on the crypto
Blockchain technology is evolving faster than we can solve the differences between CeFi, Defi, CeDefi, TeDefi or their consensus mechanisms such as PoW, PoS, DPoS, CaaS, PoSA and other lesser known algorithms. Let's find out what TeDeFi is and why Telegram was chosen as the communication protocol between the user and the blockchain network.
The authoritarian CeFi
In the beginning, the only way to buy or sell cryptocurrencies reliably was through centralized exchanges (CEX), which represent dictatorships of some kind. They work, are somewhat stable, and are based on older technology, which means most users know how to use them. However, the CEXs come with a spectrum of potential problems such as embezzlement, hacks, lack of transparency, lack of absolute control over funds, and so much more. This is particularly problematic as users' digital assets are at stake.
The democratic DeFi
Decentralized finance includes financial applications that operate through a decentralized blockchain, thus eliminating the need for users to trust third parties. Uniswap, MakerDAO, Compound are just some examples.
Ethereum was the first blockchain with smart contract functionality. It was launched using the proof-of-work (PoW) consensus protocol, similar to Bitcoin. PoWs essentially do two things:
- It allows the IT nodes, which protect and guard the platform, to agree on the validity of the information published on the Ethereum network
- It prevents any economic attack on the network
The PoW algorithm, however, is not perfect, and the flaws, including slow transaction times and high fees, have become too big to ignore. The rise of decentralized finance is the use case that underscored the importance of an efficient network.
Proof of Stake (PoS) is another consensus mechanism that has evolved as a low-cost, low-power alternative to the PoW algorithm. The rationale behind it is that it makes it easier for holders of larger amounts of tokens to mine new blocks. It later evolved into Delegated Proof of Stake (DPoS) where users wager coins on a list of elected delegates charged with producing blocks on the network and maintaining consensus rules. Good examples of such networks are EOS and Tron. The DPoS algorithm is capable of processing significantly more transactions per second than those mentioned above.
Another algorithm that has embraced the need for more efficient and scalable blockchain networks is Proof of Authority (PoA). It is similar to DPoS, but with validation nodes putting their reputation on the line instead of coins, confirming their true identities and proving their trustworthiness. PoA is mostly considered to be an effective algorithm for private blockchains due to its high performance and the need for reliable validators.
Binance Smart Chain has created a hybrid between PoA and DPoS, calling it Proof of Staked Authority (PoSA) or Parlia. This consensus model can support short block time and low fees and only requires 21 validators to execute. Validators take turns to produce blocks in a PoA way, earning an award but also require daily re-election via the governance of staking in order to continue being part of the set of validators.
The progressive TeDeFi
This algorithm laid the foundation for the TeDeFi blockchain. PoSA does the DeFi industry a big favor, however, it has the same bottleneck as the others. To access and make the blockchain work, for example, to trade a coin on a decentralized exchange or to simply check your balance, the average user needs to use a gateway app or, in the case of Binance, log into their centralized exchange, which is under regulatory control and can change their rules at any time.
To address this, TeDeFi will allow validation nodes to communicate directly with their Telegram Exchange Bot and wallet bot through their secure MTProto protocol.
TeDeFi's network has its own TEFI native token, which powers the ecosystem and provides the next functions:
- Exchange fee discount
- Staking on a validator node
- Gas taxes
- Governance
- Reward of validator nodes
Currently, the TEFI token is distributed on the BSC chain and is traded through their TeDeFi Telegram platform with the price being determined by demand and maintaining steady growth, making it a preferred investment for early adopters.
Overall, TeDeFi is an ambitious project dedicated to building a fast, autonomous and secure network without the need to sacrifice decentralization or add third-party software to access the chain.
