Introducing DFinance: DeFi Hub on the DFINITY Internet Computer

Introducing DFinance: DeFi Hub on the DFINITY Internet Computer
Table of Contents
Table of Contents

Unleash the Power of DeFi on the DFINITY Internet Computer

1. Background

Satoshi brought us into the blockchain era through the invention of Bitcoin. For the first time, people can exchange value on the Internet without any financial intermediary. Ethereum extended the functionality of blockchain by supporting smart contracts and fostering a decentralized digital economy. DFINITY, known as the third invention of blockchain boasts "web-scale" scalability, provides better accessibility and user experience of blockchain applications for ordinary users, and will further accelerate the transformation of the traditional internet.

Decentralized Finance (DeFi) is one of the most revolutionary inventions in the crypto space. The basic building blocks are smart contracts running autonomously on the blockchain. The DeFi system is highly efficient compared to traditional financial systems and it's open to everyone, no matter who you are or where you are from. We believe DeFi (or Open Finance) is the future form of finance.

The current DeFi ecosystem is mainly built on Ethereum. However, Ethereum suffers from scalability issues and high transaction fees, making DeFi the "game of whales." But ordinary users can hardly use these on-chain services due to high costs. We believe DeFi should be truly open to everyone without barriers and ought to be cheap and easy to access. We truly believe that the Internet Computer can help achieve these goals. With DFINITY's "web-scale" scalability and user experience, we can build a more accessible open financial system.

DFINITY launched the main-net a month ago, and the ecosystem is still in a very early stage. There are no fundamental DeFi components, not even a token standard. From the experience of Ethereum, the token standard is at the bottom of the DeFi ecosystem. On top of that, there are different tokens, decentralized exchanges, lending platforms, etc.

2. What are we building

The goal of DFinance is to be the DeFi hub on the Internet Computer. We are building open financial services infrastructure for the DFINITY Internet Computer, starting from the very bottom of the whole DeFi ecosystem: token standard. On top of that, we will build a token issuance app and a decentralized exchange(DEX) targeting both ordinary users and developers.

Ordinary users can easily issue and exchange their tokens on our platform. And developers can issue tokens for their projects with our token issuance app and build their products based on the APIs of our DEX. After that, we will continue to build DeFi products on DFINITY and make the DFinance platform the open financial services hub for the Internet Computer.

Our focus in 2021 will be the token standard, token issuance app, and our decentralized exchange. We will introduce these products one by one. Note that the technical details and product architectures are just initial designs and may change in the future.

2.1 Token Standard

Token standard is essential for the DFINITY ecosystem, especially for the decentralized finance system. Crypto wallets need a unified token interface to manage different tokens; developers need a token canister template to issue their own tokens for their projects. The token standard is the base layer of DeFi, so this is our first focus.

We have implemented several token canister templates in Motoko and Rust, and the code is open-sourced. Current implementations mainly follow the ERC20 style interface. We are looking forward to collaborating with the developer community to improve current implementations and provide more options (like those discussed in the developer forum) for developers. Developers can choose whichever template they want to issue their own tokens, and the community will eventually reach a consensus on which template to use as the token standard.

2.2 Token Issuance App

We will build a token issuance app (called DToken) based on the token template we have built so that ordinary users can issue their own tokens with our user-friendly web interface without any coding. In addition, we will provide token management functionalities such as minting new tokens, burning tokens, and transferring tokens. Users can also top up their token canister with our web interface.

Below is the architecture of the token issuance app. When users interact with the token registry through the web interface, the registry will deploy the token canister for users.

2.3 Decentralized Exchange

The core product of DFinance is a decentralized exchange called DSwap. We employ the automated market maker(AMM) mechanism. Liquidity providers earn swap fees, and traders pay a 0.3% fee for each swap. Ordinary users can swap their tokens in DSwap. External developers can build their own applications(such as liquidity farming apps) based on the APIs we provide.

The Internet Computer does not ensure the atomicity of inter-canister calls. This is a sacrifice for scalability, so we need to avoid inter-canister calls for the safety of user funds. Below is the initial architecture design of DSwap. We use a tight coupling structure, aiming to implement the AMM functions in a single canister. Consequently, there are no inter-canister calls involved in the swap process. The execution in a single canister is single-threaded and atomic.

3. Conclusion

We released a demo of our proof-of-concept implementation a while ago, we will gradually deploy our test-net product to the Internet Computer, and there will be a public test period before main-net launch. We will release more details later.

We believe the Internet Computer is a paradigm shift. More and more open internet services will emerge on the Internet Computer. DeFi will be a key component in the DFINITY ecosystem, and DFINITY will let more people benefit from DeFi. Let's push forward the DFINITY DeFi ecosystem together and unleash the power of DeFi on the Internet Computer.

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  • Disclaimer: The views and opinions expressed on this website are solely those of the original author and other contributors. These views and opinions do not necessarily represent those of the Dfiinty Community staff and/or any/all contributors to this site.*

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