Decentralized finance, otherwise known as DeFi, has been making headline news in cryptocurrency for much of 2020. Seduced by the promise of triple or even quadruple-digit returns, investors and speculators have been pouring their digital assets into DeFi protocols for most of this year, increasing the market’s value by nearly twenty times since January.
Liquidity mining is just one of the new buzzwords that this burgeoning space has introduced to the crypto lexicon. It has emerged as a massively popular way for projects to ensure that their tokens have liquidity on decentralized exchanges such as Uniswap, which allows swaps between different ERC20 tokens. Liquidity depends on users depositing their tokens into Uniswap pools and leaving them there. Projects have been quick to realize that by offering some sweet rewards in the form of tokens, they can leverage the market force of constrained supply to help ensure their token delivers a return on investment to its holders.
Against this backdrop of increased competition, DeFi entrepreneurs have had to work ever-harder to make sure that their rewards are that much more attractive than the competition. Now, Radix, the first layer one protocol for decentralized finance, has just raised the stakes by launching its own incentive program for its E-RADIX token. It’s giving away a cool 200 million eXRD tokens, worth around $7.8 million at the current token price, in rewards to those who contribute liquidity via Uniswap.
However, in this case, Radix has introduced two mechanisms to make its liquidity pool stand out. Firstly, it offers the maximum incentive to early participants by decreasing the rewards on offer every thirty days throughout the reward period. Secondly, it’s offering a bonus multiplier that increases the longer a liquidity provider stays in the program. Essentially those who arrive early and stay the longest can earn the most.
The move comes on the back of a sellout token sale for the project. At the end of October, Radix announced it had raised $12.7 million from 652 participants. With a minimum purchase of $5,000 worth of eRDX tokens, investors now have the opportunity to level up their initial investment by participating in the liquidity program.
The DeFi craze of 2020 has seen many bootstrapped projects come and go in the blink of an eye, partly thanks to the fact that they’re based on nothing more than a buggy smart contract and a barely-functioning user interface. However, Radix is the end product of seven years of R&D. The team behind the platform is building the first layer-one protocol specifically designed for the fast-growing DeFi industry.
It aims to reduce friction by making it easier to move money in and out of the DeFi ecosystem. It will also enable market participants to create and access liquidity pools via native functionality and simplify how financial assets are presented.
As users have noticed, Ethereum gas fees have been spiraling with the popularity of DeFi, and it’s constraining the growth of the industry. Radix is the only protocol that uses sharding to deliver linear scalability without breaking composability – the ability to weave together multiple actions across several DeFi applications in a single transaction. The project can meet the throughput needs of any number of dApps as the network grows, and all of those dApps can continue to interoperate without limitation.
The project’s breakthrough consensus design, Cerberus, provides the complete solution DeFi needs. Cerberus offers unlimited scalability without compromising free atomic composability by using a different kind of sharding. It uses a practically infinite set of shards, with assets and dApps represented dynamically across these shards. Cerberus removes the barriers between its shards with a completely new consensus design. It can directly “braid” these consensus processes together into one – atomically and on-the-fly for each individual transaction.
In a brand-new and fast-growing segment that’s been heavily dependent on Ethereum for its short lifetime to date, Radix could be just the solution to prevent DeFi from becoming a bubble at risk of bursting.
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