Boxmining

Author: Ben Chan

  • Understanding Layer 2 & Scaling Solutions: Arbitrum, Boba, Optimism, Polygon, Ethereum 2.0

    Understanding Layer 2 & Scaling Solutions: Arbitrum, Boba, Optimism, Polygon, Ethereum 2.0

    One of the core problems with the Ethereum network today is scalability. As more and more decentralized apps (dApps) are built on the network, the number of users and transactions increases. This has slowed down the speed of transactions and driven up the cost of using the network, creating the need for scaling solutions.

    At its full capacity, the Ethereum network is only able to process 15 transactions per second. To put Ethereum’s scaling limits into perspective, consider that Visa handles around 1,700 transactions per second on average. Therefore, increasing the network capacity in terms of speed and throughput is fundamental to the meaningful and mass adoption of Ethereum.

    There are multiple solutions being researched, tested and implemented that take different approaches to achieve similar goals. Two solutions that we will explore in this article are known as sidechains and optimistic rollups.

    Check out our explainer video on layer 2 solutions such as Arbitrum, Boba, Optimism, and Ethereum 2.0

    Layer 2 solutions explained (Arbitrum, Boba, Optimism, Ethereum 2.0)

    What is Layer 2 and How Does it Work?

    The Ethereum main chain is known as Layer 1. Layer 1 applications and smart contracts interact directly with the native chain. Layer 2 refers to a series of different protocols that facilitate the creation of smart contracts and decentralized applications (dApps) on top of the core Ethereum blockchain.

    Operating on Layer 2 frees up Layer 1 by taking transactions off the main chain, offloading it to Layer 2, enabling them to interact, and then recording the remainder of the whole transactions back to Layer 1. Due to transactions being processed off-chain on Layer 2, Ethereum benefits from higher transaction processing capacity, faster confirmation times, and lower gas fees. 

    In fact, many believe that Layer 2 solutions will be how Ethereum wins over mainstream users. It is estimated that 2,000 – 4,000 transactions per second can be processed in Layer 2, which is already in line with Visa’s processing capabilities. By combining the scaling of Layer 1 with Ethereum 2.0 and Layer 2, Ethereum is set to obtain a powerful economic bandwidth.

    Sidechains: Polygon Network

    Sidechains are a Layer 2 solution utilizing separate blockchains that run in parallel to the Ethereum main chain but operate independently, hence increasing its scalability. 

    Polygon is the most popular sidechain that aims to scale Ethereum by building and connecting Ethereum-compatible blockchain networks. Polygon operates on its own consensus mechanism and also has its own native token known as $MATIC.

    Because sidechains run on a separate blockchain, they do not inherit the security of Layer 1. If a sidechain is hacked or compromised, the damage will be contained within that chain and will not affect the main chain. Conversely, should the main chain become compromised, the sidechain can still operate.

    Sidechains also provide room for a lot of flexibility, allowing developers to experiment with new features or software updates before pushing them onto the main chain.

    Rollups Explained: Optimistic Rollups & Zero Knowledge Rollups

    Rollups are another Layer 2 solution intended to solve Ethereum’s scalability and complement the network. Rollups interact with the main chain, therefore inheriting Layer 1’s security features as well as its secure consensus mechanism. The term ‘rollup’ refers to the way that the chain bundles many transactions to be submitted to the main chain.

    Because rollups use smart contracts that reside within Ethereum, they do not require a native token like Polygon, but instead use $ETH as their currency. Rollups seem to be the most sound scaling solution for Ethereum as it does not compromise the security and sovereignty of Layer 1.

    There are basically two types of rollups: Optimistic Rollups and Zero Knowledge Rollups (ZK Rollups). Both aim to scale Ethereum by processing transactions on Layer 2 before submitting the results back to Ethereum. However, the difference is in how they validate transactions. 

    In simple terms, Optimistic Rollups assume that transactions are valid — hence an optimistic outlook. However, it also allows what are called “watchers” to call out fraudulent transactions since blockchain is transparent and public. If a watcher proves instances of fraud, the transaction is reverted, the bad actor penalized, and the watcher rewarded to incentivize them.

    On the other hand, Zero Knowledge Rollups attempt to prove that transactions are valid. They do so by submitting validity proof to an Ethereum smart contract along with the bundled transactions.

    Optimistic Rollups are currently the more popular option, so let us look at some projects that have adopted this mechanism. These projects are Arbitrum, Boba, and Optimism.

    Optimistic Rollups: Arbitrum, Boba & Optimism

    Arbitrum, Boba and Optimism are 3 projects which have the same goals of scaling Ethereum and reducing gas fees. All of these Layer 2 projects are competing with one another to be the best network. Therefore, each project offers different features to stand out from the others.

    • Arbitrum describes itself as a Layer 2 solution designed to improve the capabilities of Ethereum smart contracts — boosting their speed and scalability while adding additional privacy features to boot. Arbitrum is, according to the team, around 90-95% cheaper than Ethereum. And with their Nitro being launched soon, they expect costs to be cut even further.
    • Optimism is an EVM-compatible Optimistic Rollup chain designed to be fast, simple, and secure. Optimism pledges to uphold the values of Ethereum by producing infrastructure that promotes the growth and sustainability of public goods.
    • Boba Network is a next-generation Layer 2 scaling solution that reduces gas fees, improves transaction throughput, and extends the capabilities of smart contracts, shrinking the Optimistic Rollup exit period from seven days to only a few minutes, while giving liquidity pools (LPs) incentivized yield farming opportunities.

    Arbitrum’s fraud proofs seek to find the particular point of disagreement over transaction history. In contrast, Optimism’s tech looks at fraud a bit more holistically. And this means that Arbitrum has a higher transaction capacity equating to higher performance.

    Optimistic Rollups have a time period in which users can dispute transactions and call fraud. Both Arbitrum and Optimism allow one week for that dispute period, which means that transactions in a bundle under suspicion can be held in limbo for one week before they are verified and released. This is where Boba comes in as a serious player. 

    Instead of having funds locked for several days, Boba’s solution brings the dispute period down to only a few minutes. It also provides incentivized yield farming opportunities, both serving as very attractive features in comparison to its competitors. 

    Will Ethereum 2.0 Make Layer 2 Solutions Irrelevant?

    Ethereum 2.0 is regarded as the long-term solution that can bring speed, efficiency, and scalability to the Ethereum network. The long awaited upgrade will move the network from a Proof-of-Work consensus to a Proof-of-Stake consensus, a much more energy efficient method of maintaining the network that uses validators instead of miners.

    Ethereum 2.0 is currently slowly being released in different phases and will ultimately speed up transactions as well as drastically reduce the cost of gas fees. That brings up the question: Will Ethereum 2.0 make all these Layer 2 solutions irrelevant?

    While there are many different opinions and discussions surrounding this topic, however, we think that all of these solutions can coexist and benefit the network as well as its economy.

    This is because despite the upgrade, Ethereum 2.0 may still not be able to handle the amount of transactions per second required for widespread adoption. The impressive capabilities of Layer 2 solutions could eradicate Ethereum’s scalability issues for good, allowing the network to improve other aspects and prevent congestion on the main chain.

    Final Thoughts: Why Are So Many Solutions Needed?

    There is no debate that Ethereum has a stronghold over developer mindshare. It is the first network that enabled developers to build truly unstoppable decentralized applications with global distribution from day one. But competition is coming fast, and as it stands today, Ethereum will not be able to handle the scale necessary for millions of users. If the network wants to retain the same level of decentralization, it will have to look for new ways to structure use around the main blockchain. 

    As such, there are currently several Layer 2 solutions that aim to resolve Ethereum’s scaling issues. There are also some hybrid solutions which seek to improve the network’s scalability by combining the technologies. But is there really a need for so many solutions?

    We say yes, because multiple solutions can help reduce the overall traffic on any one part of the network, and also prevent single points of failure. The whole is greater than the sum of its parts. Different solutions can exist and work in harmony, allowing for an exponential effect on future transaction speed and throughput. Furthermore, not all solutions require utilizing the Ethereum consensus algorithm directly, and alternatives can offer benefits that would otherwise be difficult to achieve.

    If Ethereum achieves its full potential of becoming a global trust layer, it is likely that these solutions and more will be required to scale the network in combination with Ethereum 2.0. In the future, the Ethereum ecosystem could see significant change as new projects assess the benefits and drawbacks of running on Layer 2. 

    If all of these solutions can come together in harmony, Ethereum will achieve a blockchain system that can match the speed and scale of programmatic advertising – one that can be used by industries with high data processing needs as well as users worldwide.

    Sources:

    https://ethereum.org/en/developers/docs/scaling/

    https://hackernoon.com/ethereums-layer-2-the-story-so-far-and-what-to-expect-next-kn41342c

    https://dappradar.com/blog/ethereum-rollups-a-simple-explanation

    https://medium.com/general_knowledge/rollup-rollup-top-layer-2-compared-arbitrum-vs-optimism-vs-polygon-4a469389faef
  • IAGON ($IAG) Token Utility Model

    IAGON ($IAG) Token Utility Model

    Everything you wanted to know about Iagon‘s IAG token and its usage IAGON’s Shared Storage Economy.

    Disclaimer: 

    The presented $IAG token utility model in this article is not finalized and may be subject to updates/changes. 

    $IAG basics 

    Currently, the $IAG token is an ERC-20 token only. It’s tradeable on Uniswap, Gate.io and Bitrue. $IAG can be stored on any ERC-20 token compatible wallet.


    As it moves to Cardano, IAGON plans to make its token usable and accessible on the Cardano blockchain. This will be done with the help of a two-way ERC20-CNT bridge.  The IAGON team is working on their very own bridge solution for IAG tokens.

    Remark: 

    Currently, there is no official Cardano ERC20-CNT bridge launched. Existing converters that are on the market are either wrappers or mint functions. At this moment and to our knowledge, none of the converters burn a supply from one chain and mint on the other chain.

    $IAG Token Utility Details

    The $IAG token represents a ´share´ in the IAGON ecosystem, providing holders with a portion of the revenue generated through the decentralised storage exchange.

    Additionally the $IAG token will be used as an additional reward for resource providers and for ADA holders delegating to our Cardano stake pool.

    Also, there will be an option for the iagon ecosystem fund to buy $IAG tokens from the open market with the aim to refill our ADAGIO reward pool for stakers and resource providers on a regular basis. 

    For $IAG Holders

    $IAG token holders can earn yield by providing liquidity in either Ethereum or Cardano liquidity pools.  

    There are 2 additional revenue streams that $IAG stakers can benefit from, on top of the yield from the liquidity pool:

    $IAG stakers can earn a portion of the transaction fees from the decentralized storage exchange, used by the customers and resource providers on the IAGON network. This reward will be based on the amount of $IAG tokens staked and  the trading volume in the storage exchange.

    When a resource provider commits to provide their resources to the network, their commitment is handled by our rewards DAO, ADAGIO, and their reward is locked until the end of the commitment period (at least 1 month). 


    During the period when the reward is locked, ADAGIO generates yield on it through providing liquidity. This yield is distributed among the resource providers, the $IAG stakers and IAGON.

    Usually, staking gives only a portion of the fee from the liquidity pool you’re staking in. However, the utility of the $IAG token ensures that stakers can earn yield from two other revenue streams as well as passive income for staking.

    For Resource Providers

    Once Iagon has launched their Storage Exchange Marketplace, anyone will be able to make a profit by committing resources [storage]. 

    The rewards for providing resources will be based on the supply and demand in the decentralised storage exchange. 

    • Anyone will be able to trade their resources for stable coins by committing their resource to ADAGIO, the resource provider rewards DAO
    • The rewards are locked until the end of the commitment period, and are subject to slashing in case of unwanted node behavior impacting the performance and health of the network (frequent disconnects, attempts at changing or deleting the stored data)
    • At the end of the commitment period, resource providers are able to claim their reward
    • While the rewards are locked, ADAGIO will allow the resource provider to earn yield on it, effectively increasing the reward over time
    • By leaving the reward locked with ADAGIO for a longer period of time, the rewards will accumulate over time, greatly increasing the earnings

    In addition to this, resource providers will occasionally earn $IAG tokens as a bonus incentive to commit storage.

    Iagon Ecosystem Fund

    A portion of both the transaction fees from the storage exchange and the yield provided by the locked rewards go back to Iagon. These funds will be used to fund further development of the Iagon products, cover operational costs, and buy back $IAG tokens for the Iagon treasury. 

    The tokens in the treasury will be used to provide community reward schemes, such as resource provider bonus incentives, additional stake pool rewards, early testing rewards etc.

    $IAG tokens give you access to a passive revenue stream and multiple utilities, which is why they can be potentially valuable. 

    IAGON token utility model (Source： Iagon)

    How the IAG token will work*

    In simple words, the whole process will look like this:

    1. Resource provider commits storage to ADAGIO [rewards DAO]
    2. ADAGIO sells the storage on the storage exchange
    3. The transaction fee is split among ADAGIO and IAG stakers
    4. The reward (payment for storage) is passed from the exchange back to ADAGIO
    5. The rewards are locked until at least the end of the commitment period (at least one month)
    6. While the rewards are locked, it earns a yield through ADAGIO (providing liquidity and other such mechanisms), increasing the reward.
    7. IAG stakers earn a portion of this yield as well
    8. After the lockup period, they can claim their reward + their portion of the yield.

    *Disclaimer: 

    The presented $IAG token utility model is not finalized and may be subject to updates/changes. 

    Meantime, the IAGON team is open for discussion and encourages their community to input and share ideas about token utility. 

    About IAGON

    IAGON aims to revolutionize the cloud by developing a storage platform and a processing platform where anyone can profit from shared resources. The whole value proposition circles back to the potential of blockchain technology by letting device owners join the storage and processing power grids to create a completely decentralized data cloud and supercomputer.

    Website | Twitter | Telegram | Blog | CoinGecko | CoinMarketCap 

  • CyberFi ($CFi): Automating decentralised finance?

    CyberFi ($CFi): Automating decentralised finance?

    Decentralised Platforms (DeFi) platforms have exploded in 2020, however, their complicated user interface and user experience have hindered adoption from investors that outside into the crypto industry. And even those who are already accustomed to the mechanics of these networks still fear one thing: impermanent loss.

    Most DeFi platforms use automated market making to determine asset prices in liquidity pools. Therefore, the value of an asset inside the pool may differ from the value of the same asset outside the pool. Since the prices shift radically, it’s hard for liquidity providers to withdraw assets on time to prevent a loss.

    The solution is to use automated trading and liquidity provision on these platforms. CyberFi is among the few projects exploring this path and aiming to bring the functionality of centralized exchanges to decentralised exchanges and automatic market makers.

    Check out our podcast interview with Geralt, CEO of CyberFi.

    Background

    Geralt, Igor Sokolov, and Darius Greicius head the project as the CEO, CTO, and CMO, respectively. The CEO has over five years experience in senior management positions, four years being in the crypto sector, with three years spent in creating DeFi, centralized exchanges (CEX), and other blockchain and crypto activities.

    On the other hand, Sokolov has four years of experience in cryptocurrency, including participating in Hackathons and creating decentralized applications. Greicius is well-versed in the financial markets, crypto, and marketing.

    What is CyberFi?

    CyberFi is a blockchain-based platform allowing users to automate critical tasks when interacting with DeFi protocols. The platform uses intelligent automation to know when to exit or enter a position. The network handles the automation of tasks related to lending, trading, liquidity provision, and inter-blockchain interaction.

    Notably, CyberFi is not a know-it-all platform. Instead, it gives users the chance to define parameters on how they need things to be done.

    For example, liquidity providers (LPs) can automate processes to remove or add liquidity in a pool using set price points. Consequently, LPs don’t get rekt (wrecked) when sleeping since DeFi is a 24-hour industry.

    Geralt and his team have the vision to help DeFi enthusiasts to mitigate risks while lowering entry barriers and enhancing user experience.

    Most importantly, Cyberfi takes a non-custodial approach, minimizing the security risk to users’ funds. In addition, the protocol contains features to cater to both novice and experienced DeFi users.

    Three Areas Cyberfi Seeks to Automate

    CyberFi seeks to automate 3 major areas: Trading, Automation and MultiChian.

    Trading

    Limit orders have dominated crypto trading on centralized exchanges. CyberFi moves beyond the simplicity to tap into price divergent indicators (PDI) to enable smart order handling in DeFi. With no centralized order books, as in CEXs, the protocol uses PDIs that tap into reputable oracles to initiate controlled orders on decentralized exchanges using liquidity pools.

    To ensure its users get the best price in the market, the protocol uses the best trade value (BTV). Apart from the price, the concept also caters to the lowest fees.

    That’s not all. CyberFi uses additional tools to hedge against volatility. For example, the Change Speed (CS) tool coupled with PDIs, is baked inside the smart order feature.

    Consequently, a trader can use the price or its percentage to mark specific points during a trading session that key decisions need to be made. Some of the decisions may be to sell a token when its price falls at a given percentage within a given timeframe.

    Automation System

    CyberFi’s Automation System will feature multiple complex actions in farming, staking, Liquidity Pools and LP tokens.

    The platform uses high-end price triggers and BTV to guard users against inflation, price reduction, and other unforeseen risks.

    In addition, it makes it smoother for a user to enter or exit a strategy without the need to sign an array of transactions. As such, users can engage in high-risk yield farming, which is associated with high returns. Note that interaction with this type of DeFi strategy requires pre-defined parameters from the user.

    Multichain Activities

    The idea of moving crypto assets across different blockchains is finally catching up. Unfortunately, in the DeFi scene, the activity is still mostly manually handled. But not anymore.

    Cyberfi automates inter-blockchain activities to allow users to automate activities on popular decentralized networks such as Polkadot and COSMOS. Notably, with this functionally, DeFi users can automatically participate or move their assets on another blockchain.

    Cyberfi’s CFi token

    CFi is the protocol’s base asset and can be used in the CyberFi ecosystem. The main uses of the CFi token are:

    • Paying for gas prices;
    • access to unique products;
    • reduced commission fees; and
    • payment for multi-chain operations.

    CFi tokenomics

    CFi has a total supply of 2,400,000 CFi tokens. Key beneficiaries during distribution include strategic partners who account for 500K tokens, development (300,000 CFis), and initial liquidity team (250K).

    Around 300,000 CFi tokens were set aside for marketing and community growth, while staking rewards and liquidity providers (LPs) took 200,000 tokens. Additionally, the transaction mining program was allocated 50,000 CFi coins while the two sale rounds removed 800,000 tokens from the total supply.

    Note that allocated coins have different lock-up periods. For instance, tokens allocated to strategic partners have a six-month vesting period, while those on the transaction mining program have 24-weeks unlock period.

    The token’s major use cases include giving holders a voice on the governance table, paying for fees, paying for automation strategies, and giving holders the right to private products.

    However, automation-based activities also use ETH to cover fees. In this case, ETH coins are automatically converted to the native currency.

    Apart from exclusive access and having a voice in the decision-making table, the token gives its holders a right to earn part of the platform’s revenue. And it’s a lot! CyberFi distributes 80% of all fees collected in the native currency to CFi holders. These include those converted from ETH.

    Staking on CyberFi

    CyberFi’s staking product is called CyberEra. The offering is open for CFi and Ethereum (ETH) investors. One pool supports the native asset while the other interacts with CFi/ETH.

    Staking on CyberFi
    Staking on CyberFi

    However, staking rewards differ depending on the pool. On the CFi pool, 10,000 CFi tokens (roughly $30K) are up for grabs, while 25,000 (approximately $76K) CFi tokens are available for rewards on the CFi/ETH pool.

    Each pool has room for any amount of tokens, and each staking session lasts for 40 days upon which the staked funds are locked. Apart from the staked funds, rewards accrued during this period are also locked for the first half of the 40 days.

    On the CFi pool, the daily reward is estimated at around $750 (250 CFi tokens), while those staking on the CFi/ETH LP expect to receive about $1,898 after every 24 hours.

    Interestingly, locking the assets during the staking period attracts only serious users who share in the project’s vision. So far, over 1.5mil worth of CFi has been staked.

    However, the duration of CyberEra isn’t fixed. Depending on its success, the team will decide on how long the next staking era will last.

    A few months into its launch, the platform already boasts over $1 million total value staked. The CFi pool accounts for the largest share, with roughly $670,000, with the CFi/ETH LP having slightly above $390,000.

    CyberFi mega month January- February 2021

    CyberFi are doing huge things in January-February 2021 with product rollouts, integrations, partnerships, new development plans etc.

    The mega month will begin on 20th January 2021 with 3 major accouncements and product rollouts on-board, together with a full update of Q1 and recap.

    23rd January 2021 will be another wave of announcement including “v2” of CyberFi.

    Conclusion

    CyberFi’s entrance into the space has the right timing. Although the DeFi industry has recorded massive gains so far, the protocol could potentially boost the amount of funds locked in DeFi networks. How? By lowering the entry barriers, guarding against impermanent losses, and allowing users to comfortably initiate high-risk yield farming strategies.

    In addition, CyberFi’s implementation of CFi has more benefits to its holders. For instance, sharing 80% of all fees collected with CFi investors and keeping 20% is among the few occurrences in the cryptocurrency industry.

  • Flamingo Finance ($FLM): What is it?

    Flamingo Finance ($FLM): What is it?

    Flamingo Finance aims to provide everything a DeFi user needs in one swipe. The project is also built on the NEO blockchain, enabling it to evade the high cost and congestion of Ethereum. Here, we take a deeper look at Flamingo, why it chose NEO, its native token, and what it has to offer to DeFi enthusiasts.


    Background

    The protocol is a NEO Foundation project brought to life through the NEO Global Development (NGD) team and is meant to expand NEO’s vision of a smart economy. Flamingo offers an all-round service to its users by taking care of back end and front end issues under one platform.

    What is Flamingo Finance

    Flamingo is a full-stack DeFi protocol that is interoperable and powered by the NEO blockchain. Operations on the network are divided into distinct components to enable a smooth operation for the platform. (Modafinil) Currently, the system supports access using the NeoLine wallet for NEO assets, Metamask wallet for Ether (ETH) holders, and Cyano plugin wallet for ONT token holders.

    Flamingo’s 5 Key Components

    Flamingo ecosystem (Image credit: NeoNewsToday)

    Swap

    This handles automatic on-chain market making. The module interacts with wrapped tokens on the parent blockchain to provide liquidity. Uniswap, a leading DeFi platform, inspires its approach to automated market making. Liquidity Providers (LPs) converge on a pool by providing tokens with NEO’s standard, NEP-5.

    Wrapper

    Flamingo uses this component to power inter-chain interaction of blockchain assets. Wrapper works with Bitcoin, Ethereum, NEO, and Ontology, where tokens from these platforms can be ‘wrapped’ by being converted to NEP-5 tokens and used on the NEO network.

    Vault

    The Vault module provides an interface for managing, mining, and staking assets. Also, it handles the issuance of collateralized stablecoins. Vault stakers earn rewards in the form of the platform’s native token, FLM (more on the token later).

    Vault is projected to go live anytime between September 25 and 29 in 2020.

    Perp

    Perp is derived from the word perpetual and is designed with perpetual contracts in mind. It uses automatic market-making to power a perpetual contract exchange that deals with a host of assets. The exchange has a leverage of up to 10X for both long and short positions.

    Decentralized Autonomous Organization (DAO)

    In the decentralized world, everything should be distributed, including governance. Flamingo uses DAO to allow for optimum community involvement in the running of the platform. Issues that fall under DAO include token economics, functionality changes, and parameter configuration.

    Generally, DAO has a say in things happening on the Wrapper, Swap, Perp, and Vault modules.

    Flamingo Finance Token (FLM) and Flamingo USD (FUSD)

    FLM is Flamingo’s native currency dedicated to governance. It’s built using NEO’s NEP-5 standard. Interestingly, the token does not have a cap on its maximum supply.

    FLM coins are distributed to the community with regards to participation on the network. For example, the token will be given for staking cross-chain assets, staking LP tokens, minting FUSD, depositing stablecoins to provide a margin when interacting with perpetual contracts, and contributing to governance proposals.

    Note that before DAO takes over the governance, the Flamingo team will address governance issues through proof-of-authority (POA). FLM can be held by anyone wishing to join the NEO DeFi ecosystem. Furthermore, FLM holders are entitled to submit proposals to the DAO and also be able to vote for submitted proposals.

    Flamingo supports FIP and FCCP proposals.

    Flamingo Improvement Proposal (FIP) involves anything related to system design features such as risk control, liquidation, and liquidity improvement. Flamingo Configuration Change Proposal (FCCP), on the other hand, contains proposals directed towards the FLM release schedule, staking, fee structure, FLM distribution mechanism on the Perp module, etc.

    FUSD is a stablecoin on the platform that is pegged to the US dollar (USD). Staking LP tokens allows one to mint the stablecoin. However, to unlock their collaterals, the minted FUSD has to be burnt.

    Key strengths of Flamingo Finance

    Interoperability

    Flamingo is part of an ecosystem made up of NEO and the Poly network. Poly is a protocol developed on NEO in conjunction with Switcheo Network and Ontology. The protocol connects to other blockchain platforms such as Cosmos, Bitcoin, Ontology, and Ethereum.

    To bring the interoperability factor, Flamingo connects to NEO, NEO connects to Poly, and Poly connects to other decentralized networks.

    Capital Efficiency

    Popular decentralized exchanges (DEXs) using an automatic market maker model underutilize capital from LPs. Flamingo provides capital efficiency by clustering individual aspects such as a liquidity pool (LP) and a collateral pool.

    For instance, Swap handles the LP while Vault provides the collateral pool. Therefore, LPs can provide liquidity in Swap and still stake their tokens in Vault.

    Fair Launch

    To enable a fair launch for all, the platform does not support a pre-mine. Neither does it allocate coins to its founding team. Instead, all FLM tokens are distributed to the community.

    What is Flamincome?

    Being a DeFi-focused platform, it has a dedicated platform for yield farming or liquidity mining; Flamincome. The system provides yield farming functionalities identical to those offered by Yearn.Finance (YFI).

    Flamincome
    Flamincome (Image credit: Medium)

    Flamincome comprises an optimizer and a normalizer. An optimizer converts staked assets into interest-focused assets, while a normalizer changes interest-based assets into synthetic assets with a 1:1 peg ratio to the underlying asset. Synthetic assets can be transferred to other DeFi networks for additional liquidity mining.

    Flamingo Swap: What is it?

    Flamingo Swap is one of the modules on Flamingo Finance’s DeFi platform. It is an on-chain automated market maker powered exchange that allows users to swap one token from another. Similar to other swapping platforms, Flamingo Swap needs users to add token pairs into these pools which in turn creates a supply for traders to come in and exchange tokens. Users i.e. LPs who add tokens to specified pools are rewarded for their contribution as they receive a distribution of the trading fees (currently 0.3% per swap) and LP Tokens. The LPs can then stake these LP Tokens in the Vault and get FLM in return.

    Note the below section titled “Flamingo swap launch and change of $FLM distribution: 5th Oct 2020” to see which Vaults are eligible for distribution of FLM rewards.

    How to add liquidity to Flamingo Swap and what are my rewards?

    By way of example, if you wanted to be a LP for the FLM/nNEO trading pair you would need to do the following steps:

    1. Go to the “Pool” tab on the Swap page;
    2. connect your NeoLine wallet;
    3. click “Add Liquidity” and choose FLM and nNEO. Note the the amount deposited must be of equal value based on the market price of the tokens but this will be calculated for you;
    4. check the respective exchange prices for the FLM and nNEO tokens and the share of the pool your liquidity will form after adding the same. If this is confirmed by you, click “Supply” and confirm; and
    5. the NeoLine wallet will pop up and you will be asked to adjust and agree to the GAS fee to be paid for this transaction.

    For a full walkthrough on how to provide liquidity to Swap and withdraw your liquidity from the same, click here.

    LPs will be rewarded with LP Tokens, in this illustration, the LP would get FLP-FLM-nNEO tokens. They will also get a share of the fees collected from traders equal to the proportion of their liquidity in a pool. So for example, if their deposited liquidity forms 2% of the FLM/nNEO pool they would get 2% of all the trading fees paid by traders, which is 0.3% per swap.

    LPs can then stake their LP Tokens in specified trading pairs to get FLM. For a walkthrough on how to stake assets, claim FLM and remove your staked assets from the Vault, check out the detailed guide from Flamingo here.

    LATEST NEWS

    Are you eligible for refund of Flamincome withdrawal fees?

    Due to an issue with the Flamincome interface, some users who withdraw USDT before 5:00am (UTC) on 26th September 2020 were charged 0.5% withdrawal fees without their knowledge. Flamingcome will refund the withdrawal fees to these users, which Founder Da Hongfei said on Twitter he will “personally subsidize”.

    There is also a proposal being put forward to extend this refund period to any deposits that were made before 5:00am (UTC) on 26th September 2020 but “…withdrawn before 3 hours after the MintRush Resume.” Which from our understanding would be 4:00pm (UTC) on 25th September 2020.

    Flamingo swap launch and change of $FLM distribution: 5th Oct 2020

    At the initial launch of Flamingo Swap, only 6 trading pairs will be supported i.e. FLM/nNEO, pnWBTC/nNEO, pnWETH/nNEO pONT/nNEO, nNEO/pnUSDT and pnWBTC/pnUSDT.

    As Mint Rush 2 has finished distribution of rewards, FLM tokens will no longer be distributed to single-asset stakers. Instead, only users who stake LP Tokens from specified trading pairs in the Vault will continue receiving FLM. From 1:00pm (UTC) on 5th October 2020 to 1:00pm (UTC) on 7th October 2020, 2,857,143 FLM will be distributed per day to these trading pairs in the following proportions:

    • FLP-FLM-nNEO 20%
    • FLP-pnWBTC-nNEO 20%
    • FLP-pnWETH-nNEO 10%
    • FLP-pONT-nNEO 5%
    • FLP-nNEO-pnUSDT 20%
    • FLP-pnWBTC-pnUSDT 25%

    From 1:00pm (UTC) on 7th October 2020 to 1:00pm (UTC) on 14th October 2020, 1,071,429 FLM will be distributed per day in the same proportion as above.

    SCAM ALERT: Flamingo airdrop

    There is currently a Flamingo airdrop scam which asks participants to send their NEO tokens to a “designated contribution address” where you can get FLM tokens at a rate of 1 NEO=1,000 FLM.

    The @FlamingoAirdrop as well as the FlamingoFinanceAirdop Telegram Channels are FAKE. Be careful!

    Fake Flamingo account
    Fake Flamingo account

    I have all this FLM? What happens next?

    FLM is currently listed on the following exchanges: Binance, FTX (FLM-PERP)

    Conclusion

    A full-stack DeFi protocol, like Flamingo, presents numerous advantages to DeFi users. And among them is capital efficiency, where LPs can provide liquidity and collateral at the same time.

    The inclusion of a yield farming system gives DeFi enthusiasts a similar but improved network to YFI and SushiSwap.

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • What is AAVE ($LEND)?

    What is AAVE ($LEND)?

    Aave Protocol with their native token $LEND is a leading company within the decentralized finance (DeFi) sphere. The Company allows its users access to its open-source and non-custodial protocol to create money markets, joining a growing list of projects like Compound to bring decentralized options to the masses. We look at who is Aave ($LEND), its uses and how it differs from other projects such as Compound Finance.

    What is Aave?

    Named after the Finnish word for “ghost”, London-based company Aave was set up in September 2018 after a successful initial coin offering (ICO) the previous year for its ETHLend token which raised USD$16.2 million. The executive team under ETHLend migrated to Aave upon its establishment with ETHLend becoming a subsidiary of Aave. In January 2020, ETHLend announced it was no longer in operation and its website would only remain active for current users to close down their existing loans.

    Aave’s aim is to fill in the gaps left by centralised fintech industry giants like PayPal, Skrill and Coinbase. Their main product is Aave Protocol, an open source and non-custodial protocol for creating money markets on the Ethereum blockchain.

    Who is the team behind Aave?

    Aave has a wealth of talent and experience within its team. Stani Kulechov (CEO) and Jordan Lazaro Gustave (COO) have retained and migrated their roles from ETHLend, bringing their wealth of knowledge to Aave. Their diverse 18 man team bring together a wealth of experience in the startup scene.

    What is Aave Protocol?

    Aave’s biggest and most integral aspect is Aave Protocol which was launched in January 2020. Its shift from ETHLend marked a significant shift in strategy for the Company. Going from decentralized P2P lending to a pool-based strategy, Aave Protocol is an open source an non-custodial protocol that allows users to create their own decentralized money markets on the Ethereum blockchain.

    Aave Protocol
    Aave Protocol

    Depositors provide liquidity by depositing cryptocurrencies into lending pools which will then allow them to earn interest. Meanwhile, borrowers can obtain loans by tapping into these lending pools in either an overcollateralized or undercollateralized way. The loans do not need to be individually matched i.e. one lender to one borrower. Instead, deposits into the pool and the amounts borrowed/ collateral are used to make instant loans based on the pool’s state. There are currently 2 money markets that users can enter into, these are Aave and Uniswap.

    Aave markets
    Aave markets

    Flash Loans

    Aave has one feature that sets it apart from the rest. Flash loans allow customers or to take out loans without any collateral. These flash loans enable a customised smart contract to borrow assets from Aave’s reserve pools within one transaction. The loan is made on the condition that the liquidity is returned to the pool before the transaction ends. However, if it’s not repaid by that time, the transaction gets reversed- which will effectively undo any actions executed until that point and guarantee the safety of the funds in the reserve pool.

    The Fast Loan feature is designed for developers to make tools that require capital for arbitrage, refinancing, or liquidating purposes. Aave explained Flash Loans saying it is “designed for developers/people with some technical knowledge”, with the benefit of risk-free loans. Aave charges a 0.09% fee on flash loans.

    Rate Switching

    Rate switching is another unique selling point for Aave, which arrived during the May upgrade of their borrowing/interest rates. Rate switching allows borrowers to switch between fixed and floating interest rates, something useful in a volatile decentralized market. For high-interest rates, users will usually opt for the fixed-rate but when it is more volatile and expected to be lower, one might go for the floating option to reduce borrowing costs. The fixed-rate can change but only when the deposit earning rate increases above the fixed borrow rate as the system could get unstable by paying out more than its being paid. If so, the fixed rate is rebalanced to the new stable rate. On the other hand, when the variable rate is lower than the fixed-rate by 20%, the loan will automatically decrease to account for the difference.

    Which Cryptocurrency Tokens are linked?

    There are 19 tokens available on Aave. These include DAI, USD Coin (USDC), TrueUSD (TUSD), USDT Coin (USDT), sUSD, Binance USD (BUSD), Ethereum (ETH), Basic Attention Token (BAT), Kyber Network (KNC), ChainLink (LINK), Decentraland (MANA), Maker (MKR), Augur (REP), SNK, Enjin Coin (ENJ), REN, WBTC Coin (WBTC), Yearn.finance (YFI) and Ox Coin (ZRX).

    Please note: Each asset has a different collateral requirement. This is because of the differences in price volatility. Stablecoins naturally give loan-to-value ratios, due to their price stability. A full breakdown of Aave’s grading process can be found in their Risk Framework.

    Alongside these tokens, there is also a native token that Aave uses and which is called Lend. An explanation and analysis of the token can be found below.

    LEND ($LEND) Token

    Often referred too as ETHLend, the LEND cryptocurrency token has rolled over to become the native token of Aave following the winding-up of operations by ETHLend in January this year. Although it has kept the name, the new Aave version of Lend is largely different from the previous one.

    LEND token metrics
    LEND token metrics

    Binance Key metrics on Lend

    Built based on the ERC-20 standard, $LEND tokens can be used for fee reductions. The tokens are burnt from the fees collected from the Aave Protocol, with around 80% of platform fees used. This appears to suggest that Lend tokens will be worth more over time. LEND owners can also claim on protocol fees in exchange for acting as the first line of defense in the case of liquidity events by malicious borrowers.

    In addition, $LEND tokens can be used for voting on Aave Improvement Proposals (AIPs). What’s more, LEND holders can vote with their LEND deposited on the Aave platform, even if it is currently being used as collateral. Currently, this feature is pre-launched on the Ropsten test network before it is launched on the Ethereum mainnet. This is so the Aave community can vote on proposals without incurring huge gas costs, try out the module and provide feedback to the Aave team before it is formally launched. It is also worth noting that the outcomes of all votes on the testnet are not considered as valid for the long term.

    Voting on Aave
    Voting on Aave

    How to lend on Aave

    Depositing and earning interest on Aave is a simple process. Before you start, you must visit https://app.aave.com/ and connect using a web 3.0 wallet such as Metamask, Coinbase Wallet or Fortmatic.

    Depositing is easy, just simply pick your desired asset in which to invest and then allow Aave access to the asset. Once the transaction is processed, and the interest rate is confirmed you can check the rate changes on the Aave app. The interest-earning tokens are called aTokens which are similar to Compound’s C tokens.

    Interest generating tokens

    There are some differences between Compound’s tokens and the aToken. The main one being that the aToken’s keep their underlying assets price and will increase the amount of owned tokens when the price goes up rather than increasing the tokens price.

    Aave vs Compound ($COMP)

    Both Compound Finance and Aave appear to be the two top DeFi lending platforms. However, both have unique features that set them apart. Compound does have USDT as a usable asset, but Aave has a wider range of tokens on offer. For Aave, their new interest rates and regulations, like rate switching gives them a slight edge. For first time users, Aave offers great incentive rates. However, lending rates and Borrow fees are higher on average with Aave. Either way though, Aave has proven a good addition to the Defi community and should prove popular. You can read more about Compound ($COMP) here.

    Key features of Aave 2.0

    Aave 2.0 was announced on 14th August 2020. Aave Market now offers 19 assets, plus the Uniswap Market offers different Uniswap pairs as collateral. The platform has also grown to over 15,000 users. Here are some of the key new features which can be expected in Phase 2 of Aave.

    Pay with collateral

    Currently, if users want to repay their loan with part of their collateral they need to do 4 separate transactions on several protocols: withdraw the collateral, buy the cryptocurrency which is borrowed, repay the debt and unlock all the deposited collateral. With this new function, Aave users can deleverage or close their positions by directly paying with collateral in 1 transaction.

    Debt tokenization and native credit delegation

    Users’ debt positions will be tokens i.e. users will receive tokens which represent their debt. This enables native credit delegation within the Aave Protocol, in addition to other features such as native position management from cold wallets and user-specific yield farming strategies.

    Fixed rate deposit

    Deposits on Aave can generate predictable interest rates which are not bound by market variations.

    Improved Stable Borrow Rate

    This will further ensure the predictability of interest rates by locking down their borrow interest rate to a specified time period.

    Private markets

    Aave will allow governance to open private markets to open private markets to support all types of tokenized assets. The Aave team are also working on a collaboration with RealT which will bring mortgages onto Ethereum.

    Improved aTokens

    aTokens are Aave’s interest bearing tokens which are minted when a deposit is made and subsequently burned when redeemed. The aToken is pegged 1:1 to the value of the underlying asset deposited with Aave. In Aave 2.0, there will now be a version 2 of the aToken which integrates the EIP 2612 which allows for gasless approvals.

    Gas Optimizations

    This feature is currently in the works and will lead to a significant drop in transaction costs for most of the interactions on Aave. For some interactions the gas cost may even be reduced by 50%. Aave version 2 will also implement native GasToken Support.

    Security

    In version 2, the internal design has been made simpler, the architecture is also improved so it is more formal verification friendly. Aave is also working with top auditors such as Consensys Diligence and Certora- a leading company in automatic verification technologies.

    Native trading functionalities

    Aave v2 will introduce the ability for users to natively trade their debt position from one asset to another, i.e. you can borrow DAI, and if USDC becomes cheaper to borrow, you could change your debt position to USDC in one transaction.

    Users can also trade their deposited assets across the various cryptocurrencies supported by Aave, even when it is being used as collateral.

    Margin trading is also introduced in version 2, so users can directly take long and short leveraged positions without using third party services. Conversely with margin lending, liquidity providers can increase the weight of their deposits to take opportunities.

    Governance

    Aave version 2 also introduces several new governance features. Now, AAVE token holders can delegate their voting weight to any other address. Aave believes this may lead to the emergence of Protocol Politicians, who will represent the interests of their peers to delegated their votes to them. But unlike most representative democracies we see around the world today, vote delegation is a liquid democracy so this means a user can instantly remove the delegation in a single transaction if they so wish.

    The Aave team also recognises the pain points of the need to move tokens to another location to participate in governance. So Aave now allows users to be able to sign messages from their cold wallet to participate in Aave Governance. This will in turn reduce the security risk.

    References:

    AsiaCryptoToday: https://www.asiacryptotoday.com/aave/

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Kusama ($KSM): How is it Polkadot’s wild cousin?

    Kusama ($KSM): How is it Polkadot’s wild cousin?

    Kusama ($KSM) calls itself “Polkadot’s wild cousin”. Yet, is an initiative that seeks to solve the Polkadot ecosystem’s concerns of coding vulnerabilities. Going beyond the usual testnet, Kusama deployed on its platform a network focused on research and development with real costs to its community and developers. This makes it more mainnet-like, without having to actually put new developments up on the main Polkadot platform.

    Background

    Dr. Gavin Wood founded Kusama with a goal of supporting the Polkadot ($DOT) network via building a parallel blockchain that allows experimentation and development with very realistic conditions. With that in mind, Dr. Wood thought of having a “canary network” that functions as a warning and early problem detection protocol that can reveal the weaknesses of the Polkadot code base.

    With Kusama, new features that are planned for implementation on the main Polkadot chain can be tested. The difference between Kusama and all other testnets is that the decisions made in the platform have actual economic implications. Testnets only provide playground tokens that bear no actual value.

    What is Kusama?

    Kusama is Polkadot’s canary network, which means that it is an experimental community research and development protocol. Its main purpose is to help developers test and deploy parachains on the Polkadot project, or experiment on its governance and staking functions with real economic conditions.

    Canary testing
    Canary testing

    Canary testing is important as the developers behind both chains hypothesize that it is the best way to completely understand the critical risks that lie in Polkadot’s development.

    As an unrefined version of Polkadot, Kusama functions as an independent decentralized main network. It will continually function as long as the community allows it to since decentralized systems inherently have no kill-switches. It could possibly become a para relay chain to Polkadot, however, it is never intended to merge with Polkadot’s chain itself.

    Kusama Token ($KSM)

    Kusama’s native token is the KSM, which holders can use to stake, become a validator or nominate one, and vote on its governance mechanism, among others. Furthermore, it is the token that powers most of the mechanisms in the Kusama network.

    Investors who purchased DOT during Polkadot’s ICO are qualified to receive an equivalent amount of KSM on the Kusama Network.

    Consensus Protocol: Nominated Proof-of-Stake

    Kusama follows the Nominated Proof-of-Stake (NPoS) consensus model where validators are elected based on their stakes and the stakes of those who are voting for them. As much as possible, the platform balances the weight between validators every election.

    In Polkadot, the election of validators focuses on the balance between these three metrics (Phragmen’s algorithm):

    • The total amount staked by the nominee and their nominators
    • The stake behind the minimally staked validator
    • The variance of the stake in a set.

    Validators

    To become a validator, users are required to stake KSM first. Once users already have the minimum amount of tokens needed to become candidates for a validator set, they are elected based on the Phragmen’s algorithm.

    There are currently over 130 validators on Kusama.

    Parachains

    Parachains are application-specific data structures secured by validators on the Polkadot Relay Chain and run in parallel with the Polkadot network. This allows them to process transactions with the speed and scalability of the Polkadot blockchain.

    How parachains work
    How parachains work

    Collators, on the other hand, are tasked to maintain the whole parachain. Collator nodes keep every data concerning the parachain and create new block candidates for the verification and recording of validators.

    Parachains can have an independent economy from the Polkadot network and their own native token.

    Governance

    Before every protocol update or revision is made, they are voted upon by the network composed of token holders and Kusama’s council. Through innovations such as on-chain voting systems and stake-weighted decision making, Kusama has enabled a community-driven governance model.

    The governance function follows the following procedures:

    Proposing Referenda: Each referendum contains a specific proposal that serves as a privileged function call. Included in the referenda is the period designated for the voting process. They can be submitted by Polkadot (DOT) token holders and the council, or taken from prior referenda or recommendations by Kusama’s Technical Committee after the approval of its Council.

    Voting for a proposal: There are only two options when voting, either “aye” or “nay.” If proposals receive a majority, they can be carried out for implementation. Before the enactment of a proposal, however, users are required to lock their tokens until the whole enactment delay has lapsed. The purpose of this parameter is to ensure that a proposal has met the minimum economic buy-in and discourage vote selling.

    Tallying: There are three scenarios whenever the network votes on specific proposals. Since each proposal is distinguished on whether they are from the public or the council, the votes also differ in bias.

    Kusama vote tally
    Kusama vote tally

    For every proposal, the number of “aye” and “nay” votes are accounted for as the turnout, or the total number of voting tokens, are factored in.

    In a positive turnout bias (if the voter turnout is low), more votes in favor of the proposal are required. In a negative turnout bias, it requires more votes against the proposal. And for Council proposals, only a simple majority is necessary.

    Kusama Council

    While there are active stakers, there are also passive stakeholders in the Polkadot and Kusama ecosystem. Through an on-chain entity comprising of 17 seats, the Council decides on three main tasks of governance. These include proposals of referenda, striking out clearly dangerous referenda, and electing members of the network’s technical committee.

    Kusama council
    Kusama council

    Community on Kusama

    Kusama has deployed the Society module, an economic game that seeks to reward users for participating and maintaining a membership society. Rewards, however, are given maturity periods. This means that the user cannot instantly get their incentives until the maturity period of their entitlements has already lapsed.

    Societies can punish members by slashing their incentives if they are not being collected. There are many other violations, such as not participating in voting calls, among others.

    By a strike system, members who have committed a number of punishable actions exceeding the limits decided upon can be booted out of the society.

    As of now, Kusama only has one society organized on top of its platform. In the future upgrades though, they might add more.

    Conclusion

    The growth of the DeFi space is dependent on the participation of both its developers and the community behind them. Projects that empower developers to test out new features before they are actually implemented on main channels are important, especially if the security and reliability of a particular network are at stake.

    A project like Kusama enables developers and their community to play around the Polkadot platform while making sure that each feature they are planning to deploy is not only audited but also tested realistically.

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Curve Finance ($CRV) guide

    Curve Finance ($CRV) guide

    Curve Finance is a decentralized exchange (DEX) for trading stablecoins. As with every other Decentralised Finance (DeFi) project, Curve Finance has its own token known as Curve DAO token ($CRV). The Curve Finance DEX has already been up and running since January 2020, and yield farmers have already been making gains off of it. However, it was the abrupt listing of the $CRV token on 14th August 2020 that really turned heads in the cryptocurrency space, and not necessarily in a good way. In this article, we take a look at the background and features of Curve Finance and the controversial launch of its $CRV token.

    To learn more about Curve Finance and specifically $CRV yield farming and how to see if YOU may have any $CRV, check out our latest video:

    Curve Finance ($CRV) Yield Farming

    Background

    Michael Egorov CEO of Curve Finance, also worked with the NuCypher team as Co-founder and CTO for five years. Egorov has served Curve through his expertise in software development, thanks to his managerial stints at different tech companies in the past.

    The team behind Curve Finance officially began working on the exchange back in December 2019, and they launched it in January 2020. Even then, Curve was already being used by several arbitrage traders, but its popularity shot up after it recently (and surprisingly) launched its governance token this August 2020.

    Interestingly, it appears that even after the launch of the CRV token, some members of the Curve team did not know that it was already out. It was so abrupt that the team had to adopt it after having no option but to just review its codes following the deployment.

    What is Curve Finance?

    Curve is a decentralized exchange liquidity pool built to support the efficient trading of stablecoins. At present, Curve supports BTC pairs, as well as DAI, BUSD, sUSD, TUSD, USDC, and USDT.

    And through the help of AMMs (automated market makers), Curve makes low slippage trades possible while keeping transaction fees low. Most arbitrage traders prefer Curve compared with other liquidity pools like Uniswap simply because of the savings in trades.

    With only a few months in existence, the platform has already beaten other exchanges in terms of trading volume. With Uniswap at the top of the ranks, Curve performed stronger than projects such as Aave, Compound Finance and Balancer.

    What sets Curve apart from other DEXs?

    The problem with DEXs like Uniswap is the cost that users incur for token trades. If you look at other DEXs, they can’t facilitate direct token trades. In Uniswap’s case, for example, stablecoins still have to be traded for ETH, before they are traded with the stablecoin that the user wishes to get (Uniswap V2 might have already eliminated this drawback). Given that the transaction involves two trades, the transaction fees are also doubled for every user.

    Curve functions differently. The platform’s liquidity pool allows direct token trades among listed pairs. With a direct swap function, users save more by paying lower trading fees. And as of now, the fees are still set at 0.04% per transaction. This means that users have the opportunity to execute more efficient trades without having to pay much in fees for every transaction.

    The algorithms for both DEXs are also different. Uniswap focuses on maximizing available liquidity, but Curve’s algorithm puts more importance in minimizing slippage. Because of this, high frequency and large volume traders save more by using Curve.

    Compared with the order book systems, Curve uses an AMM model that maximizes on-chain liquidity pools to provide the necessary funding even before trades are executed.

    Making Money Providing Liquidity in Curve

    On-chain liquidity pools refer to funds held in exchanges to facilitate trades. With Curve, users can freely deposit any supported token in the pool and become a liquidity provider. This is what we mean when we talk about funding specific pools for Curve’s trading pairs.

    And in turn, liquidity providers earn fees from the swaps that are performed in the exchange.

    Thanks to Curve’s composability, its liquidity pool is also accessible to many other protocols. In fact, the platform experienced increased trading volume after the introduction of liquidity mining from yEarn.

    yCRV

    In liquidity mining, miners help run an exchange’s market-making bot to help it run its trades. This trend enticed miners to provide additional liquidity in yEarn’s yCRV token because it appeared to be quite profitable.

    The yCRV token is a wrapped token composed of Curve’s supported trading pairs and represents its liquidity pool. Additionally, since Curve’s liquidity pool is available to other protocols such as Compound, liquidity providers also earn additional income from their interest fees.

    While supplying liquidity in Curve’s pool appears profitable, it also entails some risks. These are some of the uncertainties that Curve’s liquidity providers are likely to face.

    DeFi Ecosystem Vulnerability

    Since Curve is already integrated with some other DeFi platforms, users have to be able to monitor ongoing issues on these other protocols. Looking after security issues in other projects will ensure that liquidity providers are well-knowledgeable about the risks of depositing their assets in Curve’s pools.


    Yield Volatility

    Curve’s yields fluctuate a lot. Although high yield pools entice users to provide liquidity over time, it also ultimately becomes low or medium yield pools over time.

    To combat this, users can opt to supply liquidity to all Curve pool, a diversification strategy. And this would give out the average yield of all pools. Unfortunately, it also raises slippage and gas fees, as well as exposure to smart contract vulnerability.

    Calculating Profits after Gas and Fees

    One hurdle with supplying liquidity on the Curve protocol is calculating your profits after gas and slippage fees are deducted.

    The platform splits liquidity across various pools and is linked to external protocols. As a result, gas fees are relatively high. And depending on tokens you supply, you may encounter significant slippage as well.

    This makes it rather difficult to do yield-hunting — the chasing of high yields by changing of pools. It is recommended that liquidity providers deposit tokens to pools for long enough periods in order to make a profit after slippage and gas fees are paid.

    $CRV Token

    $CRV is Curve’s native token, it is generated when you deposit and stake cryptocurrencies on the platform. It is awarded to liquidity providers proportional to their share from the yield which their pools make. And since CRV has just been released, those who have contributed to Curve’s liquidity pool will receive a prorated amount of it.

    With Curve’s transition to become a DAO, CRV tokens also represent the holders’ rights to take part in its governance mechanism, so they can make proposals and vote on them. And with CRV, governance will follow a ‘time-weighted’ voting system. It simply means that the longer they hold CRVs, the greater their voting power in the DAO becomes.

    What yield-farmers also do is to take advantage of the popularity of DeFi to speculate on tokens such as $CRV. So what they would do is after depositing and earning the $CRV token, they would sell $CRV on the market for profit.

    What happened with the $CRV token launch?

    Prior to the launch, $CRV was one of the most anticipated and talked about tokens, and the team saying it would launch in “early August 2020”. On 14th August 2020, the $CRV token was suddenly launched by an anonymous developer without anyone, including the Curve Finance team knowing. The developer was able to do this because the code of the $CRV token and DAO was available on GitHub, so all the developer had to do was to put the two together and launch the smart contract.

    Of course after the initial launch of the token other cryptocurrency enthusiasts started posting on Twitter about the news. This meant the Curve team had to go around clarifying the situation and saying it was a scam. The Curve team also scrambled to confirm that the contract deployed by the developer had the same code and that there were no significant changes or backdoors added i.e. there was nothing malicious in the contracts.

    So Curve ended up declaring that this was their official token and DAO launch, and needless to say, the cryptocurrency community were not happy about it. This was made worse by the fact that in the hours between the time the developer launched $CRV and Curve declaring it was an official launch, 80,000 CRV tokens were already mined by some users. This led many others to say that it was unfair to others considering the Curve team had previously announced there would be 24 hours between the contract being deployed and the first token being issued.

    Curve team declares their DAO and $CRV was launched

    Following this announcement, other major exchanges such as Binance, OKEx etc. also began listing $CRV.

    $CRV is highly volatile, prices were at an all time high of $54.01 on 14th August 2020, and went to an all time low of $4.17 on 17th August 2020. Also being a mined currency, the initial supply will be extremely low and only increases over time after more has been mined. This results in prices being highly volatile as we can see because with more tokens will be mined, these miners will quickly sell their tokens on the market. This is especially the case during the initial launch phase where there is a lot of hype, but very little supply.

    So those speculating on $CRV really need to exercise caution because it is very risky.

    How to Use Curve to Trade

    In order to use Curve Finance, simply go to their web portal at https://www.curve.fi and connect a web3 wallet like MetaMask.

    Choose which cryptocurrencies you want to trade. Then, click “Sell” at the bottom. You will then be prompted by your web3 wallet to confirm the transaction.

    Once confirmed, it means that your trade is successful.

    Conclusion

    While Curve can also be a profitable alternative against Uniswap in terms of high frequency and large volume trades, everyone still has to consider how to effectively balance potential earnings from its corresponding risks.

    And if the Curve project continues its run successfully in the months and years to come, it might even become one of the best performing DEXs in the DeFi space for offering low slippage trades as compared with its competitors.

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • What is Utrust ($UTK): Full guide and review

    What is Utrust ($UTK): Full guide and review

    Utrust aims to distinguish itself from the competition and overcome the volatility and lack of consumer protection which are some of the biggest factors preventing user adoption of cryptocurrencies. Utrust tries to do this by merging the best features of traditional payment gateways with the security of blockchain technology.

    Background and team

    Sanja Kon is the CEO of Utrust with an extensive track record working as the Head of Marketplaces and Large Enterprises at PayPal. She also has previous experience working as the European Partner of Development at eBay. Coming from PayPal, she has a full understanding of the eCommerce ecosystem and how to handle merchant partners. This positions Utrust at a very strategic position in terms so cryptocurrency payment adoption.

    What is Utrust?

    Utrust dashboard
    Utrust dashboard

    Utrust is a digital payment platform built on the blockchain. It combines the features of the traditional online payment system and blockchain technology to offer the best of both worlds. One that offers an affordable payment system that secures transactions between buyers and sellers from the point of payment until they receive the products.

    The platform also streamlines the exchange between merchants and consumers by making payments simpler. There is no need to bear huge operational costs or conversion fees anymore just to establish a cryptocurrency payment gateway. This makes the option of accepting and making cryptocurrency payments within everyone’s reach.

    Utrust goes further by promising real-time business-to-consumer transactions without having both parties suffer from the volatility of cryptocurrencies. After all, there is nothing scarier than transacting in cryptocurrencies only to later find out that the payment you accepted significantly changed in value.

    The Utrust platform supports different digital currencies and its native token, $UTK. Users can make payments for goods and services without any exchange rate fee if they are paid in UTK.

    UTK is backed by the platform. Each time a transaction happens, a small percentage of the fees are converted into UTK and burned. This decreases the total supply of UTK, causing its value to rise. The more transactions, the higher the token value becomes.

    Others believe that Utrust might just be the alternative to PayPal because PayPal can be expensive and at times, inconvenient to use. Here is how they do it.

    How Does Utrust Work?

    Perhaps one of the biggest problems in transacting in cryptocurrency is that at any given time, the price of a particular coin may change drastically. Or, a transaction that was already finalized might turn out to be disadvantageous for the buyer but cannot be reversed anymore.

    Here is how Utrust combined the traditional buyer protection system with blockchain technology:

    1. The transaction begins with buyers looking for merchants accepting cryptocurrencies. Through the merchant’s website, they can see if they have integrated Utrust with their payment system. Buyers can also use the Utrust wallet on their mobile phones to store, send and buy products and transactions will be processed instantly.
    2. The buyer is charged a total payment fee that covers a 1% commission and conversion fee. This is what Utrust carries to convert cryptos into fiat currencies in real-time with the best conversion rates.
    3. When the buyer completes the purchase of a product, the fiat money they pay will be converted and held in escrow. It will only be released after a prescribed holding period.
    4. Should there be no disputes in the transaction, the payment is released from escrow.
    5. The seller receives the payment in fiat currency, which he can withdraw, or convert to another cryptocurrency.
    Utrust wallet
    Utrust wallet

    What is the holding period? Utrust’s Performance-Based Criteria

    The holding period in point 3 above refers to the time period before the merchant receives the actual payment for the product sold. Utrust determines the length of the holding period depending on the reputation of the merchant in the marketplace.

    The purpose of the holding period is to ensure that the products each customer buys are received in a condition agreed upon before each transaction. If the transaction is all well and good, the amount held in escrow is released.

    For successful transactions or those that are dispute-free, the merchant earns good reputation ratings. But the more disputes they experience in their transactions, the lower their rating becomes. And the lower their reputation rating is, the longer their payment holding period is.

    UTrust’s Third-party Mediation

    Utrust’s third-party mediation in transactions takes the form of establishing a safe communication platform for everyone involved. Through a messaging system, buyers and sellers can easily discuss their concerns with a particular product if they need to. And if a conflict arises, Utrust has impartial mediators who can resolve arising disputes and decide whether to refund a buyer or release payments to the merchant.

    What Problems Is Utrust Trying to Solve?

    Cryptocurrency Volatility

    The reason why some merchants do not accept payments made in cryptocurrency is because of high transaction fees and volatility. This makes crypto transactions less feasible and much riskier for merchants and buyers.

    Consumer Protection

    Consumer protection is the process where the merchants can interact with the seller before a transaction is actually finalized. If a product received seems to be faulty, it must be settled accordingly before each transaction is closed. But this is not the case with most payment gateways. Blockchain’s immutability makes it difficult for merchants and buyers to reverse problematic transactions because of the nature of blockchain transactions.

    Advantages of Utrust

    Immediate Conversion From Crypto to Fiat

    Sellers have the option to accept the fiat currency of their choice for payments. To protect sellers from market volatility, funds are immediately converted into fiat currency whenever customers pay in cryptocurrency.

    The seller then receives the payment and is offered the option to withdraw it in his bank account, store it in their wallet, or convert it into another cryptocurrency.

    Buyer Protection System

    Apart from addressing market volatility, Utrust also took steps in protecting consumers from scams by acting as a third-party mediator between transactions. Every purchase is protected from the point of payment to delivery.

    Utrust has a blockchain-powered buyer protection system that creates a safe and secure environment for payment transactions between customers and merchants. This is done via Utrust holding the funds and releasing them to the seller on performance-based criteria.

    And because transactions are recorded on the blockchain, they are irreversible and final. This eliminates the possibility of fraud from buyers, chargebacks, and other financial losses arising from failed transactions.

    While there are a lot of other payment gateways available in the cryptocurrency space, Utrust is the first to provide consumer protection and third party mediation, unlike other blockchain payment gateways.

    Partners

    Utrust has already on-boarded several businesses such as S.L.Benfica, PRW Jewlery, Phone House, iperfumes.com, Bleu Jour, Whow, Alternative Airlines, Woocommerce, Morefrom and Elrond, among others.

    Conclusion

    We can get the best out of technology and innovation by putting together the best features of traditional innovations and blockchain technology. UTrust did exactly that when it meshed together the traditional process of consumer protection and the advanced infrastructure brought by blockchain.

    If we are looking at increasing the adoption rate for cryptocurrencies, this is the way to go. Utrust addresses the risk of price volatility that scares merchants from accepting them as payment transactions and offers a solution to the problem of fraudulent payments.

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Interview with Sunny Lu, Co-Founder and CEO of VeChain

    Interview with Sunny Lu, Co-Founder and CEO of VeChain

    Sunny Lu, Co-Founder and CEO of VeChain went on a live interview with Boxmining on 20th July 2020 to talk about what’s happening with VeChain recently and their grand objectives. It was also a great opportunity for Lu to directly speak to and answer questions from the community. Here are some key takeaways from this interview.

    VeChain is a smart contract platform mainly focused on enterprise adoption. The platform allows for the creation of decentralised applications to solve problems such as anti-counterfeiting, cold-chain logistics and maintaining tamper-proof records.

    Learn more about VeChain

    Watch the full interview here:

    VeChain interview with Sunny Lu

    What is VeChain?

    Lu said that VeChain is a “next-generation” smart contract platform devoted to providing blockchain solutions to different enterprises.

    In terms of adoption, VeChain is at the top of all the blockchain developments in the field, having been adopted by prominent clients such as BMW, Givenchy, and Walmart. Lu also said that the project has done a lot globally and they are very proud of their achievements.

    Blockchain can create a trust-free world

    He said that the innovation brought about by blockchain technology enables us to create trustless machines. With its decentralized structure and immutability, it can establish a unique trust features that may or may not be available in centralized systems.

    Blockchain creates a trust-free world because it does not rely on flawed humans in operating the whole system. Furthermore, you do not have to worry about people deciding to play “something dirty or evil” with blockchain.

    Lu also stated that if we “aim for the better world, blockchain has to be there.”

    Post COVID-19 developments need blockchain

    He said that “digitization is the new black.” True enough, a lot of people are now starting to be aware of its use cases.

    When COVID-19 shook the world, many enterprises had to digitize their business, or put them up online, in order to continue to remain afloat. According to him, that meant “relying on the digital version of the world”. If that is to be the case, he said that “blockchain is the first fundamental infrastructure technology you got to do.”

    Furthermore, a blockchain allows a business operation that is completely secure and transparent from end-to-end. With it, every data relevant to each transaction can be safely stored and accessed by anyone since it is a distributed database.

    Continuous improvements on the blockchain infrastructure

    Lu also shared that to maintain VeChain’s growth, they are continuously increasing the capacity and capability of their platform. This is what they have devoted themselves to doing for the past three to four years.

    Before, the procedure required for an enterprise to establish an e-commerce platform was extremely difficult. That was the case if we look back 25 or 30 years ago. But with blockchain technology, we don’t have to work everything out from scratch anymore.

    Blockchain has enabled us to easily build an e-commerce platform with all the new tools that can help enterprises innovate their Proof of Concept (PoC), production, and skill amplification. Other parts of the supply chain could also heavily benefit from blockchain technology.

    Adoption is increasing at a massive scale

    He said that a lot of people are now starting to use the blockchain as an essential part of transitioning to e-commerce. Just a year and a half ago, VeChain underwent numerous upgrades.

    They now have new fundamental modules that seek to provide specific solutions to enterprises. The first module provides a standard template for different kinds of businesses based on the industries that have used VeChain successfully.

    For example, you can imagine establishing a supermarket chain. With VeChain, the standard template would be to refer to Walmart China (Learn about what VeChain is doing for Walmart China) you can easily refer to China’s Walmart case. Or in the case of a pharmaceutical company looking into conducting clinical trials for new drugs, they can refer to Bayer China (Learn about VeChain’s partnership with Bayer China).

    This saves a lot of time for the user because they can start production in just a few weeks after setting it up.

    He said that looking back, it had been too time-consuming to establish a business on a blockchain platform. A project that he observed in the United States was developing a food safety platform on the blockchain. It took them 14 months, however, to set up on-chain for just a 12-month period PoC.

    VeChain helped make the process a whole lot easier. He also shared their experience in Walmart China, which only took them three months to finish everything.

    “If you are starting to use a template, it would be easier. You would just need a couple of days or a week maximum to create something. No need to wait nine months or more just to create a PoC,” he said.

    A second module accessible to them provides templates to different companies based on which practice that might fit their model. They can build on these templates, and transfer their infrastructure model to the blockchain within just a few weeks.

    The third module that they use allows the user to gather and understand data on the blockchain. It provides the user with the tools to reveal the value of the data that they have stored. In the case of Walmart China, for example, Lu explained that consumers can still easily trace the movement of their purchases with the data accessible in its public blockchain.

    Blockchain needs more business people to flourish

    He said that while blockchain is mainly a technological innovation, the entire blockchain space needs more business experts to complement its technological value with business value. That way, people can maximize the benefits of the blockchain while maintaining sustainability.

    This benefit is shared by every enterprise in the VeChain platform, even the small and medium-sized enterprises.

    What’s next for VeChain and $VET?

    Six months after they first launched the VeChain mainnet in 2018, the total number of transactions was almost half a million. But in 2019, this number shot up to 36 million. And in 2020, they were already processing a hundred thousand transactions per day.

    The growth rate is increasing consistently. But when asked about his plans on listing VeChain’s token $VET on other crypto exchanges such as Coinbase, he said that he has no comments yet.

  • Maker ($MKR) and ($DAI) : What is it and how does it bring stability to DeFi?

    Maker ($MKR) and ($DAI) : What is it and how does it bring stability to DeFi?

    Before DeFi was even a thing, Maker was already popular. With the rise of decentralized finance applications (DeFi), the cryptocurrency space has seen a drastic growth in a short span of time and Maker is the primary pioneer of DeFi applications. Meanwhile, the world of cryptocurrency is dynamic, and every moment sees new use cases emerging for different purposes. The high volatility of cryptocurrency has also posed different challenges for users and crypto investors, leading to the creation of stablecoins which can hopefully ‘stabilize’ the volatility.

    What is Maker?

    MakerDAO is a Decentralized Autonomous Organization (DAO) founded by Rune Christensen in 2014. Maker ($MKR) serves as its governance token and is powered by the Ethereum blockchain.

    The Maker ecosystem utilizes smart contracts to execute transactions in the protocol. Additionally, it uses the fractional reserve banking approach to ensure that its stablecoin ($DAI) remains stable.

    As an ERC-20 token, MRK is not mined. Its holders are given voting rights to the collateralization on the platform. As governments who have a stake in the protocol, they are incentivized to vote on changes that could benefit the Maker ecosystem. After all, poor governance would lead to the devaluation of MKR.

    The Collateralized Debt Position (CDP) makes the provision for liquidity possible when dealing with crypto assets. The idea is to provide crypto investors and traders with a decentralized platform that is suitable for margin trading. Additionally, many users have found value in exploring offshore poker sites as part of their diversified investment strategies, leveraging unique opportunities and benefits these platforms offer. Some unique things about the Maker platform include lower prices compared to other margin trading platforms, flexibility, and improved security.

    What is the difference between $MKR and $DAI?

    Maker ($MKR) was created to function as a utility token for a blockchain-based platform for P2P transfers and international payments. To avoid the volatility of the crypto market, a stablecoin called “DAI” was created and connected to Maker.

    Collateralized Debt Position (CDP) and its uses

    The value is based on the ability of the investor or trader to get liquidity without giving out their ETH tokens. It is important to protect the DAI from loss of value by depositing more than 140% of the DAI coins. 

    MKR tokens are needed to perform the transactions with the aid of smart contracts. When the CPD gets closed, or if there is a repayment of the DAI, the stability fee gets paid as MKR. 

    Furthermore, after each transaction MKR gets burned. Which invariably means that the circulating supply of MKR tokens will reduce over time. An increase in MKR’s popularity will increase the demand and number of burned MKR tokens, and result in a price increase.

    Uses of MKR

    The MKR network has four major use cases, including usages by the participants within the network. It is important to note that MKR and DAI are the two tokens used within the Maker ecosystem. Here are the four major uses:

    Traders can utilize MKR as leverage for the ETH they own

    Crypto investors and traders can use MKR if they think that the price of ETH at that moment is undervalued. While anticipating the coin’s rise, they make some ETH deposits with MKR, have a CDP, and get DAI in return. 

    They can make other ETH trades with DAI. When the ETH they own is leveraged, it is kept locked-up to get more ETH and make profits from the increase in price.

    A liquidity creation tool that helps avoid capital gains tax

    Some crypto users may be subject to capital gains tax on their earnings from cryptocurrency trades and investments. Crypto traders that have made a fortune need to secure their profits from the high volatility of digital currencies like ETH. 

    MKR provides an effective solution through ETH deposited for DAI which is pegged with the exchange rate of the US dollar. The benefit is that you avoid paying tax because your money is available in a profitable and stable cryptocurrency.

    A cheap way to facilitate the repayment of costly fiat loans, with crypto loans

    A crypto trader or investor can deposit their ETH in order to get loans at favorable rates. This helps them boycott the expensive loan fees and interest rates of traditional banks.

    For crypto investors without CDP

    Another use case of the MKR token is by crypto investors who are interested in the token. However, their interest in the token does not involve creating a CDP; rather they own the tokens to sell later.

    MKR tokens are created to promote financial freedom while eliminating volatility.

    Markets that can benefit from MKR

    MKR comes with some flexibility that makes it perfect for some markets, and these markets include:

    Financial Markets

    The introduction of smart contracts to facilitate the operations of derivatives and options helps collateralized stable prices. Decentralized trading tools are provided at zero interest rates, and are facilitated by the implementation of CDPs by MKR.

    Transparent Auditing Frameworks

    By default, the underlying blockchain technology promotes transparency. However, MKR’s platform takes transparency further with verifiable transactions. Organizations are provided with a framework that helps improve efficiency in their auditing and accounting operations. The transparency in the system mitigates corruption.

    International Trade

    One irregularity with performing international transactions is the high cost, which can be attributed to the presence of intermediaries. With MKR and DAI, intermediaries are taken off the equation in exchange for seamless person to person international transactions at reduced costs.

    Gambling Markets

    The volatility of the crypto market does not make long-term betting with crypto an advisable venture to try. The underlying risks involved include a drop in the rate and price of crypto assets.

    Where to buy MKR

    As opposed to some years ago when MKR was not available on popular exchanges, it is pretty much available almost everywhere. You can buy from Changelly, ShapeShift, OKEx, Nova Exchange, HitBTC, Binance, CoinBase Pro, BiBox, MXC, etc. 

    Getting signed up to start trading is easy and straightforward too.

    Check out our reviews for Binance and Coinbase exchanges. If you do use Coinbase, you might want to also check out our tips and hacks for avoiding Coinbase fees.

    Conclusion

    Cryptocurrency is on the path to mass adoption, and unique blockchain-based platforms like Maker are strategically positioned for it. With more use cases of cryptocurrency and blockchain technology emerging, owners of the MKR token are likely to enjoy more profitability. 

    Maker MKR has the right framework and underlying technology to tackle the issue of high volatility within the crypto market. In comparison to regular cryptocurrency, MKR poses fewer risks because of its stability mechanism.

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Balancer Finance Guide and Review ($BAL)

    Balancer Finance Guide and Review ($BAL)

    Balancer ($BAL) is an automatic market maker (AMM) protocol that reduces the cost and slippage between trades of different cryptocurrencies. Balancer is a decentralized replacement for the traditional market-maker, a 3rd party entity that provides liquidity to traded assets. Balancer protocol can be called upon by different decentralized trading platforms to automatically figure out the best rates and trading prices using Smart Order Routing (SOR). The protocol also provides the funds necessary to complete the trade, using the funds from available Balancer Pools. Balancer Finance was Launched in September 2019 by Mike McDonald and Fernando Martinelli, since then the Company had a successful seed round with $3 million invested.

    Balancer Exchange Interface

    Balancer uses the N-dimensional invariant surface that is built upon the Uniswap dapp. They also use Automated Market Makers (AMMs), much like UniSwap, which are built off computer algorithms to regulate the market. Their Pools are doing away with portfolio management fees with users instead of collecting fees from traders, who re-balance the portfolio by “following arbitrage opportunities”.

    Balancer has shifted itself into a prominent position within the Decentralized Finance (DeFi) hierarchy, as it’s BAL token caught the coattails of Compound Protocol’s governance tokens rise at the start of 2020. This saw increased attention on the exchange and has been earmarked as a competitor in the DeFi field. This perception coincides with an increase in popularity for DeFi projects and their mining qualities, something highlighted in a recent Forbes report on “DeFi Yield Famers”. So, if you are a budding or curious yielder or someone looking to understand the emerging DeFi market, this is the guide for you. In this article we provide a full breakdown of the project, what it is and explain the benefits of using this DeFi exchange and protocol.

    To learn more about Balancer including its strengths and weakness, check out our video:

    Balancer Finance: What you MUST know about this DeFi platform

    Balancer’s Pools Explained: What are they?

    Balancer pools are collections of user supplied funds that are used to provide liquidity to trades and transactions. These pools can total up to more than $11 Million USD (eg, the USDT, BAT and COMP pool). This collection of funds will be called upon during cryptocurrency trades as the as the counter-party to the transaction, thus providing liquidity to traders.

    Controlled/Private Pools: These are when a fixed state is over the pool and the creator can set out the tokens and weights. This is usually done for private actors who don’t want outside liquidators, for example third party liquidators working with large quantities.

    Finalize/Shared Pools: These pools are open for all actors to add liquidity and is a one way transition. They can not be amended and have a fixed parameter, unlike controlled pools and are usually for the general public to liquidate and make profits.

    Alongside the two main subcategories of pools, there are other more specific smart pools that you can use. For example, Liquidity Bootstrapping Pools (LBPs) give the opportunity for teams to release a project token while at the same time building deep liquidity. Other examples include stablecoin pools with zero impermanent-loss, which founder Martinelli wrote an extended explainer here.

    Pool creator tool
    Balancer’s Pool creator tool

    $BAL Token

    In its initial launch, Balancer didn’t have their own native token but this changed this year, with the company revealing their governance token $BAL. The Company began distributing the token on June 23rd 2020 and will be distributed on a weekly basis for liquidity providers on the site.

    However, there is no economic value to BAL tokens, rather they are currency for governance rights on the protocol. These rights allow the holders to have a say on the structure of Balancer protocol, with weight in terms of implementing new features, protocol fees, and larger structural changes like layer 2 scaling as well as contracts on other blockchains.

    There are 100 million tokens created but 25 million of them have already been allocated to the founding members, core developers, advisers, and investors. The rest though are free to be mined by Balancer users who add liquidity.

    According to Balancer’s website: “Every week 145,000 BALs, or approximately 7.5M per year, are distributed to liquidity providers. This means in the first year of BAL’s existence there would be 30% supply inflation off the initially allocated supply of 25M tokens.” So, how can you earn the weekly BAL allocation? This is done through BAL liquidity mining, which is discussed below.

    BAL Liquidity Mining: How to earn $BAL tokens?

    Liquidity mining has become one of the most popular topics of conversation in the space of decentralized finance (DeFi) in recent weeks. At its core, liquidity mining is essentially when users supply liquidity of assets to a DeFi protocol in exchange for some kind of reward. That reward may be various tokens, including governance tokens of the underlying DeFi protocol (which may end up having monetary value – like COMP). It basically offers a way for users to earn money on assets that they hold.

    The main way to earn $BAL tokens is through Liquidity Mining. Essentially, Balancer rewards liquidators who pay into their pools in the form of $BAL tokens. The Company’s proposal is to give out BAL tokens in proportion to the amount of liquidity each address contributes relative to the total liquidity on Balancer.

    Another way to make BAL is through creating a pool and reaping the benefits of trading fees. These are handed out in the form of $BAL. This system also incentivises the pool creator to lower fees as the lower the fees are, the more BAL they receive. Balancer’s fee gives pool creators a short term or a long term option, and they hope it will encourage lower fees so that traders are lured onto the exchange.

    Speaking on the issues concerning distribution of BAL and governance rights, founder Martinelli said: “By far the most important factor or reason why we are doing that is because we want this thing to be decentralized. We believe in a decentralized, trustless future, and we want Balancer to do that. We need the distribution to be in a healthy way.”

    Balancer Yield Farming & Best Pools

    Top liquidity pools on Balancer are currently returning up to 30% APR on Return on Liquidity. These rates have drastically improved after the Cap Factor update on July 5th 2020.

    The best way to find the current best rates and return on liquidity is via the Predictions Exchange Chart.

    Balance Coin Whitelisting

    In order to quality for airdrops of $BAL Balancer Governance token, pools need to have at least two coins that are on the whitelist. Coins are added to the balancer whitelist on a weekly basis. The amount of $BAL being distributed depends on the trade volume and total liquidity, with a maximum of $

    Trading on Balancer’s Exchange

    Alongside their liquidity and pools, Balancer is first and foremost a decentralized exchange. With no KYC or signups, the anonymity and privacy is upheld. All you need to start trading on there is a wallet like MetaMask. Learn how to set up a Metamask account here.

    The Exchange has a number of tokens available to trade. These include: Ethereum (ETH), DAI, MKR, USDC, REP, BTC++, WBTC, WETH, BAT, SNX, ZRX, LINK, DZAR, UMA, LRC, REN, LEND, KNC, COMP, OCEAN. The Exchange also has a number of tokens without pools such as tBTC, ANT, cUSDC, cDAI, imBTC, pBTC, sBTC, sUSD, PNK, AST and RPL.

    Balancer: are there any risks?

    Decentralized exchanges are often associated with high risks. This sort of ability to trade so easily with high interest rates is a concern. This was highlighted more recently by Ethereum founder, Vitalik Buterin, who cautioned that they were “flashy DeFi things” which sometimes come with “unstated risks attached”.

    Tweet from Vitalik Buterin

    Balancer has acknowledged the risks, with their website warning users that: “Balancer is a very new protocol. Although we are taking every precaution and doing extensive audits, this is still very much a beta product. Use small amounts of funds to start.”

    Conclusion

    Overall, Balancer has position itself as a powerful tool to automate marketing making and reduce transaction fees for different cryptocurrencies. It’s leading the liquidity pool market with the ability to create n-dimensional liquidity pools which is a market first. With their unique formula which negates and actively discourages large fees, Balancer has created a decentralized project that could potentially be a self-sufficient system with a community emphasis.

    For now though, the main target for Balancer is to create stiff competition for UniSwap and make themselves the industry leaders in the AMM field on Ethereum. Many believe this is possible as the DEX functionality on Uniswap is the same as Balancer, as one Uniswap token-for-token pool is equal to the Balancer pool with two tokens set to 50/50, or 1:1, value.

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.

  • Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Decentralized Finance (DeFi) has been the breakout trend of 2020. With prices of standout DeFi tokens surging and terms like “Yield Farming” getting mainstream attention, the DEFi field has taken off. This next step in the evolution of finance uses public blockchain technology and has a wide range of sub- divisions that make up the growing field. The most notable and popular of these DeFi services are decentralized exchanges, decentralized stablecoins, decentralized money markets, decentralized synthetics and decentralized insurance. To understand this emerging field, first a definition on what decentralized means must be had. 

    Learn more about DeFi, and liquidity pools such as Balancer, Uniswap and Curve with our video:

    What is decentralized and what does it mean?

    Decentralized is a term you will have definitely heard thrown around even if you are relatively new to the cryptocurrency scene. Be it on Twitter, with the various profiles espousing the benefits of decentralization and calling out centralized cryptocurrency projects, or in articles online. To give a little context, the decentralized v centralized argument is akin to economic arguments on political systems between capitalists and communists. 

    Part of the reasoning for many supporters of decentralization is that blockchain technology at its core was made to be decentralized. Blockchain is reliant on open source networks and has no central entity controlling it. Rather, the computer power and the overall network is split up, which is why it is decentralized. The benefits of this system are that it doesn’t have a single point of failure, making cyber attacks and poor leadership somewhat irrelevant. 

    As such blockchain has been earmarked as the breakout technology of the 21st century. Companies, governments and financial institutions are all clambering to bring developers on board as blockchain continues to be viewed in an increasingly glowing light. Yet, how does blockchain’s decentralized foundation play into the emerging DeFi field?

    DeFi Explained

    For many, blockchain is the embodiment of the DeFi field and is the promised land of finance that Satoshi Nakamoto first imagined when he created Bitcoin. The term DeFi has turned into an all encompassing term for a range of projects, but the core values of each are pretty clear. These are open access to anyone, resistance to censorship, privacy and an open democracy of finance away from singular control. The majority of DeFi sites are run through decentralized apps or Dapps, which allow for financial services to be created and be used easily by anyone. 

    The DeFi Market

    The DeFi market is a field that has grown massively in recent months as billions of dollars are handled every hour in the sub industry. Part of DeFi’s popularity is down to its transformative effect on almost all aspects of finance. From loans to remittance markets and even insurance, the DeFi field could give financial access to people around the world as all they need is an internet connection. The technology could have an impact on the third world, where many of the population is unbanked or even in more developed financial societies as governments and financial institutions continue to lose credibility as they go from recession to recession. Sold on DeFi now? Well if so, read on for a closer look at the different blockchain applications in the field and the top companies within each subcategory. 

    What is a Decentralized Exchange?

    Exchanges are the heartbeat of the cryptocurrency traders. Most of you will have an idea of the more famous centralized exchanges like Binance and Coinbase, but decentralized exchanges (DEX’s) may be less so. The main difference between the two is that there is no central authority over decentralized exchanges, rather governance is determined in various ways, like through earning native tokens. 

    Focusing on namely cryptocurrencies, the decentralized exchanges offer a range of benefits. The first is security as you are not trusting a centralized exchange which could be susceptible to hacks with your funds. Instead trades are done through a peer to peer (P2P) trading network and a range of methods are used to facilitate this. Some DEX’s use proxy tokens, others multi-signature escrow systems and some use shares. Popular DEX’s are dYdX, Uniswap and Kyber network.

    Decentralized Stablecoins

    Much like DeFi applications, stablecoins have also seen a rise in popularity and usage in recent times. Put simply, stablecoins are less volatile tokens that are usually backed by a currency, commodity or a collection of both that enables them to keep a steady price, unlike the often wild swings of other cryptocurrencies. Some stablecoins are centralized but there is a growing amount of stablecoins that have become decentralized. These include industry favourites like DAI, USDC and Tether (USDT). To be classed as a DeFi stablecoin, there needs to be no central figure ruling the tokens or single point of failure as well as a resilient network.

    What is a Decentralized Money Market?

    Money markets are markets for borrowing and lending assets. The decentralized element means that users can borrow and lend cryptocurrencies without the control of a central figure. The lack of central authority is fixed using smart contracts and algorithms to determine the markets function. Decentralized money markets put interest earning potential in the hands of anyone with an internet connection in the world. Popular examples of decentralized money markets include Aave, Compound, MakerDao and Balancer. This area of DeFi has gained the most traction in recent times, especially with the bearish crypto market. This is because there are lots of profits to be made, with “Yield Farmers” churning in large sums from interest earned.

    Decentralized Synthetics

    Decentralized synthetics is another growing sector of the DeFi field. Synthetics or derivatives as it is also known refers to the tracking of a value for an asset. This means traders can get an insight into an asset without physically investing themselves. This representation of the asset allows traders to make educated investment decisions. There are a number of decentralized synthetic companies, the most popular ones being UMA and Synthetik. Expect more companies to pop up in the future too.

    Decentralized Insurance

    As blockchain gains exposure, more and more use cases appear, from accounting to product tracking. One industry that has taken to the technology is insurance. The bureaucratic side of the industry is perfect for blockchain technology and smart contracts, with a wide variety of usages for the technologies. The technology has the ability to revolutionise the insurance field as it cuts out added fees and reduces smart contract risk. Notable decentralized insurance companies include Nexus Mutual and Opyn.

    Conclusion

    Overall, it would appear that the DeFi field is growing and most importantly, is here to stay. People around the world are increasingly seeing the problems of a centralized method, especially in the cryptocurrency industry which has a long history of customers’ funds being lost due to hacks of centralized exchanges. Partner this with an increasingly more aware population with regards to internet privacy, you have the makings of the next big thing in the cryptocurrency industry and possibly the wider financial field. 

    Although the industry is in its infantile stage, there are a number of interesting projects and options, most strikingly in the decentralized exchange and money market area, which users can partake in. Boxmining has a number of guides which can help you decipher more clearly which is the best project for you. For more DeFi related information and other cryptocurrency news, subscribe to our YouTube channel and newsletter. 

    Decentralised Finance (DeFi) series: tutorials, guides and more

    With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces

    The DeFi series on this website also covers topics not explored on YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

    More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!

    Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.