DeFi, or Decentralized Finance (Decentralized Finance). The industry generally believes that DeFi originated in 2018, and the past 2019 was its first year of development. At present, the DeFi ecological territory continues to expand, with multiple domain use cases such as lending platforms, DEX, stablecoins, crypto derivatives, marketing forecast, and insurance.

In the past three months, the DeFi market has achieved impressive results. The total market value of the top 100 DeFi tokens has risen to 2.316$ billion. The number of users of the crypto asset derivative financial system project led by MakerDao has rapidly increased and started to expand the market, which makes DeFi to meet people’s expectations. As the most native landing scenario of the blockchain in the financial field, the breakthrough progress in the application of the ground is undoubtedly a long time for the entire encryption field ecology and market, which directly promotes the market warming.

However, while the demand for crypto asset derivative financial products continues to increase, it also brings some new problems:

DeFi is subject of performance

At present, most of the DeFi activities on the market are built on the Ethereum network, and the performance bottleneck of Ethereum has always been a relatively prominent problem.

Today, except for a few star projects such as MarkerDAO and Compound, most projects have very little flow and capital precipitation, and others have mortgage loan projects accounts for more than 70%, so few people currently criticize DeFi’s efficiency-related issues.

However, the 3/12 Black Swan incidents is still vivid. After the price of Ethereum plunged that day, the price of collateral in many DeFi loan agreements fell rapidly, hitting the warning line, and th en faced a large-scale liquidation, resulting the surge in transaction volume. Network congestion has caused serious insolvency problems for well-known projects like MakerDAO, indicating that network throughput is critical to the impact of the DeFi project.

DeFi has high hopes, but in this global financial turmoil, its performance is still unsatisfactory. In the face of the problem of liquidity depletion and network congestion, we have to think about whether DeFi's development scale will have an upper limit.

DeFi security issues

With the rapid development of DeFi, there have been various types of security incidents. In the world of codes and rules, especially in the financial field involving funds, a careless or imprecise will attract a large number of hackers to patronize, the tokens which will be stolen and abused. Vulnerability has become a problem that DeFi must face.

For project whose own security technology is not strong, if you want to protect user assets and enhance DeFi’s network security performance, you must first have a deep understanding of the risks that your products may have, so that you can deal with them when the crisis comes. And it is necessary to cooperate with the blockchain security company to conduct a comprehensive external security review, use the original code, and start the testnet to ensure security.

Behind the frequent occurrence of security incidents there is the typical symptom of imperfect infrastructure and DeFi at an early stage.

The above two major problems are actually the reason why there is always been a ‘bottleneck’ for DeFi users, which cannot really be applied on a large scale.

How to solve the above two difficult points? First, we must build a better distributed financial infrastructure. So, what kind of infrastructure do we need? What kind of distributed financial infrastructure can accelerate the adoption of mainstream people?

Distributed public commercial blockchain project BitCherry has core competence in the field of finance: First of all, just BitCherry base layer satisfies the entire system’s architecture of the agreement; secondly, based on BitCherrry backbone it claims to create a specialized financial side chains; in addition, we want to mention BitCherry’s strong financial backbone. The business specifically encapsulates common modules, which are more friendly to developers.

BitCherry developers use development tools, including loans, stable currency, exchange, derivatives, insurance, forecasting and many other scenes. For example, borrowing can realize P2P borrowing, and it can also realize consumption installment; stable currency can be realized by using digital asset mortgage mode.

As can it can be seen, based on a distributed architecture BitCherry’s financial system is more comprehensive, including both mainstream public chain, chain of its own public, there are a variety of financial components, enabling developers to easily develop financial products based on blockchain, focusing on business logic. By reducing the threshold for developers and take an advantage of block chain technology, BitCherry is driving toward distributed financial mainstream population.

For example, since the development of traditional financial markets, there have been many problems such as cumbersome adjustments, audits, pricing and issuance, and other complicated financing processes. And there is BitCherry solving the above problems which can be simplified by intelligent contract, in order to reduce the costs. It is also possible to realize the free flow of equity and assets by putting assets on the chain. BitCherry doing the underlying business logic architecture design, we conducted in-depth consideration, there will be a number of specialized financial services for the development of the side chains, such as cross-border payments, trade finance business ecosystem supply chain, STO, etc. The characteristics of parallel computing make it capable of handling global business transactions. Intra-chain communication is also very suitable for asset registration, account management, real-time transactions, etc. Open source and interoperability also make the entire interaction process more simplified and transparent.

At present, we are in the early stages of decentralized finance, from stablecoins to decentralized exchanges, wallets, payment networks and insurance platforms, to critical infrastructure, markets and investment engines, the entire DeFi ecosystem is booming. A new financial structure is also coming out. The possibility of establishing a new pattern on their ‘DeFi track’, let us wait and see.