Let’s take a closer look at what DeFi and DeFi 2.0 are all together. It has been only two years since DeFi (Decentralized Finance) entered our lives. Satoshi’s idea of decentralization in finance already seems to have mobilized and intrigued the masses.
As it is known, there are many problems that blockchain technology still cannot solve. We experience these problems with Bitcoin and other cryptocurrencies in different ways every day. We can see that this ecosystem, which is unregulated, not universally accepted, and lacks certain standards, needs improvement. Of course, DeFi, which is more new, also has many problems. In this article, let’s get to know DeFi first. Then let’s talk about the problems DeFi has.
What is DeFi?
DeFi’s popularity started to increase seriously in 2020. Although it is still very new, its market value is now over 45.5 billion TL. We can think of DeFi as the reflection of the idea of decentralized finance, which Satoshi, the developer of Bitcoin, wanted to bring us to life, with different applications today. There are many decentralized finance applications available today and you do not have to authenticate in any of these applications. As you do not share your personal information, you can easily open the doors of a decentralized world with metamask, your decentralized wallet.
What Problems Does DeFi 2.0 Want To Solve?
DeFi 2.0 is an effort to optimize the problems of this ecosystem that is still being established and evolve it into a higher ecosystem. One of the first problems experienced is that there is no authentication system in DeFi at the moment. The ecosystem, which, by its nature, wants to provide this anonymity, unfortunately encounters various regulatory structures of the states.
DeFi does not seek solutions alone to the problems it encounters, because the issues we will talk about shortly are also the problems of blockchain technology in general.
1. Scalability: In decentralized finance, slow transaction traffic is generally seen as a high transaction fee. Over time, this makes the ecosystem inefficient.
2. Decentralization: Decentralized finance projects on blockchain infrastructure need to have decentralized governance. Many of the projects still do not implement the DAO structure.
3.Safety: With frequent updates in the sector, many of the audits that are carried out are in vain. Although people are not a fully resolved structure in terms of controlling the ecosystem, the fact that they invest huge amounts in the ecosystem also increases the danger.
4. Oracle: Decentralized applications work with code based on rules written in their whitepapers. In many cases, external information must be integrated into the system. The structures that provide this are called Oracle. It is seen that there is a need for higher quality Oracles that can support more complex jobs in the future.
5. Liquidity: We can define it as the source of money needed for the projects to be realized and the wheels of the system to turn. Financial resources dispersed over different projects cause major problems, especially in bear markets.
In DeFi 2.0, on the other hand, new projects, integratable technologies and algorithms are developed that will play a role in solving all these problems. The ecosystem is still very young and we must take these risks into account. We should not ignore that we are in an experimental process that the ecosystem should reach and experience more people.
