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.
Congratulations Everyone – You’re officially a founding member of this Newsletter! We’ve already doubled our subscriptions in the past week due to increased interest (WOOT). At the same time, crypto is moving at light speed – with new projects getting created, traded, and listed on top exchanges in the space of 2-3 days. Here’s a rundown of all that’s happening:
Post-Bitcoin Rally
Bitcoin made some major moves on Monday, shooting up all the way to $11,000 after a long dormant period. Initially, this shocked many traders, with many scrambling and selling their altcoins to jump on the Bitcoin train. FOMO is the name of the game these days, and many were hoping Bitcoin would shoot as high up as $14,000 / $17,000. However, Bitcoin didn’t go there – instead she seemed to settle down at $11,000 without much volatility. With the big cat sleeping, the mice (altcoins) are out to play. We’ve seen some insane rallies for YFI (+225%), Elrond(+65%), and UMA (+60%) this week.
Yield Farming After $YFI blew up last week, yield farming is front and center on everyone’s discussion table. We covered YFI both on our website https://boxmining.com/yfi-yield-farming/ and in a video https://www.youtube.com/watch?v=eoz9CnX-52s. In a quick summary, liquidity mining is essentially saving money in different liquidity pools. Miners will then be rewarded with token distributions (such as YFI) that can yield up to 1000% APR. Obviously, with such rewards, it’s highly risky and experimental. We definitely recommend that you check out the video and Do Your Own Research (DYOR). Currently, YFI yield farming is taking a pause as a new contract is being deployed.
YFII Launches Nope, that’s not a typo. A new project called YFII has launched – forking the YFI project and allowing yield farmers to earn the YFII token. What’s unique about this project is that it distributes YFII tokens with a weekly “halving”, similar to Bitcoin. The release of this project comes at a very convenient time as $YFI mining is currently taking a break, so farmers are left with yCurve tokens wondering what to do. YFII allows the staking of yCurve tokens in a similar fashion and UI to $YFI (it is a fork after all) This is highly controversial due to it’s rushed nature of its release, with metamask, balancer, and etherscan users quickly flagging the project as a “Scam”. This is due to two reasons, as there was an initial “owner key” for YFII which allowed the owner to create infinite tokens. However, recently this key has been destroyed. This means it’s not really a “scam”, and the community for YFII is currently building up.
Zeus Capital Vs Linkchain Recently Zeus Capital has taken up a major campaign against Chainlink (LINK) calling it a “scam” and giving a valuation of $0.07 (1% of its current value). Not only have they released a long report, but recently they have been caught paying influencers to make negative price charts on LINK. It’s clear they have taken up a massive short position and will benefit from LINK’s price going down. I find this a more mature version of the FUD and HYPE cycles we experience in crypto – and highlights the importance of DYOR – you need to be prepared for both hype and FUD.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. (https://www.adarsus.com/) Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Ampleforth is a game changer that is claiming the spotlight on Decentralised Finance (DeFi) following the success of several lending platforms such as Compound ($COMP), Aave ($LEND), dYdX, etc. Ampleforth is a DeFi protocol that aims to reinvent money both within and beyond the cryptocurrency space. While centralized finance (CeFi) and DeFi as we know today have their own unique sets of problems, the Ampleforth protocol is here with the aim to address them.
The protocol has a native token known as $AMPL. It is a stable currency that has both inflationary and deflationary capabilities designed to adapt to demand.
Table of Contents
Background
Ampleforth was created by Evan Kuo, an engineering graduate of UC Berkley. He was also the former CEO of Pythagoras Pizza, the first pizzeria to tokenize its franchise.
Evan Kuo (Image credit: Cody Pickens)
Kuoās motivation for creating Ampleforth was twofold. The death of his father, which made him want to leave a legacy after his passing, and his passion for tech and finance which brought him into the cryptocurrency industry.
He recognised two things that cryptocurrency was trying to reinvent: money and banking. Of the two, money was a lot easier to work with and so that became his focus.
The Ampleforth Foundation was then funded by Pantera Capital, True Ventures, Huobi exchange and Brian Armstrong. Most of the members of the foundation consist of āengineers, academics, investors, and enthusiastsā from Ivy League universities.
Ampleforth raised a total of nearly $10 million USD in 2 Initial Coin Offerings (ICO) and an Initial Exchange Offering (IEO).
Ampleforth Protocol
Ampleforth Protocol is a cryptocurrency ecosystem built on the Ethereum blockchain. What makes it stand out is its adaptive supply, that is to say, Ampleforth adjusts the circulating supply according to demand.
When the demand for Ampleforth increases, the supply increases. Conversely, when demand decreases, the supply also decreases. This makes Ampleforth prone to being mistaken as a stablecoin since it does function quite similarly.
However, it is not backed by any cryptocurrency or fiat currency like most stablecoins are. And although the system attempts to keep the value close to $1 USD, sometimes it could go way past $3 USD depending on the demand.
As of press time, $AMPL is trading at $1.64 USD according to Coin Market Cap.
The Ampleforth Protocol is autonomous, but not decentralized. The Foundation still holds the keys to the system, and have the power to freeze all assets or change token supply arbitrarily. So for some decentralization purists, this is a red flag.
Ampleforth Monetary Policy
Kuo came up with Ampleforthās economic design after examining the history of the U.S. Dollar. Back in the day, every U.S. Dollar bill was backed by gold bullions, which were stored in government vaults. Gold is a great store of value but it has an inflexible supply. Furthermore, going by the gold standard alone runs the risk of runaway deflation.
After World War II, the Dollar was in high demand globally and the U.S. couldnāt keep up. The amount of gold is fixed since mining can only introduce very small amounts of new gold in a given timeframe. Therefore, the U.S. government decided to abandon the gold standard to avoid stagnation of international trade.
And that became the birth of the fiat U.S. Dollar, which we now know has its own set of shortcomings. One problem with fiat money is that you could only print more of them but not destroy them. Therefore, the supply can only be partially controlled in a sense. Furthermore, the people in charge of the minting facility is also subject to greed and corruption.
Ampleforthās monetary policy is a solution to both fiat and gold-backed currencies since it is designed to maintain a stable value by adjusting the supply to match demand.
As an illustration, say you have 1 AMPL worth $1 in your wallet. If the demand for AMPL rises and causes the price to jump to $2, the Amplforth Protocol will expand the supply of AMPL such that youāll end up with two AMPL in your wallet worth $2. This process is called a “rebase”.
The rebasing process does not dilute existing token holders. You get to retain the same percentage of the total supply yet the value you held doubled.
Ampleforth use cases
Ampleforth divides its use cases based on its goals: near term, medium term and long term use cases. In the near term, AMPL aims to diversify cryptocurrency portfolios. Most cryptocurrencies are correlated to Bitcoin’s price pattern, which poses a risk. But because of AMPL’s rebase mechanism, it is decoupled from Bitcoin’s price pattern and allows cryptocurrency traders to have some diversity in their portfolio.
In the medium term, Ampleforth aims to work as a stable store of value or form of collateral for decentralised banks and DeFi applications. This is because unlike fiat-backed stablecoins, it does not pose the risk of devaluation of its underlying asset.
Ultimately, Ampleforth hopes to become a “A better Bitcoin”. It wants to be an alternative to central-bank money that can adapt to sudden shocks in the market. In that sense, it is competing with Bitcoin and XRP; not to mention national currencies. But as of the moment, it is being used primarily in the cryptocurrency space.
Another opportunity it offers is arbitrage. Arbitrage traders have the chance to reap profits during the time the supply is reduced when the price rises. On the other hand, they can increase their AMPL allocation before the supply is increased when the price drops.
How the Amplforth ($AMPL) rebase process works
The supply of Ampleforth adjusts daily every 1pm EST to match the demand via a smart contract. The system utilizes Chainlinkās oracle network alongside the Ampleforth oracle to siphon price data from KuCoin and Bitfinex.
The smart contract ensures that Ampleforth sticks within the designated equilibrium range, which is between $0.96-$1.06. If the price of AMPL hits beyond the two extremes, the smart contract will continue to āexpandā or ācontractā accordingly until the value of the token is in the equilibrium range again.
AMPL price vs supply
Ampleforth Geyser: What is it?
Ampleforth Geyser is a smart faucet that incentivizes liquidity providers to supply AMPL to a Uniswap pool. It is brought about through a collaboration between the Ampleforth Foundation and Uniswap.
Users are rewarded with AMPL tokens for depositing AMPL to Uniswap. The longer the tokens are held in the pool, the higher the returns.
Ampleforth geyser
To make money from Geyser, visit their web portal at ampleforth.org/geyser and connect either your MetaMask or Coinbase wallet. You will need to deposit equal amounts of ETH and AMPL to participate.
How do I get AMPL tokens?
Aside from getting AMPL tokens during the rebase process (though this requires you to stake some AMPL in the first place), people can also buy AMPL from cryptocurrency exchanges. Here are the major exchanges that offer AMPL tokens for sale: Uniswap (v2), KuCoin, FTX exchange and Bitfinex. Learn more about our picks for the top best cryptocurrency exchanges of 2020.
Conclusion
Ampleforth has to some degree successfully redesigned the way money works despite only being a few years old. Their influence has not penetrated a huge portion of the market as of yet but there is a lot of room for them to grow. And being part of the DeFi movement makes it a lot easier to gain more traction. As a matter of fact, over 36 million AMPL has been deposited in Geyser as of now. This is a great stepping stone for the protocol.
Ultimately, Ampleforthās goal is to compete against national currencies, and perhaps against Bitcoin as well, to become the world currency. For now, Ampleforth should work on establishing its trust and legitimacy within the cryptocurrency community, which will be a stepping stone for it to achieve its use-cases.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Before DeFi was even a thing, Maker was already popular. With the rise of decentralized finance applications (DeFi), the cryptocurrency space has seen a drastic growth in a short span of time and Maker is the primary pioneer of DeFi applications. Meanwhile, the world of cryptocurrency is dynamic, and every moment sees new use cases emerging for different purposes. The high volatility of cryptocurrency has also posed different challenges for users and crypto investors, leading to the creation of stablecoins which can hopefully āstabilizeā the volatility.
What is Maker?
MakerDAO is a Decentralized Autonomous Organization (DAO) founded by Rune Christensen in 2014. Maker ($MKR) serves as its governance token and is powered by the Ethereum blockchain.
The Maker ecosystem utilizes smart contracts to execute transactions in the protocol. Additionally, it uses the fractional reserve banking approach to ensure that its stablecoin ($DAI) remains stable.
As an ERC-20 token, MRK is not mined. Its holders are given voting rights to the collateralization on the platform. As governments who have a stake in the protocol, they are incentivized to vote on changes that could benefit the Maker ecosystem. After all, poor governance would lead to the devaluation of MKR.
The Collateralized Debt Position (CDP) makes the provision for liquidity possible when dealing with crypto assets. The idea is to provide crypto investors and traders with a decentralized platform that is suitable for margin trading. Additionally, many users have found value in exploring offshore poker sites as part of their diversified investment strategies, leveraging unique opportunities and benefits these platforms offer. Some unique things about the Maker platform include lower prices compared to other margin trading platforms, flexibility, and improved security.
What is the difference between $MKR and $DAI?
Maker ($MKR) was created to function as a utility token for a blockchain-based platform for P2P transfers and international payments. To avoid the volatility of the crypto market, a stablecoin called āDAIā was created and connected to Maker.
Collateralized Debt Position (CDP) and its uses
The value is based on the ability of the investor or trader to get liquidity without giving out their ETH tokens. It is important to protect the DAI from loss of value by depositing more than 140% of the DAI coins.
MKR tokens are needed to perform the transactions with the aid of smart contracts. When the CPD gets closed, or if there is a repayment of the DAI, the stability fee gets paid as MKR.
Furthermore, after each transaction MKR gets burned. Which invariably means that the circulating supply of MKR tokens will reduce over time. An increase in MKRās popularity will increase the demand and number of burned MKR tokens, and result in a price increase.
Uses of MKR
The MKR network has four major use cases, including usages by the participants within the network. It is important to note that MKR and DAI are the two tokens used within the Maker ecosystem. Here are the four major uses:
Traders can utilize MKR as leverage for the ETH they own
Crypto investors and traders can use MKR if they think that the price of ETH at that moment is undervalued. While anticipating the coinās rise, they make some ETH deposits with MKR, have a CDP, and get DAI in return.
They can make other ETH trades with DAI. When the ETH they own is leveraged, it is kept locked-up to get more ETH and make profits from the increase in price.
A liquidity creation tool that helps avoid capital gains tax
Some crypto users may be subject to capital gains tax on their earnings from cryptocurrency trades and investments. Crypto traders that have made a fortune need to secure their profits from the high volatility of digital currencies like ETH.
MKR provides an effective solution through ETH deposited for DAI which is pegged with the exchange rate of the US dollar. The benefit is that you avoid paying tax because your money is available in a profitable and stable cryptocurrency.
A cheap way to facilitate the repayment of costly fiat loans, with crypto loans
A crypto trader or investor can deposit their ETH in order to get loans at favorable rates. This helps them boycott the expensive loan fees and interest rates of traditional banks.
For crypto investors without CDP
Another use case of the MKR token is by crypto investors who are interested in the token. However, their interest in the token does not involve creating a CDP; rather they own the tokens to sell later.
MKR tokens are created to promote financial freedom while eliminating volatility.
Markets that can benefit from MKR
MKR comes with some flexibility that makes it perfect for some markets, and these markets include:
Financial Markets
The introduction of smart contracts to facilitate the operations of derivatives and options helps collateralized stable prices. Decentralized trading tools are provided at zero interest rates, and are facilitated by the implementation of CDPs by MKR.
Transparent Auditing Frameworks
By default, the underlying blockchain technology promotes transparency. However, MKR’s platform takes transparency further with verifiable transactions. Organizations are provided with a framework that helps improve efficiency in their auditing and accounting operations. The transparency in the system mitigates corruption.
International Trade
One irregularity with performing international transactions is the high cost, which can be attributed to the presence of intermediaries. With MKR and DAI, intermediaries are taken off the equation in exchange for seamless person to person international transactions at reduced costs.
Gambling Markets
The volatility of the crypto market does not make long-term betting with crypto an advisable venture to try. The underlying risks involved include a drop in the rate and price of crypto assets.
Where to buy MKR
As opposed to some years ago when MKR was not available on popular exchanges, it is pretty much available almost everywhere. You can buy from Changelly, ShapeShift, OKEx, Nova Exchange, HitBTC, Binance, CoinBase Pro, BiBox, MXC, etc.
Getting signed up to start trading is easy and straightforward too.
Cryptocurrency is on the path to mass adoption, and unique blockchain-based platforms like Maker are strategically positioned for it. With more use cases of cryptocurrency and blockchain technology emerging, owners of the MKR token are likely to enjoy more profitability.
Maker MKR has the right framework and underlying technology to tackle the issue of high volatility within the crypto market. In comparison to regular cryptocurrency, MKR poses fewer risks because of its stability mechanism.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Synthetix (SNX) is one of the top Decentralised Finance (DeFi) platforms in existence. According to Coinmarketcap their native token $SNX ranks no.7 in terms of market capitalisation compared to other DeFi tokens. Synthetix itself is primarily a decentralized exchange but also a synthetic asset issuance platform.
The platform enables users to issue and trade synthetic assets ā digital assets that represent other real assets like stocks, fiat currencies, commodities, or cryptocurrencies. It also has a staking mechanism that incentivizes users to provide liquidity and maintain the platform.
The Synthetix Protocol was originally conceived as Havven back in 2017 by Kain Warwick. Warwick is currently also a Non-Executive Director of blueshyft- a network of over 1200 retail locations around Australia.
Simply put, Synthetix is an Ethereum-based DeFi ecosystem that functions as a deentralised exchange (DEX) and asset issuer that is maintained via a staking incentive scheme.
Users can speculate on any real-world asset by creating synthetic assets that track their prices in real-time via oracle feeds. And unlike traditional financial systems, Synthetix requires no KYC. You donāt even need to create an account.
Yet anyone could gain exposure to Tesla stocks, high premium bonds, real estate, and just about anything. This can be done simply by depositing SNX tokens into the platform.
Furthermore, those that mint synthetic assets can earn passive income from the fees generated by people buying the assets.
One of the most exciting aspects of the Syntethix system is that it can siphon a huge chunk of the trillions of dollars of assets from traditional markets and bring them to the Ethereum network.
Synthetix Network (SNX) Token
SNX is the utility token of the Synthetix ecosystem and is necessary to create synthetic assets called Synths. Users can buy SNX tokens from several crypto exchanges and deposit them in a compatible wallet in order to stake them.
Once they are locked up, new Synths can be minted. The tokenās supply used to be deflationary until it was updated in March 2019. The update saw the implementation of an inflationary monetary policy to encourage stakers to create more Synths.
By 2025, a total of 250 million SNX tokens will be minted. SNX has surged drastically in the last couple of months. It went from $0.79 at the beginning of June to around $3.32 on the 25th of July 2020.
Synth Tokens
Synth tokens are synthetic assets that track the price of real assets. They are minted by locking up SNX tokens.
Synths can come in any form and they are denoted by āsā. For instance, fiat synths would look like these: sEUR, sUSD, SRMB. Other variations of Synths include sAAPL (synthetic Apple), sTSLA (synthetic Tesla), sAu (synthetic gold), sBNB (synthetic Binance Coin), sDEFI (synthetic DeFi Index), and many more. (https://www.furtenbachadventures.com/)
Whenever new Synths are minted, stakers create a debt. Therefore, they need to pay back the same value in Synths before they can withdraw their locked-up SNX tokens. And the value of Synth will likely change over time.
As a result, users may need to pay a different amount of Synths by the time they withdraw their locked up tokens.
Fortunately, users are not required to pay the same type of Synth that was initially minted. As long as the Synth used to pay has the same market value, the system will accept it. For instance, a Tesla share Synth can be used to pay in the place of a Bitcoin Synth as long as they have equal value.
One thing to note is that Synth tokens are not exactly the same as the assets they represent. They are known as synthetic assets for a reason.
For instance, if you hold an sAAPL token, you will be exposed to the volatility of Apple shares. However, unlike owning real AAPL shares, you wonāt be receiving dividends like real Apple shareholders enjoy.
Collateralization
The Synthetix system requires a collateralization rate of 750%. For instance, if you want to mint 100 sUSDT, you need to deposit $750 worth of SNX tokens as collateral.
This rather high collateralization rate is imposed in order to hedge the platform against extreme market price swings.
Staking SNX
Staking is currently where most people are making money out of the Synthetix protocol. But like any money-making schemes, staking Synthetix bears some degree of risk.
How to stake SNX
If you truly want to make money staking SNX, there are a few easy steps involved.
First, you need to buy Synthetix in any exchange and connect to a web3 wallet.
Visit Mintr, the best portal interface for minting and managing Synths.
Connect your web3 wallet to Mintr.
Click āMintā and choose what type of Synth you want to mint.
Remember the collateralization ratio of 750%
Input the number of Synths you want to mint.
Click āMint Nowā.
Confirm the transaction in your web3 wallet.
Afterward, your SNX token will automatically be staked. You will now be able to enjoy rewards generated from trading fees. Furthermore, you are also subject to inflation rewards.
These rewards, however, come with a price. When you mint Synths, you get to own a portion of the platformās debt pool ā the total value of all Synths. And this debt can increase and decrease regardless of the original value of your minted Synths.
Mintr
Synthetic DEX
Synthetix has a built-in DEX interface that enables users to trade without an account. The DEX currently offers 19 assets to trade and 31 trading pairs.
All you need to do is visit the Synthetix exchange and connect any web3 wallet like MetaMask. It has a slick but simple interface that eases usersā experience while trading.
Synthetic exchange charges both maker and taker fees with 0.30% which is higher than the industry standard of 0.05-0.25%. The fees will be used to reward the stakers for providing liquidity to the platform.
Furthermore, users will also be charged Gas fees by the Ethereum network. For now, all these fees could add up which might be a hindrance from the greater market to fully adopt DEXes for all their trading needs.
In time, when Ethereum finally scales, gas fees should be low enough to become negligible.
DEXes like Synthetix donāt require withdrawal fees (except for Gas) since trades are conducted directly from wallet to wallet.
Synthetix exchange
The Takeaway
As a leading DeFi protocol, Synthetix has a lot of potential. It has enabled users across the world to create and trade synthetic assets more than any platform to date. However, nothing is guaranteed to last in the crypto space.
DeFi protocols like Synthetix have seen enormous growth in the last couple of months. Whether or not this is sustainable, only time will tell.
But considering the trillions of dollars floating in Centralized Finance (CeFi), it is not far-fetched to assume that DeFiās disruption is far from over.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
I’ll be interviewing Bobby Ong, Co-Founder and COO of Coingecko this week!
In the interview we will be discussing:
DeFi Wave – Is Coingecko going big on DeFi?
Cleaning up fake volumes on exchanges – How do we identify fake volumes in the exchange space?
Coingecko research – what are they finding with recent trading trends?
What is Coingecko?Coingecko was launched in 2014 and is one of the world’s leading cryptocurrency data aggregator and tracking over 7,000 different cryptocurrencies. Coingecko also provides distinctive metrics such as user scores which survey users’ outlook on the coin. (Ativan) Another distinctive metric is “Trust Score”- Coingecko’s rating algorithm which holistically ranks a cryptocurrency exchange based on factors such as liquidity, trading activity, cybersecurity etc. so as to combat fake exchange volume data.
This video is aimed at all levels of cryptocurrency enthusiasts so feel free to ask Bobby your burning questions about DeFi, cryptocurrency projects, exchanges and this space in general. Iāll personally be giving out prizes for:
Most Creative Question;
Most Insightful Question; and
Funniest / Weirdest Question.
To ask a question, leave a comment in this post below!
Balancer ($BAL) is an automatic market maker (AMM) protocol that reduces the cost and slippage between trades of different cryptocurrencies. Balancer is a decentralized replacement for the traditional market-maker, a 3rd party entity that provides liquidity to traded assets. Balancer protocol can be called upon by different decentralized trading platforms to automatically figure out the best rates and trading prices using Smart Order Routing (SOR). The protocol also provides the funds necessary to complete the trade, using the funds from available Balancer Pools. Balancer Finance was Launched in September 2019 by Mike McDonald and Fernando Martinelli, since then the Company had a successful seed round with $3 million invested.
Balancer Exchange Interface
Balancer uses the N-dimensional invariant surface that is built upon the Uniswap dapp. They also use Automated Market Makers (AMMs), much like UniSwap, which are built off computer algorithms to regulate the market. Their Pools are doing away with portfolio management fees with users instead of collecting fees from traders, who re-balance the portfolio by āfollowing arbitrage opportunitiesā.
Balancer has shifted itself into a prominent position within the Decentralized Finance (DeFi) hierarchy, as itās BAL token caught the coattails of Compound Protocolās governance tokens rise at the start of 2020. This saw increased attention on the exchange and has been earmarked as a competitor in the DeFi field. This perception coincides with an increase in popularity for DeFi projects and their mining qualities, something highlighted in a recent Forbes report on “DeFi Yield Famers”. So, if you are a budding or curious yielder or someone looking to understand the emerging DeFi market, this is the guide for you. In this article we provide a full breakdown of the project, what it is and explain the benefits of using this DeFi exchange and protocol.
To learn more about Balancer including its strengths and weakness, check out our video:
Balancer Finance: What you MUST know about this DeFi platform
Balancer’s Pools Explained: What are they?
Balancer pools are collections of user supplied funds that are used to provide liquidity to trades and transactions. These pools can total up to more than $11 Million USD (eg, the USDT, BAT and COMP pool). This collection of funds will be called upon during cryptocurrency trades as the as the counter-party to the transaction, thus providing liquidity to traders.
Controlled/Private Pools: These are when a fixed state is over the pool and the creator can set out the tokens and weights. This is usually done for private actors who donāt want outside liquidators, for example third party liquidators working with large quantities.
Finalize/Shared Pools: These pools are open for all actors to add liquidity and is a one way transition. They can not be amended and have a fixed parameter, unlike controlled pools and are usually for the general public to liquidate and make profits.
Alongside the two main subcategories of pools, there are other more specific smart pools that you can use. For example, Liquidity Bootstrapping Pools (LBPs) give the opportunity for teams to release a project token while at the same time building deep liquidity. Other examples include stablecoin pools with zero impermanent-loss, which founder Martinelli wrote an extended explainer here.
Balancer’s Pool creator tool
$BAL Token
In its initial launch, Balancer didnāt have their own native token but this changed this year, with the company revealing their governance token $BAL. The Company began distributing the token on June 23rd 2020 and will be distributed on a weekly basis for liquidity providers on the site.
However, there is no economic value to BAL tokens, rather they are currency for governance rights on the protocol. These rights allow the holders to have a say on the structure of Balancer protocol, with weight in terms of implementing new features, protocol fees, and larger structural changes like layer 2 scaling as well as contracts on other blockchains.
There are 100 million tokens created but 25 million of them have already been allocated to the founding members, core developers, advisers, and investors. The rest though are free to be mined by Balancer users who add liquidity.
According to Balancerās website: āEvery week 145,000 BALs, or approximately 7.5M per year, are distributed to liquidity providers. This means in the first year of BALās existence there would be 30% supply inflation off the initially allocated supply of 25M tokens.ā So, how can you earn the weekly BAL allocation? This is done through BAL liquidity mining, which is discussed below.
BAL Liquidity Mining: How to earn $BAL tokens?
Liquidity mining has become one of the most popular topics of conversation in the space of decentralized finance (DeFi) in recent weeks. At its core, liquidity mining is essentially when users supply liquidity of assets to a DeFi protocol in exchange for some kind of reward. That reward may be various tokens, including governance tokens of the underlying DeFi protocol (which may end up having monetary value ā like COMP). It basically offers a way for users to earn money on assets that they hold.
The main way to earn $BAL tokens is through Liquidity Mining. Essentially, Balancer rewards liquidators who pay into their pools in the form of $BAL tokens. The Company’s proposal is to give out BAL tokens in proportion to the amount of liquidity each address contributes relative to the total liquidity on Balancer.
Another way to make BAL is through creating a pool and reaping the benefits of trading fees. These are handed out in the form of $BAL. This system also incentivises the pool creator to lower fees as the lower the fees are, the more BAL they receive. Balancerās fee gives pool creators a short term or a long term option, and they hope it will encourage lower fees so that traders are lured onto the exchange.
Speaking on the issues concerning distribution of BAL and governance rights, founder Martinelli said: āBy far the most important factor or reason why we are doing that is because we want this thing to be decentralized. We believe in a decentralized, trustless future, and we want Balancer to do that. We need the distribution to be in a healthy way.ā
Balancer Yield Farming & Best Pools
Top liquidity pools on Balancer are currently returning up to 30% APR on Return on Liquidity. These rates have drastically improved after the Cap Factor update on July 5th 2020.
In order to quality for airdrops of $BAL Balancer Governance token, pools need to have at least two coins that are on the whitelist. Coins are added to the balancer whitelist on a weekly basis. The amount of $BAL being distributed depends on the trade volume and total liquidity, with a maximum of $
Trading on Balancer’s Exchange
Alongside their liquidity and pools, Balancer is first and foremost a decentralized exchange. With no KYC or signups, the anonymity and privacy is upheld. All you need to start trading on there is a wallet like MetaMask. Learn how to set up a Metamask account here.
The Exchange has a number of tokens available to trade. These include: Ethereum (ETH), DAI, MKR, USDC, REP, BTC++, WBTC, WETH, BAT, SNX, ZRX, LINK, DZAR, UMA, LRC, REN, LEND, KNC, COMP, OCEAN. The Exchange also has a number of tokens without pools such as tBTC, ANT, cUSDC, cDAI, imBTC, pBTC, sBTC, sUSD, PNK, AST and RPL.
Balancer: are there any risks?
Decentralized exchanges are often associated with high risks. This sort of ability to trade so easily with high interest rates is a concern. This was highlighted more recently by Ethereum founder, Vitalik Buterin, who cautioned that they were āflashy DeFi thingsā which sometimes come with āunstated risks attachedā.
Honestly I think we emphasize flashy defi things that give you fancy high interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached.
Balancer has acknowledged the risks, with their website warning users that: āBalancer is a very new protocol. Although we are taking every precaution and doing extensive audits, this is still very much a beta product. Use small amounts of funds to start.ā
Conclusion
Overall, Balancer has position itself as a powerful tool to automate marketing making and reduce transaction fees for different cryptocurrencies. It’s leading the liquidity pool market with the ability to create n-dimensional liquidity pools which is a market first. With their unique formula which negates and actively discourages large fees, Balancer has created a decentralized project that could potentially be a self-sufficient system with a community emphasis.
For now though, the main target for Balancer is to create stiff competition for UniSwap and make themselves the industry leaders in the AMM field on Ethereum. Many believe this is possible as the DEX functionality on Uniswap is the same as Balancer, as one Uniswap token-for-token pool is equal to the Balancer pool with two tokens set to 50/50, or 1:1, value.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Compound Finance is a leading decentralised finance (DeFi) protocol which allows users to deposit and borrow cryptocurrencies, and earn interest whilst doing so. How Compound does this is by creating liquid money markets for cryptocurrencies by setting interest rates with the use of algorithms. They are popular mainly because they are cryptocurrency exchange Coinbase‘s first ever investment into a crypto project and prices for their $COMP token had more than doubled in the past week. In this Compound guide we cover topics such as what is Compound, how to use the platform profitably and how to earn more of their $COMP token.
For an overview, check out our explainer video on DeFi and Compound:
What is Decentralised Finance (DeFi)?
Decentralised Finance (DeFi) was designed to “cut out the middle man” i.e. banks and reduce the cost of traditional financial operations such as taking out a loan or buying property. The aim of DeFi is so that people, particularly the unbanked can have open access to every financial service on the internet with their smartphones, without needing the banking system. Smart contract platforms such as Ethereum opened the door to DeFi, whereby programs running on the blockchain can self-execute when certain conditions are met. Developers can make use of these smart contract platforms to build decentralised apps (Dapps) with various functions. Developers brought the concepts of Dapps and DeFi together by bringing functions traditionally served by banks onto smart contract platforms. Compound is an example of a DiFi app, it is a blockchain-based Dapp which allows deposits and taking out loans of cryptocurrencies on its platform.
How does Compound work?
Compound operates similar to a bank. You can deposit various cryptocurrencies and earn an annual interest on your deposits, similar to depositing your money into the bank. However, Compound’s main difference is that it does not have custody of your cryptocurrency deposits. Instead, you are actually sending your crypto to and interact with a smart contract, rather than another company or user. This feature is important because it means that no person or authority can control or take your funds.
What makes all of this so interesting is that since Compound is a DeFi platform, it does not have to follow the Federal Funds Rate. It can do something completely different and cannot be shut down since there is no central authority.
How to supply (deposit) cryptocurrencies onto Compound and earn interest
On Compound’s website you can earn interest when you deposit (Compound refers to this as “supply”) cryptocurrencies onto their platform. To do this, first load an Ethereum account with any of the cryptocurrencies supported by Compound. Then on the Dashboard, choose which cryptocurrency you wish to supply to the platform by clicking on it.
Choose which cryptocurrency you wish to supply to the platform
In the below image you can see that we will be depositing USD Coin (USDC) which generates an Annual Percentage Yield (APY) of 0.12%. So you can earn 0.12% per year if you supply USDC to the platform. Input the amount you wish to supply and confirm by clicking “SUPPLY”. A metamask window will pop up where you will interact with the smart contract and confirm the transaction. You will be charged gas fees for interacting with the smart contract. In our case we were charged USD$1.
Supplying cryptocurrencies to the platform generates interest
Once you have supplied cryptocurrencies onto the platform, you would be able to use Compound’s other features such as using these supplied cryptocurrencies as collateral to take out loans.
An important point to note is that Compound has floating interest rates which are subject to change. How Compound determines the interest rate is similar to the Federal Reserve, Compound would analyse the supply and demand for a particular cryptocurrency and then set a floating interest rate that will adjust based on market conditions. Compound also takes a 10% cut off your earned interest. Users can take back their cryptocurrencies at any time with a 15 second lag between executing the instruction and receiving their crypto.
How do I take out loans/ borrow cryptocurrencies on Compound?
You can use your deposited cryptocurrencies as collateral to borrow other cryptocurrencies. Compound requires users to put up 100% of the value of your intended loan. There are risks of doing this though which will be explained below where we look at Compound’s liquidation clause.
Borrowing cryptocurrencies does also require you to pay fees. For example in the below image you can see that taking out a loan of BAT will cost you a whopping 29.4% per year.
Borrowing cryptocurrencies requires you to put up collateral and pay fees
You can also see from the above image how Compound makes money, since there is a spread between the amount of interest generated from depositing, say BAT and the amount of fees you need to pay for borrowing the same.
What is $COMP token? How can I earn $COMP?
Since May 2020, Compound has transitioned to community governance. This means holders of Compound’s token, $COMP can make proposals and vote on decisions relating to how Compound is to be developed or run, e.g. what kind of collateral should Compound support, or what the interest rates should be.
There is a total supply of 10 million $COMP, of which 42.3% is reserved for distribution to users to earn when they use Compound e.g. by supplying or borrowing cryptocurrencies. For every Ethereum block, 0.5 $COMP is distributed across Compound’s 9 markets in proportion to the interest accrued in the market. And within each of these markets, the amount of distributed $COMP is divided 50:50 between suppliers and borrowers of that particular cryptocurrency. Hence the cryptocurrency which is earning the most COMP per day is always changing. Users should check Compound’s User Distribution page, where they can see the amount of interest paid per day as well as the amount of $COMP distributed to suppliers and borrowers.
You can also earn $COMP by voting on various governance proposals concerning how Compound should be run.
Users can vote on governance proposals and earn more $COMP
$COMP can be traded on various exchanges, such as Coinbase or FTX Exchange. And there was certainly a lot of attention focused on $COMP since prices for the token recently shot up from USD$60 to over USD$300 in a matter of days.
$COMP prices
How are people using the Compound platform to earn 100%+ APR?
Users earn COMP when they supply or borrow cryptocurrencies on the platform. So in the below image we deposited 500 USDC and borrowed 300 USDT to get a net effective interest of -12.27% which on the face of it does not look profitable.
In our case, depositing USDC and borrowing USDT generated a net interest of -12.27%
BUT at the same time we are also earning $COMP. This calculator shows you how much $COMP would be distributed depending on the type and amount of tokens supplied or borrowed. So as seen in the below image, whilst the net interest was -12.27% per annum, we EARNED 13.94% APY of $COMP. Basically, you are being PAID to take out a loan.
$COMP mining: Another way to potentially earn more $COMP
$COMP mining goes beyond simply supplying cryptocurrencies and profiting off the interest rates on Compound. Rather it is about getting as much $COMP rewards as possible in the shortest amount of time. Some methods even allow you to multiply your earnings by folding your position 4x.
In a nutshell, people have have been finding ways to do this by first depositing USDC, borrowing USDT and then converting the USDT to USDC. Then depositing the USDC onto the platform, leveraging it, withdrawing USDT and depositing it onto the Compound platform several times over.
What cryptocurrencies does Compound support?
Compound currently supports 9 cryptocurrencies, namely: Ether (ETH), USD Coin (USDC), Basic Attention Token (BAT), Tether (USDT), 0x (ZRX), Wrapped BTC (WBTC), Dai (DAI), Augur (Rep) and Sai (Legacy DAI) (SAI).
Available markets on Compound
What are the risks of DeFi platforms?
DeFi, and any such platforms such as Compound has the main feature of being decentralised. Yet, it is decentralisation that brings associated risks. This is because instead of trusting a central authority to supervise the transactions, we are trusting the code which the smart platform was built upon. If there is a mistake in the smart contract e.g. the conditions for release of funds are set incorrectly, there is no overriding body which can correct this mistake or any customer service representative that can help. And the biggest risk of all is if the developer did not code the contract correctly making it vulnerable to hackers. An example of this was the dForce hack where hackers exploited a well-known exploit of an Ethereum token, resulting in losses of USD $25 million worth of customers’ cryptocurrencies.
Risks of using Compound: Compound’s liquidation clause
For Compound, there are risks associated with trying to earn $COMP through borrowing on the platform. Compound has a liquidation clause that kicks in when borrowing on the platform. For instance if the cryptocurrency you are borrowing increases in value and exceeds the value of your collateral, your borrowing account will become insolvent. In such case, other users can step in and repay a portion of your outstanding loan in exchange for a portion of your collateral at a liquidation incentive. This liquidation incentive is the discount at which other users can receive your collateral. So if the liquidation incentive at the time is 8% (subject to change through voting on Compound’s governance system), then other users can receive your collateral at 8% off the market price when they help repay your loan. Hence there are serious incentives for users on Compound to liquidate others and this will result in the person being liquidated to potentially suffer huge losses.
What is Compound’s aim for the future?
Currently, Compound only deals in cryptocurrencies on the Ethereum blockchain. However the Company eventually wants to expand and move into carrying tokenised versions of real-world assets, for example the US Dollar, Japanese Yen or stocks in companies such as Google.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Decentralized Finance (DeFi) has been the breakout trend of 2020. With prices of standout DeFi tokens surging and terms like āYield Farmingā getting mainstream attention, the DEFi field has taken off. This next step in the evolution of finance uses public blockchain technology and has a wide range of sub- divisions that make up the growing field. The most notable and popular of these DeFi services are decentralized exchanges, decentralized stablecoins, decentralized money markets, decentralized synthetics and decentralized insurance. To understand this emerging field, first a definition on what decentralized means must be had.
Learn more about DeFi, and liquidity pools such as Balancer, Uniswap and Curve with our video:
What is decentralized and what does it mean?
Decentralized is a term you will have definitely heard thrown around even if you are relatively new to the cryptocurrency scene. Be it on Twitter, with the various profiles espousing the benefits of decentralization and calling out centralized cryptocurrency projects, or in articles online. To give a little context, the decentralized v centralized argument is akin to economic arguments on political systems between capitalists and communists.
Part of the reasoning for many supporters of decentralization is that blockchain technology at its core was made to be decentralized. Blockchain is reliant on open source networks and has no central entity controlling it. Rather, the computer power and the overall network is split up, which is why it is decentralized. The benefits of this system are that it doesnāt have a single point of failure, making cyber attacks and poor leadership somewhat irrelevant.
As such blockchain has been earmarked as the breakout technology of the 21st century. Companies, governments and financial institutions are all clambering to bring developers on board as blockchain continues to be viewed in an increasingly glowing light. Yet, how does blockchainās decentralized foundation play into the emerging DeFi field?
DeFi Explained
For many, blockchain is the embodiment of the DeFi field and is the promised land of finance that Satoshi Nakamoto first imagined when he created Bitcoin. The term DeFi has turned into an all encompassing term for a range of projects, but the core values of each are pretty clear. These are open access to anyone, resistance to censorship, privacy and an open democracy of finance away from singular control. The majority of DeFi sites are run through decentralized apps or Dapps, which allow for financial services to be created and be used easily by anyone.
The DeFi Market
The DeFi market is a field that has grown massively in recent months as billions of dollars are handled every hour in the sub industry. Part of DeFiās popularity is down to its transformative effect on almost all aspects of finance. From loans to remittance markets and even insurance, the DeFi field could give financial access to people around the world as all they need is an internet connection. The technology could have an impact on the third world, where many of the population is unbanked or even in more developed financial societies as governments and financial institutions continue to lose credibility as they go from recession to recession. Sold on DeFi now? Well if so, read on for a closer look at the different blockchain applications in the field and the top companies within each subcategory.
What is a Decentralized Exchange?
Exchanges are the heartbeat of the cryptocurrency traders. Most of you will have an idea of the more famous centralized exchanges like Binance and Coinbase, but decentralized exchanges (DEXās) may be less so. The main difference between the two is that there is no central authority over decentralized exchanges, rather governance is determined in various ways, like through earning native tokens.
Focusing on namely cryptocurrencies, the decentralized exchanges offer a range of benefits. The first is security as you are not trusting a centralized exchange which could be susceptible to hacks with your funds. Instead trades are done through a peer to peer (P2P) trading network and a range of methods are used to facilitate this. Some DEXās use proxy tokens, others multi-signature escrow systems and some use shares. Popular DEXās are dYdX, Uniswap and Kyber network.
Decentralized Stablecoins
Much like DeFi applications, stablecoins have also seen a rise in popularity and usage in recent times. Put simply, stablecoins are less volatile tokens that are usually backed by a currency, commodity or a collection of both that enables them to keep a steady price, unlike the often wild swings of other cryptocurrencies. Some stablecoins are centralized but there is a growing amount of stablecoins that have become decentralized. These include industry favourites like DAI, USDC and Tether (USDT). To be classed as a DeFi stablecoin, there needs to be no central figure ruling the tokens or single point of failure as well as a resilient network.
What is a Decentralized Money Market?
Money markets are markets for borrowing and lending assets. The decentralized element means that users can borrow and lend cryptocurrencies without the control of a central figure. The lack of central authority is fixed using smart contracts and algorithms to determine the markets function. Decentralized money markets put interest earning potential in the hands of anyone with an internet connection in the world. Popular examples of decentralized money markets include Aave, Compound, MakerDao and Balancer. This area of DeFi has gained the most traction in recent times, especially with the bearish crypto market. This is because there are lots of profits to be made, with āYield Farmersā churning in large sums from interest earned.
Decentralized Synthetics
Decentralized synthetics is another growing sector of the DeFi field. Synthetics or derivatives as it is also known refers to the tracking of a value for an asset. This means traders can get an insight into an asset without physically investing themselves. This representation of the asset allows traders to make educated investment decisions. There are a number of decentralized synthetic companies, the most popular ones being UMA and Synthetik. Expect more companies to pop up in the future too.
Decentralized Insurance
As blockchain gains exposure, more and more use cases appear, from accounting to product tracking. One industry that has taken to the technology is insurance. The bureaucratic side of the industry is perfect for blockchain technology and smart contracts, with a wide variety of usages for the technologies. The technology has the ability to revolutionise the insurance field as it cuts out added fees and reduces smart contract risk. Notable decentralized insurance companies include Nexus Mutual and Opyn.
Conclusion
Overall, it would appear that the DeFi field is growing and most importantly, is here to stay. People around the world are increasingly seeing the problems of a centralized method, especially in the cryptocurrency industry which has a long history of customers’ funds being lost due to hacks of centralized exchanges. Partner this with an increasingly more aware population with regards to internet privacy, you have the makings of the next big thing in the cryptocurrency industry and possibly the wider financial field.
Although the industry is in its infantile stage, there are a number of interesting projects and options, most strikingly in the decentralized exchange and money market area, which users can partake in. Boxmining has a number of guides which can help you decipher more clearly which is the best project for you. For more DeFi related information and other cryptocurrency news, subscribe to our YouTube channel and newsletter.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Among the growing list of emerging decentralized exchanges lies THORChain and their RUNE token. The Company is one of many decentralized finance (DeFi) options in a field that is creating much buzz within the industry. The decentralised liquidity network, whose successful seed funding was completed last year, is one that should not be missed by those who are looking into this field. After a successful mainnet launch, the cross blockchain answer to Uniswap was made official in the first part of this year. As such we have compiled a complete guide to EVERYTHING you wanted to know about THORChain, answering questions like āWhat is THORchain?ā, āWho Uses THORChainā and other important topics.
What is THORChain?
First imagined in 2018, THORChain offers a wide range of services on its decentralized permissionless network. It allows for swapping of assets like Bitcoin and Ethereum as well as providing continuous liquidity pools for users. The platform uses a cross chain and can be used on any blockchain/with any asset, unlike other decentralized exchanges.
Their development paper outlines the core conception of THORChain, saying: āTHORChain is a liquidity protocol designed to connect all blockchain assets in a marketplace of liquidity through cross-chain bridges and continuous liquidity pools secured by economically incentivised validators.ā
THORChainās consensus is Proof-of-Stake and built on Tendermint, with network validators required to bond (lock up) their native token, $RUNE. Validators are punished for bad behaviour by having their stake slashed, which in turn disincentivises such actions.The networkās data is calculated and overseen using Midguard API service and is secured and bonded by ThornNode, which also powers the network. The nodes make vaults and validate the transactions on the site.
Who uses THORChain?
Users
These are the main participants and they usually use the cross chain services between the pools with them paying a slip fee. The fee is paid due to gas fees on external services and for fast execution. However, swapping is non custodial and unrestricted on different chains.
Liquidity providers
These are secondary participants who add liquidity to the various pools which is then bound with RUNE in a separate vault. Using the continuous liquidity pool means the network does not need oracles or have a price feed. Liquidity rewards are earned through fees generated from pools and are paid out when users withdraw. As the THORChain website explained, āliquidity is provided by stakers who earn fees on swaps, turning their unproductive assets into productive assets in a non-custodial manner. Market prices are maintained through the ratio of assets in pools which can be arbitraged by traders to restore correct market prices.ā
Nodes explained
Nodes are the basis for THORChainās services. They have three main functions, these are: to Bond RUNE, create vaults (which are like wallets) and witness transactions/produce blocks. They are all run by node administrators who are also rewarded for their work through bond rewards. For a full breakdown of node operators, please click here.
In terms of THORChain, as previously mentioned, nodes earn two-thirds of the System Income and they make vaults and validate the transactions on the site. Nodes are anonymous, with plausible deniability on all transactions. The nodes are created every three days and compete to enter with bonded capital. The oldest nodes are churned out and replaced when necessary. This allows the nodes to stay fresh and keeps the network constantly updating itself.
RUNE token: what is it?
Another integral part of the system and the nodes that run it is THORChainās native token, RUNE. Available through Binance Chain, the token is a BEP2 token.The RUNE token is used in all liquidity pools and is bonded by nodes. All RUNE tokens are at a 1:1 ratio to asset value and this allows for pools to be linked. RUNE is also the rewards for pools, with the equivalent of 1/3rd of the System Income providing continuous liquidity incentives.
Alongside providing on chain liquidity, RUNE is also an important part of the THORChain security. This is because it protects against malicious actors by offering them a larger benefit for liquidating then they would receive from corrupting the system, as nodes earn 2/3rds of the System Income. Thus all transactions using RUNE on the system have double the amount at a 67% to 33% ratio. The other third is for liquidity providers. Not only that, but in terms of security nodes are also closed when malicious activity is detected.
RUNE has a total supply of 500 million tokens. Of which 100 million will be sold to the public in 3 stages, 150 million has already been allocated throughout the team, community and operational reserves, and the remaining 220 million is saved for the emissions reserve.
How to earn RUNE?
RuneVault: Liquidators and users of RUNE can have access to the RUNEVault feature which allows you to store and stake the token, with returns on investment. Using a Binance Chain Feature, users can āfreezeā their tokens even if they have staked them meaning that the currency is always in the wallet. Earnings are based on weekly RUNE staked, but this weekly taking is reset should you withdraw any amount.
Rewards
THORChain offers rewards for all participants on the network. The rewards are paid out through the distribution of system income. This is worked out by Swap fees plus Block rewards. Swap fees are paid by users when swapping assets and Block rewards are worked out on an emission schedule. As mentioned previously, the system income is paid 67% to the nodes and 33% to the liquidator. However, this ratio is officially worked out by the incentive pendulum.
Governance on THORChain
THORChain attempts to have a minimal governance model. Instead staked capital is the main driver of the market and developers respond accordingly. New assets are easily listed and this means there are rarely many governmental decisions to undertake and it is truly decentralized in many ways.
Who is the team behind THORChain?
The team behind THORChain is purposefully pseudoanonymous. According to their website, āfigureheads, personalities and founders undermine a projectās ability to decentralise,ā and that, ātransparency is demonstrated in other facets (treasury, code, research)ā. That being said, there are 10 employees listed on LinkedIn and 12 team members listed with 6 additional advisors on ICOBench.
What sets THORChain apart? What are its benefits?
THORChain takes a little while to understand the basics and the nodes that run the network. However, once you get the hang of the exchange then THORChain has a number of benefits.
The main benefit is that with their cross chain feature, any asset can be swapped and a pool created around it. That gives users a huge amount of variety and does not hem them in unlike other decentralized exchange options do. This opens a whole new world of possibilities for DeFi users and one that should be applauded.
Conclusion
For those who are fans of Uniswap, then this decentralized option could be a great alternative. Yet, as Balancer has shown with their recent security scare, the often precarious nature of DeFi security does cause concern. Perhaps though, THORChain with their incentivized payments negates this risk. However, until more is known about the site and they are around for longer it will be hard to make a final judgement.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
China has asked for guidance from the teams behind Cosmos and ChainLink for their Blockchain Service Network (BSN), it was revealed last month. Researchers have called upon both companies to aid their development of the BSN, which was launched alongside their Digital Currency Electronic Payment (DCEP) in April 2020, to help them build out a āservice hubā which would form the bedrock of its āinternet of blockchains.ā
SmartContract and Iris Foundation join BSN Development
According to reports, SmartContract, the group behind the Chainlink oracle network, will aid the BSN team in the sourcing of reliable information. Their Dapp services, potentially on Hyperledger, could allow for a cohesive and more streamline to access information.
Yifan He, BSN expert and CEO of Beijing Red Date Technology, spoke on the ChainLink addition, saying the partnership between the two, will give access to outside data from many Chinese companies, such as financial transaction information from China Union Pay, something difficult to obtain and analyze in the first place. This would then allow for BSN users to access āoutside data such as stock prices and financial transactions.ā
On the other hand, Iris Foundation Ltd., the company who uses the Cosmos network to integrate businesses using interchain services, will work on interoperability for the network. He described their addition as allowing for ācross-chain services between blockchains adapted in the network.ā
Both companies appear to know what the State Information Center and China Mobile/China Union Pay backed BSN needs in their attempts to create a worldwide blockchain infrastructure.
And it seems they have a good chance of pulling it off as the government backing allows greater alliances and interconnectivity between the important players. One of these players and a team that looks integral to the future research is ChainLink.
ChainLink suits BSN
The chance to be part of a huge project was something ChainLinkās co founder and SmartContract CEO Sergey Nazarov, couldnāt miss. Explaining how the BSN might use his company, the co-founder said: āChainlink provides the blockchain abstraction layer or secure blockchain middleware that enable dapp developers to create universally connected smart contracts.ā
Google, through its Google Cloud uses ChainLink for a similar function as he BSN, Nazarov explained. āWhat BSN really cares about, much like the people weāve worked with from Google, is this type of contract that allows blockchains to access external off-chain data,ā Nazarov stated.
The need is made even greater as blockchain canāt be directly applied to application programming interfaces (APIs) and only universally connected smart contracts can create the connection and allow for off chain data.
This use case is especially needed, Nazarov claimed, for global financial product or insurance, as the contracts must have external data and ensure goods and services are delivered, which needs the universally connected contracts.
The usage of ChainLink and their services are set to continue as Nazarov told CoinDesk, āChainlinkās technology suits BSNās vision because the network includes multiple chains that are also supported by (his) team.ā
BSN starts to build for future
Since its launch in April, the BSN has been announcing a number of partnerships with experts in the blockchain field. For example, around the initial launch the research team confirmed the plans to adapt Ethereum and EOS public blockchains into the BSN system.
A target area has been cross chain services with Polkadot one of a number of companies earmarked for positions on the interchain service. āWe plan to have at least four different interchain service technical frameworks developers can choose from in the hub,ā He said.
āThe interchain service hub is one of the three critical parts for the national blockchain infrastructureā, He continued adding that enterprise and public blockchains into the network were the other key fields.
Despite not being finalised, the network is already proving popular. āWe have been on-boarding two to three public chains every month on average, while adapting consortium chains at a slower pace since it usually takes longer to integrate them with the network,ā He claimed.
However, not all blockchain developersĀ are pleased with the creation of the network, with some developers worried about their data being stolen as well as other privacy concerns. The BSN looked to quell the fears in their recent technical white paper, but there is cause for concern considering the nations stringent Internet laws.Ā
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Hey Vefam! I’ll be interviewing Vechain CEO Sunny Lu at 10 pm UTC +8 on Monday the 20th of July. The aim of the interview is to give an updated view of Vechain and the grand objectives. Then we’ll go into the details and ask about developments with various programs such as previous partnerships, Toolchain, and the entire ecosystem.
What is Vechain? VeChain (or VechainThor) is a next-generation smart contract blockchain platform focused on enterprise adoption, Internet of Things (IoT), and mass adoption via Toolchain. The blockchain supports the creation of smart-contracts ā self-executing contacts that have a guaranteed outcome without third party trust. This allows for the creation of decentralized applications (āDappsā) that can solve enterprise problems such as:
*Update: Due to popular demand, Sunny has agreed to do the interview LIVE. Event will be held at 10 pm UTC +8 on Monday the 20th of July on the following stream:
Overall the video is for both beginners and veterans of the Vechain Ecosystem. I’d love for you guys to come up with some questions for Sunny as well. I’ll personally be giving some prizes for:
To ask a question, leave a comment in this post below!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange. (https://www.focolare.org)
There are over 300 cryptocurrency exchanges out there. So competition for cryptocurrency traders to sign up and trade with them is fierce, especially when exchanges make money from taking a small percentage from each trade. To compete, crypto exchanges often have various sign up offers or welcome bonuses to entice new users. In this article, we will compare which cryptocurrency exchange has the best welcome bonus or sign up offers.
Table of Contents
Binance
Binane is THE largest cryptocurrency exchange in the world with USD$1.3 billion in trading volume in 24 hours. Whilst they may not have the most number of supported cryptocurrencies, they definitely beat out the competition by a huge margin in terms of number of users and daily visits.
New users get 10% 20% off spot and margin trading fees forever! Enter our referral ID 10192887 to claim this offer!
Binance Futures
Binance Futures is part of the Binance brand. Specialising in futures trading, Binance Futures offers a leverage of 125x margin amongst major crypto exchanges- the highest in the market. Nevertheless, Binance is still able to offer a seamless platform for traders to switch from spot to futures trading on the Exchange.
New users who sign up for a Binance Futures account will get 10%20% discount on trading fees for the first 30 days.
Binance Pool
Binance Pool is a mining pool under the Binance ecosystem. Currently it only mines Bitcoin but more tokens are expected to be added later. Learn more about Binance Pool.
Binance Pool is operating on 0% fees until 31st May 2020 to bring in new customers. Afterwards the fee will be revised to 2. (smallhandsbigart.com) 5%
Bybit
Bybit is a cryptocurrency derivatives exchange platform and offers worth up to USD $90 for signing up as follows:
USD $5 for registering a Bybit account and joining their social media channels through Twitter;
USD $5 for trying out Take-Profit or Stop-Loss when placing entry orders; and
USD $50 for making a first deposit of 0.5 Bitcoin or more. Or users can make a first deposit of 0.05 BTC or more and get USD $5. This reward will be in the form of a coupon which can be used to offset transaction fees.
Bybit also has limited flash deals where users can get an extra USD $30:
USD $5 for completing Bybit’s customer satisfaction survey;
USD $20 for a total deposit of 1 Bitcoin or more; and
USD $5 for actively trading for 10 days accumulatively.
The Bybit coupons obtained in the flash deals can be used to offset transaction fees when trading on the Exchange. Learn more about this Exchange with our Bybit review.
Register for a Bybit account and claim up to USD$90 worth of bonuses with our referral link below.
Coinbase
Coinbase Earn program. Users will need to complete various online courses on different cryptocurrencies, in return you will be awarded a small amount of that cryptocurrency to trade with. Users can get up to USD $152 with Coinbase Earn.
Phemex is a derivatives exchange providing Bitcoin perpetual futures contracts. The Exchange also offers up to 100x account leverage. Learn more with our Phemex Exchange review.
The Exchange offers up to USD$72 worth of welcome bonuses as follows:
USD$2 worth of BTC is deposited to your account immediately after registering for a new account.
A Social Media Bonus of USD$10 is given after (a) registering for a Phemex account; (b) following their official Twitter, retweeting their pinned tweet whilst tagging 3 of your friends; and (c) completing Phemex’s application and them reviewing that you have completed step (b).
USD$60 Funding Bonus can be claimed after (a) registering for a Phemex account; (b) depositing Bitcoin into your Phemex wallet; and (c) funding your BTC Trading Account with at least 0.2 BTC in one go or funding your USD Trading Account with at least USD $1,500 in a single deposit.
You can register for a Phemex exchange account and start claiming up to USD$72 in welcome bonuses with our referral link below.
To encourage more people to get started, Phemex has introduced #PhemexMoments. Users can submit photographs of their trading setup and Phemex will give out the following rewards:
USD$50 trading bonus to 100 featured pictures on their new website; and
USD$100 trading bonus for Phemex’s 8 favourite pictures to be featured on their main website.
To encourage people to continue participating in Phemex Moments šø we've added more rewards:
– $50 bonus for first 100 pictures featured – $100 bonus for top 8 favorite pictures – Stay tuned for more surprises coming soon! š„
NAGA offers trading in cryptocurrencies along with stocks, CFDs, ETFs and Forex. The Exchange’s unique feature is that it combines trading with social media, in what they call “social trading”. Users can set up their profile and post on it similar to a Facebook profile. In particular, users can post what trades they have been doing for other community members to see, and there is a leaderboard for the Exchange’s top traders. Users can copy each others trades and you will also be rewarded when others copy yours.
Social trading allows users to see each others trades and copy them
Right now, upon registering and verifying your NAGA account, users can get a $50 welcome bonus without any required deposit within the first 24 hours. NAGA also has a deposit bonus where users will be rewarded with a 0.02 BTC bonus if they deposit USD $500 into their trading account.
BTCMEX.com
BTCMEX.com is a Hong Kong based cryptocurrency derivatives exchange offering Bitcoin perpetual contracts with 100x leverage. The Exchange claims to have the fastest speeds in the industry, with 100,000 TPS per trading pair. It is noted however that the Exchange only offers trading in BTC/USD.
Currently BTCMEX offers a 0.1 BTC trading bonus for new users that deposit 0.01 BTC into their accounts and complete the ID verification process. Users will be able to use this 0.1 BTC trading bonus to trade with a maximum leverage of 10x, and can withdraw any profits from trading with this bonus at any time.
Coinbase Earn program. Users will need to complete various online courses on different cryptocurrencies, in return you will be awarded a small amount of that cryptocurrency to trade with. Users can get up to USD $152 with Coinbase Earn.
OKEx review.
