The promise of cryptocurrencies and blockchain technologies to revolutionize the finance industry and beyond is undeniable. However, several significant challenges impede crypto's widespread development and mass adoption. Let's look at three main daunting obstacles that hinder the growth and acceptance of cryptocurrencies on a global scale and how the Kinetex team works to overcome them.
The world of cryptocurrencies and blockchain technology can be overwhelming for those unfamiliar with it. The lack of education and accessibility in this field makes it difficult for the average person to comprehend, trust, and adopt digital assets. As a result, the crypto industry remains a niche market, with a significant portion of the global population unaware of its advantages and possible risks. This lack of awareness, in turn, contributes to a general reluctance from governing officials and companies to embrace cryptocurrencies for everyday use.
In order to overcome this challenge, the crypto community needs to work in two directions simultaneously. Firstly, it is essential to have initiatives that focus on educating people about crypto assets and the technologies that are common in the DeFi space. Secondly, developers should focus on developing solutions and products that are truly intuitive and user-friendly. By creating more user-oriented solutions, simplifying the onboarding process, and launching quality educational campaigns, we can bridge the gap and make the world of cryptocurrencies more approachable to a broader audience.
The Kinetex team recognizes the significance of accessibility and strives to prioritize it in all their innovative cross-chain solutions. Their dApp comprises two distinct modes - Liquidity Aggregation and Flash Trade - 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. On the other hand, Flash Trade mode is a game-changer that empowers users by allowing them to choose parameters and have resolvers responsible for order execution. With Kinetex, users can expect a fast, secure, and hassle-free experience while trading on the blockchain.
The security issue is the second challenge that needs to be overcome. Several factors can undermine it, including reliance on third-party validators. While this approach enables crypto users to participate in the maintenance of the blockchain ecosystem and support its decentralized nature, it sadly also poses a threat to its integrity. Validators can be targeted, and their work sabotaged, jeopardizing the systems' security and user funds (Learn more about security risks associated with validators in this post). Therefore, validator-free approaches may be far more beneficial.
The Kinetex team will eliminate the use of validators in its innovative intent-based solution, Flash Trade. Intents represent a new transaction approach, empowering users to reach their desired results without choosing the most suitable method. It enables assigning responsibility for the execution process to experienced crypto players (resolvers), eliminating the need for validators and counteracting market volatility thanks to extra flexibility.
Another significant security risk is associated with the concept of MEV (Maximal Extractable Value). The potential impact is particularly severe when cross-chain swaps are performed through platforms and aggregators that automate swapping processes. In such cases, aggregators publish the planned route publicly during the swap initiation, thus facilitating MEV extraction and negatively affecting the outcome of users' trades.
The Kinetex team has enforced measures to lessen the influence of MEV attacks as much as possible in both modes of the Kinetex dApp. In the Liquidity Aggregation mode, relay nodes enable Kinetex to prevent the unnecessary premature disclosure of transaction details, hiding them from MEV searches (Read more about mitigating risks in Liquidity Aggregation here). In Flash Trade, the team was able to minimize MEV risks by implementing an intent-based approach that allows for direct trading between users and market makers (Learn more about MEV protection in Flash Trade here).
The last prominent problem is the efficiency of the crypto solutions offered. The growing popularity of cryptocurrencies has resulted in scalability issues for many blockchain networks, causing network congestion and inevitably leading to slow and expensive transactions. It limits the practicality and cost-effectiveness of crypto, especially for everyday use, not to mention trading. The high transaction fees and slow confirmation times discourage users from considering cryptocurrencies as a viable alternative to traditional payment systems, especially during periods of high demand due to the unpredictability and inefficiency of blockchain networks.
Kinetex works to enhance the effectiveness of crypto solutions, both in terms of cost and time. In the Liquidity Aggregation mode, Kinetex achieves that by aggregating hundreds of liquidity sources and introducing an advanced router, which helps find the quickest and most profitable route for each swap. In Flash Trade, the efficiency is supported by the competitive nature of Kinetex's resolving solution and built-in liquidation system. In order to execute transactions successfully, resolvers must act quickly and offer advantageous rates, ensuring a favorable and prompt swapping experience.
While the potential of cryptocurrencies is immense, particular challenges — inaccessibility, security risks, and inefficiency — hinder their development and mass adoption. As the crypto ecosystem matures, overcoming these hurdles is crucial to realizing the vision of a decentralized, inclusive, and widely adopted financial future based on crypto. Therefore, addressing these challenges must be a priority for the DeFi community, as it is for the Kinetex team.