Polkadot network: The future of decentralized finance (DeFi)

Polkadot network: The future of decentralized finance (DeFi)

There have been significant adoption and activity in the DeFi space on the Polkadot network. Some developers are building DeFi-focused parachains while others are building on platforms like Moonbeam. Most of the DeFi teams seek a less expensive and more scalable ecosystem. However, scalability is not the motivation for these DeFi teams

DeFi projects always want to be in the midst of other DeFi projects. Most DeFi projects rely on and compose with other DeFi projects. Therefore, these projects seek platforms that have low transaction costs and a rich community of assets with which they can interact. Also, they seek protocols with which they can compose and integrate.

Currently, most of the decentralized finance applications are built on the Ethereum blockchain. This is due to the already existing large user base on the Ethereum network. However, things took a different turn as the number of DeFi projects grew on the Ethereum network. The high congestion has stretched the Ethereum network to its limit, leading to high transaction fees and delays. This has made many DeFi platforms on the Ethereum network to be unusable. Developers are seeking a better alternative to Ethereum, and that is where the Polkadot network comes in.

Polkadot Network

It is an interoperable blockchain system with the capability to bridge the diverse array of blockchain networks. The Polkadot protocol has shown that it is the solution to scalability and high transaction fees faced by DeFi projects. It is built on a relatively new blockchain framework called Substrate. This Substrate is quite simple to build, all thanks to the presence of many composable modules. Blockchain developers rely on these modules to build their solutions.

Polkadot combines its relay chain (main chain), parachains, and bridges to ensure the blockchain system functions as a cohesive and interoperable unit. Parity Labs create the Substrate, and it is entirely open-source. It ensures developers build their decentralized applications for the Polkadot network, even with a limited budget. Polkadot system is ideal for building DeFi projects due to the following features:

  • High transaction speed
  • It can handle more than 1,000 transaction s within a second; therefore, it is highly scalable, unlike Ethereum. 
  • Most analysts say that the greatest advantage of Polkadot over Ethereum is its interoperability. Applications created on the Polkadot blockchain can easily interact with apps on other blockchain protocols. 

Something great is coming to the Polkadot ecosystem. Moonbeam has reached is bringing a Balancer deployment to the Polkadot Ecosystem. Although this is not a form of partnership or endorsement, it gives the Polkadot network more credibility in the market.


The above features had positioned the Polkadot network as the future of Decentralized finance (DeFi). Maybe it might extend to the crypto industry in general, but we have to wait and see how it goes.

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