In a recent Sora Coin Investment Thesis (XOR), the Cointelegraph Research team explored the current state of the DeFi industry, highlighting the biggest challenges facing the industry today. The two biggest problems are scalability and separation of several independently located blockchains that cannot communicate with each other. The Polkadot project seeks to address these bottlenecks by providing blockchain transfers for all types of assets. It also provides scalability by distributing transactions and validation across multiple parallel blockchains.
You can download the entire investment dissertation on SORA (XOR) here.
Polkadot aims to improve two key components of the DeFi economy, namely automated market makers and decentralized cryptocurrency exchanges. Connecting to Polkadot through the SORA network enables the Polkaswap Decentralized Exchange (DEX) to offer significantly higher transaction performance than its competitors, while maintaining reasonable transaction fees. As of March 22, the largest DEX Uniswap Ethereum recorded a daily trading volume of $ 1.08 billion, while the largest DEX Pancake exchange from Binance Smart Chain was $ 860 million. Coinbase, one of the largest centralized exchanges, listed $ 1.7 billion. There is definitely a demand for commercial infrastructure, and Polkaswap is likely to gain a foothold as the DEX Bolcadot flagship.
However, the Sora project is not limited to another blockchain in the Polkadot ecosystem. Rather, it sets an ambitious goal of becoming a supranational monetary system that competes with modern government monetary systems. In order for this to be possible, Sora will require the current acceptance of XOR as a payment method. Instead of being a stable currency linked to the value of a fiat currency, Sora’s price is driven by a flexible offer driven by a smart contract. This means that when the price of the XOR token rises and reaches a critical level, buyers can buy newly issued tokens directly from the “buy” smart contract, instead of in the secondary market from a negotiable offer owned by current owners. Conversely, if the price falls, users can sell tokens under a smart contract for sale. This algorithm adjusts the amount of tokens in circulation, thus minimizing price volatility.
Furthermore, the XOR correlation curve is different from the curve used in other DeFi projects because instead of over-collateralization as 150%, the XOR correlation curve is close to 100%; It is fully protected by assets used to purchase XOR from a smart contract. At the same time, this is not a loan, because when you buy XOR, an asset is issued that served as a down payment. Therefore, the XOR bond basket’s smart contract does not inflate the financial basis, and the XOR buyer does not risk weakening or liquidating collateral, as is the case with digital assets locked in DAI’s collateralised debt positions.
To learn more about the SORA network and other coins on that network, PSWAP and VAL, you can download the report for more information.