DeFiChain is a decentralized finance (DeFi) platform built on top of Bitcoin that aims to bring speed, scalability, and liquidity to the DeFi space. Launched in 2020, DeFiChain allows users to leverage Bitcoin as collateral for decentralized lending and other DeFi applications.
How Does DeFiChain Work?
DeFiChain operates as a blockchain purpose-built for DeFi that is secured by a network of masternodes powered by the DFI coin. It uses a proof-of-stake consensus model and can handle high transaction throughput. DeFiChain is compatible with Ethereum allowing projects to port over code from ETH to build DApps rapidly.
At the core of DeFiChain’s product suite are decentralized assets like DFI coins, liquidity pools, and collateralized debt positions. Users can stake DFI to operate masternodes that secure the network and enable staking rewards. The platform offers a decentralized exchange (DEX) to trade assets and liquidity pools that enable yield farming incentives.
DeFiChain sets itself apart from other DeFi platforms through the following key features:
- Bitcoin-backed assets — Users can mint tokenized Bitcoin bonds backed 1:1 with BTC to unlock Bitcoin for DeFi without custodians.
- High scalability — DeFiChain can handle thousands of transactions per second and offers lower gas fees compared to Ethereum.
- EVM compatibility — The EVM compatibility allows for simple porting of Solidity based smart contracts and projects into DeFiChain.
- Liquidity mining — Users can earn DFI rewards by staking crypto into liquidity pools on the DEX. Pools include BTC, ETH, USDT, and more.
- Decentralized price oracles — DeFiChain uses a network of masternodes to post data to obtain decentralized price feeds for assets.
Governance and Staking
DeFiChain uses a masternode system to secure the network similar to Dash. Masternodes stake a set amount of DFI collateral to participate in governance and enable staking rewards. Masternode operators can vote on proposals to steer the ecosystem’s growth.
Regular users can also stake DFI into liquidity pools to earn a yield on their holdings. Stakers collect trading fees from the DEX proportional to their share of the pools as a reward for providing liquidity.
The DFI Token
DFI is the native utility token of the DeFiChain platform. It has a fixed max supply and is used to operate masternodes, provide liquidity for DEX pools, and pay transaction fees. DFI tokens also offer governance voting rights. The token enables staking yields when locked up in masternodes or staking pools.
DFI had an initial distribution in 2020 via liquidity mining and an airdrop to Bitcoin holders. It trades on major exchanges like KuCoin and Bittrex. The token saw massive growth in 2021 along with increased DeFi adoption.
In summary, DeFiChain brings speed, liquidity, and expandability to decentralized finance by leveraging the security of Bitcoin. Users can mint BTC-backed assets, farm yields, borrow/lend, and trade on the DEX using DFI as the core platform currency. With its focus on scalability and rapid growth, DeFiChain aims to become a leading chain dedicated to decentralized financial services.