What is DeFiChain | How many Features of DeFiChain

What is DeFiChain
DeFiChain has a simple view of the cryptocurrency industry people should be in charge of their own money. But the way things are now, users don’t really have control over the financial services they use. SDeFi stands for “disrupting financial intermediaries,” which is what the name suggests. It is a term used to describe a range of financial applications based on cryptocurrency or blockchain that are designed to make financial intermediaries less important.
DeFi technology is based on blockchain, which is the technology behind bitcoin. Blockchain lets multiple parties keep a copy of a history of transactions, so it can’t be controlled by a central authority. This is important because centralised systems and human gatekeepers can slow down transactions and make them less complex, while giving users less direct control over their money. One thing that makes DeFi stand out is that it makes blockchain useful for more complex financial transactions than just simple value transfers.
In other words, the idea behind DeFi is to put the traditional financial system on the blockchain. This includes banks and other financial intermediaries. Here are two well-known ones:
If you use the blockchain, you don’t have to go to a bank to get a loan. Instead, you can do it from your home.
By using decentralised exchanges, users can buy and sell things online without the help of a third party. Before DeFi, the only way to make money with cryptocurrencies was to buy and sell them at the right time. This will change when more advanced DeFi applications come out, giving everyone a lot of new ways to make money.o, DeFiChain’s goal is to make it easy for everyone in the bitcoin ecosystem to use decentralised financial services.
The DeFiChain Foundation came up with DefChain. The system, on the other hand, is so decentralised right now that it broke away from its foundation in June 2021 and is now run by Masternodes alone. Masternodes are basically people who keep the network safe and make sure that transactions are legitimate.
DeFiChain is an open source platform that lets anyone make their own projects in a way that is truly decentralised. There are even ways to get money and help from the neighbourhood. More about that will come later in the article.
What DeFiChain is, let’s look at what makes it so different. But before we can do that, we need to know what DeFi is and how it works.
What is DeFi
DeFi stands for “disrupting financial intermediaries,” which is what the name suggests. It is a term used to describe a range of financial applications based on cryptocurrency or blockchain that are designed to make financial intermediaries less important.
DeFi’s technology is based on blockchain, which is the technology behind bitcoin. Blockchain lets multiple parties keep a copy of a history of transactions, so it can’t be controlled by a central authority. This is important because centralised systems and human gatekeepers can slow down transactions and make them less complex, while giving users less direct control over their money. One thing that makes DeFi stand out is that it makes blockchain useful for more complex financial transactions than just simple value transfers.
In other words, the idea behind DeFi is to put the traditional financial system on the blockchain. This includes banks and other financial intermediaries.
If you use the blockchain you don’t have to go to a bank to get a loan. Instead, you can do it from your home.
Features of Blockchain DeFiChain
DeFiChain is full of features that can be used by its users. They have everything from collateral tokens to decentralised loans to a strong system for running the network.
Hybrid Proof of Work/Proof of Stake Consensus
DeFiChain uses a consensus system that is completely decentralised and combines PoW and PoS. Among the advantages of this solution
- Quickly be able to make DApps
- A consensus that is easy to measure
- Strong safety measures and fast transactions
- Dispersed power in government
- Investments that can be cashed out quickly and don’t have a minimum payment
- Freedom from other financial systems and instruments
- Multi-token support
This blockchain isn’t considered to be a general-purpose one, so it only supports commands that are part of the main set of functions. By cutting down on the number of commands that can be used, hackers will find it harder to get into the ecosystem. When you use DeFiChain, you can be sure that your crypto assets are safe.
The security mechanism
DeFiChain is a hard fork of Bitcoin, so much of its programming code is similar to Bitcoin’s. Both Bitcoin and DeFiChain use blockchains that are not Turing complete. This word may seem hard to understand at
First but it’s actually pretty simple. In general, there are both blockchains that are Turing complete and ones that are not.
When a blockchain is Turing complete, you can programme almost anything you want on it. At the moment, Ethereum is probably the most well-known Turing-complete blockchain. Open and flexible blockchains that are Turing-complete may be a good thing, but they are more likely to make mistakes and be attacked maliciously, which makes them less useful. We’ve seen this happen more than once before, when hackers broke into Ethereum-based apps and stole millions of dollars.
On the other hand, blockchains that are not Turing complete, like DeFiChain, offer fewer ways to programme, but they are also harder to hack. This keeps arbitrary code from running on blockchains that aren’t Turing complete. As a result, only code that has been “predefined” can be run. DeFiChain, on the other hand, doesn’t see this as a problem. Instead, they see it as an important part of the design, since financial products need a high level of security that can only be reached with a non-Turing complete architecture.
Rapid Development of DApps
DeFiChain focuses on giving developers the tools they need to make decentralised apps quickly (DApps). For example, collateralized systems and collateral tokens are used to make decentralised loans. Wrapping tokens makes it possible for developers to work on-chain with a wide range of crypto assets. With pricing oracles, it’s easy to get data from markets that don’t use cryptocurrency and from other blockchains. There are other things that help DApps be made quickly, such as:
- Full help with the exchange
- Non-collateralized debt is made up of decentralised loans that are based on credentials and reputations that can be checked.
- Asset tokenization that makes it possible to tokenize real estate and stocks
- Distribution of dividends, which allows for automatic payments
Decentralized Wrapping of Tokens
DeFiChain can use ERC-20, Ether, Bitcoin, and other crypto assets that can be wrapped in a decentralised way. This feature makes it possible to use digital assets on different blockchains. The DeFiChain ecosystem has a wrapping mechanism that lets the owner of an asset use the mechanism without having to rely on a third party as a guarantor. Then, users can trade wrapped tokens for their original price. This feature is an incentive for people who own crypto to use the DeFiChain network to make wrapped tokens.
If wrapping wasn’t an option, crypto holders would have to convert their assets to the DeFi currency to use the platform’s services. If you put your crypto assets in Ethereum or Bitcoin, you shouldn’t have to switch to a completely different token just to make a transaction. This feature lets you use the crypto you already own to make investments in other types of money.
You have Bitcoin but want to lend someone Ether. Using wrapping technology, you can turn your holdings into Ether so that the user can use them.
What are Decentralized Exchanges
Decentralized exchanges use smart contracts to let traders execute orders without a middleman. On the other hand, centralised exchanges are run by a single organisation, like a bank, that offers other financial services and wants to make money.
Centralized exchanges do most of the trading on the cryptocurrency market because they are regulated, hold their users’ money, and have easy-to-use platforms for people who are just starting out. Some centralised exchanges even insure the assets you put in them.
A centralised exchange is like a bank in that it offers services like those of a bank. The bank keeps its customers’ money safe and offers security and surveillance services that people can’t do on their own. This makes it easier to move money from one place to another.
Decentralized exchanges, on the other hand, let users trade directly from their wallets by talking to the smart contracts that run the trading platform. Traders are responsible for losing their money if they do things like lose their private keys or send money to the wrong addresses.
Customers who deposit money or assets get a “I owe you” (IOU) that can be traded freely on the network. This is done through decentralised exchange portals. An IOU is basically a token based on the blockchain that has the same value as the asset it is backed by.
Top blockchains that can handle smart contracts have been used to build popular decentralised exchanges. They are built on top of layer-one protocols, which means they are built directly on the blockchain. On the Ethereum blockchain, the most popular DEXs are built.
How do DEXs work?
Since decentralised exchanges are built on top of blockchain networks that support smart contracts and where users keep control of their funds, every trade has a transaction fee in addition to the trading fee. Traders use DEXs by talking to smart contracts on the blockchain.
There are three main kinds of decentralised exchanges: automated market makers, order books DEXs, and DEX aggregators. All of them have smart contracts that let users trade directly with each other. The order books of the first decentralised exchanges were the same as those of centralised exchanges.
Bitcion Anchoring
DeFiChain is not only a hard fork of bitcoin with a function set that is not Turing complete, but it also anchors on the bitcoin blockchain every so often. A small set of data from the DeFiChain blockchain is added to the bitcoin blockchain every few blocks. In this case, it’s important to keep in mind:
If someone has more than 50% of the coins, which is called a “51 percent attack,” the blockchain can only be reset to the point where the last anchoring happened.
This also means that a 50% attack is not very appealing from an economic point of view, which means that the DeFiChain is pretty safe despite being young.
How do DFIPs and CFPs work?
Anyone can send in an improvement proposal (DFIP) or a funding request (CFP) for a fee of 50 DFI or 10 DFI, respectively. A DFIP is a plan to change an important part of the blockchain or how it works. A CFP, on the other hand, is a plan to fund a single project that will help the community and the whole DeFiChain ecosystem.
During one of the voting rounds that happen once a month, masternodes look at each proposal and decide whether to approve or reject it. There are strict deadlines for submissions, and if things get really bad, the core team may also call for an emergency vote.