5 Reasons why AliceFi is better than Compound Finance
Cross-Chain Asset Support, Composite Collateral, Super Fast & Convenient DEX and so on
AliceFi is quite a new & fresh project in this DeFi market. But that doesn’t mean it is an immature or less competitive one.
Rather, it gives users a better experience with benefits that Compound Finance doesn’t offer. Let’s investigate these differences, one by one :)
Cross-Chain Assets Support
Only ERC-20 assets are supported in Ethereum DeFi protocols. But what if you want to pledge ATOM tokens from Cosmos and borrow DAI? You can’t do this in Compound Finance.
While ERC20 has been by far the most adopted standard for tokens, did you know the total combined market of cryptocurrencies is 8.2x greater than Ethereum and ERC20s?
On AliceFi, any assets from Ethereum, EOS, Binance Chain, Cosmos, and more are supported, which means you can pledge tokens from any of these chains as collateral for borrowing DAI! It brings more liquidity to the ecosystem and users have more options.
Synthetic Collateral
AliceFi supports synthetic collateral which means you can combine two or more assets into one and pledge it for your loan. This was never possible in any other DeFi protocols including Compound Finance.
By synthesizing assets, you could hedge the risk from price fluctuations. As more and more assets are synthesized, the ecosystem gains greater immunity to sudden changes of the market. And you know what? As AliceFi supports cross-chain, you can synthesize assets from multiple blockchains!
Imagine combining ETH, EOS and BNB into one basket and using it as your collateral. Even if the price of ETH goes up and down in the market, the rest two token will stabilize your collateral calmly. You are exposed to less risk when borrowing DAI! It’s never possible in Compound Finance.*
Super Fast & Convenient DEX
What do users do with borrowed DAI in Compound Finance? They trade on exchanges to get more profit. So we could say, collaterals are used for leverage trading.
On Ethereum network, there are many DEXs that they can trade. But those only support ERC-20 pairs such as ETH-DAI or MKR-DAI. And more importantly, you need to wait for at least 15 seconds to create or fill an order!
AliceFi offers a super fast and convenient DEX for borrowers. It guarantees 1–3 tx confirmation times because it is run by PlasmaChain, a DPoS blockchain. It provides user experience that is almost identical to a centralized exchange, which most crypto traders are familiar with.
Also, not only ERC-20 tokens but all cryptocurrency from Ethereum, EOS, Binance, and Cosmos! It’s orderbook-based and all orders are written on blockchain so you don’t have to rely on another off-chain orderbook server.
Trustless Price Feeds
Bitcoin and other blockchains are valuable because it removed the necessity of trust. Prior to bitcoin, we needed to trust a central authority for transferring money. The value of blockchains comes from being trustless.
Compound price feeds are centralized and input directly by a whitelisted address controlled by Compound. Even though price updates cannot be moved outside a range of 10% per hour, there’s still a potential threat that these accounts in whitelisted addresses can manipulate the price. It is critical for borrowers because it means they could cause sudden margin calls for a huge amount of loans at once. Users need to trust that these whitelisted addresses are honest.
In AliceFi, operators are responsible for reporting price feeds. So what makes this different from Compound Finance? Do we still need to trust these guys? No. Operators need to stake ALICE tokens in advance.
After staking tokens, they need to follow the rules written in smart contracts of AliceFi. If they break the rules, such as reporting an unreliable price, their tokens get slashed. If they want to cheat the system by reporting manipulated price over and over again, they will incur a huge amount of penalties on their staked ALICE, removing the incentive for such behaviour.
Permissionless Collateral Listing
In Compound Finance, votes are held to select new collateral assets. But who selects the candidates? Compound Finance team. No-one else can be involved in the process. So even if voting takes place, collateral listing in Compound Finance is quite centralized.
AliceFi is fully permissionless. No-one decides what tokens to be used as collateral. Then how does it work? When operators stake ALICE, they need to designate asset address, such as ETH or EOS. So in short, operators work for each asset, not the whole system.
If at least one operator exists for any asset, that asset is automatically enabled for collateral! Operators don’t have need permission from anyone. They just stake in ALICE and that’s it! This creates possibilities for competition between assets. Competition might be bad for operators, while for users it will provide a more stable and reliable ecosystem.
Conclusion
AliceFi supports Cross-Chain Assets and this is what other DeFi protocols on Ethereum haven’t been able to offer so far. Also because it is run by DPoS blockchain, it guarantees 1–3 confirmation for all transactions. By this borrowers can trade on the DEX which is super fast and convenient to use.
Are you excited to participate for all these benefits? Download AliceFi app now!
