The Future of FinanceTo answer the question of why Radix, we first need to understand what is DeFi (Decentralized Finance).
DeFi is a general term for financial products and services that are available online to anyone with an internet connection without the need of using a traditional financial intermediary, like a bank. DeFi is a much better, faster, and cheaper solution to using the banking system we have today. |
Unlike with a bank, with DeFi you have full custody of your money. For example, you could directly send money to anyone, invest, lend or borrow money, even earn high-yield interest on savings - all without having to go through a traditional bank. Your transactions are processed online within seconds, instead of days, and recorded on a public distributed ledger (or blockchain) at a fraction of the cost than with banks.
Find out more about why DeFi is the future of payments, please read: Why DeFi is the future of payments
Find out more about why DeFi is the future of payments, please read: Why DeFi is the future of payments
This is all made possible by using what are called "smart contracts". Smart contracts are agreements that are governed in the form of computer code (which cannot be altered) and they interact directly with a public distributed ledger (or blockchain). These smart contracts can be written to handle almost any imaginable type of transaction between two parties.
The key feature of a smart contract is that it provides "trustless" execution, meaning you do not need to put your trust into a third-party like a bank, lawyer, or escrow company to broker the deal. You do not even need to trust that the other party will make good on their end of the deal. The smart contract will only execute if both sides of the agreement are held up. This is the magic of DeFi!
The key feature of a smart contract is that it provides "trustless" execution, meaning you do not need to put your trust into a third-party like a bank, lawyer, or escrow company to broker the deal. You do not even need to trust that the other party will make good on their end of the deal. The smart contract will only execute if both sides of the agreement are held up. This is the magic of DeFi!
Smarter Contracts
Right now on Ethereum (currently the most popular smart contract blockchain) smart contract developers have to spend the majority of their time making sure there are no costly bugs in their smart contract code. This is because the Ethereum smart contract programming language, called Solidity, was designed for general use and not developed specifically for DeFi in mind. As a result, billions of dollars have been stolen through smart contract exploits and it is easy to see why.
Look how complicated it is for a developer to program a smart contract without making a coding mistake using Solidity. Here is an example of one of the most popular DeFi apps on Ethereum called Uniswap where the smart contract just performs the basic task of swapping two tokens on Ethereum:
Look how complicated it is for a developer to program a smart contract without making a coding mistake using Solidity. Here is an example of one of the most popular DeFi apps on Ethereum called Uniswap where the smart contract just performs the basic task of swapping two tokens on Ethereum:
Way too complicated that it should be, right?
Now here is the same Uniswap example, but instead imagined on a future smart contract blockchain called Radix, using a new language called Scrypto:
Now here is the same Uniswap example, but instead imagined on a future smart contract blockchain called Radix, using a new language called Scrypto:
So why is programming with Scrypto on Radix so much more straight forward and simple?
That is because Scrypto is an asset-oriented programming language built specifically for DeFi that allows developers to build quickly and easily. With Radix, there is also a much lower risk of exploits or hacks thanks to the Radix Engine which can stop insecure code from running by applying the same style of finite state machine logic to smart contracts as found in mission critical systems. This prevents unintended state outcomes from occurring giving additional peace of mind to both smart contract developers and DeFi users.
That is because Scrypto is an asset-oriented programming language built specifically for DeFi that allows developers to build quickly and easily. With Radix, there is also a much lower risk of exploits or hacks thanks to the Radix Engine which can stop insecure code from running by applying the same style of finite state machine logic to smart contracts as found in mission critical systems. This prevents unintended state outcomes from occurring giving additional peace of mind to both smart contract developers and DeFi users.
Radix also allows developers to build smart contracts quickly through the use of a smart contract blueprints catalog. Enabling new developers to reuse code already published by existing developers and to assemble them together like "money lego bricks". This not only makes building easier for new developers, but also provides a revenue stream for existing developers through the Radix Developer Royalties System whenever blueprints they created are used in a transaction.
Discover more about how Radix is making smart contracts better: The Problem with Smart Contracts Today
Discover more about how Radix is making smart contracts better: The Problem with Smart Contracts Today
Scale Without Breaking DeFi
The future of DeFi will require the ability for smart contracts to be able to communicate instantly with each other in order to compose complex transactions (like booking a plane flight, hotel room, and rental car all at once). No one wants to be stuck with a booked hotel room and a rental car if they cannot also successfully book their plane flight. Either the entire transaction across all of the smart contracts being composed must be valid and accepted all at once, or the entire transaction must be allowed to safely fail all at once. This is known as atomic composability and it is absolutely necessary in order for complex transactions like this to work out as desired if we ever want people to trust and use DeFi.
Ethereum's base layer has atomic composability but cannot scale itself up enough to support the amount of transactions per second that the future of DeFi will require. To combat this scaling problem Ethereum has implemented Layer 2 rollups at the cost of breaking atomic composability between layers.
Ethereum's base layer has atomic composability but cannot scale itself up enough to support the amount of transactions per second that the future of DeFi will require. To combat this scaling problem Ethereum has implemented Layer 2 rollups at the cost of breaking atomic composability between layers.
Likewise, other next generation layer 1 protocols like Polkadot, Avalanche, and Binance Smart Chain have also made shortsighted tradeoffs destroying atomic composability for the sake of scalability. Atomic composability across all shards must be maintained in order to fulfill the full potential of DeFi.
But there is hope...
Radix is being built specifically from the ground up to deliver DeFi without breaking atomic composability. Using its consensus mechanism called "Cerberus", Radix will be upgraded to linearly scale to almost an unlimited amount of shards while maintaining cross-shard atomic composability!
Please watch this quick video below about Cerberus to learn about how Radix solves the blockchain scaling problem facing DeFi.
But there is hope...
Radix is being built specifically from the ground up to deliver DeFi without breaking atomic composability. Using its consensus mechanism called "Cerberus", Radix will be upgraded to linearly scale to almost an unlimited amount of shards while maintaining cross-shard atomic composability!
Please watch this quick video below about Cerberus to learn about how Radix solves the blockchain scaling problem facing DeFi.
To learn more about how Radix is designed to scale, please read: How Radix Engine is Designed to Scale dApps
The Road Ahead
The future looks bright for Radix and the global adoption of DeFi. The traditional financial (TradFi) market currently has a total value locked (TVL) of around $400 trillion. Right now DeFi has only about $82 billion TVL. $45 billion sounds like a lot, but it is still almost 5,000 times smaller than TradFi today!
This is just the beginning for DeFi, its growth potential is huge, and Radix will be the foundation to support it. But in order to gain mainstream adoption Web3 and DeFi need to be made radically better. To see the Radix' vision for "radically better" DeFi I recommend you watch the RadFi 2022 video below.