SXT: Unlocking A More Data-Driven DeFi
DeFi Summer of 2021 undeniably brought DeFi into the spotlight and paved the way for the future of finance. It marked a period of exponential growth and innovation across the entire web3 ecosystem. From automated market makers to algorithmic lending platforms, the evolution of DeFi has brought about significant advancements.
However, DeFi also has an Achilles' heel—smart contracts’ inability to access data. For DeFi to reach the next level of sophistication, especially with complex financial instruments like cross-chain derivatives and tokenized RWAs, it needs to become more data-driven.
In order to understand the limitations of the current state of DeFi, let’s look at a simple analogy.
In TradFi, if you want to borrow money, you get a personalized loan from a bank. If you've paid off previous loans on time, the bank keeps a record of your positive history and might offer you a better interest rate the next time, rewarding your reliability.
In DeFi, however, it’s like applying for a new loan each time, because lending protocols can’t access your personal history or past behavior. Smart contracts lack the ability to access historical data or query past interactions. As a result, they can't offer personalized rewards or better terms based on your past performance, nor can they easily identify high-risk borrowers.
We believe the next generation of DeFi will bring more complex financial instruments onchain, such as lending markets with dynamic interest rates, and tokenized RWAs. Unlocking these use cases requires a trustless, crypto-native query engine that can provide smart contracts with the proper context to facilitate more sophisticated DeFi.
Let’s take a look at one of our ecosystem partners, Lendvest, and how they've built on SXT.
Lendvest is a non-custodial protocol that enables fixed-term loans for DeFi lending protocols. By offering longer-term loans and better rates on existing platforms, Lendvest enhances the capital efficiency of the DeFi lending market. With SXT's data indexing and real-time query capabilities, Lendvest can more accurately assess borrower behavior and offer personalized lending terms, thereby improving overall market efficiency and risk management.
How is SXT unlocking a more data-driven DeFi?
SXT Chain can essentially be defined as a decentralized database that witnesses data from onchain and offchain sources, secures it, and stores it for devs to query using Proof of SQL, SXT’s ZK coprocessor.
Stay with me as it’ll be much easier to understand the above by understanding how SXT is solving the issue of trustless data access in DeFi.
1. ZK Coprocessor for Safe and Efficient Data: SXT’s Proof of SQL enables developers to quickly and verifiably query large datasets with sub-second latency, allowing smart contracts to process data in real time. By using zero-knowledge proofs, it ensures both the accuracy and integrity of queries. This enables faster, trustless data access—crucial for DeFi platforms managing complex tasks like dynamic interest rates and cross-chain transactions.
2. Real-Time Data Access for Smart Contracts: SXT Chain enables smart contracts to access real-time data from major blockchains like Ethereum, Bitcoin, ZKsync Era, and Polygon. This process captures data from the genesis block onward, giving developers access to the full history of each chain, updated in real-time. This enables smart contracts to make more informed decisions by utilizing data from various blockchains and offchain sources, unlocking advanced use cases like tokenized assets, thus facilitating a more dynamic DeFi ecosystem
3. Solving the Fragmented Data Issue: DeFi has struggled with fragmented data, as generally smart contracts can’t access data across different blockchains or offchain sources. SXT Chain solves this by integrating onchain and offchain data into a unified, decentralized database. Developers no longer need centralized databases or manual aggregation, as data from multiple chains and offchain sources is securely stored and easily accessible. This enables the creation of more sophisticated, interconnected DeFi applications leveraging real-time, cross-chain, and even offchain data.
SXT is tackling key challenges in data access, efficiency, and fragmentation currently faced by DeFi. By introducing the aforementioned technology, SXT empowers developers to create more sophisticated onchain applications that can fully leverage data from multiple chains in real-time
With unique features like sub-second ZK coprocessing for fast data access, indexing across major blockchains, and a unified solution to the fragmented data problem, SXT is providing the tools needed to build the next generation of DeFi protocols. By offering a more efficient, secure, and unified data model, SXT aims to pave the way for complex, data-driven financial instruments which will drive the future of DeFi.
