A new report on a company called Dot Finance provides some insight into a greater trend in how aggregators and exchanges are using the Polkadot and Kusama networks.
Shaurya Malwa at Coindesk reports today that the Dot Finance company is unrolling defi lending and staking solutions through using parachains in the Polkadot (DOT) ecosystem
The previous model, Malwa says, utilized the Binance exchange, but now Dot Finance is poised to use Moonbeam and its ‘Moonriver’ canary Kusama network.
“Dot Finance automates and maximizes rewards for its users and helps them earn fees from other DeFi services, such as lending, trading and borrowing,” Malwa reports. “Similar to other DeFi applications, Dot Finance uses smart contracts instead of third parties to provide financial services to users.”
There’s kind of a dearth of operational information easily accessible online about how Polkadot works, so here are some key takeaways:
Polkadot allows developers to build blockchains onto their own networks.
The parachains are parallel user created networks.
Polkadot’s main blockchain is called a “relay chain,” and “bridges” connect the parachains to other blockchains.
DOT can also process an estimated 1000 transactions per second, which is far faster than top crypto blockchains like Bitcoin and Ethereum.
Then there’s the chain’s proof of stake mechanism:
“Polkadot uses a proof-of-stake consensus mechanism (as opposed to the proof-of-work system Bitcoin uses) to secure the network, verify transactions, and create and distribute new DOT,” writes an unnamed author at Coinbase. “There are several ways DOT holders can interact with staking system — depending on how much time, technical knowledge, and money they want to devote.”
Analysts see Dot Finance’s pioneer project as part of a greater move toward using Polkadot as a protocol, and this is something that crypto investors should be aware of within the rapid innovation that’s driving the decentralized finance sector.
