A new decentralized finance (DeFi) “money Lego” will allow app developers to make it possible for users to automate their transactions. Called Gelato, the protocol moved from alpha to a live and audited v1 on Ethereum’s mainnet on July 3.
And, according to a blog post shared early with CoinDesk, decentralized exchange (DEX) Gnosis will be the first major platform to integrate Gelato, allowing users to swap and withdraw tokens in a “seamless Uniswap-like UX.”
“It's a network that transacts on behalf of users or even dapps themselves, based on some conditions, like price or the collateralization ratio of a debt position,” Gelato co-founder Hilmar X. Orth told CoinDesk.
In short, the project gives developers simple infrastructural pieces to plug DeFi into decentralized applications (dapps).
Gnosis did not return requests for comment by press time.
Blockchains do not easily lend to trading without a little tech wizardry. They are slow and expensive to keep up, and users must bid against one another to record a transaction on the ledger.
Regardless of the difficulties, DeFi projects have attempted to build a new financial system on top of blockchains because of their other valuable features, namely their permissionless nature. The Ethereum blockchain has been a common choice for DeFi – quickly approaching $2 billion currently “staked,” or pledged, as collateral – for numerous reasons, mostly boiling down to Ethereum’s rich programming language which makes building projects easier.
Money Lego are tech stacks that allow different applications to fit (or be shoved) into other projects. For example, you can deposit ether (ETH) into MakerDAO, receive the stablecoin dai (DAI) and then lend it on Compound to a trader in order to earn the network’s governance token COMP.
That being said, the infrastructure for connecting these crypto-financial Lego is still being cast. Gelato is just one such project bringing composability to DeFi and dapps, Orth said.
“For example, we have a developer building Gelato into his smart contracts, which will withdraw funds from the wallet of his users to his smart contract every month, as an insurance premium payment. If the user then runs out of cash, the insurance will automatically be cancelled and the claims of the user [will] be burned,” Orth said.
Gelato has integrated with data provider Chainlink to supply gas rates on the Ethereum network as well, according to a July 3 blog. The pairing allows users to select gas prices based on current network congestion in order to lower settlement costs.
Orth said the project’s code base will hopefully transfer by “the end of the year” to a decentralized autonomous organization (DAO) for maintenance consisting of dapps using Gelato. Gelato will self-finance through network fees collected by the DAO, he said.
“It's just really a new way of building dapps that schedule asynchronous transactions right from their smart contracts,” Orth added.
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