Decentralized finance is a compelling industry capable of unlocking many new use cases, services, and products. That can only work if the underpinning technology is fast, reliable, and cost-efficient. Tezos may be the next major blockchain for DeFi, as it checks many of the right boxes.
DeFi on Tezos Is Popping Off
Numerous blockchain ecosystems are competing for traction across various market segments. As decentralized finance is one of the hot trends in the cryptocurrency industry today, the quest to gain market share is always ongoing. Competing with Binance and Smart Chain is not easy on paper, but the situation can be very different in reality.
Tezos, a blockchain many people tend to overlook, is gaining momentum among DeFi enthusiasts. As a proof-of-stake network completing a massive upgrade recently, Tezos continues to push the boundaries of lowering fas fees and adjusting the block size accordingly. Moreover, the blockchain supports smart contracts, paving the way for more complex financial products and services.
Several projects are building and operating on Tezos today. Moreover, two of them – Smartlink and Crunchy Network – raised over $1 million to bring their products and services on the Tezos blockchain. Combined with several decentralized exchanges and DeFi protocols, there is a lot to explore in this ecosystem. The recently created bridge between Ethereum and Tezos lets users leverage ERC20 tokens on Tezos’ DeFi products and services, improving overall liquidity.
Bridging the different blockchain ecosystems will give rise to more complex and robust solutions. For Tezos, the decentralized WRAP bridge provides a gateway to and from the Ethereum blockchain. Having the ability to transfer ERC20 and ERC721 tokens to Tezos and its native DeFi solutions can create compelling use cases. This bridge creates wTokens to wrap the Ethereum tokens on the Tezos blockchain.
Eco-friendliness Goes A Long Way
Compared to other blockchains that require mining, Tezos’ Proof-of-Stake consensus algorithm is more co-friendly. It is cheaper to use, does not require more electricity than some small countries, and has attracted the attention of multiple musicians. The OneOf NFT marketplace prioritizes eco-friendliness and empowering creators, which is why it has collected $63 million in seed funding.
Being two million times less energy-intensive than Ethereum – the leading blockchain for DeFi and NFTs – is a significant selling point. As eco-friendliness is currently a hot topic of debate, any ecosystem capable of offering something better than the rest has a fair chance of succeeding. Using Ethereum to mint and trade NFTs, for example, has a far bigger environmental impact than most people give it credit for. Some minted NFTs require as much energy as a small country, a situation that is no longer acceptable in 2021 and beyond.
Competition for both NFTs and decentralized finance is essential, as both industries are still in an early stage of development. Tezos can run a blockchain that supports both sectors and allows for cryptocurrency usage without requiring as much energy as other networks. For DeFi, its Financial Application 2 token, which allows programming multiple token types under one standard, is a powerful tool for developers focusing on complex token interactions. In the NFTs segment, it is more efficient, eco-friendly, and cheaper to use Tezos over any other blockchain on the market today.