The invention of decentralized finance (DeFi) has transformed blockchains into cities. Ethereum (ETH) is the first and oldest blockchain city. It had the first banks, the first on-chain exchanges, and the first art galleries. It's a city that transcends distance. It has real communities of thousands of people interacting every day via social media. But like cities do, Ethereum got congested, and people started building sidechains and second layers (L2) to Ethereum. These are all independent cities, occupying new real estate. All of these new independent cities need to grow and attract inhabitants. Because they are open to do business with everyone blockchain cities will be among the coolest cities in the world.
Every populated city has to have a functional bank and stablecoins to let its inhabitants save and borrow money. ETH has Maker, Aave, Cream, and Compound. Binance Smart Chain (BSC) has Venus and Cream. You can see this with the success of Terra Chain and Anchor protocol, too. These banks all accept different banknotes, and the banknotes you own play a big role in which city you live in. Ethereum's banks accept ERC 20 tokens, Wrapped Bitcoin, and Uniswap LPs as collateral. BSC's Venus bank natively accepts BTC, ETH, BCH, ADA, DOT and will be a huge reason for capital to stay with its ecosystem. Terra/Luna have rocketed into the top 20 blockchains by market cap. There will be many more multi-billion dollar DeFi cities in the future.
New chains offer blank slates for new communities. A Layer 2 is a blockchain which is dependent and receives security guarantees from the Layer 1 chain (Ethereum). A sidechain is a stand alone blockchain whose security is guaranteed by its own consensus but is linked via bridges. If an L2 or sidechain is to succeed they need to have a safe lending protocol. Many deployed L2's and sidechains have working exchanges and low transaction fees. At least until now, low fees and Uniswap clones alone have not been enough to attract users to the empty cities. Even fiat onramps haven't led to much adoption. Working on expanding blockchain loans, though difficult, is key to unlocking more billion-dollar DeFi cities.
Very soon, any Ethereum Virtual Machine (EVM) compatible chain or L2 like BSC, FTM, Arbitum, Polygon (MATIC), Loopring (LRC), Dot, or Optimism, will have the ability to be composable with any other chain (See this article by Makoto Inoue). These cities will have even more reason for more people to come in and use their independent services. You can live in one city and still shop in every other city. The sameness of the underlying EVM on these chains is a good thing, because the unique projects on each chain will serve as focal points attracting users while retaining compatibility with other projects.
Independent cities may grow or shrink, but the invention of DeFi has evolved us past the reach of "ETH killer" chains. Short of a straight up 51% attack, how could you possibly kill 10 billion or more in locked assets? The other cities can't kill ETH, but there's fundamentally nothing ETH can do to kill every other city. London can't kill Paris, it can only choose to change the level of trade it does with Paris. And Paris can't kill London or Milan. Making the roads wider on the original city won't bring all the people back for multiple reasons. People yelling at other people that their cities are dirty, dangerous, slow, or boring won't change other people's decisions. You can only decide which DeFi cities are right for you.
Discover new EVM compatible DeFi chains. These are all chains compatible with Metamask and other similar wallets. This table will be updated as the space evolves and grows. If you have a chain for us to add or like this article, please tweet at us and add us: twitter @bscgateway
|Blockchain||Ethereum Chain ID||Banks||Type|
|Ethereum||1||Maker, Aave, Compound, Cream.finance||Mainnet|
|Binance Smart Chain||56||Venus, Cream.finance||Mainnet|
|xDAI||100||Agave (Coming Soon)||Sidechain|
|Fantom Opera||250||Cream.finance, Fantom Finance (Coming Soon)||Mainnet|
|Harmony ONE||1666600000, |
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