Cardano’s benefits for DeFi applications
Soon, through the Mary hardfork, smart contracts and a multi-asset ledger will be available on the Cardano blockchain. In turn, this will pave the way for decentralized applications (DApps), native tokens, and DeFi use cases.
But why might a DeFi project choose to run on Cardano, rather than one of our peer protocols? Let’s break it down to some simple areas where the Cardano blockchain could excel for DeFi projects.
1. Lower transaction fees
Although the complex topic of gas fees is outside the scope of this article, we can summarize that high gas fees have been, and continue to be, a huge issue and stumbling block for DeFi protocols. Gas fees on some protocols have become so high due to increased network demand, that users have reported paying exorbitant fees to process a single transaction.
2. Token and smart contract security
Tokens are an essential part of most existing DeFi protocols, used for governance, utility, or yield distribution. On other chains, such as Ethereum, tokens require smart contracts to run, and often necessitate the deployment of complex purpose-written code in the token contract.
3. Cardano community power — the ultimate DeFi Catalyst?
This section is about you.
Cardano’s community is immensely powerful. Together, we have achieved feats that other protocols have long aspired to — near full decentralization through community led stake pools, a thriving staking and delegation ecosystem, and bustling community channels.
Short on time or relatively non-technical? Here are the key takeaways:
- There are no execution fees payable when transferring native tokens on Cardano,
- There is minimal custom code required to launch a user-defined token on Cardano,
- There is no custom code available to exploit in the deployment of user-defined tokens on Cardano,
- DeFi will be more affordable, more secure, and easier to launch on Cardano.