Alex Melikhov founded and co-founded projects such as crypto exchange Changelly, Oxygen trade, and EOSDT. Currently, he heads Equilibrium, which is a cross-chain DeFi protocol based on the Polkadot ecosystem, providing pooled lending, borrowing, trading, and staking services.
The decentralized finance industry has literally exploded in 2020, as new and innovative ways of earning yields on digital assets become available to an ever increasing number of investors. Alex Melikhov, the founder of one of those new DeFi platforms, has spoken to BeInCrypto on what lies in store for the sector in 2021.
DeFi has faced a number of challenges this year and has had more than its share of ups and downs, including several high profile smart contracts exploits. When asked what, in his opinion, would be the biggest challenges for the sector going into 2021, Melikhov said that scaling would be a larger challenge:
“DeFi would benefit from an increased awareness of the space, but this is true for any business niche. The most meaningful challenge as we head into 2021 is about imbuing DeFi with scalability. And it’s not just about the scalability of particular DeFi products or layer one protocols like Ethereum, but uniting the scattered blockchain space as one ecosystem. This is where full interoperability across blockchains will have the most impact.”
There were a number of occasions during this summer’s DeFi frenzy that ground networks to a halt as Ethereum (ETH), which forms the foundations of the industry, struggled to keep up with demand. This resulted in average gas prices surging into double figures, making minor operations too expensive for the average user.
Rival blockchains such as Polkadot have emerged to provide that scalability and the reduction in transaction fees that accompanies it. The next logical question then was whether Melikhov sees Polkadot being a real threat to Ethereum or complementary, wherein he said:
“I believe it’s complementary. Polkadot is readily embraced by the Ethereum community as a second-layer solution. I’m sure we will see more hybrid projects that provide settlement on Ethereum but run complex and resource-consuming logic to Polkadot. And Polkadot, with its off-chain worker technology to unload the network and attention to true decentralization, is a perfect trustless environment for these purposes. So if it was confrontational and antagonistic, we’d never see any synergy of a kind.”
Just the term “Ethereum killer” implies an antagonistic approach to a problem that is better solved with cooperation and compatibility rather than competitiveness, after all, the goal is the same for everyone – faster and cheaper decentralized finance.
With this month’s long awaited launch of the Ethereum 2.0 Beacon Chain, it was pertinent to ask whether the industry executive thought that Ethereum would remain the DeFi standard in 2021, or could a new contender get a foothold? Melikhov responded:
“There may be room for new contenders to get a foothold, but it simply won’t happen next year. I believe, it will take some time for other promising ecosystems (like Polkadot, Near, or Algorand) to get more matured and to start actually contending with Ethereum. While Ethereum has rather a lot of momentum behind it for DeFi, and the Ethereum 2.0 roadmap makes it clear that the network is about to get more competitive.”
Phase 0 of Beacon Chain will only consist of the proof-of-stake blockchain running in tandem with ETH 1.0 which will still carry the heavy loads, smart contracts, DApps, and transactions. Phase 1 will introduce the much-needed sharding for scaling, but it will not be until Phase 1.5 that the two systems are fully merged.
In the meantime, new DeFi solutions and Layer 2 scaling will need to be used to bridge that gap. Equilibrium aims to be one of those solutions, but what will it provide to set it apart from every other automated market maker and DEX?
“There’s a lot to talk about here. Equilibrium offers out-of-the-box margin trading and true cross-chain settlement. We use off-chain workers to match and batch-settle orders for improved speed and efficiency. Our users can trade synthetic or derivative assets and take advantage of cross-chain liquidity for ETH, BTC, XTZ, ERC-20, EOS, and other assets. A combination of our innovative lending products with DEX makes Equilibrium the most comprehensive DeFi platform. And we like to think these features stand out in the DeFi space,” said Melikhov.
With new products entering the rapidly expanding DeFi ecosystem, 2021 is likely to be even bigger than this year, which has already been witness to an over 2,000% increase in crypto collateral entering this new financial landscape.
BeInCrypto would like to thank Alex Melikhov for talking to us.