White paper original

From DeFiChain-Wiki

White paper

Everything about DeFiChain.


The DeFiChain Foundation is developing DeFiChain, a blockchain specifically dedicated to decentralized financial applications. By focusing on the functionality of the blockchain and dedicating it specifically to decentralized finance, DeFiChain provides unparalleled high transaction throughput, reduced risk of errors, and intelligent feature development specifically for the fulfillment of financial services on the blockchain.

This Document is not a Prospectus

This document does not constitute nor imply a prospectus of any sort. No wording contained herein should be construed as a solicitation for investment. Accordingly, this whitepaper does not pertain in any way to an offering of securities in any jurisdiction worldwide whatsoever. Rather, this whitepaper constitutes a technical description of the functionality of the Cake products and the development and distribution of DeFiChain.

This Document is not a final technical specification

This document does not constitute nor imply a final technical specification of DeFiChain. Information presented on this whitepaper, technical or otherwise, is meant to outline the general idea of DeFiChain, its design and its use-cases and is subject to change with or without notice. For the latest up-to-date technical specification, check out the updates and documentations on the official website https://defichain.com.

Executive summary

The cryptocurrency industry is based on a simple premise: people should be fully in control of their finances. While it seems like a simple and obvious statement, the current systems are far from providing financial services that are truly under the control of the people who use them. The mission of DeFiChain is to give people (and in the future, machines, and devices) seamless access to decentralized financial services.

For that purpose, we are introducing DeFiChain, a dedicated blockchain specifically for decentralized finance (DeFi) www.DeFichain.com.

By dedicating the functionality of a blockchain specifically to decentralized finance, DeFiChain provides high transaction throughput, reduced risk of errors, and intelligent feature development specifically for the fulfillment of Satoshi’s original intent: To create a reliable alternative form of financial services built on top of Bitcoin.

Bitcoin, as described in the original Satoshi whitepaper, is designed as a form of digital cash, as a store and exchange of value. The evolution to Ethereum and smart contracts has allowed for tremendous new functionalities to be built on top of a blockchain, yet this development has come at a cost. The concept of one global operating system for everything has created a system that requires a complex codebase for smart contracts, slow throughput, and difficulty around the governance of the system.

DeFiChain approaches decentralized finance as a specific and critical segment of the blockchain community. DeFi is a dedicated blockchain that is optimized specifically for DeFi applications. DeFiChain is intentionally non-Turing-Complete and does not support any function, other than those needed for Decentralized Finance, resulting in a blockchain that provides higher throughput and better functionality specifically for dApps related to finance. The advantage of a non-Turing complete command set is that there is a much lower potential for coding errors of the type that have plagued Ethereum smart contracts such as with the DAO hack or the locked funds with Parity. While it is important that we have some smart contract languages that are Turing complete, in the area of finance, it is appropriate to restrict the capabilities of the language in favor of a more secure system with greatly-reduced attack vectors.

The Problem

Today, almost all financial services are run by banks. Investments, for example, by definition, is the use of capital to earn more capital. Investors use a bank to put their money into interest or dividend-making instruments in order to grow their wealth. The problems with financial services are increasingly becoming obvious to everyone: compounded costs due to middle(wo)men, slow transactions, delays for cross-border transactions, and inaccessibility to many sectors of the population. A myriad of fintech solutions have been brought in to improve the system, but fundamentally the underlying banking system is still in control, so fintech has brought only limited improvements.

Cryptocurrency and Decentralized Finance (DeFi) offer a way to start with a new system, circumventing the difficulties faced in changing the finance industry. While crypto has attracted billions in investments, decentralized financial services are lagging. When it comes to investment in cryptocurrency, crypto investors can buy and sell, but that’s it. The cryptocurrency itself cannot be invested in the same way fiat currency can be. Initial attempts to create peer-to-peer lending and asset tokenization so far have proven partial and unreliable, so investors have extremely limited options when it comes to an investment of their cryptoassets. The potential is enormous to provide financial services in crypto, the same way they are offered in fiat currency.

The Solution

DeFiChain is designed for investors in the cryptocurrency market who are looking to make their cryptocurrency work just like any other form of capital, such that they can ensure a return on investment in any market. DeFiChain is a dedicated non-Turing-complete blockchain, designed specifically for the decentralized finance (DeFi) industry. DeFi provides full functionality for this specific segment of the DLT community, sacrificing other types of functionality for simplicity, rapid throughput, and security.

The function set includes among others:

  • Decentralized lending
  • Decentralized wrapping of tokens
  • Decentralized Pricing oracles
  • Decentralized exchanges
  • Transferable debts and receivables
  • Decentralized Non-collateralized debt
  • Asset tokenization
  • Distribution of Dividends