Dubai, UAE, 20th January 2024, The indisputable potential of cryptocurrencies and blockchain technologies to revolutionize the finance industry and beyond is not without its fair share of challenges. Several notable challenges restrict crypto development and mass adoption, including insufficient accessibility, security risks, and inefficiency of processes. Let’s examine these challenges impeding the growth and acceptance of cryptocurrencies globally and how the Kinetex team aims to resolve them.
The crypto world may seem too complex and even unsafe for those unaccustomed to it. Due to the lack of sufficient information about crypto technologies and the abundance of complicated interfaces and processes, the average person finds it difficult to understand and embrace digital assets. Because of this, the crypto industry remains a niche market, with a large portion of the global population unsuspecting of its benefits. This lack of knowledge also contributes to the reluctance of government officials and companies to promote cryptocurrencies for day-to-day use.
To solve this problem, the crypto community should focus on improving two aspects at the same time. First, it is vital to have initiatives that aim to familiarize people with crypto assets and the technologies common in the DeFi space. Secondly, developers should create solutions and products that are easier to understand and use. By developing more user-friendly solutions, streamlining the swapping and other processes, and devising quality educational campaigns, we can make the world of cryptocurrencies more accessible to a wider audience.
The Kinetex team acknowledges the importance of accessibility and thus pays a lot of attention to it while developing its solutions. Therefore, Liquidity Aggregation and Flash Trade — two modes constituting the Kinetex dApp — are both designed to be intuitive and efficient. The Liquidity Aggregation mode offers a seamless swapping process by providing automation, advanced route building, and gasless flow, ensuring a hassle-free experience. The Flash Trade mode approaches ensuring accessibility differently by moving responsibility for choosing the best conditions for order execution to resolvers.
The second challenge that needs to be tackled is related to security. Various factors can undermine it, with third-party validators and MEV attacks being two of the most severe. Although this approach allows crypto holders to partake in supporting the blockchain ecosystem, it also poses a threat to its integrity. Validators are highly vulnerable to being attacked or compromised, which can threaten the overall network’s security as well as user funds.
Since a validator-free approach is more advantageous, the Kinetex team has chosen to employ it for the upcoming intent-based Flash Trade solution. Intents enable users to receive assets they would like without taking responsibility for selecting the most suitable swap routes and liquidity providers. Consequently, the execution process is supervised by professional market makers who ensure the best conditions.
Regarding MEV attacks, cross-chain swaps performed through platforms and aggregators that automate swapping processes pose significant risks since aggregators publish the planned route publicly during the swap initiation, enabling MEV extraction. The Kinetex team has taken measures to minimize the influence of MEV attacks in both modes of the Kinetex dApp. For that, they eliminated early disclosures of transaction details in the Liquidity Aggregation mode and adopted direct trading in Flash Trade.
The third prominent challenge is the inefficiency of many solutions currently present in the DeFi market. The increasing popularity of cryptocurrencies has led to scalability problems for many blockchain networks, resulting in network congestion and slowing down transactions, which limits the feasibility and cost-effectiveness of crypto, especially for daily use and trading. During periods of high demand, the unpredictability and inefficiency of blockchain networks, evidenced by high transaction fees and slow confirmation times, discourage users from considering cryptocurrencies as a viable alternative to traditional payment systems.
Kinetex addresses these issues in both modes. In the Liquidity Aggregation mode, Kinetex ensures increased efficiency by aggregating hundreds of liquidity sources and using an advanced router to find the quickest and most profitable routes. In the Flash Trade mode, Kinetex relies on the competitive nature of its resolving solution and built-in liquidation system to sustain efficiency. Resolvers must act quickly and offer advantageous rates to execute transactions successfully, ensuring a favorable and prompt swapping experience.
Although cryptocurrencies have great potential, some significant challenges restrict their development and widespread adoption. These challenges include issues with accessibility, security, and efficiency. As the world of crypto continues to evolve, it is essential to address these obstacles to achieve a decentralized, inclusive, and beneficial financial system. As such, both the DeFi community and the Kinetex team must prioritize solutions to these challenges.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Economy Lane journalist was involved in the writing and production of this article.