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Category: Crypto Trends

Make sense of the news and how it affects the blockchain space as a whole. Crypto trends is a collection of relevant news and insights to help you make an informed decision.

  • Ledger Stax: Next-Gen Crypto Wallet Designed by iPhone Co-Creator Tony Fadell

    Ledger Stax: Next-Gen Crypto Wallet Designed by iPhone Co-Creator Tony Fadell

    Ledger and Tony Fadell Unveil Stax Wallet

    Ledger, one of the top hardware wallet providers, has announced the launch of its new Ledger Stax wallet in partnership with Tony Fadell, co-creator of the iPod and iPhone. This is a significant initiative as Fadell being one of the world’s foremost tech engineer is stepping in to bring clarity and confidence to owning digital assets following the collapse of FTX.

    Pre-order your Ledger Stax Wallet here!

    buy now

    Key Features of Ledger Stax Wallet

    Fadell realized that existing hardware wallets are difficult to use for mass consumers. Therefore, he drew inspiration from his iPod design to bring a more user-friendly experience for wallet users.

    Ledger Stax resembles a small smartphone and has a monochromatic E ink display which covers the front and curves around the spine. That way users can easily view complete transaction details as well as their NFT collections even when the wallet is off. This works in conjunction with integrated magnets, allowing multiple Stax devices to stack, hence its name. This is particularly useful for Ledger owners who have different portfolios since they can look at the labels displayed on the spine, like books on a shelf.

    Stackable Ledger Stax wallets with displayable screen on the spine (Source: Ledger)

    Users can store more than 500 cryptocurrencies or NFTs on Ledger Stax. Developers are also planning to allow users to explore Web3 applications through the Ledger Live app. Users can connect the Ledger Live app on (1) laptops via secure USB-C or (2) smartphones via bluetooth. This new user interface will enable clear and intuitive interaction for all mainstream users.

    Ledger Stax also has good energy efficiency and supports wireless Qi charging. Its battery can last as long as few months with a single charge.

    How to Get Ledger Stax Wallet?

    Ledger Stax is now available for preorder at $279 and will begin shipping by the end of March 2023. It will also be available from select retailers such as Best Buy in the U.S. Those who purchase the wallet will also receive an Infinity Pass, which provides users with a free utility NFT.

    Additionally, a Ledger Stax NFT Bundle is available to mint on [Ledger] Market for 0.22 ETH to redeem a free Ledger Stax device. It also unlocks access to exclusive NFT artwork from Ledger’s network of hand-picked artists. However, Genesis Pass holders and PREMINT Collabs have special mint-priority, and there are only 10,000 bundles available.

    Key Takeaway

    “Not your keys, not your crypto” — there is a great risk of losing all your crypto if you park it on a centralized exchange. Hardware wallets are great self-custodial solutions because only you have control over your funds. But the problem is it can be quite daunting to operate one, especially for beginners.

    Ledger Stax will revolutionize this by bringing the familiar user experience of smartphones into hardware wallets. This is a big step towards a decentralized financial future as more people are opting for self-custodial solutions. If you are interested in other hardware wallets, feel free to check these out:

    Pre-order your Ledger Stax for only $279 and get it by end of March 2023!

    buy now
    What is the Ledger Stax wallet?

    The Ledger Stax wallet is a new hardware wallet developed in partnership with Tony Fadell, co-creator of the iPod and iPhone. It has a unique and innovative design in the style of high-end Samsung cell phones, and lets users view their NFT collections even when the wallet is off.

    When will the Ledger Stax be available for sale?

    Ledger Stax is now available for reorder at $279 and will begin shipping by the end of March 2023.

    What features does the Ledger Stax offer?

    The Ledger Stax wallet is an easy-to-carry device about the size of a credit card, which allows users to store more than 500 cryptocurrencies or NFT collections. It also features an E-Ink touchscreen for viewing NFT collections, and a battery that can last for weeks or even months with a single charge.

    Are there any incentives for purchasing the Ledger Stax?

    Yes, those who purchase the wallet will be eligible for various prizes, such as a “Magnet Shell” protective case and an NFT from the “The Art On Ledger Stax Collection.”

  • Binance futures trading: How to guide

    Binance futures trading: How to guide

    Crypto futures trading allows traders to have exposure to cryptocurrencies without the need to own the underlying crypto asset. Binance exchange offers futures trading to users through Binance Futures, which has 279 trading pairs. This article provides a guide on how to trade on Binance Futures.

    Get 20% off fees when signing up for Binance with the following link!

    What is Binance?

    Binance was launched in 2017 and is arguably the world’s most popular centralized cryptocurrency exchange. It has over 2 billion average daily volume and 72 million site visits daily. The Binance ecosystem includes Binance exchange, BNB Chain, Trust Wallet, Binance card, and other services.

    What is crypto futures trading?

    Crypto futures contracts create an obligation for parties to exchange the asset at a predetermined price and date. On most cryptocurrency exchanges, however, the parties can settle for the cash equivalent. But, the trade must take place. 

    Traders use futures trading to profit from market movements by going either “long” or “short” on a futures contract. Going “long” means that a trader purchases a futures contract expecting it would increase in value in the future. And if the value of the cryptocurrency does increase, the long trader would profit. On the other hand, a trader going “short” means they are hoping prices will drop.

    Learn more about crypto futures trading with our guide- Crypto Futures Trading: What is it?

    What is Binance Futures?

    Binance Futures allows users to trade crypto futures contracts on Binance. It has 279 trading pairs and has the second-highest 24-hour trading volume amongst all crypto derivative exchanges. Binance Futures offers USDⓈ-M Futures and COIN-M Futures. These are perpetual or quarterly contracts settled in USDT/BUSD, or cryptocurrency respectively.

    Binance Futures also has interesting features such as a leaderboard, showing traders with the highest ROI or PNL. Other traders can follow these top traders and see what positions they are holding, as well as copy their trades.

    For traders who are more competitive, Binance Futures has a battle mode where you can guess whether prices will rise or fall within the next 1 or 5 minutes. Then, you will be matched with another player who predicted in the opposite direction. Players will still gain points regardless of whether they win or lose. Points can then be used to earn further rewards.

    Binance Futures trading fees

    Binance uses a maker-taker fee structure. Maker trades are orders that go on the order book partially or fully e.g. limit orders. Taker trades are executed immediately before entering the order book. Market orders are a type of taker trade. The fee charged depends on which type of trade. As maker trades add volume to the order books and thus “make” the market, it is in an exchange’s interest to have more of these orders. Therefore, maker fees are usually lower than taker fees.

    Binance also has a 9-tier VIP structure which offers progressively lower fees for users with high trade volume and substantial BNB holdings. Users who use BUSD, Binance’s USD stablecoin, or BNB for settling fees are also rewarded with lower trading fees.

    The lowest tier, i.e. “Regular users” are traders with a past 30-day trading volume of less than 15 million BUSD or hold 0 BNB. For regular users, the maker/taker fee for USDⓈ-M futures trading is 0.02%/0.04%, and for COIN-M futures, the maker/taker fee is 0.01%/0.05%.

    Highest tier users i.e. VIP 9, users must have a past 30-day trading volume of over 25 billion BUSD and hold over 5,500 BNB. VIP 9 users enjoy a maker/taker fee of 0.00%/0.017% for USDⓈ-M futures trading, and for COIN-M futures, the maker/taker fee is -0.009%/0.024%.

    Binance futures trading fees
    Binance futures trading fees (Source: Binance)

    Extra discount! Enjoy 20% off fees when signing up for Binance with the following link!

    Pros and advantages of trading on Binance Futures

    Binance is one of the leading cryptocurrency exchanges. According to CoinGecko, Binance has the second-highest trading volume with over US$35 million being traded in 24 hours. Here are some of the pros and advantages of crypto trading on Binance Futures:

    • Many trading pairs. Binance Futures have 279 trading pairs, giving traders a wide range of options from popular cryptocurrencies such as Bitcoin ($BTC), to meme coins such as Shiba Inu ($SHIB).
    • Low trading fees and generous fee structure. Maker/taker fees start at 0.02%/0.04%. However, Binance Coin ($BNB) and BUSD holders, and high-volume traders are entitled to discounts, bringing trading fees to as low as 0.0100%/0.0207%.
    • Low minimum trade amount. Traders can start with a minimum trade amount of 0.001 BTC on the BTCUSDT Perpetual market.
    • Binance offers up to 100x leverage. This allows more experienced traders to potentially maximise their gains.
    • Binance has trading tools such as Grid Trading, TWAP, Advanced TP/SL, and Multi-Symbols Trading Page for maximum trading efficiency.

    Cons and disadvantages of trading on Binance Futures

    • Futures trading is not available in the US. So US traders will need to use other exchanges for futures trading.
    • Users must pass the verification process in order to begin using Binance Futures.

    Is Binance Futures trading safe?

    Binance has a US$300 million Insurance Fund to protect traders. The Fund acts as a safety net to protect bankrupt traders from adverse losses whilst ensuring that winning traders are paid in full. The purpose of Binance’s insurance fund is to limit counterparty liquidations. Counterparty liquidations are where the positions of opposing traders are automatically liquidated in order to cover a bankrupt trader’s position. The insurance fund takes the remaining positions when a trader in liquidation has less than 0 USDT after all their positions are liquidated. These remaining positions would be offloaded onto the market gradually and liquidation fees will be collected from users that do not result in bankruptcy.

    Binance also has a Cooling-Off Period function to help traders prevent compulsive trading behaviours. It works by preventing traders from trading futures-related products on the exchange for a predetermined period.

    How to start trading on Binance Futures

    Trading on Binance Futures only requires 5 simple steps.

    1. Sign up for a Binance Account

    To sign up AND get an additional 20% off trading fees click here.

    Alternatively, on the Binance main page, click register and enter your details. Don’t forget to fill in GQWT3T1T for the Referral ID in order to be eligible for 20% off trading fees.

    You can sign up with your phone, email, Google, or Apple accounts.

    2. Open a Binance Futures account

    Go to Binance Futures and click Open Now, if prompted, you can enter GQWT3T1T as the Futures referral code in order to enjoy 20% off trades. Then, complete and get all the answers correct on the 14-question quiz on how to use Binance Futures.

    3. Complete the verification process

    Click Profile and then Verification. Follow the steps and fill in your personal information. A government-issued ID (e.g. a passport) and address proof must be provided, and you must also pass the facial recognition test.

    4. Make a deposit into your Binance account

    Binance allows you to deposit fiat or cryptocurrencies into your account. To deposit, click on your profile and go to Dashboard. Under Fund your Account, you can choose to Buy crypto using Mastercard, Visa, Google, or Apple Pay. Users can also choose to Deposit crypto from other exchanges or their hardware wallet.

    5. Start trading

    On Binance Futures, choose between USDⓈ-M and COIN-M Futures Contracts. On the top left-hand corner (marked in yellow), you can choose which futures contract to trade.

    Choose which futures contract to trade
    Choose which futures contract to trade (Source: Binance)

    On the left-hand side, there are various tools to help you identify patterns or trades such as trend lines, arrows, or Fibonacci retracement. You can use these tools to annotate your charts.

    Binance Futures chart tools
    Binance Futures chart tools (Source: Binance)

    On the top right-hand side of the page, you can select the Margin Mode. Users can choose between Cross or Isolated margin modes. Cross-margin mode means that the entire margin balance will be shared across open positions. However, if there is a liquidation event, the risk is that their entire margin balance and any open positions may be lost. Isolated margin mode, on the other hand, allows traders to manage their risk on individual positions by restricting the amount of margin allocation. The benefit of isolated margin mode is that if a position is close to being liquidated, users can allocate additional margin to that position.

    Select Cross or Margin Mode on Binance Futures
    Select Cross or Margin Mode on Binance Futures (Source: Binance)

    Set your Leverage (if any) by clicking on the top right-hand corner. Traders can set the leverage from 1x to 125x. However, traders should be careful that setting high leverage could result in significant losses in the event of a liquidation.

    Set leverage on Binance Futures
    Set leverage on Binance Futures (Source: Binance)

    On the right-hand side of the page, you can also select the type of order (e.g. Limit, Market, Stop Limit, etc), the order price, and size. For a more automated yet managed trading experience, traders can also select TP/SL i.e. when to take profits, or stop loss. Finally, traders need to select between a Buy/Long, or Sell/Short order.

    Is Binance Futures safe?

    Binance Futures comes with security features expected from every reputable cryptocurrency exchange. Binance Futures requires users to have passed the KYC verification before they can start trading. Before trades are executed, users must also have enabled 2FA authentication and will be sent an Anti-Phishing Code for verification.

    Binance Futures also has a nearly US$300 million insurance fund to protect bankrupt traders from adverse losses. It also ensures that profits of winning traders are fully paid out.

    Finally, if users really need help, Binance offers customer support in 17 different languages via Live Chat or email.

    Conclusion

    Trading futures contracts are a great way for cryptocurrency traders to profit from fluctuations in cryptocurrency prices. Furthermore, Binance Futures is a popular exchange for traders of any level to trade futures since they have a large number of trading pairs. Binance Futures also has the benefit of a huge insurance fund, helpful tutorials, and customer support to ensure that customers have a straightforward and secure trading experience.

    Enjoy 20% off fees when signing up for Binance with the following link!

  • Crypto Futures Trading: What is it?

    Crypto Futures Trading: What is it?

    Crypto futures trading is a type of derivative financial contract. It creates an obligation for the parties to exchange the crypto asset at a predetermined price and date. In this article, we look at what is crypto futures trading.

    What is futures trading?

    Futures are generally named based on the month they expire. For example, a March crude oil futures contract will expire in March and is based on crude oil as an underlying asset. You can also find contracts for other commodities. 

    Traders use the term futures broadly for a whole asset class. And there are multiple futures contracts available based on different types of assets. For example: 

    • Commodities such as crude oil, corn, and wheat;
    • US bonds, or any other government-backed financial bond;
    • Precious commodities like silver and gold; and
    • Index futures such as the Dow Jones Industrial Index.

    For example, a BTCUSD quarterly contract uses BTC as an underlying asset and expires quarterly.

    What is crypto futures trading?

    In crypto futures trading, traders can gain exposure to cryptocurrencies without actually needing to possess the underlying crypto asset. However, there are risks involved with futures trading such as high price volatility.

    Traders use futures trading to take advantage and profit from market movements by going either long or short on a futures contract. Going “long” means that a trader purchases a futures contract expecting that it would increase in value in the future. On the other hand, a trader going “short” means they are hoping prices will drop.

    Here is an example of a futures contract:

    Adam enters into a long futures position when BTC was trading at US$15,000 whilst Bob enters into a short futures position. BTC prices rose to US$20,000 and both Adam and Bob agree to settle their positions. For Adam, BTC was worth more at settlement than when he entered the long position. So Adam makes a profit of US$5,000 from the exchange, being the price difference between the two times. On the other hand, Bob is holding a losing trade since he was holding a short position. So Bob must instead pay the exchange the deficit loss of US$5,000.

    Crypto futures trading
    Crypto futures trading (Source: Binance)

    Difference between options and futures contracts trading

    Futures and options contracts are not the same. An options contract does not impose an obligation on the buyer or the seller. Rather, an options contract gives the parties the option to buy or sell a crypto asset at a fixed price on a specified expiry date. There are 2 types of options contracts: call contracts which give traders the right to buy, and put options which give traders the right to sell.

    On the other hand, in a futures contract, the buyer has to take possession of the underlying asset, and the seller has to sell that asset. The parties can settle for the cash equivalent, which is what happens on most cryptocurrency exchanges. However, the trade must take place. 

    Pros of crypto futures trading

    Here are some benefits (pros) of crypto futures trading:

    • Crypto futures contracts allow traders to gain exposure to cryptocurrencies and possibly profit from their price movements without holding the cryptocurrency itself.
    • Traders can bet against the direction of the market and profit from it. Long traders predict the price of a crypto asset will increase. Whist traders which go short would profit if prices drop.
    • Trading crypto futures with leverage allows traders to potentially have more gains with only a fraction of the total cost. This, however, comes with risks.

    Cons of crypto futures trading

    Here are some risks (cons) of crypto futures trading:

    • Cryptocurrency markets can be very volatile. And unlike traditional markets, cryptocurrencies are traded 24 hours a day. This means traders must constantly check the direction of the market.
    • Leveraged trading is very risky and could lead to substantial losses.

    Conclusion

    Crypto futures trading is a good way to gain exposure to cryptocurrency trading without holding the underlying cryptocurrency. It is also a hugely popular financial product that is offered on most crypto exchanges. Traders however should take extra care and ensure they have appropriate trading risk mitigation strategies in place to manage their portfolios. You would never invest more than you can afford to lose, especially when cryptocurrency markets are by nature extremely volatile.

  • Crypto funding rates: How it works and how to earn passive income

    Crypto funding rates: How it works and how to earn passive income

    Funding rates are periodic payments by cryptocurrency exchanges to traders based on the difference between the perpetual contract market and spot prices. Depending on your standpoint, you could either stand to receive payment or be the party paying it. Many cryptocurrency traders take advantage of crypto funding rates to earn passive income. In this guide, we look at how crypto funding rates work and how you can earn passive income from them.

    What are traditional futures vs perpetual futures contracts in crypto trading?

    To understand what is a funding rate, we must first know the difference between Traditional Futures and Perpetual Futures contracts. 

    A key feature of traditional futures contracts is the expiration date. Traditional Futures contracts usually settle (expire) once a month or quarter. And when this happens, the settlement procedure begins. During this settlement period, the contract price converges with the spot price and then all open positions will expire.

    Crypto-derivative exchanges like Binance often provide Perpetual Futures contracts, which have a similar structure to Traditional Futures contracts. Perpetual contracts, on the other hand, have a significant advantage. The advantage of perpetual contracts is that they do not have an expiry date. So traders can, for example, keep a short position open indefinitely unless they are liquidated.

    Furthermore, Traditional Futures usually have a broker who will ask the trader to top up the amount accordingly based on “margin calls” i.e. the margin difference between the contract price and the spot price.

    Due to the fact that perpetual futures contracts never settle or expire, cryptocurrency exchanges require a system to ensure that futures and index prices converge on a regular basis. This is where the concept of the funding rate comes in.

    What is a Funding Rate?

    Funding rates are periodic payments to long traders, which predict the market will go up, and short traders, which foresee the market will go down. The funding rate amount is based on the difference between the perpetual contract market and spot prices. So, depending on the traders’ position, they can either stand to pay or receive the funding rate.

    When the funding rate is positive, the price of the perpetual contract is greater than the mark price. In such cases, long traders pay short traders. Conversely, the funding rate is negative when perpetual prices are below the mark price. This is when the short traders pay the long traders.

    Why do Funding Rates Exist?

    Futures contracts expire (settle) at a future date. When this happens, the futures price will meet with the current spot price. That is, the futures price is a predetermined spot price at a predetermined date in the future.

    The futures market can be in one of two states relative to the spot price:

    • Contango: The futures market is trading above the spot price; or
    • Backwardation: The futures market is trading below the spot price.

    The difference between the futures and spot market is called the “basis”.

    Whilst perpetual contracts do not expire, they still need to settle at a spot price. However, there are sometimes differences in the cryptocurrency’s prices between the spot and futures prices on an exchange. This is despite the fact that they should be in line since they need to settle against each other over time.

    Therefore, to keep the spot price and the perpetual contract prices in line, exchanges add an interest rate component (i.e. a funding rate). This funding rate incentivizes traders to take positions that help close the price gap, whilst penalizing those that do the opposite. In essence:

    • When the funding rate is positive, those who are long pay those who are short. This means those who are short will benefit. Therefore, people are incentivized to take short positions; and
    • When the funding rate is negative, those who are short pay those who are long. So if you are in a long position, you will receive the funding paid by those who are short.

    Traders try to avoid paying the “penalty” by closing their long or short positions before the funding rate expires. When traders do this, the prices between the contracts and spot prices will begin to converge.

    For example, when the contracts price is above the spot price, the funding rate is positive. In such cases, those who are long pay those who are short. Traders with long positions are encouraged to close their positions before the funding rate expires to avoid paying those with short positions. Meanwhile, traders are incentivized to open short positions because they can receive payment. The effect of this is that the contracts price will be pushed down and the gap between that and the spot price will be closed.

    On the other hand, when the contract price is below the spot price, the funding rate is negative. Shorts will pay the longs. Therefore, traders with short positions will try and close their positions to avoid payment and open long positions to receive payment. Thus, the contract price will be increased to meet the spot price.

    What is the Purpose of Funding Rates?

    The purpose of funding rates is to prevent continued divergence in the perpetual contract market and the spot price for a cryptocurrency. And since prices of cryptocurrencies are consistently fluctuating, the funding rate has to be recalculated periodically. For example, some exchanges like Binance will recalculate their funding rates every 8 hours.

    How to Make Money and Earn Passive Income from Funding Rates

    One tip to make some “passive income” from funding rates is to buy AND short the exact same amount of the cryptocurrency you put your money on. 

    This method balances the positive and negative funding rates, where technically you do not have a position in that particular cryptocurrency market since it is counterbalanced. 

    However, your short trading will get paid on an hourly basis. So, you can get “passive income” on the side, even though overall it mostly turns out to be net value since you have the positive trades too. 

    A lot of large trading firms use this defunding method to get large sums of money quickly. 

    Conclusion

    Crypto funding rates are an integral feature of the perpetual futures market Most cryptocurrency exchanges use funding rates to ensure that contract prices are always in line with spot prices. In turn, traders can benefit from taking advantage of funding rates to earn some passive income with funding fees.

    To learn more about how to profit from funding rates on different exchanges, check out these articles:

  • Proof-of-Reserves Explained: Essential for Crypto Exchanges

    Proof-of-Reserves Explained: Essential for Crypto Exchanges

    In light of the FTX collapse, cryptocurrency exchanges are implementing proof-of-reserves (PoR) as a form of on-chain accounting that shows their entire holdings and customers’ assets. As centralized entities, this is a big step towards a more transparent crypto ecosystem, but some argue it might not be enough to regain investor trust. In this article, we will explain how PoR works and why it matters.

    What is Proof-of-Reserves (PoR)?

    Proof-of-reserves (PoR) is a cryptographic method to verify that an exchange has enough assets to cover all customers’ deposits. In doing so, the exchange ensures customers they have sufficient liquidity on hand to process all withdrawals, should a bank run occur.

    This came to light after FTX secretly used $10 billion of customer funds to prop up its sister company Alameda Research, which ultimately led to a liquidity crunch amidst mass withdrawals.

    This has left the crypto community wondering what other crypto exchanges might be doing with customer assets. As a result, Binance CEO Chengpeng Zhao (CZ) urged all crypto exchanges to do PoR, albeit Kraken was one of the first exchanges to prove their reserves in February 2022.

    How Does Proof-of-Reserves Work?

    Proof-of-reserves essentially involves taking a snapshot of all balances held on the exchange which are aggregated into a Merkle tree — a data structure designed to encapsulate and encrypt data. These Merkle trees, also known as hash trees, function as a map of the exchanges’ assets and liabilities (customers’ tokens).

    From there, a Merkle root is obtained, which is a cryptographic fingerprint that uniquely identifies the combination of these balances at the time when the snapshot was taken. Afterwards, digital signatures produced by the exchange are collected, which prove ownership over the on-chain addresses with publicly verifiable balances. To put it simply, the exchange discloses these addresses and provides proof that they have access to the associated private key.

    Because Merkle trees are part of blockchain technology, anyone can compare and verify if these balances exceed or match the customers’ balances represented in the Merkle tree. In the case of crypto exchanges, this process is either self-attested by the exchange or carried out by an independent third-party audit. As of now, most crypto exchanges have been working with Nansen, a blockchain analytics platform, for their PoR audit.

    Downsides of Proof-of-Reserves

    Although proof-of-reserves is certainly a step in the right direction, there are still several improvements that could be made to enhance transparency and trust.

    Proof-of-Reserves are Pointless without Proof of Liabilities

    A proof-of-reserve audit without disclosure of total liabilities, not just customers’ tokens, does not paint a full picture of an exchange’s solvency. This would include anything the exchange owes such as debts and taxes. Kraken CEO Jesse Powell expressed that Binance’s PoR is pointless without liabilities. This is also in reference to other platforms publishing their PoR without mentioning any liabilities. He also added that accounts with negative balances must also be included in the sum of total liabilities.

    However, the problem is that these liabilities are NOT on-chain, which means an independent auditor has to step in. At that point, crypto exchanges will have to provide the same proof as all public and regulated companies provide — audited financial statements. (Clonazepam) Coinbase is one of the few exchanges to do this. Since they are a public company subject to U.S. regulations, they have already been proving their reserves using balance sheets audited by the SEC.

    Therefore, the most reliable way to prove an exchange’s assets are more than its liabilities is via third-party auditors. In fact, CZ responded to Powell’s comments that Binance would involve third-party auditors to audit their PoR results.

    Proof-of-Reserves Audits Can be Falsified

    Although the cryptographic proof do not lie, it can be manipulated and framed to look healthy. There is the issue of crypto exchanges moving their funds right after the snapshot for the audit was taken. Recently, Crypto.com mistakenly transferred 280,000 ETH to a Gate.io address after it released its proof-of-reserves audit. Many speculated that exchanges were borrowing assets to show a healthy balance sheet, only to return them after the snapshot.

    Moreover, a PoR audit is only as good as its verifier. There is also the issue of exchanges colluding with third-party audits to produce false results. Unless the exchange is audited by a reputable source such as the Big Four accounting firms, we will just have to take their word for it.

    Proof-of-Reserves Do Not Prevent Customer Fund Misappropriation

    Even then, audits and attestations may not suffice. At its core, crypto exchanges are not the same as banks — crypto is not insured by government depositary schemes. Even if all the steps are done correctly, customers can still lose their crypto if mishandled.

    Merkle tree-based PoR would not prevent the misappropriation of customer funds completely. It only tracks the money, providing information. It does not provide customers with greater control over their funds. If the exchange is caught in the act, you would not be able to get your crypto back as it is likely to be tied up in litigation.

    Not your keys, not your crypto. We strongly suggest keeping your crypto on hardware wallets such as Ledger Nano X, Ledger Nano S Plus, Ledger Nano S, Trezor One or Trezor Model T.

    Why Proof-of-Reserves is Crucial

    At the end of the day, proof-of-reserves is the first step towards a more transparent crypto ecosystem. In effect, it functions as a verification tool to filter out fraudulent crypto exchanges, albeit not completely.

    By leveraging blockchain technology, PoR brings crypto exchanges closer to the treasuries of DeFi protocols, allowing anyone to trace funds on-chain at any time. However, there is much to improve in this aspect. But with on-demand, real-time tracking of exchange reserves, the industry is working towards a decentralized and trustless system, where customers do not need to trust the institution, only the math.

  • Binance Funding Rates: What is it and how to profit from it?

    Binance Funding Rates: What is it and how to profit from it?

    Binance is the world’s most visited and used centralized cryptocurrency exchange in the world. The exchange has over 2 billion average daily volume and over 1.4 million transactions per second. The Binance ecosystem includes not only Binance exchange, but also BNB Chain, Trust Wallet, Binance card, and more. Many crypto traders like to take advantage of an exchange’s funding rates and fees to earn some profit and passive income. In this article, we look at how Binance funding rates and fees work, and how to profit from it.

    Sign up for Binance and enjoy 20% off fees!

    What is Binance?

    Changpeng Zhao (CZ) and Ye He founded Binance in 2017. Since then, Binance has become the world’s most popular cryptocurrency exchange with the largest organic trading volume. Binance is available in most countries, including the United States under Binance.us (with the exception of a few states). The exchange also supports 600 cryptocurrencies on its international site and over 130 cryptocurrencies on Binance.us.

    What are crypto funding rates?

    Crypto funding rates are periodic payments of the price difference between perpetual contract markets and spot prices. Funding payments are made either to/by long or short traders depending on the funding rate.

    Funding rates exist to align the perpetual contract price to the spot price. If the perpetual contract trading price is higher than the spot price, long position holders would pay short position holders. Conversely, if the perpetual contract trading price is lower than the spot price, short position holders pay long position holders.

    Learn more about crypto funding rates with our article: Crypto funding rates: How it works and how to earn passive income

    What are Binance funding rates?

    As mentioned above, the purpose of funding rates is to prevent continued differences between the price s fo the perpetual contract markets and spot prices. Therefore, crypto funding rates are periodically recalculated. Binance recalculates its funding rates every 8 hours.

    Users can locate the funding rate, and when the funding interval expires at the top of the Binance Futures page. So as seen in the below screenshot, the funding rate is -0.0014% and the funding period will expire in 3 hours 26 minutes.

    Binance funding rate and expiry
    Binance funding rate and expiry (Source: Binance)

    How does Binance calculate the funding rate?

    Binance calculates the funding rate based on two factors: The interest rate, and the premium.

    Binance Futures generally fixes the interest rate at 0.03% per day (i.e. 0.01 per funding interval). However, for BNBUSDT and BNBUSD, the interest rate is 0%. Meanwhile, the premium fluctuates depending on the price difference between the perpetual contract and the mark price. A large difference, or spread, equates to a high premium. On the other hand, a low premium means there is only a narrow difference between the two prices.

    When the funding rate is positive, it means that the price of the perpetual contract is higher than the mark price. Whereas if the funding rate is negative, the perpetual prices are below the mark price.

    Binance uses the following formula to calculate funding rates:

    Funding Amount= Nominal Value of Positions x Funding Rate

    Where Nominal Value of Positions= Mark Price x Contract Size

    How are Binance funding rates paid?

    When the funding rate is positive, long traders pay short traders. On the other hand, when the funding rate is negative, the short traders pay the longs. On Binance, funding rates are paid between users i.e. peer-to-peer. This means Binance does not take any fees from users paying or receiving the funding rates.

    Funding payments are made every 8 hours at 00:00 UTC, 08:00 UTC, and 16:00 UTC. However, this can be subject to change in cases of extreme market volatility. Traders must have open positions 15 seconds before or after the specified funding times in order to be liable to pay or receive any funding fees.  

    How to profit from Binance funding rates?

    The purpose of funding rates is to encourage traders to take positions that allow the perpetual contract prices to be in line with the spot market. So, traders can develop strategies that allow them to take advantage of funding rates and profit from it.

    How to be notified of Binance funding rates

    Binance offers a notification feature where they will send you an email/SMS/in-app notification when the funding rate reaches a certain percentage. To activate this feature, log in to your account and go to “Derivatives” and then “USDⓈ-M Futures”. Then, click on the “notification” button, “preference” and then “notification”. Here, you can set the funding fee trigger. The default trigger is 0.25%, meaning that Binance will send you a notification when the funding rate reaches 0.25%.

    Crypto funding rate trends

    Crypto funding rates are correlated with the price trend of the underlying asset, as seen from historical data. So the spot market generally dictates the funding rate.

    Binance historical funding rates
    Binance historical funding rates (Source: Binance)

    The above diagram shows the correlation between Binance’s funding rates and Bitcoin prices for the period from 20 December 2019 to 20 January 2020. As can be seen, the rise in funding rates corresponds to a Bitcoin price pump.

    Traders can see Binance’s historical funding rates here.

    Sign up for Binance and get 20% off fees!

  • Key Similarities and Differences Between FTX.com and FTX.us

    Key Similarities and Differences Between FTX.com and FTX.us

    FTX operates two exchange domains, including “FTX.com” for users outside of the US, and the US-regulated “FTX.us” for traders in the US. Although both domains are quite similar, there are a few notable differences in their features and functionalities.

    FTX cryptocurrency exchange first came onto the scene in 2019 as FTX.com. Since then, FTX cryptocurrency and derivatives exchange experienced tremendous growth in trading volumes and the number of registered users. FTX has increasingly hit several milestones on these metrics by providing innovative financial products for all types of crypto traders. The exchange offers leveraged tokens, futures trading, and many more features, including reduced trading fees and multiple ways to earn passive income. In 2020, FTX.us was launched specifically to be US Regulation compliant and to cater to US customers. 

    FTX EXCHANGE (INCLUDING FTX INTERNATIONAL AND FTX.US) ARE NO LONGER IN OPERATION

    Both exchanges have filed for bankruptcy. Subsequently, the exchange was “hacked” and more than US$600 million worth of cryptocurrencies drained. The hacker is strongly rumoured to be a former FTX employee. For more about how this story unfolded and the latest news, check out these articles:

    FTX.com and FTX.us: Who Are They For?

    Although both domains belong to the same platform, they cater to different groups of users. FTX.com is not available for traders in the US due to securities and crypto asset trading regulations imposed by the US government. US customers can only use the FTX.us exchange, as it complies with regulatory requirements. All features users enjoy on FTX.us are also available on FTX.com.

    FTX.com is more suitable for experienced traders since it is strictly a crypto derivatives trading platform with a higher risk of fund loss. Most of the financial products offered by FTX require substantial knowledge of the market and the crypto assets up for trading.

    Similarities Between FTX.com and FTX.us

    FTX.com and FTX.us offers similar features, including user-friendliness and an easy trading experience. Like many exchange platforms, they both feature a trading chart that provides various trading features, charting tools, and in-built indicators.

    Many traders opt for the FTX exchanges because both platforms offer convenient ways to control and track open trading positions. FTX also provides more order types than most crypto exchanges. Available order types include:

    • Market order
    • Limit order
    • Stop limit
    • Stop market
    • Trailing stop
    • Take profit
    • Take profit limit

    Another interesting feature is that they both allow the integration of API keys to automate trading using crypto trading bots. Both domains require users to complete a KYC verification process to start trading and withdrawing funds.

    Differences Between FTX.com and FTX.us?

    FTX and FTX.us are run by different companies, hence previous negotiations to buy out FTX international did not include FTX.us as part of the deal.

    The major difference between the .us and .com FTX exchanges is that FTX.com is a crypto derivatives platform where users can’t trade any real crypto. Users can only trade derivatives, which are secondary products that derive their value from these assets. On the other hand, FTX.us allows users to trade the actual underlying cryptocurrency. Furthermore, the two domains have a few differences regarding the following:

    • Trading pairs and contracts
    • Leverage and margin trading
    • Deposits and withdrawals
    • Trading fees

    Trading Pairs and Contracts

    FTX.com supports futures contracts trading for over 80 cryptocurrencies. Unlike many of its competitors, FTX.com allows futures trading for coins with low market caps. It also supports many fiat currencies, including USD, EUR, AUD, SGD, GBP, TRY, HKD, TRY, CHF, BRL, and CAD.

    One unique feature of the FTX.com platform is its MOVE contract, which allows users to trade market volatility. MOVE contracts represent the absolute value of the amount a crypto asset moves over a period. Additionally, the platform allows its users to trade leveraged ERC-20 tokens, which give traders leveraged exposure to the cryptocurrency market.

    On the other hand, FTX.us does not support as many currencies and contracts as its .com counterpart. The US version only supports about 24 cryptocurrencies and has fewer financial products than FTX.com.

    Leverage and Margin Trading

    FTX.com currently offers its users up to 101x leverage, with an initial maximum leverage of 10x by default. Traders may expand this leverage if their user accounts meet the platform’s requirements. With FTX.us, crypto traders can only get up to 10x leverage subject to specific terms and conditions.

    Deposits and Withdrawals

    FTX.com supports deposits in many cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and various stablecoins. The exchange promptly processes all deposits and withdrawals and does not charge deposit or withdrawal fees for Ether and ERC-20 tokens. For Bitcoin, all withdrawals of more than 0.01 BTC are free. Smaller withdrawals incur withdrawal fees only after the first free one for the day.

    FTX.com also allows users to deposit and withdraw in their local fiat currencies using bank wire transfers. USD transactions take one business day, while other currencies may take longer. Although there are no charges on deposits with FTX.com, fiat withdrawals below $10,000 incur a $75 fee.

    Deposits and withdrawals on FTX.us are also very fast. However, depositing and withdrawing USD can take up to two weekdays. Like FTX.com, FTX.us also charges a fee for USD deposits completed via wire transfer. Users can make one free withdrawal of less than $5,000 per rolling week period. Additional withdrawals cost $25, but all withdrawals above $5,000 are free.

    Trading Fees

    FTX.com uses a 6-tier structure for trading fees. Like many other crypto exchanges, FTX.com gradually decreases the trading fees for its users based on their daily trading volume to encourage higher trading volumes. Tier 1 traders pay a taker fee of 0.07% and a maker fee of 0.02%, while traders in tier 6 only pay 0.04% in taker fees.

    As for FTX.us, the platform generally charges its users higher fees. Although it operates a similar fee structure, FTX.us has 9 tiers. Tier 1 traders pay a maker fee of 0.1% and a taker fee of 0.2%, while traders in tier 9 pay only 0.05% in taker fees and no maker fee.

    Is FTX.us affected by the collapse of FTX International?

    As of 10th November 2022, when users go to FTX international, there will be a banner warning: “FTX is currently unable to process withdrawals. We strongly advise against depositing.”

    Now, when accessing the FTX.us website, there is now an announcement banner warning that, “…trading may be halted on FTX US in a few days. Please close down any positions you want to close down. Withdrawals are and will remain open. We will give updates as we have them.”

    Banner on FTX US website
    Banner on FTX US website

    However, Sam Bankman-Fried, Founder of FTX has tweeted that FTX US is unaffected by the crisis surrounding FTX International and that it is “100% liquid”.

    Nevertheless, many members of the crypto Twitter (CT) community are warning users to withdraw their funds from FTX.us as soon as possible. Given the current situation with FTX International, users of FTX.us are indeed urged to exercise caution and keep updated on any news from the team.

  • Bullish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Bullish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Technical analysis made easy with bullish chart patterns packed into a cheat sheet, so that you can make better trades at Bitcoin or other cryptos!

    Is Technical Analysis Useful?

    Crypto, as a new asset class, is volatile in nature. Its price fluctuates because it is heavily influenced by supply and demand, and it reflects how the public feels about the asset. This is known as market sentiment — bullish when prices are rising, bearish when prices are falling.

    The market is constantly changing. In many cases, it does not matter how you feel about it, it only matters how the market is going to feel about it.

    Market sentiment is a critical indicator to predict price movements and make investment decisions. An easy way to gauge market sentiment is by looking at chart patterns. They tend to repeat themselves, and once you are able to recognize them, it becomes easier to strategize your entries and exits.

    However, it is important to note that they are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

    Bullish Chart Patterns

    These are some of the most common bullish chart patterns you will see in the market. This cheat sheet will help you identify real-time candlestick patterns whenever you’re on Binance, or other crypto exchanges, so that you can time your entries better.

    Ascending Triangle (Bullish)

    Ascending Triangle (Bullish)

    An ascending triangle is a bullish pattern which signifies the continuation of an uptrend, hence “ascending” triangle. It can be drawn onto the chart by (1) placing a horizontal line along the swing highs, which is the resistance, and then (2) drawing an ascending trend line along the swing lows, which is the support.

    Ascending triangles often have more than two identical peak highs which allow for the resistance line to be horizontal.

    The pattern completes itself when the trend breaks through the resistance, continuing the uptrend. This signifies that the asset has a high buying pressure, and buyers are most likely opting for a long position.

    Falling Wedges (Bullish)

    Falling Wedges (Bullish)

    A falling wedge occurs when the trend line is sandwiched between two downwardly sloping lines, getting narrower as the resistance line gets closer to the support line. In this case, the line of resistance is steeper than the support.

    It may seem like a downward trend but it isn’t. In fact, it is a reversal pattern. A falling wedge is usually indicative that an asset’s price will drop before it rises and breaks through the level of resistance, as shown in the second picture above.

    A falling wedge usually signals the end of the consolidation phase that facilitated a pull back lower. The consolidation phase happens when buyers regroup and attract new buying interest. It can be explained as the “calm before the storm.”

    Double Bottom (Bullish)

    Double Bottom (Bullish)

    A double bottom indicates a period of selling in which the price drops below the level of support. It will then rise to the level of resistance, before dropping again. It resembles a W shape, hence “double bottom.” Jokingly, the W stands for “win”!

    Finally, the trend will reverse and begin an uptrend as the market becomes more bullish. It may seem like a bearish trend, but it is in fact a bullish reversal pattern. This signifies the end of a downtrend and a shift towards an uptrend.

    It is important to note that most traders would jump the gun by entering a position before the pattern is activated. A double bottom is active only once the buyers break the neck line and secure a close above it. This is why it is important to wait for a close above the neck line before entering the market.

    Rounding Bottom (Bullish)

    Rounding Bottom (Bullish)

    A rounding bottom is both a bullish continuation and a reversal. During an uptrend, the price will drop slightly before rising once more. This would be a bullish continuation.

    Afterwards, the bullish reversal occurs when the price is in a downward trend and a rounding bottom forms before the trend reverses and continue upwards.

    Bull Flag and Pennant (Bullish)

    Bull Flag and Pennant (Bullish)

    A bull flag signals that the overall uptrend is likely to continue, followed by a consolidation. It resembles a flag fluttering upwards in the wind.

    Usually, there will be a significant increase during the early stages of the trend, before entering into a series of smaller upward or downward movements. This would be the pennant.

    Pennants can be either bullish or bearish, and they can represent a continuation or a reversal. The picture above is an example of a bullish continuation.

    While a pennant may seem similar to a wedge pattern, as mentioned in the previous section, wedges are much more narrower than pennants. Moreover, wedges differ from pennants because wedges are always ascending or descending, whereas pennants remain horizontal.

    Summary

    These are some of the most common bullish patterns you will see in the market. This cheat sheet will help you better time your entries when the market sentiment is bullish. However, it is important to note that crypto is volatile in general.

    These chart patterns are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

  • Will Terra Luna Classic (LUNC) Make a Comeback? USTC Repeg?

    Will Terra Luna Classic (LUNC) Make a Comeback? USTC Repeg?

    Everyone loves a good comeback story. With Luna Classic now in the hands of the community, they are doing everything in their power to revive the ecosystem. Several crypto heavyweights such as Binance have also joined their cause. The question is, “will Luna Classic succeed long-term?” In this article, we will take a look at the recovery plan proposed by the Classic community and share some insights on the future direction of Luna Classic.

    History of Terra Luna

    The collapse of the Terra ecosystem in May 2022 was one of the most devastating black swan events in crypto history, wiping at least $60 billion off the market which triggered a dangerous domino effect across the industry such as the fall of Three Arrows Capital and Voyager Digital.

    Terraform Labs (TFL) developers shortly abandoned the Classic chain in support of Luna 2.0, the new Terra blockchain. This led to an overhaul of the community demographic, leaving only the validators and true believers of Luna Classic behind, not to mention millions of investors who are still holding onto LUNC or USTC with no exit opportunity.

    Luna Classic’s Chance at Redemption

    Despite its unfortunate history, there might be a glimmer of hope for Luna Classic. The technology and blockchain infrastructure are still there, and developers can still build on it. In fact, there are numerous DApps that have expressed an interest to return and build on Luna Classic. However, the ecosystem faces the opposite problem of most layer-one protocols. Instead of incentivizing user adoption with tokens, Luna Classic has hundreds of thousands of active users but no additional token incentives.

    This means that Luna Classic’s native tokens do not offer much utilities for developers to build off of, due to trillions of LUNC tokens in circulation and the USTC depeg. Therefore, in order to attract developers and builders to the Classic chain, the token situation must be addressed, and that is exactly what the community is doing right now.

    Luna Classic – Community-Driven Blockchain

    Community volunteers have self-organized into multiple groups to help build and restore the Luna Classic blockchain. Terra Rebels is one of the larger communities with seasoned developers and business professionals that is leading the recovery plan. None of the groups have any affiliation with TFL nor work under any central organization or established entities at this time. Essentially, the communities are filling the developer void impartially and in accordance with community proposals that pass the voting process. All codes are open to audits and feedbacks, and all community members have a say in vetting and implementing the code base.

    On August 26th 2022, after two months of disabled proof-of-stake validation in response to the collapse, governance was restored as citizens of Luna Classic could delegate, stake, and vote for the future of the ecosystem. As of now, proposals and the associated implementations are being passed by the Terra Classic Decentralized Autonomous Organization (DAO). When adopted, a new wave of delegators and validators from the community would stake on Luna Classic, built by community developers. This would be the beginning of a truly community-driven blockchain, but the path to that is still long and arduous.

    Recovery Plan of Luna Classic

    Deflationary Token Mechanism (Tax and Burn)

    On September 15th 2022, Terra Classic governance proposal 4661 passed with a 99.88% “yes” vote to enable a 1.2% tax and burn on all on-chain transactions. With more than 6 trillion LUNC in circulation, the main goal is to reduce the hyperinflated total supply until it reaches 10 billion LUNC. After that, the mechanism will be disabled via smart contract, and the total supply will not be changed. Based on the law of supply and demand, this creates scarcity which inherently increases the value of LUNC tokens. However, it takes more than just burning for LUNC to maintain a relatively stable price. There has to have a mechanism for LUNC to capture some of the value brought to the blockchain, otherwise it would be another exit race for all investors.

    The main concern for the tax and burn is that it would likely reduce on-chain activities, as core users and projects are affected. Terra Rebels addressed this in their white paper, stating that the community can structure the implementation to be flexible as time progresses. The tax rate can be changed via parameter proposal at any time and adjusted after every epoch. Nevertheless, the community has voiced with unity that they are willing to play their part.

    The bigger play here however is to reach out to major centralized exchanges (CEX) and implement the same tax and burn for all LUNC trades on their platform, since it only applies to on-chain transactions. As a result, several major CEXes such as Binance, KuCoin, Kraken, Huobi, MEXC Global, and more have joined the cause. Moreover, a petition has been filed on change.org to relist LUNC on Coinbase. It is important to note that the Terra ecosystem is still under strict government regulations as a result of the collapse. But if it succeeds, the help from the U.S. market would greatly accelerate the burning process.

    This goes to show the power of a unified and driven decentralized community, and perhaps the potential crypto heavyweights see in a Luna Classic comeback.

    USTC Repeg Proposal

    In October 2022, two factions of the Terra community proposed their own approach to repeg USTC. As both plans are new, there are no specific timings outlined. It is up to the community to debate these proposals and decide which approach is better.

    Proposal #1 – Algorithmic Fungible Token Debt Restructuring

    The first one jointly published by Alex Forshaw, Edward Kim and Maximilian Bryan presents the idea of minting 500 million LUNC to purchase Bitcoin as collateral for a new algorithmic fungible token (AFT) called USTN. The whole point of it is for current USTC holders to receive compensation meaningful relative to the current USD value of their holdings, making them as whole as possible under current legal constraints. It is akin to a debt-for-equity swap in traditional finance.

    However, this proposal was met with a lot of criticisms from the community, since minting more LUNC defeats the purpose of the tax and burn initiative. Although it would create a short-term growth cycle, it would most likely be unsustainable medium to long-term, due to the oversupply of LUNC.

    Shortly afterwards, Forshaw announced that the updated plan will not involve minting LUNC. Instead, USTN’s Bitcoin collateral will be managed by a tranche-based decentralized reserve system as outlined in section 5 of their original white paper. However, most of the community still do not like the idea of creating a new token. Why not just create mechanisms around USTC, bringing value to the ecosystem, instead of phasing it out? This is where the second proposal comes in.

    Proposal #2 – Quantitative Tightening to Incentivize New Businesses

    In response to Forshaw’s proposal, core developer Tobias Andersen (aka Zaradar) developed a different solution that focuses on improving USTC, instead of substituting it. Andersen believes that a USTC repeg could be accomplished by incentivizing new businesses to use Luna Classic’s existing blockchain infrastructure. The plan to achieve this however is a more “painful” journey as quoted by the author, but is more organic and sustainable in the long run.

    The plan adapts a form of quantitative tightening (QT), a traditional finance technique used by central banks to decrease liquidity in the economy. For Luna Classic, it would involve installing burn taxes and increasing interest rates on staking rewards. Rewards would be lowered and lock-up periods increased. The whole point is to significantly reduce the circulating supply of both USTC and LUNC, making the value networks sustainable long-term.

    As for incentivizing new businesses on the blockchain, the features include partitioned pools, where DApps can create their own commodity token which is captalized via LUNC and traded via USTC. Based on each pool, this brings another utility to USTC as a “value transfer”, with investors using the stablecoin to swap between pools. To help keep partitioned pools stable, a swap tax is applied when commodity tokens exit the partitioned pools into USTC. This process would be measured and regulated by the ABS keeper, which is a range of volatility guards and tax policies governed by the DAO.

    However, some things are unclear in the proposal. Andersen did not explain exactly how a successful implementation of these would help USTC regain its peg, and more importantly maintain the peg. He only explained a way to appreciate the price of USTC with increased network activity on the blockchain. Unless there is a way to successfully prevent another death spiral, we would see $10 billion worth of USTC debt tear down any bull run with an avalanche of speculative mercenary capital.

    Rebuilding the Project Ecosystem

    In order to restore DApp and project support on the Luna Classic, Terra Rebels will restore inter-block communication (IBC) between Osmosis and Terra, re-enabling and unlocking the transfer of token and data between chains. Currently, more than 150 million USTC is stuck in Osmosis alone. Opening up the channel will allow users to transfer funds from Osmosis’ LUNC and USTC liquidity pools for use in other DApps.

    Moreover, on June 24th 2022, Terra Rebels launched “Rogue-1” TestNet to test governance parameter proposals and ensure the tax burn code is working. It also has the necessary upgrades in Cosmos smart contracts and IBC to communicate with the rest of the Cosmos ecosystem. Based upon the Luna v2 core, other projects built on Luna v2 will not require additional development as it is compatible with both blockchains. The core implementation is expected to be completed in 2023.

    Verdict on Luna Classic Comeback

    For Luna Classic, there is a sense of justice that is unprecedented in the history of crypto. People around the world have literally lost their life savings because of the collapse. Similar to how volunteers help rebuild communities who were hit by natural disasters, we are seeing the crypto community and even crypto powerhouses step in to help revive a project with a failed reputation and fix a problem they did not create.

    There is a reason why LUNC is still performing relatively well, ranking top 35 in market cap at the time of writing. Whereas LUNA is barely in the top 100, since it is more associated with Do Kwon and the TFL. This goes to show that the Classic chain is entirely governed and driven by the community, which is the essence of decentralization in the first place.

    Despite the communities’ effort, there is no way to be sure that the comeback of Luna Classic is written in the stars. As of now, the proposed plans of the community solely focus on reducing the hyperinflated token supply and attracting new businesses to the blockchain. And even if Luna Classic does make a comeback, we cannot know for certain that their token price and network activity will remain stable long-term. But it is reasonable (or optimistic) to assume that the plans being debated and deployed now are just the first step to recovery.

  • Magic Square (SQR) Guide: First Ever Crypto App Store Backed by Binance

    Magic Square (SQR) Guide: First Ever Crypto App Store Backed by Binance

    Magic Square is one of the upcoming projects that is highly anticipated by the crypto community. Imagine Apple’s App Store or Google’s Play Store integrated with blockchain technology and driven by the community. This web3 solution offers a way to simplify crypto applications hence driving adoption, creating one integrated ecosystem for all crypto apps and activity.

    Magic Square’s innovation has gained the attention of many heavyweights in the crypto industry including Binance, KuCoin, and DAO Maker. All you need to know about Magic Square is in this article, made simple to understand and updated in real time.

    What is Magic Square (SQR)?

    Magic Square is more than a web3 app store hosting a multitude of decentralized apps (DApps) such as DeFi, NFTs, and GameFi. In fact, Magic Square has their own ecosystem which allows any user to earn crypto from using the app. We will explain this in detail later.

    But first it is important to understand why a project like Magic Square might just be the missing link in driving crypto adoption.

    Current Pain Points of Web3

    As of today, there are nearly 6,000 active DApps running across multiple different blockchains including Ethereum, Binance Smart Chain, Solana, Cardano, and more. This number does not even account for all the centralized crypto apps in the market such as Binance, Coinbase, and Kraken.

    However, with so many crypto apps scattered on the market, there is no established platform that can host them all in one place. As a result, navigating in the crypto space can be a chaotic and cumbersome experience for both users and blockchain developers alike.

    • For users, there is no all-in-one platform where they can easily discover, access, and manage vetted crypto apps.
    • For developers, there is no real multi-chain service that allows them to monetize their apps and market them to users.

    Magic Square’s Solution to Web3 Pain Points

    Magic Square has a built-in Decentralized Autonomous Organization (DAO) structure in which all users and developers have a say in the DApp quality control and listing process. This means that the app store is governed by the community, and they are incentivized to vet all DApps coming through the platform. Based on the principles of decentralization, this provides a secure environment for all users to engage with the listed DApps on Magic Square, as low quality projects and potential scams are filtered out, similar to how invalid Bitcoin transactions are rejected by the miners.

    Magic Square is also building their own multi-chain Software Development Kit (SDK) that will help creators develop, validate, deploy, market, and monetize their DApps.

    All in all, a decentralized crypto app store powered by the community as well as providing useful tools for blockchain developers could be the key to organize all DApp activities in one established platform. This would help bring order, ease, and trust to the crypto app space, which would help develop the infrastructure that powers the growth and success of the crypto industry. Now, let’s take a look at the key features of Magic Square and how their ecosystem functions as a whole.

    Key Features of Magic Square

    • Magic Store & Magic Spaces

    Magic Store is where users can browse and download DApps, similar to Apple’s App Store or Google’s Play Store. Within Magic Store, users have a personalized dashboard called Magic Spaces where they can access all of their DApps and track their app activity in one place. By clicking on the DApp, it will be opened inside the tabs within the user’s personal space. This is a convenient feature as users do not need to switch between websites or crypto apps on their device. Additionally, Magic Spaces is fully synchronized across all devices, including desktops, web browsers, and mobile devices.

    • MagicID (SSI & DIDs Technology)

    Users do not have to give up control of personal information to centralized databases like Apple or Google. Thanks to MagicID which is their Self-Soverign Identity (SSI) and Decentralized Identifiers (DIDs) technology, Magic Square ensures that the verifiable credentials a user has can only be shared with DApps or other users they deem trustworthy.

    SSI allows users to use their digital wallet and authenticate their own identity using the credentials they have been issued. This works in conjunction with DIDs, which creates unique, private, and secure peer-to-peer connections between two connection points. Users know who they are connecting with and vice versa, and no third party can interfere in any way. The platform only collects and aggregates on-chain data about users’ app activities, which they can provide relevant and up-to-date information for users, similar to YouTube’s algorithm. Magic Square does not hold any personal data of their users.

    • Magic SDK

    Magic Square is developing their own SDK that allows developers to enhance their development process in various ways. Its tools are built to optimize payment system with subscription model, wallet infrastructure, trading data aggregation, on-chain data, Automated Market Making (AMM) solutions, in-app token and NFT staking, community management, and more.

    Magic SDK supports common programming languages such as Java, Node JS, C++, which is easy to use for all levels of developers. In addition, the SDK is open-source, allowing every developer to add new tools that can be used by the community of developers. These tools would be vetted by certified auditors to ensure security. For more information on Magic Square’s SDK and their technical product description, their white paper is available.

    • Cross-Chain Bridges

    Magic Square will implement cross-chain bridges using deBridge technology, allowing users and developers to transfer data and liquidity across different blockchains and protocols. This can help developers integrate their DApp from different blockchains into Magic Square. Moreover, its cross-chain functionality allows for integrated DeFi solutions in Magic Square, which we will talk about next.

    • Integrated DeFi Services

    Magic Square’s business model is based on revenue sharing with all pre-integrated CeDeFi solutions that will also be available to the community. These solutions include token/NFT staking, custody services, AMM pools, payment, lending, swaps, and insurance. They will be fully integrated into all DApp pages, supporting their native currencies and protocol. That way, users do not need to leave the app to access related DeFi products and services.

    Moreover, any third party DeFi provider can apply to add their service in Magic Square. If they are approved by the community, their service will be added to the catalog of DeFi services in which DApp developers can use to add on their app page. For each transaction with a third party solution, Magic Square will charge payment based on transaction cost charged by the third party. This revenue will then be shared with the DApp developers, even free-to-own DApps can earn money this way.

    This is how Magic Square makes money and how they fund their community reward pools to distribute SQR tokens to users, which we will cover next.

    How to Earn on Magic Square?

    Magic Square Token (SQR) – Utilities

    The Magic Square (SQR) token is the primary unit that powers the ecosystem. Within the ecosystem, there are three types of members that play a vital role in running Magic Square: (1) users, (2) validators (3) creators. Each of them also has different ways to earn SQR tokens.

    Users

    Anyone who interacts with the DApp store is considered as a user. Magic Square’s core model “use-to-earn” distributes SQR tokens for all users for their in-app activities, which include downloads, comments, ratings, follows, shares, reviews, and using DApps. Individual DApps can even reward users for reviews with their own native app token, giving users the ability to earn double.

    The SQR token rewards are based on the personal ranking of the user which is called “Magic Karma.” All in-app activities are summarized and quantified on a daily basis in the Magic Karma score. The higher the user’s score, the more rewards they can earn. As cited in their lite paper, users can “earn SQR tokens without investing their money, just their time.”

    Users can also stake SQR tokens to unlock different levels of Packages which grant them additional perks. “Base Package” requires 150 staked SQR for unlimited DApp downloads. “Pro Package” requires 500 staked SQR for daily rewards and referral bonuses. Lastly, “Influencer Package” requires 1000 staked SQR and a high Karma score to unlock daily reward boosts and access to Magic Square events and exclusive contests etc.

    Validators

    To fill the role of Apple/Google engineers, Magic Square has validators to determine which DApps to feature in the store. There are three types of validators: (1) qualified validators, (2) nominees, (3) standard validators. Although all community members are eligible for these roles, there are certain conditions that must be met.

    To become a qualified validator, you must stake 5,000 SQR tokens, and pass a qualification test to demonstrate your level of knowledge and competency. Qualified validators can also transfer validating rights to nominees. However, nominees must also pass the qualification test, but do not need to stake SQR tokens. On the other hand, any user can register as a standard validator without passing the qualification test or stake SQR tokens.

    80% of the DApp creator’s validator fee is rewarded to qualified validators, which a portion of it is also shared with the nominees. The remaining 20% is rewarded to standard validators.

    Creators

    All DApp developers and their project team are considered as creators. For creators to have their DApp listed on the Magic Store, they would have to send 10,000 SQR via smart contract, where 35% is paid to validators, 15% is paid to Magic Square, and 50% is staked for the period the DApp is listed in the Magic Store.

    From the list of pre-integrated DeFi services, creators can choose to add them in their DApp page, allowing them to manage their liquidity through in-store interaction. With a higher rate of DeFi adoption by users, creators can efficiently engage with their target audience and increase market penetration.

    Furthermore, each newly listed DApp can apply for a grant of up to 200,000 SQR tokens to be used by the creators to build and improve their product. However, creators must first stake the number of SQR tokens to match the amount they are requesting, for 12 months. The grant would be decided through voting processes by the validators.

    Who is the Team behind Magic Square (SQR)?

    Magic Square is co-founded by Andrey Nayman (CEO) and Benjamin Vodovozov (CMO), both who are seasoned entrepreneurs and mathematicians who have decades of experience in quantitative analysis and performance marketing.

    The team consists of a first-class group of industry professionals, blockchain veterans, software developers, and crypto enthusiasts. Their goal is to gradually influence a widespread organic shift to the web3 space, and they aim to achieve that by developing infrastructures that power the growth of the crypto app ecosystem.

    What’s Happening with Magic Square (SQR)?

    In July, Magic Square concluded a $3 million seed round investments with an evaluation of $30 million, led by Binance Labs and Republic Capital. Mia Mai, Investment Director at Binance Labs, commented that they see potential in Magic Square, especially in their user-friendly designs and business model as a Web3 DApp store. They believe that the product suites of Magic Square can potentially be the driving force of Web3 ecosystem mass adoption and implementation.

    Other crypto industry heavyweights have also become strategic partners with Magic Square, including KuCoin Labs, GSR, DAO Maker, IQ Protocol, Gravity Ventures, Alpha Grep, and other angel investors.

    Several major web3 brands have integrated with Magic Sqare including Chainlink, KyberSwap, Banxa, and deBridge.

    Key Takeaway

    Magic Square is definitely bringing something new and innovative to the crypto space. Its product could essentially organize all DApp activities that are scattered throughout the market, making it easily accessible to crypto users and newcomers. Magic Square published their roadmap, stating that their token will be released in Q1 2023. We are now witnessing many crypto heavyweights such as Binance recognizing the potential of Magic Square and their ability to drive mass adoption through simplicity.

  • Blockchain Attacks Explained: Understanding Network Vulnerabilities

    Blockchain Attacks Explained: Understanding Network Vulnerabilities

    Based on principles of cryptography, decentralization and consensus, blockchain technology offers one of the strongest securities against traditional cyber attacks. However, it is not foolproof, even the strongest blockchains like Bitcoin and Ethereum have inherent vulnerabilities due to their infrastructure. In this article, we will look at the different types of attacks possible on a blockchain.

    51% Attack

    What is a 51% Attack?

    A 51% attack, also known as a majority attack, is when a single person or a coordinated group controls over 50% of the hashing power on proof-of-work blockchains OR more than half of the validating power (staked cryptocurrencies) on proof-of-stake blockchains.

    How does a 51% Attack work?

    Since transactions on a blockchain are validated via consensus, owning 51% of the blockchain’s hashing power or staked crypto gives the attacker majority rule, effectively allowing them to take control of the network. In such a scenario, the attacker has the final say in the validation process, even if the other 49% are against it. This potentially causes network disruption in a number of ways:

    • The attacker could reverse their own transactions, leading to a double-spending problem.
    • They could rewrite parts of the blockchain protocol, deliberately modifying the ordering of certain transactions.
    • They can even prevent some or all transactions from being confirmed, denying other miners or validators from earning rewards, which results in a monopoly.

    Limitations of a 51% Attack

    On the other hand, a 51% attack does have its limits in the amount of disruption it can cause. While the attacker could reverse their own transaction, they cannot reverse other users’ transactions on the network. Moreover, given the immutable nature of the blockchain, the attacker cannot alter the functionality of block rewards nor create coins out of thin air (unless there is a bug in the smart-contract coding).

    How likely will a 51% Attack happen?

    While possible, a 51% attack is unlikely as it is extremely expensive to execute. Owning more than half of the network’s computing power or staked crypto could potentially cost millions or billions of dollars depending on the user population of the blockchain. This is why the bigger the network, the stronger the protection. A majority attack is virtually impossible to occur in leading blockchains such as Bitcoin, Ethereum and Binance Smart Chain.

    But it is worth noting that the blockchain should be truly decentralized, on top of having a large userbase. This is because organizing a 51% attack would most likely be a coordinated effort. If several malicious actors collude and pool their resources together, then the network would be more centralized, which could potentially lead to a majority attack. This is more prevalent amongst smaller altcoin blockchains. Ethereum Classic (ETC), Bitcoin Gold (BTG), and Verge (XVG) were notable victims of the 51% attack.

    Sybil Attack

    What is a Sybil Attack?

    A Sybil attack is when an attacker uses a single node to create and operate multiple fake accounts in order to gain disproportionate influence over decisions made in the network. It is a smaller variation of a 51% attack. The main difference is that a Sybil attack largely focuses on manipulating the number of accounts or nodes rather than already owning them. It also targets smaller areas in the blockchain, whereas a 51% attack is capable of taking over the entire network. However, in some cases, a successful large-scale Sybil attack can transition to a 51% attack.

    The word “Sybil” derives from a case study about a woman named Sybil Dorsett, who was diagnosed with a Dissociative Identity Disorder, also known as Multiple Personality Disorder.

    How does a Sybil Attack work?

    A Sybil attack is quite difficult to detect and prevent, because most public blockchains do not have trusted nodes due to its decentralized nature. This means that the system perceives all nodes and accounts as real, even the fake ones. There are two scenarios of a Sybil attack:

    1. By creating numerous fake identities (or Sybil identities), the attacker will have enough capacity to out-vote the honest nodes on the network, allowing them to perform unauthorized actions in the system.
    2. The attacker can also control the flow of information in a network. If the attacker manages to obtain information about your IP address, they can create many fake nodes to surround you. They can then prevent you from receiving or transmitting blocks, effectively blocking you from using the network.

    How to prevent Sybil Attacks?

    Although a lot of time and research went into figuring out a way to detect and prevent Sybil attacks, there is still no guaranteed defense as of today. But there are some ways to help mitigate Sybil attacks:

    1. Identity validation techniques such as phone number, credit card or IP address verification can help reveal the true identity of hostile entities. This is a secure way to suss out fake accounts or bots for most types of peer-to-peer networks. However, this relies on a central authority to perform these identity validations which sacrifices anonymity for accountability. Moreover, this means that the validation authority could become a target for attack.
    2. Social trust graphs, on the other hand, can limit the extent of damage by a specific Sybil attacker, while maintaining anonymity. You can analyze connectivity data in social graphs like SybilGuard or SybilLimit to identify suspected Sybil clusters in distributed systems. But this technique is not perfect either, as small-scale Sybil attacks are more difficult to detect.

    Blockchain Denial of Service Attack (BDoS)

    Denial of Service Attack (DoS)

    Before we go into Blockchain Denial of Service attacks (BDoS), let’s take a look at its predecessors.

    Traditionally, a Denial of Service attack (DoS) or a Distributed Denial of Service attack (DDoS) when multiple computers are involved, is a malicious attempt to disrupt real users’ access to a website or network service by overloading its servers with a massive amount of traffic, causing the website or application to slow down its functionality or even crash entirely.

    But for blockchains, a DoS or DDoS attack is difficult to execute, especially if the network’s userbase is large and decentralized. This is because a decentralized network distributes computing power worldwide, eliminating single points of failure such as servers or apps. Even if several nodes are down, the blockchain is able to continue operating and validating transactions, unless…

    What is a Blockchain Denial of Service Attack (BDoS)?

    With the rise of blockchain technology, a new type of DoS attack emerged — a Blockchain Denial of Service attack (BDoS). These attacks focus on the protocol layer of a blockchain, usually PoW blockchains, with the biggest threat being transaction flooding.

    Since most blockchains have a fixed block size, there is a limit to how many transactions can fit into a block. Attackers can exploit this by spamming transactions to the blockchain, filling the blocks to prevent legitimate transactions from being added to the chain. The legitimate transactions remain in the public mempool waiting for the next block.

    When this happens, the throughput capacity of the network is drastically slowed down, and in some cases shut down. It happened to Solana in January 2022, where the network went offline for four hours as a result of a BDoS attack.

    How to prevent a Blockchain Denial of Service Attack (BDoS)?

    Penetration testing is a core security auditing process that helps identify potential vulnerabilities before the mainnet is deployed. By simulating in-dept attacks, penetration testing offers traffic analytics tools that can help blockchain developers spot some of the telltale signs of a DoS attack such as unusual traffic patterns from a single IP address or IP range.

    In our previous article, we have covered some of the top blockchain security auditing firms that offer the best penetration testing services.

  • What are Crypto Launchpads? Investing in Startups for Massive Profits

    What are Crypto Launchpads? Investing in Startups for Massive Profits

    In the crypto industry, discovering early-stage moonshot projects can be difficult. Investors who manage to enter early usually secure massive returns, and some of these projects end up becoming successful in the long run. However, there are many low-quality projects and scams looking to take advantage of early investors, resulting in pump-and-dump schemes. Therefore, the market needed a more secure mechanism to raise funds for crypto startups. This is where launchpads come in.

    What is ICO? – The Origin of Crypto Fundraising

    Before we take a look at what crypto launchpads are, it is important to learn about its predecessor — Initial Coin Offering (ICO) and why they are no longer practiced.

    What is ICO and Why does it Matter?

    Similar to all business ventures, crypto projects require capital to build their product and meet their objectives. They typically achieve this via crowdfunding, and the first fundraising model in the crypto industry is an ICO, where crypto projects would raise funds by selling a part of their total token supply to the community. This allowed investors to purchase tokens at the cheapest price possible before they are listed on a crypto exchange.

    In fact, Ethereum conducted one of the first ICOs in 2014. More than 60 million ETH were created and sold to the public, raising $18.3 million USD.

    ICO Bubble in 2017-2018

    In 2017, ICOs began to take off thanks to Ethereum’s open-ended smart contract protocol. Developers can easily create new applications and tokens (ERC-20 tokens). Moreover, smart contracts can be executed to calculate raised funds and distribute tokens once crowdsale is complete. As a result, the majority of ICOs took place via the Ethereum network.

    Numerous projects saw substantial gains of their token as high as 10,000x, making a lot of early investors very rich. By the end of 2017, an estimated $4.9 billion was raised through ICOs reported by the Wall Street Journal. However, ICOs quickly became a way for investors to gamble in hopes of making easy profit. As a result, project fundamentals became less important to would-be investors.

    This led to many security issues. For example, since cryptocurrencies were unregulated at the time, anyone can launch an ICO anonymously. Many malicious actors took advantage of the hype and created false projects and ICOs. They would rug pull investors’ funds, or even just run away with the money, abandoning the project before it ever got listed on an exchange. It became so severe that the U.S. Securities and Exchange Commission (SEC) intervened, imposing strict securities laws on ICOs which subsequently led to ICO bans worldwide such as South Korea and China.

    Crypto Launchpads – The Beginning of IEO and IDO

    Because of the ICO bubble, faith in the crypto industry was lost. This made it very difficult for legitimate blockchain projects to raise funds and build products with real value. Fortunately, not long after, crypto launchpads came to the rescue. Launchpads are essentially platforms that help crypto projects raise capital while giving access to early-stage token sales for their group of investors.

    There are two main types of crypto launchpads — Initial Exchange Offering (IEO) and Initial DEX Offering (IDO). The difference between the two is where the fundraising is being held. Let’s look at the first one, IEO.

    What is IEO?

    An IEO is a fundraising model where the project receives the backing of a crypto exchange like Binance or FTX. The fundraising event is administered by the exchange, in contrast to an ICO where the project team themselves conducts the fundraising on their website. With IEOs, users can buy tokens on the exchange’s launchpad directly from their exchange wallet.

    IEOs generally have high security as most crypto exchanges are regulated to an extent. They actively follow stringent protocols to prevent fraud including know-your-customer (KYC) and anti-money laundering (AML) verifications. The projects are carefully scrutinized, vetted, and selected by the exchange team for their IEO. Project teams must at least have a white paper and minimum viable product (MVP) ready for the exchange to review. Thus, would-be investors are assured that the startups under IEO listings are legitimate. After all, the exchange is staking its reputation behind the projects on its platform, offering a higher degree of trust behind the project.

    For crypto projects looking to raise funds, an IEO offers the promise of an immediate userbase that can see their product. In other words, IEOs help create exposure to the project. This also means that the project can reduce their outside marketing funnels for fundraising, enabling them to focus only on the development of their product.

    Top IEO Launchpads

    Some of the top IEO launchpads include Binance Launchpad, Huobi Prime, KuCoin Spotlight, Gate.io Startup, and many others. In fact, the first IEO in history was launched by Binance Launchpad in the first quarter of 2019. Moreover, these top IEO launchpads are more than a platform for offering tokens. They also provide full advisory service for projects, leveraging their insights and experience to help build better products.

    Disadvantages of IEO

    Though IEOs are generally secure, not all crypto exchanges are equal. Some may not be as strict in doing due diligence or implementing regulations. This means that there is still a risk of a pump-and-dump scam, as advanced scammers could pull a meticulous long con.

    Moreover, listing fees may be quite high, especially on reputable exchange platforms. Startups may also be asked to pay commission from token sales. They can be considered as centralized gatekeepers about the types of projects that proliferate, meaning that only somewhat established projects can earn a spot.

    What is IDO?

    On the other hand, IDOs are approved by the community of a decentralized exchange (DEX) instead of a crypto exchange. Given the decentralized nature of these exchanges, anyone can become an approver. The community can vote on projects that they are interested in. This alleviates the gatekeeping bottleneck that IEO exchanges have, giving smaller legitimate projects a chance to shine.

    Similar to ICOs, some DEX teams also provide advisory service to listed startups, offering them a tool for engaging their communities in an economy that enhances their products while allowing them to make smart business decisions regarding their assets. However, unlike centralized exchanges, most IDO launchpads have their own native tokens, which in some cases serve as an entry requirement for users to participate in crowdfunding.

    Top IDO Launchpads

    Some of the top IDO launchpads include Polkastarter, TrustSwap, Scaleswap, DAO Maker and more. We have a complete guide on choosing the best IDO launchpads: Private: Ultimate Guide to the Best Initial DEX Offering (IDO) Launchpads.

    Disadvantages of IDO

    Though IDOs are more transparent and accessible to everyone, there are also drawbacks. Since DEXes tend to be a lot smaller than centralized exchanges, new projects might receive substantially smaller traffic than IEOs. Moreover, because every one gets a say in the approval process, long-con projects can also sneak their way in with eye-catching proposals and marketing.

    Key Takeaway

    Investing in potential crypto startups can generate massive returns if successful. IEO and IDO launchpads are a great place for you to research upcoming innovations and learn more about what they offer. Though not completely risk-free, they offer far more security advantages than ICOs.