DeFi has become a mainstay in the crypto world, and a growing new industry in itself. However, the Ethereum DeFi craze seems to be cooling down from all time highs in May 2021. According to CoinTelegraph, most Eth DeFi tokens are corrected anywhere between 15% to 85%. In terms of the reasons, most potential retail users are scared off by the skyrocketing Gas Fees on Ethereum whereas existing users are frustrated by the low network efficiency.
While the cost of making a simple Ether transaction multiplied, interacting with DeFi contracts requires jaw-dropping fees, often times higher than the transaction amount itself. At the time of this writing, making an ETH to DAI exchange requires $10 in Gas fee on Uniswap, and $14 on Balancer. The decentralized financial networks of today remain fragmented and can’t communicate with each other in a transparent way where they meaningfully exchange value. To achieve a new-level of information sharing, Clover Finance created a technology that allows seamless cross-chain communication and trustless two-ways pegs between complete blockchains.
In addition to the cross-chain communication, today’s DeFi applications require firm financial investments, and donations from the community are not sufficient to cover development expenses that help grow the ecosystem for DeFi applications.
For the Ethereum network, which is where the largest number of dApps are deployed, all gas fees are directed to miners. However, Clover Finance believes that dApp builders should be incentivized and benefit from making contributions to the ecosystem by receiving a subsidy of the gas fee as a form of passive income.
Tekin Salimi viewed that Clover Finance has a valuable technology offering because it is developed based on Substrate, the foundation of the Polkadot network. As a sharded multi-chain network, Polkadot is able to process many transactions on several chains in parallel, which eliminates the number of bottlenecks on legacy networks that process transactions one at a time. The ability to process power simultaneously improves scalability and creates the right temperature for increased adoption and growth. By leveraging Polkadot and Substrate, Clover is able to not only reduce the gas fees, but also improve the high-speed trading experience for users.
Regarding the financing round, this was spearheaded by Polychain’s Tekin Salimi who explained the following about raising capital for Clover via a Telegram message to CoinDesk:
“We believe Clover’s timing for launch gives it a unique edge to leverage upcoming Bitcoin protocol upgrades to facilitate two-way pegs between Bitcoin and Ethereum”.
Prior to Clover Finance, a big hurdle was faced when attempting to bridge Bitcoin and Ethereum with Bitcoin’s limited scripting language. Interconnection between Ethereum and Bitcoin will be a game changer for crypto, and it’s exciting to see Clover Finance disrupt this underserved space.
