Everyone who knows anything about computers and money agrees that crypto is the future.
There is a precise movement toward decentralization as people worldwide discover the freedom of peer-to-peer transactions in a world increasingly dominated by cryptocurrencies.
On the road to complete decentralization, however, innovative methods must be taken and complex infrastructure built to accelerate the adoption of decentralized finance (DeFi) and to accommodate the complexities of the current centralized financial system.
Such nuances include simplifying complex processes to provide the best possible service to customers.
Multiple prototypes will be created, refined, and sometimes scrapped to reach this goal.
This article focuses on one DeFi-related innovation: the Reef ecosystem, home to the most advanced EVM-compatible blockchains. Reef’s platform aspires to do the same for users of financial apps that payment switches do for consumers of retail goods.
The Reef blockchain
As its foundation, Reef was built on Parity’s Substrate SDK. Due to this feature, it can interact with Polkadot parachains and function as a node in the Web3 network of chains.
Due to its compatibility with the Ethereum Virtual Machine (EVM), Reef makes it simple to deploy EVM-based decentralized applications (DApps) and develop on, especially for developers already versed in Solidity, Ethereum’s core coding language.
The blockchain relies on the NPoS consensus process for creating new blocks and on Proof of Commitment (PoC) for choosing new members of the Technical Council.
Reef burns all network fees (including those for smart contracts), and Validators receive their compensation from a predetermined pool of funds.
Doing so eliminates the financial motivation to design contracts with hefty fees—which can lead to network congestion—.
How Reef governance works
The Reef has a more direct way for upgradeability thanks to implementing a governance architecture superior to that of Bitcoin (BTC) and Ethereum (ETH).
With Proof of Work (PoW) protocols like Bitcoin and Ethereum, miners vote on which updates should be implemented.
This approach causes inertia and resistance to improving scalability, which is bad for mining profitability.
Contrarily, Reef facilitates collaboration between a Technical Council and Validators to implement network changes.
The Technical Council
Modifications to the network must be reviewed and approved by the Technical Council.
Anyone willing to risk Reef casting a vote for a Technical Council member will be incentivized to choose candidates who will serve for a long time and do a good job.
These individuals are chosen through a PoC consensus process. PoC is comparable to Delegated Proof of Stake but includes a much more extended bonding period of at least a year.
Decisions about technical aspects such as block size, block time, and throughput are made by the Technical Council.
To implement these changes on-chain, the Technical Council’s consent is required.
Validators
Validators are responsible for operating a node and processing blocks of valid transactions. To select these, the NPoS consensus procedure is used.
All transaction fees are, as was previously said, incinerated on the Reef. As a result, validators receive compensation from a reward pool that grows with inflation each year (now around 8%).
What Is REEF?
The Reef network developed the REEF coin, serving as a governance token and a utility token. As a result, its owners can use it for transaction fees and governance activities.
You can become a validator by staking REEF tokens and using them as a utility tokens to pay for blockchain-related services like transactions and data storage.
Token owners have a voice in crucial network decisions, such as which validator joins the network. One’s stake in the system is proportional to the number of REEF tokens one own. The token holders contribute to the upkeep of the Reef platform by adding new blocks of data to the blockchain, just like Bitcoin miners do.
What Is the REEF Token Used For?
The need that the REEF token aims to fill must be appreciated if its utility is to be grasped.
Decentralized applications (DApps) that facilitate financial transactions are the lifeblood of the decentralized finance (DeFi) system.
These decentralized applications (DApps) use tokens for transactions, yet, they are often above the technical ability of the typical user because they involve the use of cryptocurrency wallets and blockchains.
Say Bob has some USDT and wants to utilize a hotel booking DApp that supports it.
However, if his tokens are kept in cold storage on a blockchain incompatible with the DApps, he may be unable to complete the transaction.
You will need to use a centralized exchange to make the purchase. But it’s possible he doesn’t have an account or isn’t sure how to set one up. That’s what the Reef network is trying to fix.
The Reef network’s goal has always been to create a cross-chain DeFi operating system that facilitates the exchange of tokens representing value across different blockchains.
This paves the way for the value exchange between regulated and unregulated markets.
The Reef blockchain will provide a cross-chain operating system for DApp developers, allowing them to transfer value between networks.
It’s an intermediary between Bob (the requester) and the service provider (the vendor of the DApp).
Like the hundreds of tokens built on the Ethereum blockchain, the Reef chain may support the creation of more tokens.
Essential Aspects of the Reef Ecosystem
Proof of Stake, Nominated
Cryptographic puzzles are solved by nodes using specialized hardware in PoW.
Thus, a lot of money is spent on buying these machines to execute the computations, known as mining, and a lot of electricity is used in the process.
There are fewer energy problems with PoS-based blockchains than with PoW-based blockchains like Bitcoin.
Reef’s energy needs are the same as those of a large commercial building. Bitcoin, by itself, uses more energy than Poland.
In light of climate change and the need to reduce our reliance on nonrenewable energy sources, blockchains that employ the Proof-of-Stake (PoS) mechanism are expected to pioneer the next phase of financial decentralization.
Ethereum Virtual Machine Compatibility
The blockchain protocol Reef runs on is written in the Solidity computer language. The EVM, among others, uses Solidity, an OOL used for developing smart contracts.
This compatibility means developers of decentralized applications (DApps) on the Ethereum network can quickly bring their DApps to the Reef network without altering their code.
On-Chain Upgradability
Reef chains can improve and evolve in ways neither Bitcoin nor Ethereum can. To upgrade a blockchain, the chain must be split in two (a process known as a “hard fork”), which has slowed the technology’s progress.
Some cryptocurrencies have attempted to implement centralized development procedures in their governance frameworks. Ethereum, on the other hand, is upgradable thanks to its active development team, but the network’s widespread decentralization has made it difficult to implement beneficial improvements. The emergence of on-chain upgradability has made it possible to create newer versions of the blockchain without compromising its decentralized nature or disrupting its current operation.
Should You Put Money Into Reef Blockchain?
By lowering the threshold on technical complexity, Reef makes it easier for individual investors to take advantage of DeFi frameworks. This will encourage more financiers to join the network and lay the groundwork for Reef to develop into a leading DeFi service.
Because of its extremely low fees, Reef Chain has a great possibility of dominating the market for cross-chain service providers. It has the potential to become the backbone of most DApps due to its capacity to overcome the scarcity of funds in DEXs by bridging CEXs and DEXs and serving as an aggregator of liquidity.
The network offers various possibilities, from a decentralized trading platform to the REEF Baskets engine and the REEF smart yield engine. All of these have an easy-to-navigate UI. Compared to Bitcoin’s (3,600 seconds) and Ethereum’s (600 seconds+), this blockchain’s transaction finality rate is far faster at 40 seconds. Its block time is significantly shorter (10 seconds) than those of Bitcoin and Ethereum.
Conclusion
The ability to transact between chains is rapidly becoming an essential part of the decentralized system. The efficacy of adopting decentralized systems versus centralized systems will be further enhanced now that transfers may be made between blockchains and different DApps.
It’s common knowledge that the key to success in any industry is an eye for opportunity. To rephrase, it’s essential to have financial foresight if you want to succeed. If you missed Bitcoin’s promise a decade ago, here’s another chance to capitalize on cryptocurrency innovation by incorporating the next big thing in the distributed ledger technology (DeFi) space: interoperability.
The Reef network is a significant advancement over previous blockchains and may even serve as a liquidity bridge in the future (or payment switch, as we know it). In addition, it provides developers with the Reef chain building tools and investors with the chance to gain from the anticipated expansion of decentralized financial systems. This is your chance to go on a wild ride around the DeFi sector, so I hope you enjoy exploring.
