As the decentralized finance boom surged in mid-August, Ethereum co-founder Vitalik Buterin warned his followers about the crypto craze: “Unless you *really* understand what’s going on, it’s likely best to sit out or participate with only very small amounts.”
It was a candid admission from Buterin — not least because the Ethereum blockchain dominates the DeFi industry despite its scalability problems. Nonetheless, his tweet was an acknowledgement that these protocols can be really hard for casual investors to understand. Complicated concepts and tokens posting outsized gains are often a potent mix, and sizable numbers of investors have had their fingers burned.
ECOChain Financial Growth (known as EFG for short) agrees. The project says its goal is to make DeFi “simple and accessible for everyone, even digital asset novices.” It also warns that, unless weaknesses in the industry’s economic cycle are addressed, a “cycle of death” could form that’s financially detrimental to a large sub-section of users.
EFG’s dApp aims to tackle the downsides associated with behavioral investing, which can prompt people to make decisions that work against their interests.
“As a fundamental part of human nature, these biases affect all types of investors, both professional and private. However, if we understand them and their effects, we may be able to reduce their influence and work around them,” the company said.
EFG cites the BSV model, which says two forms of bias often cloud investment decisions. The first is representative bias, where investors place too much emphasis on the changes in recent data and don’t pay enough attention to the overall factors that produced them. Conservation bias is also an issue, and this is where investors fail to promptly correct their forecasting models based on changing circumstances.
This project’s DeFi platform aims to counter these by providing accurate technical analysis data in a timely fashion. An oracle system obtains real-time exchange rates from a number of trusted sources and injects them into smart contracts — ensuring that the system remains decentralized. EFG also says that its dApp stands out from others in this crowded space owing to its low gas fees and fast transaction times.
EFG also says that the DeFi industry must provide lenders with a more robust channel of credit, but it will take time to create stable, reliable monetary attributes.
This chimes with arguments made by Messari researcher Jack Purdy, who says the sector badly needs to offer more fixed-rate lending options. These rates provide certainty for lenders and borrowers who seek to accurately forecast their costs and returns on capital. Purdy went on to describe fixed-rate lending as “one of the most important primitives underpinning the global financial system.”
EFG’s dApp, which has been created by ECOChain, is based on smart contracts architecture. All of the tokens on this DeFi platform are ECRC-20 standard tokens, which are described as being similar to the ERC-20 standard seen on the Ethereum blockchain.
The dApp also aims to be cross-platform through “wrapped tokens,” meaning coins and tokens on a number of blockchains can be swapped in a decentralized way. These assets have enjoyed an uptick in popularity of late, as evidenced by the fact that Wrapped Bitcoin (WBTC) recently reached all-time highs, with a market capitalization of $1.6 billion.
ECOChain, the parent company behind EFG, says its blockchain runs on a Proof-of-Stake consensus and supports up to 560 transactions per second. Blocks are also created every 32 seconds, helping to ensure that transactions can be confirmed far more quickly than on rival networks.
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