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The Evolution of DeFi: How Orbs and Layer 3 Are Pioneering Sustainable Use Cases
The Decentralized Finance (DeFi) sector has grown exponentially over the years, yet it faces a persistent challenge: How many use cases are truly generating sustainable revenue and meaningful user engagement? A "true use case" in this context refers to a service that is technically viable, scalable, and favored by users due to its solid, enduring business model.
Despite impressive advancements, the DeFi ecosystem continues to struggle with delivering consistent returns and widespread adoption. By addressing core issues and exploring new technological layers like Layer 3, companies like Orbs are paving the way for a more sustainable and scalable DeFi future.
Current Landscape: Layer 1 and Layer 2 in DeFi
DeFi primarily operates on two foundational layers:
- Layer 1 and Layer 2 Blockchain Infrastructures: Platforms like Ethereum, Solana, and Base form the technical backbone, providing the infrastructure necessary for DeFi applications.
- DeFi Decentralized Applications (DApps): Solutions such as Uniswap, PancakeSwap, and Aave deliver services like decentralized trading, lending, and staking on top of the blockchain layers.
While these layers establish much of DeFi's value, they face critical challenges that hinder sustainable growth. Key issues include fragmented liquidity, operational inefficiencies, and restrictive scalability.
Key Challenges in DeFi
Liquidity Fragmentation and Interoperability Issues
One of DeFi's primary roadblocks is liquidity fragmentation arising from the coexistence of multiple competing blockchains that lack full interoperability. This problem impacts cost-efficiency in trading and creates a suboptimal user experience.
Operational Inefficiencies
DeFi DApps often struggle with basic operational benchmarks. Complex wallet integrations, slow transaction speeds, and non-intuitive user interfaces (UX) prevent them from competing with the streamlined experiences offered by centralized finance (CeFi) players and Web2 platforms.
Limitations of Smart Contract Infrastructure
In addition to creating functional bottlenecks, existing smart contract infrastructure faces issues related to limited scalability and insufficient adaptability for complex use cases. Without addressing these inherent limitations, the growth of DeFi into a sustainable, scalable ecosystem is unlikely.
Enter Layer 3: The Middleware Solution
To overcome these entrenched challenges, the DeFi ecosystem increasingly looks toward Layer 3 middleware. Functioning as an intermediary layer between Layer 1/2 blockchains and application layers, Layer 3 enhances scalability and functionality by introducing specialized services tailored to specific needs.
Orbs, a leading Layer 3 blockchain protocol, has emerged as a key player in demonstrating how middleware can unlock new opportunities to scale DeFi and improve its core infrastructure.
Orbs’ Role in Layer 3: Solving DeFi’s Core Issues
Orbs is positioned as a Layer 3 protocol, designed to enhance the capabilities of Layer 1 and Layer 2 blockchains without requiring existing DApps to migrate liquidity or infrastructure to another chain. By offering advanced technical solutions, Orbs enhances decentralization, execution, and operational efficiency.
Strengthening Decentralization
Many DeFi apps depend on centralized services, such as AWS servers, for computational tasks and backend management. By decentralizing these processes and eliminating single points of failure, Orbs addresses hidden centralization issues while boosting the trust and reliability of DApps.
Using a proof-of-stake (PoS) consensus mechanism, Orbs relies on its Guardian network nodes for governance and security. Token holders stake ORBS tokens on Ethereum and Polygon to earn staking rewards, further fostering community involvement.
Orbs’ Core Use Cases: Driving Innovation in Decentralized Trading
Orbs has identified and addressed significant gaps in the decentralized trading landscape, developing innovative solutions like dLIMIT, dTWAP, and its Liquidity Hub to enhance DeFi’s functionality and scalability.
Advanced Trading Protocols: dLIMIT and dTWAP
Traditional decentralized exchanges (DEXs) like Uniswap operate on Automated Market Maker (AMM) mechanisms, often supporting only basic market orders. However, Orbs delivers a more sophisticated suite of trading strategies:
- dLIMIT Protocol: Enables decentralized limit orders, allowing users to execute trades only at pre-defined target prices, greatly reducing risks associated with market order volatility.
- dTWAP Protocol: Divides large trades into smaller transactions executed over time to minimize price slippage and maintain market price alignment, a valuable feature for navigating volatile crypto markets.
With dLIMIT and dTWAP integrated into over 15 major DEXs—including PancakeSwap, SushiSwap, and QuickSwap—these protocols have already demonstrated their practical efficacy. For instance, PancakeSwap, which handles over $200 million in daily trade volume, showcases the transformative potential of Orbs' Layer 3 functionalities.
Liquidity Hub: Consolidating Fragmented Liquidity
The Liquidity Hub is Orbs’ flagship DeFi innovation, aimed at consolidating liquidity across chains and external sources to improve trade efficiency. This solution enables:
- Superior Trade Quotes: DEXs gain access to broader liquidity pools, reducing price impact and providing competitive trading terms.
- MEV (Maximal Extractable Value) Protection: Mitigates risks associated with arbitrage by ensuring equitable transaction execution.
DEXs benefit from engaging new users while traders enjoy optimized pricing, creating a sustainable model for long-term growth.
Futures Liquidity Hub: Pioneering On-Chain Derivatives
On-chain derivatives trading in DeFi has long been underdeveloped compared to centralized markets. Orbs is working to close this gap through its Futures Liquidity Hub, which integrates futures trading capabilities into existing DEX frameworks.
Despite launching within the past year, the Futures Liquidity Hub has already exceeded the transaction volume of Orbs’ original Liquidity Hub, underlining its potential in the expanding on-chain derivatives market.
Enhancing UX with the Open DeFi Notification Protocol
Orbs also directly improves the user experience through its Open DeFi Notification Protocol, a free, decentralized notification app. Accessible on iOS and Android, this tool provides critical alerts related to transaction monitoring, gas fee fluctuations, and impending liquidations.
Though not a direct revenue driver, this protocol enhances user satisfaction and retention, critical for the widespread adoption of DeFi platforms.
Strategic Expansion: EVM and Beyond
With 61% of blockchain total value locked (TVL) concentrated on Ethereum, Orbs strategically focuses on EVM-compatible networks such as Polygon, BSC, and Arbitrum. By deploying its solutions across ten EVM-compatible chains, including Ethereum, Base, and zkEVM, Orbs strengthens its multi-chain capabilities.
Beyond EVM chains, Orbs has forged key partnerships with Non-EVM blockchains such as TON, supported by Telegram. Collaborative projects like TON Access and TON Vote underscore Orbs’ commitment to diversifying its presence in the blockchain space.
Proving Sustainability Through Practical Innovation
The long-term viability of DeFi depends on its ability to deliver both meaningful revenue and sustained traffic. Orbs directly addresses these goals through robust integrations, like its advanced trading protocols, scalable Liquidity Hub solutions, and strategic forays into derivatives markets.
With a presence on all major South Korean exchanges—Upbit, Bithumb, Coinone, and GOPAX—Orbs continues to bridge the gap between innovation and accessibility. As DeFi matures, Orbs’ middleware approach to Layer 3 technology positions it as a pivotal force in shaping the future of decentralized finance, eliminating inefficiencies and unlocking new growth opportunities.
