Position Exchange

<h2 id="header-0"><strong>Current DeFi state</strong></h2><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/dc7d1e1960ac433a9293ec32d36f6e12.jpg"><p><a href="https://www.coindesk.com/learn/what-is-defi/" rel="noopener noreferrer nofollow">Decentralized Finance (DeFi)</a> is taking the world by storm. Between 2020 and 2022, the industry increased by 865%, reaching $254.99 billion in total value locked (TVL) in December 2021. Despite the high-yield opportunities of creating solutions that give users access to multi-chain capabilities and interoperable blockchain transactions, DeFi is having a hard time just to hold a minor percentage of 1% in the traditional financial market share.</p><p>Hence, this article will list some significant obstacles to DeFi adoption in 2022 and potential solutions for navigating the adoption maze.</p><h2 id="header-1"><strong>Challenges to overcome</strong></h2><p>DeFi has faced difficulties that might impede its worldwide expansion, like every new technological advancement.</p><h3 id="strong-transaction-cost-strong"><strong>Transaction Cost</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/f2bf9b2e0313448984e3bf0b4ca10900.jpeg"><p>The overwhelming of DeFi activities on a single network implies a corresponding rise in transaction fees due to network congestion. This high traffic on one network and the scaling limitations often result in spiking <a href="https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/crypto-gas-fees/" rel="noopener noreferrer nofollow">gas charges</a>.</p><p>For example, users have to pay $300 per transaction fee on average to carry out retail activities on Ethereum. Hence, there is a need for a solution that enables users to access assets in one spot via multiple chains while reducing the gas fee. Capitalizing on Ethereum’s weakness, alternative blockchains are striving to offer faster and cheaper solutions.</p><h3 id="strong-liquidity-strong"><strong>Liquidity</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/9b4c8f1f7bcf4d348749e6b32fe1f4ba.png"><p>The DeFi ecosystem suffers from the inefficiency of an inefficient market, which is primarily caused by a lack of liquidity. Different models have been adopted to address the problem. The first was the adoption of liquidity pools, which provide incentives for users to deposit their tokens in asset pools and gain rewards generated from trading activities in the pools. However, this approach carries risks such as impermanent loss and is mainly dependent on token holders who may not act in the interest of the protocol.</p><h3 id="strong-interoperability-strong"><strong>Interoperability</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/1b65ab9a63fb4a2a8baf447781836cf1.jpg"><p>Since blockchains’ designs and protocols are greatly different and the capabilities offered by their networks often exist in isolation, it is difficult for users in DeFi to move assets from one blockchain to another.</p><p>There have been workarounds for centralized interoperability, like swapping cryptocurrencies between chains or building a blockchain bridge.</p><h3 id="strong-defi-regulation-strong"><strong>DeFi Regulation</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/a2c834af7773401e903ac0ce7bddb172.jpg"><p>The current DeFi ecosystem is largely unregulated. This is because protocols depend on smart contract codes without a centralized authority recognized by law to be held liable for their issues. This absence of regulatory presence in the DeFi ecosystem has made room for many malicious activities, with over $10 million lost in investors’ funds in 2021.</p><h3 id="strong-stability-strong"><strong>Stability</strong></h3><p>The stable running of a platform is the foundation of its credibility. Any instability in a blockchain causes concern for investors.</p><p>In September 2021, Solana suffered from a complete network shutdown for 17 hours. The company blamed "resource exhaustion" for the issue and said its engineers were working on it. Reliability is critical for cryptocurrency investors, many of whom weren't satisfied with the relatively vague explanation.</p><h2 id="header-2"><strong>How <a href="https://position.exchange/?utm_source=coinmarketcapcom&amp;utm_medium=article" rel="noopener noreferrer nofollow">Position Exchange</a> address the issues</strong></h2><p>To limit the hindrances against DeFi, <a href="https://position.exchange/?utm_source=coinmarketcapcom&amp;utm_medium=article" rel="noopener noreferrer nofollow">Position Exchange</a> is working on Decentralized Exchange (DEX) and Decentralized Perpetual Trading Protocol (DPTP) version 2 with notable improvements.</p><h3 id="strong-dex-strong"><strong>DEX</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/5ccc72008f21441aaef538095cd01cdd.png"><p>The DEX supports buying and selling on-chain crypto coins at the best price while facilitating users to create their own transaction pairs without allowance (permissionless).</p><p>DEX 2.0 is a combination of Orderbook and Automated Market Maker (AMM) which helps increase liquidity. Utilizing DEX 2.0, users are granted numerous benefits, regarding better price, lower slippage, better control over their funds, etc.</p><p>Besides increasing profits, this upgraded version of DEX allows users to share transaction fees, farm to earn income, and actively trade with limit orders. Without the need for an intermediary, users can manage their own funds and establish custom trading pairs.</p><p>With these advantages, DEX eliminates obstacles of high slippage, sandwich attack, high swap fee, and AMM with no on-chain limit order. It also addresses the need for high liquidity.</p><p>Our DEX is proud to provide the best price in the market. <a href="https://position.exchange/?utm_source=coinmarketcapcom&amp;utm_medium=article" rel="noopener noreferrer nofollow">Position Exchange</a> guarantees that DEX 2.0 will bring about an excellent user experience with fast processing speed, easy usage, and faultlessness. Its high credibility has been audited and examined through various bug bounty hunter programs.</p><h3 id="strong-dptp-strong"><strong>DPTP</strong></h3><img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/d5a50d324c3a49569d877198eb00c785.png"><p>Similarly, DPTP is a 100% on-blockchain Decentralized Derivatives Protocol that uses an Orderbook mechanism that provides traders with a convenient way to trade derivatives right from their DeFi wallet. Position Exchange introduced DPTP with the aim to create a futures exchange where token holders can use leverage to make quicker and higher profits. Gas and transaction fees are reduced thanks to DPTP.</p><p>Since DPTP 2.0 works 100% on-chain, it can ensure transparency, allowing users to check transactions and gain better control of their own assets with no deposit required.</p><p><a href="https://position.exchange/?utm_source=coinmarketcapcom&amp;utm_medium=article" rel="noopener noreferrer nofollow">Position Exchange</a>’s DPTP 2.0 is the first to use Orderbook on EVM, making it easier for users to transact in a CEX-like experience. At the moment, there is no 100% Decentralized derivative for DeFi products. By using the Orderbook mechanism, DPTP 2.0 helps to diversify the DeFi market and provides users with more tools to make more money with less capital. It charges fewer fees compared to other centralized exchanges.</p><p>So what problems can DPTP 2.0 solve? It enhances the transparency of the Crypto Futures market, which is currently dominated by CEX. Because DPTP facilitates users to have complete control over their money, the risk of losing assets due to bankruptcy like in CEX is effectively managed.</p><h2 id="header-3"><strong>Conclusion</strong></h2><p>In recent years, there has been a remarkable rise in the adoption of DeFi products. With the rapidly evolving nature of the DeFi space, 2023 will witness further significant improvements and solutions to roadblocks in order to accelerate DeFi growth towards the mainstream sector. The introduction of Position Exchange’s DEX and DPTP 2.0 will promisingly be a game changer in tackling these hurdles.</p>

Challenges of DeFi in 2022 and How Position Exchange Address Them

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