A New DeFi Era With Radix
The experiences of many individuals at different centralized finance outlets each day has prompted calls for a better alternative. As a result, many developers have looked into the concepts and principles of decentralized finance (DeFi) as a prudent and innovative alternative to the traditional banking systems’ walled gardens and the shortcomings associated with it.
Radix, a DeFi platform, is one of several venues that sprung up after bitcoin to proffer working solutions to the problems faced by centralized finance. However, Radix is pioneering a new era of financial innovation and democratization that will enable an open infrastructure of programmable assets which could be a much more substantial alternative to traditional methods.
Radix aims to address the issues of existing DeFi platforms by eliminating barriers in technology, which limits DeFi expansion through the provision of a layer-1 protocol that will directly address the many technology needs of existing DeFi, ultimately ushering in a new era for financial services for the world.
Radix’s method is a full-stack approach, including distributed virtual machines, re-engineering consensus, DeFi application building, executable on-ledger code, DeFi component building and developer incentives.
Some of these features will be expanded upon in this article.
Smart Contracts Hacks, Exploits and Failures Reduction
Smart contracts are application codes developers write to be deployed to a distributed ledger. They were first used in Ethereum, enabling more programmability of blockchains. Many other blockchain platforms have since embraced this technology to make their blockchains more programmable; however, the adoption of smart contracts by newer blockchains has been with Ethereum’s mechanism’s adoption of general-purpose Turing-complete language and a virtual machine running on-ledger. Thus, they inherit the same problems faced by Ethereum smart contracts.
The problem with the Ethereum smart contracts is that the codes set up by the developer act like a server in a box, offering “methods” users or other apps can call upon by sending a signed message. To accurately capture the needs of many users, the pressure is put on developers of these smart contracts to ensure that the representation of tokens, or whatever else, by their smart contract is always correct and that updates made to its internal variables as a result of the messages it receives via its “methods” match intuitive expectations.
When a transaction involves multiple composed smart contracts, the situation becomes complex, as one contract may call upon the others’ methods, with each having to update their internal variables to generate a combined result. When the number of connections among these boxes increases significantly, the network of contract calls may explode. The system may malfunction, become less predictable, and therefore be exploited by an adversary.
In contrast, Radix smart contracts are a built-in form of Components. These components mirror real-world expectations for finance. They are built from the finite state machine (FSM) logic, and their behaviors are defined by Actions that directly translates a “before” state to an “after” state. This means that these components are not defined by “methods” but by what is possible for the component to do.
By programming it this way, bad results are eliminated from smart contracts because they behave intuitively like physical assets, and their behavior (through Actions) becomes easier to figure out, design, and analyze.
These components also become more predictable, and creators can thus directly define what should be possible for a particular transaction, ultimately dictating what can and cannot happen in the final output of a transaction.
Faster Interoperable DeFi dApps Building
Developers should build simple, ordinary things on a blockchain quickly with a minimum learning curve. There should also be the possibility of accelerating complicated makes by providing reliable, pre-built solutions for parts of a problem other developers have experienced and solved already.
These standards and solutions encourage interoperability between decentralized applications (dApps) peculiar to the DeFi space’s advance because of the recurrence of finance-oriented functionality across many DeFi applications and developers’ need to have pre-existing, proven, and well-maintained solutions to problems they may encounter.
Through the component catalogue on the Radix Engine, Radix can assist developers in building dApps on the platform. The system puts community collaboration and packages manager-like functions directly on-ledger. Components can be modularly used, leveraged, updated, versioned, combined, and extended by developers through this mechanism.
These on-ledger Components directly extend the effectiveness of the Radix platform and support the developer ecosystem, eliminating the need for developers to build fully functional standalone dApp Components to be able to contribute usefully.
An exciting prospect is that Components which carry out a task very well can be built to be easily reused with other Components; thus, forming standards that accelerate building and enhance interoperability.
Contributors to the growth of a DeFi Network must be incentivized based on their contributions to the network. This decentralized developer self-incentivization can create a breakthrough in rapid decentralized ecosystem growth, enhance the network’s functionality, and lead to its scale-up.
In the case of Radix, there is a need for a thriving developer ecosystem to create the essential interoperable Components enabled by the Radix Engine and the Component Catalog. This led to the adoption of a developer royalty system.
This system enables a developer of any Component to specify royalty in RADIX tokens to claim whenever that component is used in a transaction. This system cannot be compared to the traditional “app store,” where users pay for access to Components. Instead, it is a per transaction use fee that is included in the transaction fee itself.
Therefore, the payment of these royalties is based on its utility. The Radix protocol can calculate and charge the appropriate royalty fees because the Component Catalog and the different user types are all on-ledger. Radix also ensures that these rewards for highly useful Components are awarded in a decentralized manner.
DeFi applications deployed on a distributed ledger network should run trustlessly, autonomously, and irreversibly, managing millions of dollars in assets in the process.
These assets should not be compromised by faulty smart contracts or the lack of appropriate ones, programming errors, and programming language quirks that could create spaces for exploitation.
Further, developers should build on unique development environments and get incentivized by creating useful, interoperable dApps that will run on the DeFi platform.
To solve these problems existing in blockchains and other Decentralized finance platforms, Radix brings about unique solutions with its unique Layer-1 protocol, Radix Engine, Components, and Component Catalog.
This, therefore, positions Radix as opening up a new era for Decentralized finance. Let Me know your thought about this in the comment’s section.