Just for now, the decentralized finance sector currently represents only 0.1% of its maximum potential, and its significant growth is inevitable, so DeFi’s future volume several times the current market volume is visible!

DeFi is a natural outgrowth of the cryptocurrency and blockchain technology implementation and has the right and readily available infrastructure to propel the technology into a larger playing field. The space has surged since the launch of the Ethernet network in July 2015, with the volume of transactions on the Ethernet network now growing 33 times to 1.2 million per day, and if other chains were included, the blockchain would be trading in excess of millions per day. Most of these transactions come from DeFi services such as Uniswap, which facilitates more than $1 billion in swaps per day, and lending agreements such as Aave, Compound and BondAppetit, with a market size of tens of billions of dollars. While these are large numbers by any standard, it is only a decimal point in a trillion dollar traditional finance industry.

The traditional financial system is required to support the exchange of goods and services, including equity markets, debt markets, derivatives markets, commodities markets, payments, and more. This is done by service providers - banks, insurance companies, stock exchanges, financial intermediaries, custodians, etc. - who collect trillions of dollars in fees for the services they provide.

The mainstream DeFi services currently include lending, decentralized trading, insurance, payments, stablecoin and revenue aggregation - a relatively short list compared to the wide range of financial services offered by TradFi. This will not remain the status quo, as DeFi developers are actively exploring and building more services for the ecosystem. There will be an explosion of protocols that find the right product/market fit, such as the recent rise of dYdX, which focuses on the derivatives market, while the current DeFi derivatives market includes contracts, synthetic assets, insurance, interest rates, and more!

Instead, dYdX’s main service area is now perpetual contracts, which is similar to futures in the traditional market today. In traditional financial markets, the market for derivatives can often reach tens of trillions of dollars. dYdX has chosen this track to make it the number one DEX over Uniswap!

The Ethernet network currently processes more than millions of transactions per day in 2022, including money transfers, trades, debits, credits and various other types of transactions. This is a small number compared to the more than 1 billion daily global credit card transactions and the approximately 5.5 billion daily transactions on NASDAQ. Then EtherChip could capture at least 8 times the current transaction volume by capturing just 1% of the credit card transactions on its EtherChip! Evidently!

And the current crackdown on cryptocurrencies in certain countries around the world has only accelerated the use of DeFi. Active Ether Wallet and Browser Extension MetaMask users have grown 10x to 10 million in August 2021. While this may seem like a high number, it only has a 5% penetration rate out of 221 million cryptocurrency users worldwide. This suggests that the average crypto user accustomed to frictionless centralized services is a huge untapped market for DeFi and can be captured as UI/UX improvements are made.

We can foresee that the momentum of DeFi will continue for a long time to come, and it is clear that DEX, one of the cores, will export more ideas to traditional finance as a window to the early practice of the spirit of DeFiism, the biggest difference between SumSwap and traditional finance is reflected in the right to “ This right is the right to freedom of wealth and income, the right to demand for investment channels, and the democratic right to investment models.

The biggest core of DeFi is DEX, and it can be said that the development of DEX directly determines the pace of DeFi’s overall development. Another aspect of DEX solves the current common problem of traditional finance - disconnecting from investors and exploiting their right to create revenue models, in the case of DEX, AMM automatic market maker, and liquidity mining, and constant product The introduction of algorithms are unheard of solutions that are different from traditional financial exchanges, which only care about the market and ignore the intrinsic needs of users, such as providing more revenue channels, more autonomy, and more involvement of users in the construction of the platform, while DEX provides solutions that make these things a reality.

For example, the AMM trading used by DEX is almost real-time settlement (T+0), while in traditional financial markets, such as the stock market, some are implementing T+1 trading mechanism, some are implementing T+2 trading mechanism, and in the U.S. stock trading market there is even a T+3 trading mechanism to settle most liquid securities, it is clear that AMM near real-time settlement brings two benefits, the first is to reduce counterparty risk and improve balance sheet management.

Because financial institutions in the capital markets must set aside cash on their balance sheets to cover the risk of non-delivery of their counterparties, reserve requirements are determined by the parties to the transaction, and they must take cash on their balance sheets to compensate for the risk until the transaction is settled, it is clear that if the DEX AMM agreement framework is used for clearing, then this part of the capital costs can be saved so that the excess funds can be used for more economic purposes in the market, thus converting opportunity costs into economic benefits

Another important point is that DEX is a smart contract exchange, which, first of all, acts as an enforceable computer program, eliminating 100% of human intervention and allowing for truly intelligent trading.

First of all, it can make the transaction safe and reliable. Blockchain is a distributed cryptographic ledger with the participation of multiple parties, and the immutability and transparency of the information determines the stable and secure characteristics of the block, while the smart contract of DEX is based on the blockchain, and it can effectively prevent hacking and protect the funds of both sides of the transaction by applying it to the traditional exchange!

Traditional centralized exchanges require a lot of complex vetting procedures for a single transaction due to issues such as financial guarantees, and thus the counterparties have to wait a long time and are inefficient. This is not the case with SumSwap. Thanks to the use of smart contracts, a series of complex trading procedures are simplified and the automatic execution of the machine takes only a few seconds to complete, thus shortening the transaction time and increasing efficiency significantly

DEX’s smart contracts are 100% machine operated, completely excluding human interference. As long as the conditions related to the trade are set in advance before the start of the trade, once it starts, the smart contract will be executed automatically as long as the conditions set before the trade are met, without stopping the trade because one of the parties changes its mind.

Thus DEX represents a new trading solution of the future, it is both a platform and a synonym for innovative financial solutions!