Like punk, flat caps, and corned beef sandwiches, DeFi has never died – but it has gone out of fashion for a while before making a comeback. The tools and technologies popularized during the great DeFi summer of 2020 – AMMs, yield farming; lending platforms – have remained industry staples, forming a strong foundation for subsequent projects to build upon.
That said, it’s fair to say that DeFi’s phenomenal pace of innovation slowed for a while, which is to be expected of a flame that burns so bright. It’s impossible to invent the wheel twice, and thus after the major breakthroughs that ushered in DeFi as we know it, an inevitable period of consolidation – both for asset prices and use cases – followed. We’re out of that trough now, however, as a wave of DeFi projects bring liquidity and utility back to the multichain landscape.
Chief among these architects pioneering new ways to do DeFi is Orbs, the liquidity layer responsible for several developments now transforming onchain user experience, starting with liquidity. Together with a handful of other leading DeFi developers, Orbs is realizing the promise of a decentralized financial system that works for everyone, just as it was originally envisaged. Here’s what Orbs and other innovators bring to the table.
How Orbs Does DeFi Differently
Positioned as a Layer 3 blockchain, Orbs enhances onchain trading by optimizing liquidity and enabling advanced trading orders. Through protocols like dTWAP, dLIMIT, Liquidity Hub, and Perpetual Hub, Orbs delivers a CeFi-level trading experience without sacrificing decentralization. By operating as an additional execution layer atop existing blockchains, Orbs augments the capabilities of DEXs and AMMs without necessitating liquidity migration to a new chain.
Its primary product in facilitating this, Liquidity Hub, enables decentralized exchanges to access aggregated liquidity from multiple sources, ensuring competitive pricing and reducing the impact of liquidity fragmentation. dTWAP Protocol, meanwhile, is a decentralized Time-Weighted Average Price (dTWAP) protocol that allows DEXs to execute time-based orders directly onchain. Finally,
There’s dLIMIT Protocol which supports limit orders for DEXs, and Perpetual Hub which offers a suite of services including hedging, liquidation, and oracle functionalities for onchain perpetual futures trading.
Like other DeFi projects that are innovating in their respective lanes – Aave; Uniswap; Chainlink – Orbs’ power lies not so much in what it does but in what it allows others to do. In other words, it’s through technology such as Orbs Liquidity Layer that DeFi developers can create new trading experiences, protocols and even new L2s, fed by boundless liquidity to ensure user experience is optimized and slippage minimized. Notably, Orbs’ decision to include CEX liquidity is a key way in which its solution differs from anything that’s gone before in DeFi.
DeFi Still Has Room to Grow
DeFi has come a long way in the last two years after a period of stagnation. TVL is approaching $120B, nearing its 2022 peak, while the market cap of all DeFi assets has surpassed $65B. But while it’s evident that the industry is advancing in leaps and bounds, there are still a few hurdles to surmount before the goal of mass adoption can be achieved.
In particular, user experience, liquidity fragmentation, and scalability remain industry-wide challenges that must be solved. In many cases, the technology to achieve this has been developed but is yet to be widely implemented. Orbs’ Liquidity Hub is the perfect case in point: it can deliver liquidity to wherever it’s needed, but the onus is on protocols to integrate it in order to enhance user experience across the multichain landscape.
Speaking of user experience, onboarding remains one of the trickiest parts of navigating DeFi, particularly for new users. Despite improvements in UI/UX, seedless wallets, and gas abstraction, we’re not yet at the stage where interacting with DeFi can be said to be as seamless as using a web2 social app. As for scalability, the days when everyone was using Ethereum for DeFi and transaction fees could be measured in double-digit dollars are mercifully over: an explosion of L2s and faster L1s has seen to that. But interoperability improvements are now required to make it easier to navigate seamlessly between all these chains.
DeFi Still Has Further to Go
The future of DeFi is one that will entail greater institutional participation and greater retail involvement. In the case of the former, this means regulatory clarity coupled with better custodial solutions to make it possible for institutions to operate onchain: they need both the requisite security and the requisite legal certainty to do so. Once in place, their presence will bring billions of dollars in additional liquidity onchain.
As for retail, the primary barrier here is a complexity one, which is where greater UI/UX comes in. Think better wallet design, better fiat onramps, and better user flow and education so that retail have an idea of what they can actually do onchain. If the last four years have taught us anything, it’s that DeFi developers are dogged, working tirelessly on seemingly insurmountable challenges until they can engineer a solution.
They’ve done it with liquidity, as can be seen in innovations such as Liquidity Hub and its clever combination of CEX and DEX liquidity. You wouldn’t bet against DeFi imagineers doing the same with user experience, scalability, and interoperability until the industry finally arrives at a place where mass adoption isn’t just possible but is occurring at a dizzying rate. The DeFi renaissance has already begun. Soon, it’ll be a full-blown revolution.
