Avalanche Summit is a conference for developers, researchers, and makers building on Avalanche at Barcalona, Spain from the 22 to 25 March 2022.
The Avalanche Summit hosted huge names in the crypto space inclusive of Ava Labs, Chainlink, VC firms and even the trade and investment Secretariat from the El Salvador government.
In case you missed the segment on the game changing trends in DeFi, here are some key conversations that happened between AAVE’s Marc Zeller, Republic’s Andrew Durgee, MC Venture’s Omer Demirel and Injective protocol’s Eric Chen.
A multiverse blockchain ecosystem
March Zeller mentioned that blockchains used to be in a maximalist space, every blockchain for themselves. But that vision is the past, it is all about the synergy now.
Andrew Durgee added that DeFi drives interoperability with the idea that chains would be able to work together in a high functioning manner. He also added that the community plays a key role in driving the entire ecosystem.
“Predominantly, tech driven industries are very competitive however Blockchains are more cooperative.”
When different chains are able to collectively communicate and work and build together, it will give rise to a stronger crypto space as a whole. The narrative of multiverse blockchain ecosystem is one to look out for as a major game changing trend in 2022.
DeFi infrastructure is evolving
New technology driving DApps
The technology that drives DApps could also be one of the game changing trends in the DeFi space. Omer Demirel from MC ventures mentioned that AVAX’s subnets are of great importance, which will bring DeFi to have its own narrative and economy in attracting new users.
Avalanche Subnet – A Subnet, or Subnetwork, is a dynamic set of validators working together to achieve consensus on the state of a set of blockchains. Each blockchain is validated by exactly one Subnet. A Subnet can validate arbitrarily many blockchains. A node may be a member of arbitrarily many Subnets.
The improving technology in infrastructure will also see a huge push in worldwide adoption between institutional and retail investors.
But the next big question would be how do we then build an infrastructure that goes from 3 to 30million?
Layer-2 frameworks might be game changers in the crypto space. Andrew Durgee mentioned that every L1 would have its L2 pair within its framework to put off noise and fill in gaps the L1 can not cover themselves.
This could be especially important in the NFT and GameFi space, where payment finality is not required.
ZKRollups and the premise of Zero-knowledge are key aspects in reshaping the crypto space aggressively.
Durgee mentioned that there are a variety of chains working on ZK which is going to be the real answer in pulling away all of the noise off chain and focus on the settlement aspect of the L1.
Zero-Knowledge: Zero-knowledge proof, a concept from cryptography, an interactive method for one party to prove to another that a (usually mathematical) statement is true, without revealing anything other than the veracity of the statement.
ZK Rollups: The ZK-rollup smart contract maintains the state of all transfers on layer 2, and this state can only be updated with a validity proof. This means that ZK-rollups only need the validity proof instead of all transaction data. With a ZK-rollup, validating a block is quicker and cheaper because less data is included.
Watch this light hearted video for a further understanding of Zero-knowledge:
Solutions collectively will prevail
The Cosmos ecosystem is designed in a coordinated way where blockchains developed on IBC are coordinated efforts within chains and within the community. Each chain have their own set of application, purpose and special set of community.
Many blockchain projects comes as solutions for areas others lack, but there might not need to just be 1 solution after all.
Interoperability solutions could mean, an example, AAVE connecting to multiple L1s like FTM and ETH, which gives seamless experience to users who don’t feel like they are leaving a certain chain when in fact they are utilizing more than one of them.
Fixing the infrastructure issue of bridges
Bridges are essential to every ecosystem. Durgee claimed that the AVAX bridge to Ethereum is one of the best out there, and is “eloquently executed”.
However, the introduction of bridges to L1 or L2 will come with additional amount attack factors, just like what we saw with wormhole.
All that means is the need to have aggressive iterations on the development to fend off any of those attacks.
With bridges, you are almost taking two communities and “slamming them together in a rapid pace”, with the doubled efforts from both sides of the bridge, a matured and secure bridge development would see huge institutional participation which may unlock billions of assets in the crypto space.
Evaluating new projects in the DeFi space
Before finding the next shiny thing, it is important to look at innovation, where projects are not just another protocol. Tokenomics and community are also key aspects in evaluating new projects in the DeFi space.
Two examples on Avalanche include how TraderJoe is not just a fork of Uniswap but has their own offering and how Platypus is not just another curve (finance) because they tweak the tokenomics in a way where the $PTP token can be more liquid and have a better synergy with other chains.
There are projects out there which has similar functions just like AAVE and BENQ, both being liquidity providers on Avalanche, however, everybody wins when protocols are being utilized in a cohesive and synergistic manner.
When you provide liquidity on BenQ, you utilize the liquidity staking token by using half the yield for staking and the other for BenQ then using that into AAVE as collateral to borrow stablecoin and providing liquidity into Platypus. Everyone wins and the ecosystem gets stronger.
As the DeFi space looks to work towards a more cohesive and shared solutions space in benefitting the entire crypto ecosystem, the development of Multiverse blockchain ecosystem and innovative infrastructure will continue to reshape the crypto space in the coming year.
Perhaps the world may not be ready for full decentralization but there has to be stepping stones in getting there. However, for the first time in financial history every individual has a choice. Individuals can go straight to the infrastructure layer or take the easy route into traditional finance.
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
Featured Image Credit: Chain Debrief