Decentralization was main topic of Daniel Larimer’s tweets the other day. The CTO of Block.one and the creator of EOSIO wrote that Ethereum has failed when it comes to DeFi [decentralized finance]. He wrote: “Just ask bitfinex, bancor, or anyone trying to implement a simple orderbook on eth”.

DeFi is conventional financial tools built on a blockchain — specifically Ethereum. It’s a shared community of open-source protocols or modular frameworks for creating and issuing digital assets. It encompasses products like lending protocols, security tokens, derivatives, exchanges, prediction markets and more.

Order book on Ethereum

On chain transactions hosted on the Ethereum ledger result in high transaction fees and wait time that are very impractical for an order book and can lead to inaccuracy. Ethereum’s performance is so low that wait times are on the order of minutes causing mismatch in timing between a maker’s submission of an order and a taker’s fulfilment of an order. For this reason Ethereum’s most used decentralized exchanges like 0x, AirSwap, EtherDelta, and IDEX employ off-chain order books.

This is also the reason why Bancor doesn’t use an order book but liquidity reserves instead. Bancor holds token reserves that are readily accessible to anyone wishing to exchange tokens while pricing is calculated through a formula that factors in the reserve supply of each token plus a constant reserve ratio.

Decentralized finance on EOSIO

On EOS decentralized finance system is simpler because there are no transaction fees and wait times are on the order of milliseconds. EOSIO performance permits for an on-chain order book that is hosted directly on the distributed ledger. This allows all orders to be submitted to the distributed ledger network and be confirmed by the network.

On EOSIO anyone can host and access a copy of the order book, and anyone may submit their own orders to be included in the order book. EOSIO has been built on the same graphene technology as Bitshares which was the first ever decentralized cryptocurrency exchange also created by Daniel Larimer.

Eosio has markets for ram, lending of bandwidth, bancor, name auctions, and several pegged token designs. The future of defi is on eosio.

EOS is the blockchain with most user activity and other EOSIO chains are in the top 8.

DeFi EOSIO

“Defi was invented on bitshares and generalized on eos. Maker team is a splinter from bitshares dev team. Besides eos doesn’t copy because eosio does things eth cannot.”

“PEGRAM can enable leverage on EOS vs RAM and pick up some of the speculator demand for RAM lowering RAM prices and it can all be done without relying on price feeds or even the consent of the producers” wrote the developer.

Larimer also expressed an opinion on decentralized and cenralized systems.

“If people wanted decentralization then they would pay more for local services. Most people want accountability not decentralized services that are lower quality and higher cost.”

“Wise individuals support decentralized systems which have an abundance of service providers. This means supporting many currencies, many blockchains, and many centralized businesses. Going all in on any chain is centralized thinking.”

“Decentralized solutions will not take off until the financial cost of centralization exceeds the benefits for the masses. As long as people believe in big government and socialism we have a long way to go. Accountability can give centralization new life.”

“Centralized systems take advantage of the prisoners dilemma whereby individuals defect for private savings at expense of group freedom. Breaking this dilemma requires individuals to value principles over profit or centralized enforcement of decentralized systems. A paradox.”


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