Rai Finance is a decentralized cross-chain exchange that is set to provide the DeFi sector with a diverse range of assets, higher liquidity, and a wider financial use case. 

Decentralized Finance (DeFi) has seen the greatest rally of the crypto world this year. But with the level of interest and attention the sector has gotten, it has also faced the challenge of scalability all year round. And at the rate at which analysts have overflogged the scalability issue, it has begun to sound like a cliche. However, regardless of the way the scalability issue is being spoken about, one fact is that there is no way DeFi could move forward without addressing this major challenge.

Rai Finance has been purported as the solution for the DeFi sector. Rai is a DeFi project that is built on the Polkadot blockchain. The project sets out to establish a DeFi ecosystem that seeks to solve the problem that comes with building DeFi-based digital assets.

In this post, we would look at Rai Finance and how the project would be invaluable to the DeFi subsector.


Rai Finance was founded by a team of crypto experts who are experienced in trading and how DeFi works. 

Kevin Lee

The team is led by Kevin Lee, who is the Chief Executive Officer. He is also the co-founder of VIU, as well as the research analyst at Honestfund.

Minkyu Cho, the co-founder of top social trading platform, League of Traders, is the CTO of Rai Finance. Cho also has the honor of being the co-founder of the first decentralized exchange (DEX) on EOS, DEXEOS. 

Another member of the team is Sandy Liang, who handles all communication-related issues for the firm. She is also the senior operation manager at Ontology.

All in all, Rai Finance is in safe hands as the team members are veterans who have verifiable experience working in the blockchain industry. They have been able to prove their mettle by establishing and operating in the industry’s top consulting firm, Layer 1 Protocol, dApps, and Decentralized Exchanges (DEX).

What is Rai Finance?

Rai Finance is a decentralized cross-chain exchange that is set to provide the DeFi sector with a diverse range of assets, higher liquidity, and a wider financial use case. 

The massive growth DeFi has seen this year has drawn loads of plaudits and attention to it. The industry grew from having a total value locked (TVL) of $1 billion in June to having over $10 billion in its TVL, as of November. The sector’s major challenges have been that liquidity, scalability, and the paucity of choice when it comes to available assets.

Rai Finance solves all of these problems with the introduction of its layer 2 scalability. This means the Rai helps to improve the swap protocol and the automated market at the same time. All of these were hitherto impossible, but with Rai’s native token, RAI, the DEX is set out to help DeFi improve its scalability while offering an increase in the numbers of digital assets that are open to the industry.

RAI would be combined with the cross-chain compatibility of the Polkadot ecosystem. It is this feature that enables decentralized financing with access to new assets while also giving room for more liquidity.

Issues facing the DEX Ecosystem 

Rai Finance would be solving the following challenges that the DEX ecosystem faces:

  • High network fees 

The network fees charged on Ethereum has increased exponentially in recent while. The high fees have led to the pricing out of the small scale retail investors.

This high transaction fee would need to be solved if DeFi is going to gain a wider acceptance from the general public.

  • Lack of diversity in asset types

When it comes to asset types supported by DEX, the option is restricted to ERC20 tokens and single-chain transactions are the main supported option especially when it comes to Ethereum-based DEXs. 

This lack of freedom in choosing a variety of asset types outs is one limitation facing the DeFi world.

Rai Finance Protocol Features 

Rai finance protocol would be designed to support a wider range of assets, while providing more liquidity, and more financial uses for the DeFi system. 

The design of the protocol is set in such a way that it would be breaking whatever limitations that might be holding DeFi back. 

The architecture of Rai Finance is structured in a way where it provides layering for secure off-chain transactions with its on-chain settlements. This would enable complex computations and more efficient transactions without losing the security and decentralization of blockchain. 

The complexity and speed of this architecture would lead to more opportunities that were traditionally exclusive to centralized exchanges.

As such, Rai is bringing opportunities in CeFi to DeFi.

Rai Finance Secure Off-chain Transactions

Many would wonder how Rai would be improving the scalability issue that is battling DeFi. It turns out that the protocol could achieve this goal via Secure Off-chain Transactions through the use of Zero-knowledge Proofs for trustless computation and cryptographic accumulators for immutable data storage, a layer 2 solution that would provide scalability, transparency, and privacy in transactions. 

Furthermore, by putting most of the work off-chain, the cost and time of each transaction would be greatly reduced. This would, thus, enable a larger variety of previously out-of-bounds financial use cases.

At the end, transactions and computations for trades would be performed and validated off-chain instantaneously, while the final settlement is being made on-chain.

Ray Finance Cross-chain Asset Capability

Rai would be getting a more varied type of asset when it is integrated into the Polkadot ecosystem. This is going to be done through the compatibility of Polkadot’s relay chain with the cross-chain protocol. 

As Rai Finance develops, the smart contract capability of the Polkadot ecosystem would allow for the possible integration of unique assets and non-fungible tokens (NFTs). Essentially, this would ensure that there is an increase in the numbers of assets that the protocol would be able to support as time goes.

RAI (Protocol’s Native Token)

As stated earlier, Rai Finance’s native asset is the RAI token. Recently, it is expected that the token would play the following roles in the governance proposals:

  • Transaction Fee

The protocol would take a certain percentage on every transaction. The transaction charges are then divided into two equal parts; a part of the fee is taken by the liquidity provider and the other via a token burn.

  • Asset Generation

Users that create assets based on their tradings or yield strategies and users who invest in these strategies must stake RAI which correlates directly with their exposure.

  • Governance

Users would be able to vote on issues like transaction fee burn, liquidity mining, pool staking fees, etc. This is done through the governance function of the RAI protocol.

  •  Network Incentives 

RAI would be used to reward and draw the attention of users and traders who provide liquidity on the protocol. The variability of the protocol would ensure that users can maximize their profit by selecting the best liquidity pool while also receiving RAI.


DeFi has grown massively in 2020, there is no denying that. However, upon its growth, the paucity of choice users face and the challenge of scalability keeps holding the industry back.

Rai Finance is aimed to help the DeFi sector improve on these major challenges by working around how it is going to ensure more scalability while still give users an avalanche of opportunities to choose from a wide variety of digital assets.

The protocol would achieve this by integrating on the Polkadot ecosystem while using its native token, RAI, to achieve these aims.