# Problems in DeFi

The problems currently plaguing today’s DEXes are, for the most part, not caused by any technology issues specific to the platforms themselves. The reason why people do not trade on them or do not lend them their liquidity lies in the high gas costs associated with doing so. At the time of this paper, an average Ethereum-based DEX user would find transaction fees unsustainable for small and medium size tickets. This makes it not practical for small trades and it creates limits on who can participate and make use of the decentralized finance promises.

Unfortunately, these scalability and gas-driven problems bring in some unintended consequences, such as bots and miners reprioritizing or creating transactions that benefit from market movement at the cost of the average user. In order to fix many of these issues, blockchain networks have been moving toward different security models: opting for PoS as a solution to increase scalability and speed, while lowering transaction costs. This has worked in some ways but still faces the same PoW challenges. As adoption grows, the network gets congested and consequently causes increasing transaction costs. At the same time, security levels are sub-optimal compared to PoW networks that provide provable financial security. Ultimately, it seemed impossible to simultaneously have scalability, speed and security.

Kadena has proven to be the only blockchain able to solve this infamous trilemma.


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