Can you imagine another crypto ecosystem without decentralized financing (DeFi)? That’s right, the DeFi projects have become more and more common lately and are developing very quickly. Their popularity is booming, but they all have the same problem: a lack of interoperability. Protocols and contracts can hardly or cannot work together or operate in a different ecosystem, which causes frustration for users and developers. They then have to communicate with different dApps and applications if they want to invest in a particular DeFi project.
Denko Macheski, CEO of Reef Finance saw a recurring problem in the fledgling market of decentralized finance. He and his team wanted to immediately solve the core of the problem: the unnecessary complexity that DeFi entails. Mancheski believes that, despite crypto’s popularity growing and more projects emerging, it still remains difficult to gain global adoption. He himself speaks of a psychological barrier that stands in the way of the growth of DeFi.
REEF’s protocol was born from the founders’ experiences in the DeFi ecosystem. They saw for themselves that the complexity was repeated over and over and that therefore access to this DeFi world was difficult for many investors and the general public. So they set to work with the REEF protocol to minimize complexity and increase access to the DeFi ecosystem.
In September 2020, Reef launched their Initial Coin Offering. During this private sale, no less than 4 billion REEF tokens were sold at an average price of $0.00095. At the end of December 2020, when the Reef token hit the market, it opened with a price of $0.02792. All participants of this ICO immediately saw a very favorable return from their investor.
Investing in DeFi protocols can be a cumbersome process that requires you to complete a lot of unnecessary steps before you can make a purchase. Think of charging fiat money to an exchange , sending it to an external wallet such as MetaMask, then connecting it to a decentralized exchange (DEX) and then making a purchase. One solution would be a simple interface where a user can access a common DeFi environment and all their favorite dApps in one place. Discover Reef Finance.
What is Reef Finance?
Reef Finance creates a platform that brings all the different dApps together in one ecosystem. It was created in response to counteract the complexity of the current DeFi ecosystem. This facilitates user access to the DeFi ecosystem. Reef Finance therefore strives for one decentralized platform where they can buy, trade and borrow various assets.
Reef Finance is also a liquidity aggregator and a multi-chain smart yield engine that enables the integration of any different DeFi protocol. Reef runs on the Polkadot blockchain and integrates with DeFi from Ethereum , Polkadot, Avalanche, Cosmos and Binance Smart Chain. New DeFi projects may face liquidity issues which could lead to impermanent loss. Reef wants to avoid these risks through this cross-chain aggregator.
Reef’s protocol is based on a chain of smart contracts that ensure integration of the ecosystem. These smart contracts communicate with the analytics engine and the liquidity aggregator to ensure that a user can enter multiple positions in the DeFi platform from one easy-to-use interface. Making the world of DeFi more accessible will only make it grow.
The current DeFi landscape
A growing economy has advantages, but it also comes with a number of disadvantages. When an industry develops too fast, it can cause problems for the protocol. The same applies to users in the DeFi protocol. The DeFi hype continues to grow, but if current issues are not addressed, this trend will no longer continue. Investors, despite being enthusiastic about a project, will not invest because the process is too complex. The fear of making a mistake is real and many stay away from the world of DeFi, which until now has little regulation.
Developers are often busy designing complex structures, forgetting how a user navigates through the network. Soon, a dApp runs on a very complex technological ecosystem with poor user functionality.
The blockchain technology and the developments of DeFi need interoperability to enable communication between all platforms. The project also takes its name from the similar situation of the coral reef system in the sea. When you look at coral reef, you see all the individual components of an ecosystem working together to form a whole. This is exactly what Reef Finance aims to do: bring all individual dApps and DeFi projects together to make it easy for a user to invest and navigate.
If Reef can eliminate all the complexity from the DeFi ecosystem, more innovation is possible. More users will be open to DeFi protocols, which ensures support and increased stability of the ecosystem.
To date, most DeFi protocols run on Ethereum’s network. Then why is Reef different and running on Polkadot’s network? Ethereum has been under fire lately because of its transaction speed and gas fees. In practice, we see that you already have to invest a high amount before the transaction costs are worth making this investment. As a result, the threshold is too high for many people to venture into DeFi projects. It can also be a complex process, especially for investors who are relatively new to the market.
The high transaction costs and long waiting times limit the scalability of Ethereum and bring with it a number of problems. By leveraging the Polkadot ecosystem, it avoids the issues of these sky-high fees and extraordinary transaction times that have recently become the norm on the Ethereum network.
Ethereum 2.0 , an update to the current network that aims to address this issue, is due to be launched in mid-2021, but this implementation has already been postponed so it remains to be seen when it will actually take place and what the effect will be. We see that that is why more young projects are opting for the Polkadot ecosystem.
By leveraging the Polkadot ecosystem, Reef helps provide the interoperability that Reef needs and empowers. It can thus communicate through different blockchains to bring in different networks. Reef’s platform is made up of three wasteful components that need each other:
Global Liquidity Aggregator
Liquidity is always essential and on a decentralized exchange possibly even more important if this can lead to an impermanent loss. Reef Finance’s platform is connected to major crypto trading platforms that allow it to provide a high degree of liquidity. This liquidity all runs through decentralized exchanges (DEX) and central exchanges (CEX). Decentralized liquidity comes from orders and automated market makers (AMMs). This liquidity aggregation also protects Reef users from things like market manipulation of whales, for example.
Reef uses the Polkadot system to aggregate liquidity in the ecosystem. This means that you can buy the Reef token from both decentralized exchanges and large central exchanges such as Binance. This gives investors access to the greatest possible liquidity which makes trading on Reef affordable and easy.
Smart Yield Farming Aggregator
Reef wants to simplify the process and remove the complexity to create broad support in the DeFi ecosystem. They also want to simplify yield farming. This is the process by which users can lock in their crypto and receive rewards for it, similar to strikes but in a DeFi market.
So far, staking in a DeFi ecosystem is still a complex activity. You often have to send several coins to your wallet to place a balanced trading pair in the pool for which you get LP tokens that you can use to stake afterwards. This is a complex process, which according to the makers of Reef can also be simplified and made accessible.
Through this simplification, the Reef protocol aims to attract investors to use the decentralized financial system so that they too can benefit from these returns. It also automates other DeFi services such as digital asset lending and lending. It combines ‘Yield engine’ and ‘Intelligence Engine’ to make this possible.
This Yield Engine makes it easy for users to invest in various digital assets. The process and choice can be automated using AI captured on personal financial goals. The AI will dynamically adjust and balance the portfolio and then move assets as needed.
Smart Asset Management
A third component of Reef is the Smart Asset Management that is controlled by the Reef Intelligence Engine. It allows Reef users to balance and maintain their inventory across the different investment pools. The AI engine makes recommendations in this regard based on all the information they have received from the investors.
In this way, Reef Intelligence Engine ensures that the AI assets are properly managed based on the investor’s needs and goals. In this way, investments can be made in an automatic way and this profitable method becomes more accessible to everyone. This form of machine learning ensures that the process is continuously improved and optimized.
Although it is still a young project, it is already in the top 150 of CoinMarketCap and CoinGecko with nice results. The protocol uses REEF, the native utility token of the Reef platform. The protocol uses Polkadot ‘s Proof of Stake consensus mechanism and is managed through a DAO, a decentralized autonomous organization. This is an organization that is run on the basis of coded rules that we also know as smart contracts. Holding REEF tokens in pools allows users to participate in important protocol decisions.
A governance token gives an investor a say in the protocol, a kind of voting right. We see more often that DeFi projects use governance, in this way they bind investors to the protocol and collectively build the future. For example, owners of the token also have a say in certain decision-making of the protocol on certain topics that can be voted on. Examples include interest rates, change of reserve limits or even the revision of the structure of the DAO.
This voting right is proportional to the number of REEF tokens a person holds. The protocol thus retains its democratic and decentralized character. Do you have more tokens? Then you have a greater say in the governance of the Reef protocol.
Every user wants to maximize their investment, and staking is a great way to get extra return on your investment. REEF holders who decide to lock their tokens in a pool will be rewarded with REEF tokens. The interest rate is determined by, among other things, the protocol costs and the percentage determined by the users themselves by means of the governance protocol. Strikers have the freedom to choose how they want to receive their rewards. This can be in trading pair ETH-USD or in the native token of Reef itself. Choosing the native token usually leads to better rates.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com