network, including powerhouse projects like Binance Chain, Crypto.org, and Terra, Cosmos is quickly becoming the backbone for interoperability between all blockchains.

So before we hop into the top 3 benefits of Cosmos' cross-chain De Fi solutions, let's first examine De-Fi in its current state, along with its key benefits and of course, limitations. 

This will help us understand Cosmos' cross-chain solutions in the contexts they're meant to serve.

So Let's Talk De-Fi

De-Fi is often regarded as the greatest innovation in finance. 

Since its rise to fame in the summer of 2020, De-Fi continues to experience explosive growth with over $100 Billion of total value locked in its De-Fi Protocols.

With its godly potential to completely strip the almighty legacy banking system of its airtight control on money, financial products, and services, De-Fi is hailed by many as the next evolution in finance.

Let's take a look at some of De-Fi's defining features.

De-Fi is Permissionless

With no regulatory hoops to jump, the world of De-Fi is accessible to anyone with an internet connection and a crypto wallet.

You don't need a VIP credit score. You don't need to chase after your bank rep. And you don't need any forms to fill.

De-Fi is Customizable

De-Fi's open peer-to-peer network supports trade with smart contracts. These contracts are highly programmable and can be customized to best suit any transaction. 

Once programmed, these smart contracts take certain actions as soon as certain requirements are met with minimal human maintenance.

De-Fi is Transparent

With 90% of De-Fi being built on Ethereum's open-source blockchain, every transaction is visible to the public.

Undisguised and fully accessible, all transactions can be viewed and audited by anyone on the network.

But Is De-Fi Perfect?

No.

With all the revolutionary benefits De-Fi offers, the technology is still in its early stages of development. As such, it has limitations.

Let's take a look at some of these restraints and how Cosmos' cross-chain solutions directly address them.

De-Fi has Scalability Limitations

As more and more users join the world of De-Fi, one of the major concerns with De-Fi's blockchains is that they only process one transaction at a time.

This means that if there are several transactions that need to be processed simultaneously, they will all have to wait until one transaction finishes processing.

For example, De-Fi's primary blockchain, Ethereum, can only process 13 transactions per second at its peak.

 Compare that to VISA's processing power of 20K transactions in the same period and you'll begin to see De-Fi's urgent need for a scalability solution.

Benefit #1: Cosmos' Scalability Solution

Cosmos' cross-chain solution immensely boosts transactional processing power by facilitating the execution of multiple transactions across a network of interconnected blockchains. 

This means that all transactions are not confined to one blockchain, and as such, they do not have to wait on one blockchain to finish before they can be processed.

In addition, the Cosmos Network uses its own token, called ATOM, to incentivize network participants to perform necessary tasks that ensure transactions are processed efficiently.

De-Fi Charges High Transaction Fees

Given De-Fi's transactional processing limitations, those who wish to trade may be subject to high trading fees or as they're commonly known, gas fees.

Gas fees are the costs of transacting on a congested blockchain.

The higher the congestion, the higher the gas fees, which is why timing transactions has become an important strategy in De-Fi.

Benefit #2: Cosmos Dramatically Reduces Gas Fees

Cosmos' Cross-chain solutions reduce gas fees significantly.

Using cross-chain communication, Cosmos enables the transfer of value between different blockchains, sometimes, removing the need for fees almost entirely.

This means that instead of paying gas fees when transacting with De-Fi, you may now make a transaction with negligible trading costs.

De-Fi Trading Can Be Cumbersome

For a long time, crypto traders have struggled with storing their digital assets in a common wallet.

Due to the lack of interoperability between blockchains, traders have had to store their assets in different wallets for each blockchain network they use.

This has been one of the main reasons why traders have been reluctant to enter the De-Fi space.

But what if there was a way to make crypto trading easier? 

Benefit #3: Cosmos Eliminates Frustrating Bottlenecks 

Cosmos' cross-chain solution eliminates frustrating bottlenecks experienced in crypto trading.

It makes it possible for traders to store all their digital assets in a single wallet and avoid the chaos of managing several at once.

This is because cross-chain allows different blockchains to communicate and exchange information, all while speeding up transactions and reducing liquidity risk.

Conclusion

De-Fi is experiencing explosive growth, but unless it can effectively adopt cross-chain solutions, its growth will stagnate and it will remain in its infancy.

Interoperability is a crucial necessity for mainstream De-Fi adoption.

Cosmos' cross-chain solution promises to solve the lack of communication between blockchains so traders like you can seamlessly exchange value between different blockchains, directly from a decentralized exchange.

Want to take part in cross-chain De-Fi today? Simply open the Emeris app to transfer and trade assets, earn competitive yield, and discover the benefits of expanding across blockchain ecosystems.