A new platform aims to provide a connected network of DeFi ecosystems and eliminate some of the issues seen with decentralized networks.
A decentralized platform claims it is helping to create a connected network of DeFi ecosystems — and offers an innovative hybrid model that blends transaction-free mining and liquidity mining in one place.
MiniSwap says that cryptocurrency exchanges currently process billions of dollars in trading volumes every single day, but serious issues have been identified with centralized platforms. The team points to the sorry saga of QuadrigaCX, the Canadian exchange that lost customer assets worth approximately $190 million when its owner died.
Although the project firmly believes that decentralized alternatives help eliminate trust issues by allowing traders to buy and sell cryptocurrencies on a peer-to-peer basis, MiniSwap says there are downsides that decentralized exchanges need to solve. Sustainability, unfairness and long confirmation latency are three of the biggest problems — and incentivizing liquidity providers to get involved can be a challenge due to “flawed incentive designs.”
MiniSwap aims to change this by encouraging traders and liquidity providers alike to join its ecosystem. The project also says its approach is sustainable, given that it uses a mining process that can last for 100 years.
Warning that the status quo cannot continue, the project’s white paper states: “Many exchange platforms have been created to provide convenient services for users to trade their coins. However, a vast majority of them are centralised platforms and require access to users’ private keys. In other words, users would have to fully trust the services provided by the exchange platforms. Generally, such a strong trust cannot be established and this also contradicts the design principle of a decentralized financial system.”