A by-product of the DeFi boom is rarely mentioned


In the blockchain world, there are endless discussions about the importance of decentralization. However, there is a by-product of the DeFi boom, which is rarely mentioned.

Segmentation is the inevitable result of the innovation we have seen in the past decade-if implemented properly, both companies and individuals can benefit.

For example, it is now possible to buy a small portion of Amazon stock, which may make it more affordable for millions of investors. The cost per share now exceeds $3,000, which may be a high barrier to entry for most people.

The explosive growth of non-fungible tokens urgently requires this segmentation to be applied to crypto collectibles—especially when NFTs sell for hundreds of thousands or even millions of dollars.

Now, the valuation of a large number of NFTs is much higher than the affordability of ordinary customers. Segmentation has paved the way for these retail investors to participate in the market instead of wandering in the DeFi ecosystem. Even better, this releases a higher level of liquidity, which we all know is essential to its smooth operation.

Remember our roots

Sometimes, it is easy to ignore the fact that Bitcoin was created in response to the 2008 financial crisis-ultimately giving people a way to control money for themselves and create a more transparent and democratic economy. Big banks keep people out, and cryptocurrencies are creating a way to welcome them in.

With the total market value of all cryptocurrencies recently reaching 2 trillion U.S. dollars, and the total value locked in the DeFi agreement reaching 90 billion U.S. dollars, history threatens to repeat itself. Segmentation gives everyone the opportunity to enjoy the functions provided by this vibrant ecosystem-allowing us to jointly own assets that they could not otherwise buy. If segmentation is removed from the equation, only the richest people can benefit from the capabilities of DeFi, which significantly limits market depth.

But let us also take a moment to think about it from an adoption perspective. If more people are given the opportunity to show interest in a particular product, then awareness of its value will increase. At present, the NFT field is dominated by whales, and they decide what to use their disposable income-which makes people worry that the explosive growth of the industry is unsustainable.

Segmentation gives the public the opportunity to decide which projects are truly beneficial to the ecosystem, promote innovation and stimulate enthusiasm. This is the difference between a top football game watched behind closed doors by a wealthy investor and the 90,000 fans with season tickets having the opportunity to enjoy a game.

Correctly handle fractionation

It is hard to overstate the importance of cross-chain bridges in helping DeFi reach its full potential, but achieving transparency in the way these bridges are designed is by no means easy, and all of us should be concerned. Are they on-chain or off-chain? How to choose a validator? How do we ensure that they always act in our best interests?

On-chain bridges are the best choice here because they can help achieve complete transparency and solve the concerns of users and developers. But there are obstacles ahead. What happens when a large number of users exceed the bottleneck capacity of the interconnected blockchain? In this case, the bridge may only transfer the problem from one network to another, but cannot solve the underlying problem.

Imagine if the crypto world had an infrastructure that could distribute the number of users fairly across different chains-completely eliminating this problem. This would be equivalent to ensuring that commuters during peak hours are evenly distributed on all trains in the network, eliminating delays and providing seats for everyone.

This approach means that the number of users required to create a bottleneck on the blockchain needs to be very high. With the emergence of more types of digital assets and the surge of cross-network user bases, technological advances like this are becoming an inevitable feature of DeFi in the future-paving the way to reduce the cost of congested chains while increasing the available market fluidity.

Currently, the extremely fragmented nature of the blockchain industry hinders the promise of fragmentation. Compared with small islands in the vast ocean, the various chains that exist may be the best. Just as air travel makes our world smaller and establishes important connections between different lands, we need to build infrastructure to make it easier for travelers in the encrypted world to jump from one platform to another.

True financial independence lies in cross-chain integration-allowing people to combine an unlimited number of digital assets through a large number of different chains.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andre Veliki He is a former Cisco certified network expert and has been engaged in IT since 2002, mainly engaged in data center architecture, networking and switching. Andriy entered the crypto industry in 2015 and established a mining farm before further technological breakthroughs, such as the integration of encrypted payments and point-of-sale devices, network security, and non-custodial multi-chain encrypted wallets. His current project APYSwap is a protocol for decentralized trading of tokenized vault stocks.