DeFi on Arweave The Ultimate Platform for the Future of Decentralized Finance?

Unlocking the Potential of Decentralized Finance on Arweave The Advancements of DeFi's Ultimate Platform

Author: Azriel, PermaDAO

In modern times, the power of banks has become evident. From monitoring our daily transactions to peeking into our social media activities, banks are everywhere and hard to ignore. But with the rise of decentralized finance (DeFi), a more free and equal solution has emerged. Arweave is such a platform that will completely change the landscape of DeFi.

TelePORT will connect the Arweave ecosystem with the mature DeFi infrastructure of other EVM chains, bringing much-needed liquidity and allowing thousands of users to discover data-rich assets. – Jakub, Founder of Warp Contracts.

Banks are watching us closer than ever

Recent reports have revealed that many leading banks in the UK, including high street giants, have secretly included the right to monitor customers’ social media in their privacy policies. Take Nigel Farage, former leader of the UK Independence Party (UKIP), for example. His bank, Coutts, closed his account, claiming that his views “do not align with our values.”

• Analyzing DeFi Trading Product Uniswap V3 Concentrated Liquidity, Protocol Fees, Price Oracle
• Simplifying DeFi: The Rise of MC2 Finance
• Postponed Fraud Trial of Mango Markets Exploiter: A Delayed Showdown

After all, if Elon Musk compares platforms like Twitter to town squares, shouldn’t everyone have equal freedom of speech?

The case for decentralized finance

Given the excessive control of banks, there is an urgent need for a decentralized alternative. When the world of traditional finance (TradFi) remains stagnant, DeFi brings a beacon of hope.

Although the total value locked in DeFi fluctuates, its future remains bright.

With its strong privacy protection capabilities, people are starting to see the appeal of DeFi. Currently, DeFi’s TVL is $42.9 billion. However, this is far from the peak of around $177 billion in November 2021.

Source: DefiLlama

Dr. Merav Ozair wrote on Nasdaq, “An exciting moment is upon us: in the foreseeable future, financial and economic services will operate on distributed ledger technology (DLT) – a decentralized database managed by multiple participants without a central administrator. 2023 will mark the acceleration of this transformation.”

However, the key is to recognize the existing vulnerabilities. Even mature DeFi platforms like Uniswap can easily be influenced by external pressures, just like their restrictions on access to tokenized stocks. Such events demonstrate that although DeFi protocols may seem immutable, they are still susceptible to external interference.

The case of Uniswap

Leading DeFi protocol Uniswap announced that due to increasing regulatory scrutiny from its competitors on similar products, it has decided to limit access to some tokens offered on its application, including Tether Gold and tokenized stocks. The company released this news through a blog post on July 23 (Friday), stating that it only affects a small portion of the overall activity on the platform – Uniswap delists tokenized stocks from the platform due to regulatory issues. – FX Leaders.

This is where Arweave comes in, providing a permanent and unblockable platform for any data. It serves as a refuge for DeFi frontends, ensuring their accessibility for centuries to come, unaffected by external changes.

On July 23, 2021, Uniswap Labs restricted access to around 129 tokens through its official user interface (UI) in order to potentially comply with evolving regulatory standards. This action came exactly a year after the famous DeFi summer. The removed tokens were mainly tokenized stocks and derivatives from platforms like Synthetix.

Uniswap operates on a decentralized protocol defined by immutable smart contracts on the Ethereum blockchain. This setup gives the Uniswap protocol features of anti-censorship, security, and self-regulation, enabling peer-to-peer exchanges without the need for trusted intermediaries. However, Uniswap’s more centralized user interface (UI) introduced a token censoring system, exposing its vulnerability to regulatory demands. Despite the unaffected underlying protocol, which continues to provide unrestricted access to all tokens.

Arweave allows for the permanent deployment of web pages on a decentralized network, ensuring their accessibility and immunity to censorship. The pre-audit Uniswap user interface, as well as the user interfaces of other DeFi platforms like SushiSwap, LianGuaincakeSwap, and Synthetix, can be used on the Arweave Permaweb. This helps mitigate the risks posed by regulatory actions on centralized user interfaces and maintains the availability and uncensorability of these protocols.

The Power of Atomic Assets on Arweave

Arweave stands out because of its atomic assets. In this unique system, asset data is seamlessly combined with smart contracts in a single transaction. This ensures that NFTs and other assets remain 100% on-chain, without any external components that could easily disappear or become inaccessible.

In addition, these atomic assets are highly customizable, allowing for functionalities like partial ownership directly within the smart contract. This holds tremendous potential as it opens the doors for tokenizing massive datasets such as movies, applications, or entire video games.

DeFi Infrastructure Opportunities for Arweave

Despite Arweave’s numerous advantages, its potential in the DeFi space remains largely untapped. Now is the time to leverage its capabilities and build a more decentralized and resilient financial future.

Warp Contracts recently proposed a solution called telePORT. It is envisioned as a noncustodial and trustless cross-chain asset transfer protocol that taps into Arweave’s vast pool of tokenized assets.

One of the significant challenges faced by DeFi is liquidity risk. The cryptocurrency market itself lacks liquidity, meaning even small buying or selling actions can cause significant fluctuations in asset values. Investors who fail to factor in this risk can suffer substantial losses. Even seasoned players like billionaire Mark Cuban have fallen victim to such risks.

However, Warp Contracts’ telePORT is a promising solution to address liquidity risks. Unlike traditional bridging, telePORT acts as a cross-chain transfer protocol. What sets it apart is its ability to leverage existing on-chain liquidity from platforms like Polygon, Arbitrum, and Ethereum.

Unlike traditional bridging where assets are locked on one side, telePORT offers a simplified transfer mechanism that keeps assets stored in self-custodied contracts owned by users. This approach significantly reduces vulnerabilities associated with bridging hacks.

TelePORT’s unique proposition, as explained by Warp Contracts’ founder Jakub, is that it allows trades of digital assets minted on the Arweave blockchain without ever leaving Permaweb. This essentially means that telePORT can utilize existing decentralized trading infrastructures, lending markets, and more, providing a more stable trading environment for Arweave’s assets.

TelePORT is not your typical bridging solution, but rather a cross-chain transfer protocol that enables trading of native assets from Arweave through settlement on EVM-based chains. Essentially, telePORT leverages the existing on-chain liquidity, decentralized trading infrastructures, lending markets, and more from platforms like Polygon, Arbitrum, and Ethereum. This allows unique digital assets minted on the Arweave blockchain to be traded without ever leaving Permaweb. – TelePORT serves as a trading venue and bridge for digital assets between Arweave, EVM, and other chains – Permaweb News

But caution must be exercised. From Ronin to Binance, the DeFi space has witnessed multi-billion dollar hack attacks. Therefore, while the potential of telePORT is undeniable, strong security measures must be in place.

Summary

A shift towards a more decentralized financial world is inevitable. With encroachment from banks and violations of personal freedom, Web3 and blockchain offer a much-needed alternative — and Arweave has the potential to go further than most blockchains.

By leveraging its unique atomic assets and potential solutions like telePORT, Arweave could very well become the ultimate platform for future DeFi. This is a call to innovators and visionaries everywhere: let’s build a fairer and freer financial system for all.

Say it with me: “Arweave is more than just a storage layer.”

We will continue to update Blocking; if you have any questions or suggestions, please contact us!