Another breakthrough in DeFi 2.0 is the frictionless integration of cross-protocol liquidity. While older DeFi projects largely worked in isolation, this feature was created in a fractured manner that doesn’t allow others to easily share or interact with other applications’ liquidity pools. Tapping into cross-protocol liquidity, DeFi 2.0 would have a more cohesive and effective ecosystem. Users will be able to get access to liquidity across multiple platforms, which shall decrease slippage and increase trading efficiency.
For instance, protocols like Curve Finance have been early innovators in developing the concept of liquidity aggregation: aggregating liquidity from different sources can provide users with the best possible rate. Approaching liquidity cross-protocol goes a long way in increasing the general liquidity available in the DeFi ecosystem and therefore improves the user experience.
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