Crisis fueled stock markets volatility! Whether the politicians who are now insisting on the latest crypto crisis agree with the matter or not, crypto is not (yet) dead. Or at the very least, crypto outside of the three-letter crypto group isn’t dead yet. And as a hard lesson for many, the failure of FTX also brings up an interesting question for DeFi (which some say is the only real crypto thing right now)
What Would Crypto Look Like Without Volatility?
Let’s start by removing the features, or rather the main functions, provided by the average crypto exchange. First, it allows people to trade their Bitcoin for Ethereum, their Cardano for Solana, and any of the cryptocurrencies that are not compatible with each other.
It does this for an expensive price. The trades and exchanges are executed very quickly without many problems with locks etc. However, it is not perfect, with many breaks in their story. Finally, and perhaps most importantly, they make it easier to connect your bank account to the crypto market, giving consumers a convenient off-ramp to get rid of each other and table (or double).
In short, we are talking about interoperability, scalability and integration. And remember: they are designed to be crypto newbie friendly.
In the world of DeFi, there are green shoots, but the sector has a long way to go before it can compete in the same field and connect with newcomers.
Interoperability has been brutal 2022. Some of the biggest hacks this year have been in the role of change. Badger DAO suffered a $120 million exploit from its Bitcoin-to-DeFi bridge, Wormhole suffered a $326 million attack on its cross-chain bridge, and PolyNetwork lost $611 million for similar incidents.
However, not all bridges are created equal, so there is real hope that a more robust design will emerge. Protocol Hop is one example, but only in Ethereum, Gnosis and Layer-2 solutions. Synapse is another popular cross-chain protocol that connects Layer 1 and Layer 2 networks. These are just examples, of course, and the bridge is only as reliable as his last attack.
On the other hand, THORchain also works with cross-chain swaps that benefit from a slightly different structure. Despite this, it is not as easy to trade assets that are not compatible with DeFi as with centralized exchanges. And for the values of society, it will continue to be a big problem. Keep it alive
Layer 2 solutions will play an important role in helping non-security markets emerge for the public.
It’s quiet in crypto these days, and gas bills are always high, but remember: with every bull market or disaster, those bills go up a ton. The chart below shows average fuel costs since this time last year. As the cattle market slowed, these fees went down.
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And Can You Tell When Terra Screamed?
Measured by standards such as the number of users switching from Ethereum to these solutions and the number of ongoing transactions, the market is growing rapidly. There are more than 516,000 different addresses to transfer money to zkSync, for example. The largest amount transferred between Ethereum and Arbitrum was 2.08 million ETH, according to the Dune database.
The chart below makes this process a little clearer. Although Layer 2 solutions were almost non-existent this time last year, users are doing more with Optimism and Arbitrum than ever. And that only measures two products on the market. Crisis Fueled Stock Markets Volatility!
Show Me The Money
The last thing here is to be able to do any of these actions without the need for a trusted agent. Yes, many are blessed with access to rational banking services from the start, but removing exchange from equity in bank-exchange-smart-contracts is an important step in a world where exchange can enter overnight.
Consider Fiat’s recent launch on Uniswap. Now, when you go to an exchange, you can choose to use a wire transfer, credit or debit card to buy crypto. Once purchased, crypto is sent directly to a non-secure wallet of your choice, either a Ledger hardware solution or your browser wallet. This solution, powered by MoonPay, is also available on layer 2 networks such as Optimism and Arbitrum, so you can jump to those faster levels as well. Crisis Fueled Stock Markets Volatility!
Bottom line: The next year will bring many business opportunities for smart entrepreneurs who find unique ways to solve each of these problems, or many of them. them immediately. As former Netscape CEO Jim Barksdale said, “There are only two ways to make money in business: collection and collection.”