How CrowdSwap helps to solve the problems of today’s Decentralized Finance (Defi)

best price crypto app

The crypto space allows investors to make above-average returns to life-changing profits. With Decentralized Finance (DeFi), the opportunities have increased much more. Every new project on the crypto startup platforms, for example PolkaStarter, has performed amazingly well after that, sometimes reaching valuations of 100x or even more.

How does it happen.
In a bull market and hype, everyone wants to trade these cryptocurrencies / tokens / coins available first on the decentralized exchanges (DEXes), e.g. Uniswap. the popularity of this business has now created some problems. Network traffic exceeded earlier expectations and Ethereum in particular suffered from high transaction fees. These high transaction costs gave other network providers a chance to step in. With lower prices, they can catch up to Ethereum as the number one network, and different chains bring another dimension of complexity to the Decentralized Finance (DeFi) space. Now, the amount of DEXes is not only growing on Ethereum, but it is spreading across all types of DeFi networks. The majority of users can no longer keep track of all DEXes. Not to mention the hassle of transferring their coins and tokens across networks.

This development leads to four major challenges that DeFi faces:
1. high transaction costs
2. intransparency
3. complexity and
4. weak usability

Problem 1: High transaction costs

Defi

Transaction costs on the Ethereum network are far too high for token exchanges. Compared to central counterparties in the crypto environment, the transaction costs in DeFi are extremely high and amount to many times the pure exchange fees. In some cases, transaction costs exceed the $100 mark, which is often several percent of the exchange value.

From the overwhelming acceptance for Decentralized Finance (DeFi), its popularity creates a problem on the Ethereum network that no one can solve overnight. One reason for the high cost and low transaction per second (TPS) is the proof-of-work approach. The EIP-1559 will weaken the position of miners, but it remains to be seen whether this will significantly reduce transaction costs. Recently, berlin hard-fork has already slightly reduced transaction costs.

Binance has seized the opportunity to create the Binance Smart Chain (BSC), an Ethereum clone that operates on a proof-of-stake basis. BSC allows for low transaction costs, some of which are less than one US dollar. The low transaction fees currently make Binance Smart Chain very popular and competitive.

How does Crowdswap help solve this problem?

The CrowdSwap search algorithm finds the best routes for swaps within different DEXes. Through on-chain data analysis, CrowdSwap analyzes and provides accurate transaction fees based on historical gas costs for each einzelnenen swap across the displayed routes.

Problem 2: Intransparency

Intransparency

The fee structure of DEXes is not always easy to understand. While they do show fees, they are usually in token form and not in US dollars. These numbers create confusion about the amount of the costs. For swaps over multiple LPs, the fees of 0.3%, for example, are incurred multiple times. I.e., for a value of $1000 over two LPs, there is not $3 but $6. It also happens that different pools charge different fees. In the new V3 of Uniswap the rates go from 0.05% — 1%, depending on the pool.

The swap fees are not shown on most DEXs because they are a network issue and not from the DEXs themselves. We agree with this only in that it makes no difference on a DEX. However, if the user can choose, they would likely use the exchange platform with the lowest ancillary fees.

Further, most DEXes focus on swapping from token A to token B based on their liquidity pools. The best route for the swap is not always the one that DEXes suggest as the best price. Many transactions by arbitrage traders show that in certain market phases there are more optimal routes that have the greatest benefits for the user.

Only a consideration of all criteria will reveal the best price in the end. Focusing on one measure, on the other hand, obscures the total cost.

How does CrowdCwap help solve this problem?

CrowdSwap transparently displays all routes of the compared DEXes and emphasizes the transparency of the best route for the swap, the fee structure and the swap side costs. Thereby Crowdswap always shows the fees of the swap in US dollars to be able to compare them with each other.

The best price algorithm ensures that the best route of each DEX is found. The goal is always the best price, including all additional costs. Other criteria, such as pool ratio, pool health, volume or TVL, do not matter. The focus is solely on the price advantage for the user.

As far as ancillary costs are concerned, we are only assuming transaction costs here. Significant differences can arise due to different smart contracts. In addition, the tokens involved also have an influence on the gas costs and thus on the transaction costs. Optimizing the smart contracts can therefore lead to significant savings. The providers are working on this with varying degrees of success.

However, it is not always the case that the DEX with the higher ancillary costs also always have a worse price after CrowdSwap representation. Sometimes the swap-only prices are so favorable that even higher incidental costs still yield the best overall price. So we take all costs into account to make sure that the user pays the best price per token.

The CrowdSwap Search App shows maximum transparency when comparing the best routes of different DEXes. The prices of the DEXes were created based on the best routes from a supplier perspective. On-chain data analysis provides the exact transaction cost based on the historical gas cost for the swaps across the displayed routes. When CrowdSwap finds a better route, it provides an additional entry in the search results.

Problem 3: High complexity

High Complexity

The Decentralized Finance (DeFi) ecosystem is not easy to enter, especially for newcomers to the blockchain space. First of all, you need a so-called wallet, which is technically a network address protected from third parties by a password and a seed phase. The construct is already very technical and too complex for most users on their own.

At this point, however, we will look at another type of complexity that is already being observed on a small scale, but will likely soon pose even greater challenges for providers, their products, and users.

We are talking about the ever increasing number of DEXes as new members in the financial markets, which will expand to other networks in the future, as the example of the Binance Smart Chain shows. A sample of a few networks of this type that already have or will soon have their first DEXes are: Ethereum, Binance SC, Polygon, Cardano, Polkadot, Stellar, Solana, Tron, Neo, IOTA, Avalanche, Elrond, Zilliqa, Kusama, Harmony, XDAI. Multiplying the number of DEXes by the networks results in the following requirements:

Reasons why crypto complexity is so high.

1. not all tokens can be exchanged on all DEXes and networks
Knowledge about the different cryptocurrencies is the basis for successful exchange in the Decentralized Finance (DeFi) space. Taking any cryptocurrency, a user needs to know where to exchange it. This information alone is not always easy to find.

2. the user needs a different wallet for each network.
If the user found out which DEX is exchanging the token, it could be on a network where the user does not have tokens to exchange. The user must first create a wallet and purchase tokens before the exchange is possible.

3. the user must transfer his tokens to another network.
Let’s assume that the user has a wallet in the target network, but the tokens needed for the exchange are in a wallet in another network. In this case, the user must first transfer the cryptocurrency over what is known as a network bridge, and users who have already struggled to get started will leave the Decentralized Finance (DeFi) space at this point at the latest and turn to traditional centralized exchanges. The complexity also goes hand in hand with the user-friendliness.

4th barrier to entry: Switching from fiat to cryptocurrenciesMany
people interested in crypto already have difficulties getting started at all. The barrier to entry is due to the nature of switching from fiat money to cryptocurrencies. Currently, there are only two options:

4.1. option 1. registration and KYC on a centralized exchangeThis
was the only way for most crypto users to get into crypto a few years ago. Widespread interest in Decentralized (DeFi) began in 2020, however, centralized exchanges such as Binance, Coinbase and others strongly oppose the decentralized approach of blockchains. In addition, many shy away from KYC procedures that require more and more identity features and insights into financial circumstances.

Some countries have moved to block access to central exchanges, thus depriving their citizens of the opportunity to enter the DeFi sector. The banning of cryptocurrency exchanges is particularly the case in countries where politically difficult conditions prevail and the national currency is often subject to severe inflation.

4.2 Option 2: Purchase of cryptocurrencies via credit card or bank accountOption
2 refers to the purchase of cryptocurrencies via credit card or bank account via a so-called “fiat ramp-on/off provider”. These providers usually handle the sale of crypto quickly and transparently. However, there are also many scammers in this environment. The fees for such an exchange vary widely.

4.3 Option 3. deposit ATM fiat -> crypto is transported to the wallet.
This option involves extremely high fees and is therefore mostly uninteresting.

How does CrowdSwap help to solve this problem?

CrowdSwap relies on Option 2, the “fiat ramp on/off provider” approach, to enter Decentralized (DeFi). CrowdSwap will vet providers before deciding to include them to avoid issues such as fraud or overpriced fees. Criteria for inclusion in the CrowdSwap Ramp on/off program are:

1. fee structure,
2. settled transactions/historical performance, smart contracts
3. awareness/perception,
4. cryptocurrencies offered,
5. ease of use of the solution,
6. integration effort

Problem 4: Weak usability

Weak Usabilty

The great success of Uniswap and Co. is due to the fact that their users have been around cryptocurrencies for a long time and have therefore accumulated excellent knowledge. Some of the applications are very technical and leave beginners with many questions. For example, it is often not explained what a wallet is and how to get the first tokens.

How does Crowdswap solve this problem?

crowdswap

CrowdSwap offers the possibility of direct exchange of coins across DEXes. Building on the search, the transition to the swap app is smooth and transparent. The user can transfer a search result into the swap interface to swap multiple options. Experienced users can, of course, jump directly into the Swap UI.

The first option is a direct swap based on the information in the search result. CrowdSwap makes it especially easy and transparent for the user. The latter does not have to worry about the technical challenges of the exchange, but can receive his exchanged tokens.

Based on the Best Price Routing (BPR), CrowdSwap takes care of all actions to successfully execute the swap while saving incidental costs as much as possible. The BPR takes into account the tokens and wallets of the users’ wallets on the different networks and automatically performs transfers to other networks when necessary. These features increase usability and significantly reduce complexity.

The future of Decentralized Finance (DeFi) is bright, and CrowdSwap believes in DeFi. The above problems are to be solved to make Decentralized Finance (DeFi) a place of equality for everyone.

For more information, visit https://crowdswap.org — or compare prices and exchange coins directly here: https://app.crowdswap.org

Crowdswap concept

FAQ

What is Decentralized Finance (DeFi)?

Blockchain is the underlying technology that powers Bitcoin and other cryptocurrencies. It is also a key component of smart contracts, which are computer protocols designed to digitally facilitate, verify, or enforce the negotiation or fulfillment of a contract without the involvement of a third party. This text is designed to introduce you to Blockchain and how it can be used in finance. You will learn what Blockchain is and some potential use cases for financial institutions as well as individuals with cryptocurrency holdings. Examples where Blockchain has already been implemented to give you an idea of the potential applications for financial products and services in the future.

1. blockchain is a decentralized platform
2. smart contract can be programmed to execute automatically when certain conditions are met
3.Blockchain technology could be used for voting, record keeping and other purposes.
4.There are many advantages of this new technology such as transparency and decentralization
5.It would take some time for the whole world to adopt this technology, but right now it is still in its infancy, so there could be more opportunities for us to use it in the future

How to participate in DeFi applications, so-called DeFi dapps?

There are many ways to participate in DeFi applications; The term DeFi (Decentralized Finance) refers to the growing number of marketplaces and applications that use blockchain technology to allow users to retain ownership of their funds in transactions and use the Ethereum blockchain protocol (ETH), to provide immutable, transparent proof of ownership.

A DeFi software application allows members to deposit funds that can be invested in a range of underlying assets,such as cryptocurrencies, fiat currencies and other investment vehicles.

Any member of a DeFi application can exchange their token for another asset at any time, without intermediaries or fees.

One of the main advantages of DeFi applications is that, unlike centralized exchanges, there is usually no transaction to hold tokens.

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