Your blockchain not letting you lend, stake, or earn? Just add pTokens!
This year, decentralized finance (DeFi) has led the way for crypto adoption. With new innovations for financial architecture steeped in transparency, autonomy, and community governance, it’s no wonder that so many are experimenting with decentralized protocols for savings, loans, trading, liquidity mining, and more.
The benefits of DeFi stretch for miles. For the masses of unbanked people across the world, it offers a place for the creation of a digital bank account. For many who cannot meet the criteria to become legally recognized as “sophisticated investors” within their country, DeFi provides access to financial markets that they would otherwise be totally restricted from. For many, the advantage of DeFi lies in the lucrative profits through the new financial activity of “yield farming.”
Yield farming involves lending value to a range of smart contracts which, in turn, offer massive “yields” — interest on the deposited capital.
Yield farmers focus on constantly moving their crypto assets between different protocols offering different yield rates in order to maximize their returns. This has turned out to be an extremely popular pastime in 2020 with many making huge profits in the process.
There is, however, one major setback preventing broad adoption and use of DeFi protocols. At the time of writing, DeFi Prime has 252 DeFi projects listed and 204 of them built on Ethereum. Only 26 DeFi projects listed are built on Bitcoin and only 22 are built on EOS. Certainly, Ethereum is the biggest of the blockchains that can easily facilitate the construction of adaptive and dynamic DeFi projects due to its fundamental architecture. However, this creates a dilemma for those prospective DeFi users who want to lend, stake, earn or engage with one network’s DeFi space even though they hold crypto-assets on a different blockchain.
For example, a BTC holder may wish to interact with DeFi protocols built on EOS or Ethereum. This holder cannot do so without converting their holdings to either EOS or ETH. They may not wish to do so since the process of exchanging assets is long, difficult, costly and always involves a degree of risk. Plus, once they have completed their interactions within that alternate ecosystem, they would have to reverse that process in order to retrieve their original holdings.
This issue of siloed blockchains has surely dissuaded many from entering the DeFi world and, to some extent, hindered its growth. pNetwork, however, offers a simple solution that promises to allow prospective users to interact with any protocol regardless of its chain, with ease.
pTokens are 1:1 pegged representations of a deposited token in a different token standard.
In other words, any user can acquire a form of their own token that is compatible with the protocols that they want to utilize at the click of a button. This is a simple idea with massive implications.
Say, for example, I am an LTC holder and I want to go and interact with a lending protocol on Ethereum. Usually, I would have to head to an exchange and go through the rigmarole of setting up a wallet, getting verified, connecting that wallet, placing an order, waiting for the order to be filled, waiting for enough blocks to pass before I receive my ETH and losing a significant percentage of the value of my capital in fees in the process. Worse yet, when I’ve finished making use of the lending protocol and I want my LTC back, I have to go through the same process in reverse all over again.
With pTokens, I can simply head over to the pTokens dApp, deposit however many LTC I wish to have converted, and my pLTC on ETH — a 1:1 pegged representation of LTC in ERC-20 form — will be minted at near-instant speed and sent to me. I will then be free to take this pLTC on ETH and go to interact with DeFi protocols within the Ethereum ecosystem. When I am done, I can return to the pTokens dApp, resubmit my pLTC on ETH and retrieve my LTC that has been safely locked away in the pTokens vault awaiting my return. The pLTC that was minted is burned and my deposited LTC returned also at near-instant speed. This whole process is fast, intuitive, free from the risks of interacting with exchanges — and will cost me a fraction of that which I would otherwise face in fees on exchanges.
There are no restrictions on who can participate either. pTokens allows anyone holding any supported crypto asset to mint a pToken in whatever alternate supported token standard they need, then use and access the DeFi sphere without ever selling their underlying assets. Those previously unable to participate in yield farming activities or those restricted to yield farming within only one blockchain’s DeFi ecosystem are now free to move their crypto assets wherever they choose, without borders.
With pTokens – and the pNetwork — the world of DeFi is yours to explore!
🔗 For any blockchain project looking to integrate pTokens into their infrastructure, we have also built a pTokens JS library.
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