Radix DLT has launched the first layer-one protocol built specifically for decentralized finance. Radix is made up of four technologies: Cerberus, a high-speed network consensus mechanism; the Radix Engine, a purpose-built development environment for building DeFi applications; the Component Catalog, a library of DeFi building blocks; and the Developer Royalty System, a first-of-its kind decentralized incentive program. These core technologies were developed to prepare DeFi for mass adoption, and are detailed further in a new DeFi White Paper published by Radix.
Traditional financial systems require many layers of intermediation and manual processes, costing an estimated .05% of the global GDP, or or $71 billion annually. While decentralized finance has the potential to remove much of this friction and cost, today’s DeFi applications are built on blockchain protocols that were not designed to meet the requirements of mainstream adoption.
As the numbers of DeFi hacks increase, and transactions cost rise above $100 on Ethereum, Radix is introducing a platform with fast, low-cost, secure transactions; a development environment focused on enabling safe and flexible management of user assets; and a smart contract marketplace designed to create a vibrant developer ecosystem.
The Radix Engine allows the creation of on-ledger DeFi application logic that is secure by design, reducing the risk of exploits, hacks and bugs. This is achieved because the Radix Engine is a Programmable Finite State Machine, a class of execution environment that is common in mission-critical embedded systems where predictable correctness is the top priority. To make clear the distinction from typical Ethereum-style smart contracts, Radix Engine smart contracts are called Components.
Building on the Radix Engine’s foundation, the Component Catalog offers a decentralized, on-ledger hub for developers to create, share, extend, and combine modular Components to accelerate dApp builds. Developers can opt to either charge a royalty for the on-ledger use of their Components, or make them free to use. Components created by one developer can be securely incorporated into a larger Component set by another, allowing a fast but secure process that leverages the work of the community.
This first-of-its-kind incentive program is called the Developer Royalty System, and it is designed specifically to facilitate and accelerate DeFi innovation. This system provides protocol-level incentives – similar to the incentives for secure network operators created by crypto “mining” – for any developer to contribute Components, large or small, that can become standards on the platform.
Underpinning the entire Radix solution is its unique consensus algorithm, Cerberus. Cerberus uses a new consensus process called ‘braiding’ that allows both synchronous and asynchronous communication between shards. This avoids the current limitations on DeFi interoperability created by other scalable consensus designs such as Ethereum 2.0, Algorand, Polkadot or Cosmos.
Cerberus enables an incredibly flexible protocol that can parallelize an unlimited number of transactions to provide linear scalability, while retaining DeFi composability. Higher network demand can be served by greater numbers of incentivized node runners, much like adding check-out lanes at a busy grocery store. Cerberus ensures network resources are used as efficiently as possible for maximum throughput and composability, making it ideal for the interconnected, high-demand DeFi ecosystem.
Together, these tools are designed to create a decentralized, incentivised and self sustaining DeFi ecosystem on Radix, and to make it the world’s most powerful, user-friendly and interoperable DeFi platform.
“DeFi has more than $6.7 billion under management and counting, but that’s a drop in the bucket compared to the trillions of assets managed by today’s global financial system,” said Piers Ridyard, CEO of Radix. “Radix introduces the technology that will power DeFi applications on a broader scale, letting them truly compete with traditional banking services without compromise.”
Radix has raised $6 million in startup funding. The company recently announced a $4.1 million investment from VC LocalGlobe and TransferWise Co-Founder Taavet Hinrikus. The Radix project has also benefited from over 3,000 BTC in community contributions since inception.