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Category: Decentralised Finance (DeFi)

Decentralized Finance (DeFi) is a sector within the cryptocurrency and blockchain space which aims to provide a decentralized version of the products available in traditional finance- without central control and at a lower cost with potentially higher returns. These products include loans, interest-bearing deposits and borrowing services.

The advantages of decentralized finance are that it addresses the problems we have with the traditional banking system. For example, decentralized finance protocols are controlled by multiple people, and all participants are required to abide by the rules written into the smart contracts underlying the protocols.

  • Glitch ($GLCH): world’s first “for-purpose” DeFi protocol?

    Glitch ($GLCH): world’s first “for-purpose” DeFi protocol?

    Glitch is a platform that seeks to complement the Ethereum network by providing a protocol specifically for DeFi applications.

    Ethereum brought the possibilities of blockchain technology to life by birthing many crypto-based protocols that leverage its smart contract feature to build incredible financial applications. The sporadic development of these applications, however, has weighed down the Ethereum network, causing congestion and inefficiencies.

    While many are placing their hope on the full-deployment of Ethereum 2.0, other innovators don’t have that patience, and therefore, are creating their own solutions, such as Glitch.

    Background

    Sean Ryan, the founder of Glitch, is a business development expert who had contributed to the creation and acquisition of several SAAS products and companies before the creation of his blockchain project.

    Ryan has advocated for the cryptocurrency industry since 2015 and has developed a passionate interest in Decentralized Finance (DeFi) systems over the years.

    He created Glitch in August 2020 and was able to leverage his finance and business development experience to put together an incredible team to build a DeFi solution now known as Glitch Protocol.

    Hong-Kong serves as the platform’s development base.

    What is Glitch?

    Glitch protocol is a blockchain super protocol constructed to support and provide a working framework for decentralized financial applications to be built upon, and is designed to work in symbiosis with the Ethereum platform.

    It aims to be a scalable solution, providing increased throughput that would enable the process of thousands of transactions every second.

    Described as the world’s first “for-purpose” DeFi protocol, it offers a smart-contract platform for facilitating decentralized applications (dApps). In addition to the support it provides, the Glitch protocol also provides an enhanced user experience and efficient cross-chain interoperability.

    How does Glitch Work?

    As a solution that prioritizes user experience, it is designed to work effectively to remove redundancies caused by non-functional applications. However, its primary selling point is its high scalability, cost-effectiveness, and significantly increased throughput.

    The core concepts and features responsible for bringing these ideas to life are explained in the next few paragraphs.

    Consensus Mechanism

    The Ethereum platform used the same framework as Bitcoin to improve its consensus mechanism from a Proof of Work (PoW) to a Proof of Stake (PoS) system. Glitch protocol, on the other hand, employs a faster consensus mechanism known as Delegated Proof-of-Stake (DPOS). 

    In the DPOS mechanism, stakeholders reach consensus by outsourcing the network’s security to third-parties known as ‘block producers.’

    These individuals are authorized to create a new block every 0.5 seconds. Byzantine Fault Tolerance (BFT) is imposed on block producers to prevent block creation on multiple forks. Despite having a bypass to this limit, the protocol would automatically change consensus to the longest chain.

    What’s unique to Glitch’s consensus mechanism, however, is that voters do not select the block producers. Instead, each stakeholder is given an equal chance at block creation. This is to ensure fairness in the governance system.

    The Vault 

    The Vault is the system by which profit is distributed on the Glitch protocol. An immutable vault on the Glitch Blockchain collects 20% of all network fees and other revenues generated from the dApp. The deposit is automatic and shared among stakeholders on the network. 

    This revenue-sharing model encourages active participation in the network while fostering community support. The model also creates a positive feedback loop where the community supports developers and is incentivized to continually do so. 

    This loop drives the protocol forward, which maintains the platform’s progress.

    Token Wrapping

    Token wrapping on Glitch involves mirroring ERC-20 tokens from Ethereum on its platform with its GRC-20 token standard.

    Users with tokens on the Ethereum network can register their Ethereum address on the Glitch protocol. Their tokens can then be mirrored as a Glitch coin during an initial snapshot.

    This way, developers can simulate products and dApps from Ethereum while benefiting from the faster throughput and circumventing the high transactional costs they would otherwise have to work with on ETH. And while token wrapping is currently being developed for ERC-20 tokens alone, there are plans to incorporate other blockchains.

    Glitch Token ($GLCH)

    The Glitch Protocol allows the use of a single token, known as Glitch Token (GLCH), for all transactions and dApps be built across its ecosystem. This ensures consistency for all applications that utilize the network. In addition, users can exchange GLCH tokens on Uniswap.

    The total supply for the native token (GLCH) in circulation is 88,888,888 GLCH. After the public sale, 15% of the total supply (i.e. 13,333,333 GLCH) will be openly circulating.

    What is GLCH token
    What is GLCH token? (Image credit: Medium)

    Glitch GLCH Token Distribution

    8,888,888 GLCH had been sold in the seed round at $0.03375 / GLCH. 0.625% of tokens will be released weekly for 4 months.

    22,222,222 GLCH had been sold in the private round 1 at $0.0675 / GLCH. 3.125% will be released weekly for 2 months.

    • 4,444,444 GLCH had been sold in the private round 2 at $0.07875 / GLCH. 1.125% will be distributed weekly for 1 month.

    • 13,333,333 GLCH had been allocated to the public sale at at $0.09 / GLCH. There were immediately unlocked upon listing on 11 January 2021 at 6:00am PST.

    Glitch Rewards Program

    Glitch Finance had provided initial liquidity on the GLCH/ETH pair on Uniswap. To incentivise users to provide liquidity, Glitch has a LP Rewards Program where they have allocated 888,888 GLCH (i.e. 1% of the total supply of GLCH) for rewarding participants. This program will run for 3 months starting on 17 January 2021.

    Glitch DAO

    The Glitch Protocol is governed by a network called the Glitch DAO (Decentralized Anonymous Organization). The DAO’s members are stakeholders who locked up their Glitch tokens in various pools. 

    The Glitch DAO has a unique structure, which employs two different DAO models to govern the protocol at its different stages. These two models have been engaged as a solution to conflicting incentives that are borne out of the need to support both Ethereum-based dApps on the Glitch network, as well as native dApps built from scratch on Glitch. 

    This difference in product-based risks the problem of exclusion if the DAO was based on either platform (Ethereum or Glitch). 

    The first model is an off-chain voting system, which uses an oracle to assign voting weights to either platform. This way, the potential exclusion would be mitigated. Yet, this model is vulnerable to fraud through oracle manipulation, especially when there is a substantial TVL (Total Value Locked) on native Glitch products.

    The other model is the on-chain DAO, which would see the establishment of two separate DAO’s that govern and support the Glitch Protocol on their platforms. Both DAO would contribute to the progress of the ecosystem.

    For the time being, before the TVL becomes significant, the off-chain DAO model would be used. 

    Conclusion

    Most DeFi enthusiasts agree that the current financial system has to be decentralized for the ideal of a free market to come to pass. Transactions and processes should be transparent and accessible by anyone with interest. 

    With the power of blockchain technology, this revolution is closer to home than ever as DeFi Innovators are already building applications for the Ethereum 2.0 platform. All that is needed now is a good network of smart contracts that is fast and efficient. 

    Protocols like Glitch would help achieve that outcome as a complementary protocol to the Ethereum.

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

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

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

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

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

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

  • Oddz Finance ($ODDZ): decentralised options trading?

    Oddz Finance ($ODDZ): decentralised options trading?

    Decentralized finance (DeFi) projects have seen an enormous boost in recent years. While there has been an increase in its total value locked, especially in protocols that support yield farming, liquidity mining, and leveraged trading, there is still a need to design these platforms in a way that makes the experience easier for users, especially non-crypto people. This is what Oddz aims to do.

    Oddz Finance ($ODDZ) is offering an on-chain options trading product on their platform without significant costs on the part of the user, lowered barrier to entry, zero gas fees, and reliable data feed. These are features that are not completely embraced in most projects we see in the DeFi space.

    Background

    According to the team behind Oddz, while the boom of DeFi introduced new trading opportunities for cryptocurrency holders, it still has its problems. Most trading platforms that offer derivatives to their users are not as user-friendly as they are supposed to be. This is a concern if adoption is the end goal.

    Moreover, most platforms suffer from slow trade execution and a lack of transparency, which makes it difficult for traders to establish the positions they want given these limitations. Oddz protocol is designed to solve these issues on its own on-chain option trading and derivatives platform.

    As of this writing, the next step for the team is to work on the integration of the protocol to the Polkadot network. There is also a plan for the team to launch its oracle, options on wallet applications, and futures platform by the second quarter of 2021. Conditional and perpetual markets will be introduced by the third quarter of 2021.

    What is Oddz Finance?

    Oddz Finance is a decentralized, cross-chain, options trading platform that runs on Binance Smart Chain, Ethereum, and Polkadot. It offers a simplified approach for users to engage in derivatives trading. Through the platform, they can easily create positions, settle options contracts, and enter futures contracts, among others.

    Oddz abstracts several functions in derivatives trading such as accessing features like call and put options, conditional market, and swap contracts. There are different stakeholders unified by the platform, including arbitrageurs, hedgers, and speculators.

    Products of Oddz Finance

    Leveraging and Hedging Options – Traders can make either call and put options on the protocol. In Call options, traders are given the ability to purchase underlying assets listed on the protocol based on a specified price within a particular time period. In Put options, traders can determine a specific price in selling a particular asset within a time period.

    Oddz Finance products- call and put options
    Oddz Finance products- call and put options (Image credit: Oddz Finance litepaper)

    Conditional and Perpetual Tokens – Users can create and trade conditional tokens which can be valued based on any standard that is tied to it, say political, sporting, and other similar events. They can also trade either long or short through the protocol as supported by the platform’s high liquidity.

    Attributes of Oddz Finance

    • Blockchain Agnostic -The platform can facilitate user trades regardless of the blockchain that they belong to. Because the platform is also designed to be multi-chain, DeFi platforms from other networks can be easily deployed on Oddz.
    • Customizable – Through the implementation of smart contracts, users can freely change the parameters covering their automated trading positions according to their own preferences.
    • Economical – Unlike most leveraging platforms, Oddz does not charge gas fees for each transaction made on the platform.
    • Low Barrier – The platform allows users to leverage any amount in on-chain option trading products without the need for any authorization or third-party approval.
    • Reliable – To help traders establish informed positions on the market, the platform has integrated a built-in oracle which feeds real-time blockchain data to the network.

    Liquidity Pool

    In order to further support the liquidity of the platform in facilitating leveraged trading, users can also choose to lock a portion of their assets using Oddz’s USD-pegged stablecoin (oUSD). These will be used to supply liquidity for both call and put options.

    Liquidity providers can withdraw their stake at any given time. However, a period of at least 14 days is required before they are given the opportunity to collect their share in the premium fees of the network.

    Providing liquidity on Oddz Finance
    Providing liquidity on Oddz Finance (Image credit: Oddz Finance Litepaper)

    There will be multiple liquidity pools for the protocol. It has a maximum threshold for staking and liquidity providers who staked ODDZ tokens will receive their portion of the platform’s collected settlement fees. However, there is a minimum stake requirement for users joining the pools.

    Apart from the distribution of settlement fees to stakers of ODDZ or oUSD, there will be a portion of it that will be allocated to cover the gas fee for users to help keep its “zero gas fee” model.

    ODDZ Token

    ODDZ token is the platform’s native utility token. They can be used as a medium of exchange and to support other platform features such as governance, staking, reward distribution, referral incentives, and liquidity pools, among others.

    ODDZ will be mainly used to pay for transaction fees to help facilitate trades. They can also be staked in the liquidity pool to earn rewards.

    Since the platform is decentralized, ODDZ holders are given the right to vote on important protocol upgrades, modifications, and other community-based proposals.

    And if the users refer others to the platform, they are also entitled to earn rewards which are given out in ODDZ.

    Conclusion

    In order to take advantage of DeFi’s boom, the design of its protocols today must be aimed at lowering its barriers to entry and maximizing adoption. Here, the complexity and level of advanced understanding required to make transactions on a platform is worth considering. There are many projects that offer options trading to users but most of them still haven’t addressed these prevailing concerns so far.

    Oddz Finance is a welcome development in the derivatives and options trading market. Since its platform is user-friendly and it minimizes the barrier to entry from required capitalization, more traders can finally tap leveraged trading in their own portfolio. Another advantage in using the platform is that if users wish not to participate in leveraged trading, they can just stake their holdings and still earn additional rewards in doing so.

    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.

  • DAOVentures ($DVG): Automated advisors and Robo-fund managers in DeFi

    DAOVentures ($DVG): Automated advisors and Robo-fund managers in DeFi

    DAOVentures ($DVG) aims to simplify and create easy to use solutions for people to invest and manage their Decentralized Finance (DeFi) portfolio.

    DeFi products are difficult and complex for users to interact with, especially for newbies. Quite a number of investors still have some distrusts about the space. Others have to deal with the possibility of risk and expensive gas fees. However, DAOventures was able to identify these problems and come up with solutions.

    What Is DAOVentures?

    DAOventures is a decentralized protocol that helps liquidity providers invest in DeFi projects by employing automated advisors and robo-fund managers to help users invest in DeFi products with great returns.

    DAOventures relies on its beliefs as a guide to provide exceptional services for investors. The system uses the best strategies to consistently monitor performance, manage risk/reward ratios, as well as audit smart contract security. Some perks of the DAOventures platform include:

    What is DAOventures (Source: DAOventures website)

    Proper Risk/Reward Management

    The risk/reward ratio is a very important aspect of any trade or investment. DAOventures strategies provide users with wide-ranging products based on their risk exposure level: low, medium, or high risk so newbie and intermediate traders can make more informed decisions before executing a trade.

    Curated Information

    The protocol’s team investigates, analyzes, and backtests new Dapps to sift out the bad from the good. They do this by matching up all protocols with the best performing algorithm to meet the demands of investors.

    Security

    The core value of the protocol is security. The platform audits and reviews all products to ensure that it is safe to deploy their crypto products.

    The platform allows audits by third-party firms and performs other security tests to ensure that users’ funds are secure. Since DAOVentures is a decentralized platform, it does not own any private keys as funds are secured by users themselves.

    Transparency

    DAOventures’ investments are transparent since they can be viewed on the blockchain so users could see where and how their money is being moved, as well as be able to review and improve their portfolio to properly track their capital.

    Reduced Gas Fees

    Users can save a considerable amount of gas when they use DAOVentures. The protocol allows for a better gas calculation through properly managed pooled investment funds.

    DAOventures Tokens ($DVG)

    Liquidity providers can earn DAOventures governance tokens, denoted as DVG, which allow them to cast votes regarding changes in the protocol’s rules. The Launch for the DVG token would be done on Polkastarter, an auction protocol that is based on the Polkadot blockchain and is used for fund-raising by DeFi projects.

    DVGs are basically “tokens” on a smart contract that are developed to follow a fixed set of rules, which can be amended or upgraded through a consensus voting mechanism integrated into the smart contract. 

    The utility of DVG tokens is numerous. It will be used to incentivize LPs to drive long-term demand of the token, as well as the involvement of the DAOventures community. Users holding $DVG will benefit from staking incentives such as lower transaction fees and rewards.

    DAOventures will release a total supply of 444,444 DVG tokens for public sale. The platform will offer a discounted sale of DVG token to POLS token holders and the public before it is listed on Uniswap.

    How Does DAOventures Operate?

    The protocol works similarly to a normal VC firm in the sense that it searches for better openings for investors to create higher earnings. The technological tools that the platform uses are built through a combined effort from the professional teams.

    DAOventures Test App (Source: DAOventures ‘Test Beta App’ )

    These tools explore deep into the markets and help liquidity providers deploy their funds into desirable DeFi investments. Examples of the tools used include an automated balancer, liquidity miner, arbitrage bot, and swap token.

    DAOVentures employs smart contracts and robo-traders to help investors put money in the top-performing DeFi assets to get the best results. In addition, before smart contracts are deployed for use on the platform, they are first audited and vetted to ensure compliance.

    The decentralized processes of the platform help to eliminate counterparty risks. DAOVentures ensures that users have full control of their funds and wallets. As a result, users can interact with smart contracts individually.

    While other crypto investors find it difficult interacting with DeFi protocols, DAOventures employs algorithms to manage investors’ funds. Robo-advisors distribute all the pooled funds and deploy them to the DeFi protocol with the best ROI%.

    The products and services offered by DAOventures include:

    Yield Farming

    The platform offers various yield farming strategies for users in order to earn returns. Users can choose a yield farming strategy based on their risk level and profit target. The protocol provides users with investments based on their risk appetite.

    Lending And Borrowing

    DAOVentures plans to integrate with lending and borrowing protocols such as Uniswap in the near-term. This will help them better manage investor funds and expand the reach of DAOventures operations.

     Automated Defi Manager

    Through robo-advisors, users have the benefit of investing in the best DeFi projects and products. Investors can profit from the platform’s structured products and yield-farming aggregation via automated managers.

    Robo-trade Strategies – AMM (Source: DAOventures High-level product explanation ppt)

    Conclusion

    With the growth DeFi has seen, there is little doubt that its ecosystem is the future of finance. However, DeFi’s rise in popularity also brought along several opportunities, risks, and benefits. With that in mind, DAOventures continues to play its part to speed up DeFi’s transition to the much-anticipated future by constantly providing investors with proper solutions. The protocol aims to leverage cross-chain interoperability to provide its users with the best services.

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

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

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

    Tutorials and guides for the ESSENTIAL DEFI TOOLS:

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

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

  • Moonbeam ($GLMR $RIVER): expanding to multi-chain with Polkadot

    Moonbeam ($GLMR $RIVER): expanding to multi-chain with Polkadot

    For a long time, decentralized platforms have been operating in silos, but now, developers are looking for ways to interface with different blockchain platforms. Apart from interoperability, new projects are looking for ways to power the seamless movement of tokens between chains.

    One such project is Moonbeam ($GLMR, $RIVER), a platform that works under the belief that the future of distributed systems is multi-chain. The project brings smart contract technology to another level and takes developers, end-users, collators, and other network participants along with it. Moonbeam’s entry into the scene provides a crucial pillar to decentralized finance (DeFi) platforms.

    For example, SushiSwap has already transferred its core exchange protocol on Moonbeam, specifically on the Moonbase Alpha TestNet. Below, we explore the platform, including how it offers Ethereum developers an easy way out.

    Background

    PureStake, a master in developing reliable, secure, and next-generation blockchain infrastructure, is behind the Moonbeam project. PureStake’s team experience spans from managing high-end data centers, as-a-service platforms, and networks for institutions strictly bent towards security and availability.

    Top PureStake team members include Derek Yoo, Stefan Mehlhorn, and Tim Baldwin. Yoo, the CEO, has 20 years of experience in software development and cloud systems. Mehlhorn is the chief operating officer with 25 years in technical operations in various top companies such as Samsung.

    Before joining PureStake, he was the CEO of Collego and Parmessa. On the other hand, Baldwin is PureStake’s vice president of engineering and has 20 years of experience leading DevOps and application development teams.

    What is Moonbeam Network?

    Moonbeam is a developer-focused decentralized network providing tools to enhance compatibility with the Ethereum blockchain. Notably, the network fully implements the Ethereum Virtual Machine (EVM), an application programming interface (API) with Web3 compatibility, and provides bridges to enhance connection with Ethereum-based protocols.

    With these functionalities, developers can deploy solidity-based smart contracts and decentralized application (Dapp) frontends on Moonbeam with little to minimal modifications.

    Additionally, Moonbeam is part of the Polkadot ecosystem, where it operates as a parachain.

    Consequently, it taps into Polkadot’s security and connects to other networks on Polkadot.

    Building on Moonbeam can either be done by employing a standalone node on the network or connecting to Moonbase, a testnet environment. The protocol supports major wallets such as MetaMask and MathWallet.

    Note that Moonbeam’s Ethereum compatibility allows it to support other wallets that work with the Ethereum blockchain. In addition, it works with major Ethereum tools such as Remix, Truffle, HardHat, Web3.py, Ethers.js, and Web3.js. Additionally, for projects requiring interaction with external data, Moonbeam supports leading oracle platforms like Band Protocol, Chainlink, and Razor Network.

    How Moonbeam Works

    Moonbeam employs a proof-of-stake (PoS) mechanism for block production and transaction confirmations. However, it leverages Polkadot’s PoS model that features validators and collators. Collators collect transactions from Polkadot’s parachains, such as Moonbeam. They then create state transition proofs for use by validators on the relay chain.

    Collators are selected depending on their stake in the protocol. However, the staked amount is slashed in case a collator acts dishonestly. Notably, network users can delegate their tokens to collators who share their block rewards with the delegators or nominators. The high the stake, the stronger the network security, the higher the chance of being selected as a collator.

    Currently, the Moonbeam network caps the maximum number of nominators that can delegate their tokens to 10, and a nominator can stake their tokens with a maximum of 8 collators.

    Each block production round takes roughly two hours and is made up of 600 blocks. The staking rewards are delayed for two rounds.

    Observe that collators charge nominators for their service as soon as they are successfully nominated to be block producers. Therefore, during reward distribution, collators remove the commission after getting the block rewards and then distribute the rest to nominators depending on their delegated amount.

    Glimmer ($GLMR) and River ($RIVER) token

    Moonbeam has 2 utility tokens: Glimmer ($GLRM) and River ($RIVER). The major difference between the 2 tokens is that they are respectively deployed on the Polkadot and Kusama relay chain.

    Glimmer and River token utilities
    Glimmer and River token utilities (Image credit: Moonbeam network)

    Glimmer token (GLMR)

    The Moonbeam platform has a base asset called Glimmer (GLMR), which has specific functionalities throughout its ecosystem. Glimmer works on the Moonbeam network and the Polkadot relay chain.

    GLMR is used to:

    1. Pay transaction fees.
    2. Support network operations.
    3. Reward collators.
    4. Power on-chain governance.
    5. Support gas metering of smart contract execution.

    GLMR has a genesis token supply of 10 million and an annual inflation rate of 5%. The token distribution goes to seed funding, strategic sale, public sale, parachain bond funding, treasury, development, partners/advisors, founders, among others. Moonbeam tackles the 5% inflation by burning 80% of the transaction fees.

    River token (RIVER)

    The RIVER token is deployed on Kusama and acts as a “CanaryNet” on the network. This means the token utility behaviours on Moonriver will mirror Moonbeam.

    Governance on Moonbeam

    Moonbeam employs community governance through the Glimmer token. Token holders range from developers, users, collators, and contributors. The governance aspect defines how token holders interact with proposals, referendum, voting, enactment, lock period, and delegation. Moonbeam takes a layered approach to governance.

    Most importantly, governance is conducted on-chain. Some critical governance components include:

    1. Referendum – This is made up of the proposal with the highest number of votes. A proposal contains suggestions to change Moonbeam parameters, such as code upgrades and governance parameters. The platform supports a maximum of five proposals at each referendum.
    2. Voting – Voting is done by token holders. Notably, the weight of each vote depends on the amount of staked tokens.
    3. Council – This is a group of participants that propose referenda and vet community-suggested proposals. However, council members have special voting rights and are voted in by GLMR holders.
    4. Treasury – The treasury holds funds from users who wish to submit a proposal. The council can either approve or reject such proposals. Unfortunately, in case of a rejection, the proposer loses the amount held in the treasury.

    Conclusion

    Moonbeam is not a typical EVM implementation. Instead, it adds to the existing Ethereum features such as staking, on-chain governance, and inter-blockchain connections.

    Notably, Moonbeam’s community governance framework employs a layered structure. As such, it ensures only the most viable proposals make it to the voting stage. Additionally, integrating EVM and Web3 makes it easier for developers to transfer existing projects to the network with minimal changes.

    On the other hand, GLMR helps power the network by enabling staking, payment of transaction fees, and rewarding collators. Note that the network’s use of the Polkadot PoS consensus mechanism provides scalability and high transaction speeds.

    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.

  • Best Crypto Savings Accounts 2022

    Best Crypto Savings Accounts 2022

    Let’s be honest, traditional banking methods are starting to lose their value. Brick-and-mortar banks are paying disappointingly low rates on savings accounts these days. So if you want a higher return for lending out your money, it might just be the right time to explore alternative routes to engage your idle cash.

    More and more investors are exploring the advantages of cryptocurrency savings accounts. A crypto savings account allows you to enjoy the benefits of an old-school savings account but with the growth potential of cryptocurrencies.

    In this guide, we will explore some of the best crypto savings accounts for you to earn interest with your crypto assets.

    What is a Crypto Savings Account?

    The concept of crypto savings accounts are similar to traditional savings accounts. You put crypto assets into your crypto savings account, which are then lent on your behalf by a third party. The difference with a traditional account is that instead of dealing with fiat currency you will keep your funds in the cryptocurrency of your preference. 

    If you are looking for high returns but don’t want the risk of volatility in cryptos like Bitcoin or Ethereum, you can also choose to earn interest on stablecoins that offer high rates with more stability. Stablecoins are fixed to the value of the US dollar so you will not be exposed to cryptocurrency price fluctuations. 

    The best crypto savings accounts offer up to 12% interest on stablecoins and lets you earn 6% interest on popular assets like Bitcoin and Ethereum.

    What are the Best Crypto Savings Accounts for 2022?

    With so many players in the market, it may help to compare crypto interest rates side-by-side before deciding on where to put your money. That being said, high interests should not be the only consideration for choosing a crypto savings account. Some other factors to consider are supported coins, compound interest, loan-to-value rates, withdrawal restrictions, transaction fees and security. You should always choose a platform that best fits your needs.

    Let’s have a look at some of the best and most trusted crypto savings account providers for 2022.

    Nexo

    nexo crypto savings

    Nexo boasts a high yield of interest, as high as 20% APY, on a wide range of cryptocurrencies. It also has a minimum lock-up time below 24 hours, which means that the interest is paid on a daily basis. The platform also has security measures like two-factor authentication (2FA), login alerts, and withdrawal confirmation.

    With no account minimums and a tiered withdrawal system, Nexo allows you to make instant transfers with no fees or restrictions. You may withdraw any amount for free up to the percentage of NEXO tokens you possess. A Mastercard debit card is also available and accepted by millions of merchants worldwide.

    NEXO token owners earn bigger interest rates on savings accounts. Daily compounded interest is credited to your account, so there’s no need to wait a month to begin earning passive income.

    Despite the fact that the platform is jam-packed with features, it is geared toward novices. It is simple to learn and even easier to get started.

    Highlights:

    • Daily payouts
    • No minimum deposit
    • Tiered withdrawal limits
    • Clean layout and shallow learning curve

    Consensus:

    Best for daily interest and beginners

    Gemini Earn

    gemini earn crypto savings

    Since its inception, Gemini has best been known for its unbeatable high-level security. When a certain amount is deposited, a vast majority of it is stored offline, in an air-gapped cold storage system, and only a small amount is stored in hot wallets. This minimizes the chances of theft and malware attacks. Gemini also provides two-factor authentication (2FA) and bug bounty to prevent hacking. According to reports, Gemini has secured the highest amount of insurance, around $200 million.

    With Gemini Earn, you can receive up to 8.05% APY on your cryptocurrency, including stablecoins. Gemini is highly rated, secure, and simple to use for basic functions like making a trade or linking to external bank accounts. There are some good educational tools available on the website and app and it also offers competitive rates, a broad variety of cryptos, and a solid yield on stablecoins.

    Gemini is a sophisticated trading platform that is ideal for amateur and experienced traders and investors of all skill levels. However, the fee structure for small transactions is expensive, as is the case with most exchanges. There is no linked debit card but you can shop at a variety of internet retailers through their mobile app.

    Highlights:

    • Most safe and secure provider
    • No minimum deposit
    • No withdrawal fee, but costly transactions fee and convenience fee
    • No collateral required for loans

    Consensus:

    Best for security

    Binance Earn

    Binance earn crypto savings

    Binance Earn is the one-stop crypto interest solution from Binance. With Binance Earn, you get a complete suite of staking and savings products for earning passive income on your crypto holdings without any trading involved. There are more than 60+ cryptocurrencies and stablecoins to choose from and you can earn interest under fixed or flexible terms.

    Users can select between regular savings products, staking, and DeFi solutions, each with its own risks, terms, and returns. These include Savings with flexible or fixed terms, Locked Staking, DeFi-Staking, ETH 2.0 Staking, Liquid Swap, Launchpool, and the BNB yield aggregator Vault.

    If you’re not interested in trading but want to increase your holdings, the interest-bearing products from Binance are worthy of choice. While the many features can be overwhelming at first, the savings and staking solutions from Binance could potentially create a passive income if you’re willing to learn how to use them.

    Highlights:

    • Flexible and locked terms
    • Minimum deposits varies
    • Largest cryptocurrency exchange in the world
    • Overwhelming for beginners

    Consensus:

    Best for experienced traders looking for flexibility

    YouHodler

    youhodler crypto savings

    YouHodler is a European bank-like crypto asset management platform with offices in Cyprus and Switzerland. The platform focuses on long-term cryptocurrency holdings, offering attractive crypto savings accounts with high compound interest of up to 12.3% APR and crypto-fiat loans with high loan to value ratios of up to 90%.

    YouHodler has no lock-up periods, and investors are allowed to withdraw or sell their assets at any given time. Accumulated interest is paid out once every week, and the weekly interest period starts compounding as soon as you deposit funds into your savings account.

    YouHodler keeps your digital assets secure with insurance, two-factor authentication, withdrawal stopping feature, and by using a combination of hot and cold storage. It also has bonus features like crypto-backed loans, margin trading, and it also supports NFTs.

    Highlights:

    • Weekly payouts
    • No lock-up period or special tokens required to get the best rates
    • 5 USD minimum deposit
    • Zero weekly or monthly fees

    Consensus:

    Best all-in-one

    Coinloan

    coinloan crypto savings

    CoinLoan ranks next to Gemini when it comes to the safety and security of your digital assets. Apart from their security features, CoinLoan also offers about 26 types of cryptocurrencies offering APYs between 3% to 12.3%, which vary depending on the type of cryptocurrency. 

    Interest for crypto is accrued daily on your deposit and credited directly to your wallet on the first day of each month. There is no minimum deposit requirement.

    Coinloan is a European-based cryptocurrency lending and borrowing platform licensed and authorized in the EU. For security, CoinLoan stores crypto-assets in offline, cold, multi-signature wallets with the digital asset trust custodian BitGo with $100 million worth of insurance from Lloyd’s. Furthermore, all transactions are done in accordance with Cryptocurrency Security Standard (CCSS).

    Highlights:

    • Licensed and certified platform with fund insurance
    • No minimum deposit
    • Intuitive and easy-to-use platform
    • Excellent customer support

    Consensus:

    High yields and second best for security

    Coinbase

    coinbase crypto savings

    Coinbase is one of the most well-known names in crypto wallets as well as holding and trading cryptocurrency. They also cater as one of the best crypto savings accounts for newbies. Coinbase does not loan out the currency that you invest in, and this is what makes it a great alternative to traditional banks because there are fewer restrictions when it comes to funding withdrawal.

    The crypto savings account provides a wide range of currencies with small minimum deposits needed. Coinbase has a simple, top-rated mobile app with additional features. There is a wide range of beginner tutorials, crypto hints, and lessons in the app. You may also get free cryptocurrency by enrolling in certain courses.

    The current APY for stablecoins is around 4% compounded monthly. Because Coinbase is said to be more rigorous in its lending procedures, the yield is relatively modest.

    Coinbase charges a high 0.50% fee on every transaction, which few people are willing to pay for tiny purchases. On most currencies, interest rates are little. More experienced traders may want more sophisticated trading tools and low trade costs.

    Highlights:

    • Well-known and trusted platform
    • Easy-to-use for beginners with plenty resources and tutorials
    • Low yields
    • High transaction fees

    Consensus:

    Best for beginners

    Conclusion

    Cryptocurrencies are quickly becoming mainstream, and an increasing number of providers now offer crypto savings accounts that pay monthly or daily dividends. These platforms provide a great investment opportunity for crypto owners looking for ways to generate passive income.

    With such a high yield, it’s no surprise that crypto owners are increasingly demanding reliable crypto savings accounts to put their money to work for them. However, before you invest your hard-earned savings in any crypto savings account, there are many factors to consider.

    If chosen wisely, crypto-based savings accounts can provide pretty good long term returns. 

    It all depends on the choices you as an investor make in terms of the currencies you choose, the duration and size of your investment, and your risk-taking ability.

  • Aries Market Guide

    Aries Market Guide

    Aries Market is a decentralized cryptocurrency exchange built on Move, the same programming language used by Aptos to build its blockchain. Aries Market provides a wide range of decentralized finance (DeFi) products such as borrowing, lending, and margin trading on 1 single platform. Products include lending, borrowing, margin trading, swapping, and account risk management.

    What is Aries Market?

    Aries Market is a decentralized crypto exchange offering a wide range of DeFi products on a unified platform. On Aries Market, users can have a unified margin account on which they can borrow from various liquidity pools, earn interest on deposits, and do swaps and trades.

    What products are available on Aries Market?

    Aries Market is currently in a “soft launch” phase where all its features are not available yet. At present, the following products are available on Aries Market: lending, borrowing, swaps, and global account management. Notably, trading features are not yet available on Aries Market.

    There are, however, deposit limits for the available asset pools on Aries Market. The limits are as follows: 4 million zUSDC (LayerZero), 4 million USDC (Wormhole Bridge), 500,000 APT, 10,000 SOL.

    Aries Market
    Aries Market

    Supported assets

    Aries Market currently supports the following assets: zUSDC (LayerZero), USDC (Wormhole Bridge), APT and SOL. The team expects more assets to be listed soon.

    Coming soon on Aries Market

    The Aries Market team expects the following features to be available in the coming months:

    • Full set of features will be available on Aries Market;
    • integration of Aries Market with Aptos; and
    • Gamified events and campaigns on the Aries Market and Aptos community.

    Learn more about Aries Market

    Twitter

    Medium

    Website

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

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

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

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

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

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

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

    What is Layer 2 and How Does it Work?

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

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

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

    Sidechains: Polygon Network

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

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

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

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

    Rollups Explained: Optimistic Rollups & Zero Knowledge Rollups

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

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

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

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

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

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

    Optimistic Rollups: Arbitrum, Boba & Optimism

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

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

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

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

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

    Will Ethereum 2.0 Make Layer 2 Solutions Irrelevant?

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

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

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

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

    Final Thoughts: Why Are So Many Solutions Needed?

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

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

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

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

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

    Sources:

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

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

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

    https://medium.com/general_knowledge/rollup-rollup-top-layer-2-compared-arbitrum-vs-optimism-vs-polygon-4a469389faef
  • What are “Money Legos” in DeFi? Composability Explained

    What are “Money Legos” in DeFi? Composability Explained

    What is Composability in DeFi?

    Decentralized finance (DeFi) has revolutionized financial services, creating new possibilities unlike anything that exists in traditional banking. DeFi protocols allow you to transfer value, exchange tokens, take out loans, provide liquidity, earn yields and so much more. As the market expands, it is likely that even more innovations will surface.

    This is because of how smart contracts work. The open-source and permissionless nature of blockchains allows anyone to code their own contracts or even integrate a component of another protocol in their own application. As a result, the applications built on a smart-contract network can run interchangeably.

    This is known as “composability” — the interoperability of DeFi protocols resulting in efficient and creative financial services and products for users. It is the core basis of DeFi and is what helped the ecosystem grow so quickly.

    What are “Money Legos” in DeFi?

    To understand how composability works in DeFi, we can view components of DeFi protocols as Lego blocks, giving rise to the term “money legos.” Each building block has its own functionality such as borrowing, lending or staking assets, just to name a few. Developers can stack multiple protocols together like Aave, Compound, Yearn, Curve or Synthetix to create a new DeFi protocol, just as you would a Lego set.

    For developers, money legos save a lot of time and complications around building a new decentralized application (DApp). They do not need to start from scratch as they can simply integrate existing money legos into their own. What money blocks provide are solutions to more complex processes which require more steps than usual.

    Moreover, developers can build smart contracts that can operate the legos in any order, be it one before or after the other, or in parallel. For example, by joining the money legos together and then specifying the order of events through a smart contract, users could

    1. Put up collateral for a loan on Aave
    2. Stake half of the loaned amount on Curve
    3. Trade half of the loaned amount on Uniswap
    4. Pull out both amounts simultaneously and take profit
    5. Pay off the loan on Aave

    This is just one type of scenario. As you can see, there are infinite possibilities with money legos. It is up to your creativity how much use you can make of the combination of their functions to optimize your crypto. Furucombo is a great platform to experiment different possibilities of DeFi money legos.

    Why “Money Legos” Matter?

    “DeFi” is a buzzword that gets thrown around a lot. People often associate DeFi with low fees and yield farming, but do not exactly know how the underlying infrastructure works. Therefore, it is important to learn about money legos as they are the building blocks for programmable money, hence its name. While developers can compare and choose specific DeFi protocols to cut down on fees when building new applications, investors can better optimize and manage their crypto by having a better understanding of money legos.

    As savvy investors, we know that key performance indicators (KPI) of a healthy market and ecosystem are trading volume and activities. As such, money legos are powerful tools that can expand the potential possibilities of the ecosystem. They add to the utility of each existing protocol, while improving the blockchain’s network effect.

    In other words, each time a new protocol is created in the DeFi space, a new money lego is born that can also be used to offer more new services within the sector. These new protocols will offer faster and more efficient services, giving investors more ways to generate profit. For each new money lego, hundreds or thousands of new combinations become possible.

    However, as of now, composability mostly favors protocols of the same blockchain. For example, DeFi protocols on Ethereum can only interact with other protocols on Ethereum. Same goes for Solana or Cardano. Perhaps in the future, true multi-chain interoperability will allow protocols on one blockchain interact with a protocol on another blockchain. This means that crypto will become more accessible, further increasing their adoption.

    Risks of “Money Legos” Composability

    Since DeFi protocols can seamlessly integrate with each other, this means that the entire ecosystem hinges on each of its money legos. If one of the core money legos is compromised, it could lead to a chain reaction, potentially affecting other integrated applications.

    This is possible because of the interoperability between the DeFi protocols. For example, you can carry out complex strategies like borrowing Synthetix (SNX) from Aave, depositing SNX into Synthetix to mint sUSD, then swap sUSD for DAI on Curve. Now if any one of these protocols is attacked, then all of their liquidity pools will be severely affected.

    Moreover, certain protocols also have wrapped crypto tokens (e.g. WBTC, renBTC, wETH) that are pegged to the value of another crypto. This means that you not only have to trust the protocol you deposit your funds to but all the others it may be reliant upon.

    Key Takeaway

    It is important to understand money legos as they are the building blocks of the DeFi ecosystem. Money legos help developers create new protocols, offering faster and more efficient financial services for DeFi end-users. It also helps investors get the best trades and the best yields when it comes to earning from DeFi protocols. That is the whole concept behind the idea of composability. Seamless interoperability among components helps to build the best and most creative solutions.

  • Serum DEX ($SRM): A Guide to Using Aldrin and Raydium on Serum

    Serum DEX ($SRM): A Guide to Using Aldrin and Raydium on Serum

    Serum ($SRM) is a decentralized exchange (DEX) that offers cross-chain trading at a speed and efficiency that rivals centralized exchanges. It runs on the Solana blockchain but will be fully interoperable with Ethereum as well as Bitcoin.

    Learn how to trade on Serum DEX with Aldrin and Raydium in this video:

    There are several factors that make Serum unique. Serum is a protocol that is fully decentralized down to the core, unlike most decentralized finance (DeFi) platforms today. In fact, it does not utilize oracle price feeds at all. Instead of using the traditional automated market maker model, Serum DEX facilitates decentralized automated limit order books. Serum end-users can place orders with fully automated matching through an on-chain order book. This allows traders to have more control over their trades.

    What is the difference between Bonfida, Aldrin, Raydium, and all these markets listed on Serum?

    When you go onto the trading section on Serum, you are presented with all these markets such as Bonfida, Mango Markets, Aldrin and Raydium to name a few. But what is the difference between all these markets listed on Serum DEX? And are they the “real” Serum?

    Well, it turns out all these markets are the “real” Serum. These markets are decentralized apps (dApps) available on Serum DEX because the DEX gives users the opportunity to create their own custom financial products and dApps. These dApps can be found by entering the Serum portal and are part of the Serum ecosystem with their own interface, each competing with the other to provide the best user experience.

    In this article, we will explore the functions of two of the most popular dApps available on Serum: Aldrin and Raydium.

    How to use Raydium on Serum DEX

    What is Raydium?

    Raydium is the first automated market maker (AMM) built on Solana, enabled with lightning-fast trades, shared liquidity, and yield earning. The swap function is the simplest function available and the most user-friendly for beginner traders.

    How to trade on Raydium- Swap feature?

    To access this feature, simply click on the ‘Swap’ tab and you will be redirected to the page below.  

    raydium step 1 swap tab
    Step 1: Swap tab

    Next, you will need to connect your wallet. Once your wallet is connected, you can expand each drop-down menu to select the tokens you would like to swap. ‘From’ is the token you will pay and ‘To” is the token you will buy during the trade.

    After selecting the tokens, you can input the amount you would like to pay and receive an estimate of the amount you will receive.

    raydium step 2 insert amount
    Step 2: insert amount

    Before confirming the trade, you will want to take note of the price impact. Price impact is the difference between the market price and estimated price due to trade size. Typically, you would want minimal price impact so if the amount is 1% or 2%, you might want to reconsider the trade. This is especially important for tokens with a smaller market cap.

    To proceed with the trade, simply click on the Swap button and approve the transaction. The transaction will then be processed and completed.

    Raydium’s swap feature is simple to use and the speed of the Solana blockchain allows transactions to complete almost instantly. However, the tokens you can swap are limited and because of its simplicity, more experienced traders do not have access to additional features such as limit orders. 

    To access these more advanced features, we like to use Aldrin.

    How to use Aldrin on Serum DEX?

    What is Aldrin?

    Aldrin is a decentralized exchange (DEX) on Solana that seeks to simplify the process of digital asset trading for both beginners and advanced traders alike. There are many token pairs that can be traded on the exchange. The dashboard for traders is also pretty comprehensive and informative, with an option for users to review important token data before they conduct their trades. Aldrin makes it easier for traders to find the website of a token, its trade analytics, and other pertinent data about it.

    How to trade on Aldrin?

    To trade on Aldrin, head over to their DEX and make sure you have the Trade tab selected.

    aldrin step 1 trade tab
    Aldrin Step 1: trade tab

    Connect your wallet and select the token pair you would like to trade. For this example, we will use SOL/USDC.

    aldrin example SOL
    Adrin example SOL

    Under the Order Book section, you can see all the current buy and sell activities by other traders. 

    Adrin Step 3: Book section
    Adrin Step 3: Book section

    Aldrin’s order book allows both limit orders as well as market orders. 

    Aldrin Step 4: Select Limit Order or Market Order
    Aldrin Step 4: Select Limit Order or Market Order

    Market orders are transactions meant to execute as quickly as possible at the current market price, which may fluctuate. Limit orders allow you to set the maximum or minimum price at which you are willing to buy or sell, and the transaction will only be executed when the target price is achieved.

    How to place a market order on Aldrin?

    To place a market order, select the ‘Market’ tab and input the amount you would like to buy or sell.

    Aldrin Step 5: Input amount
    Aldrin Step 5: Input amount

    Once you have entered an amount to buy or sell, you will see the amount you will receive for the trade. Then, you can click on the Buy or Sell button to submit the trade. Upon approving the transaction, the trade will be executed.

    For first time users, it is important to note that after the trade has been executed, the funds will remain in your trading account and will not return to your wallet until you have settled your balances on the exchange.

    Aldrin Final Step: Settle Balance
    Aldrin Final Step: Settle Balance

    Simply click on Settle All and you will be able to see your funds in your wallet.

    How to place a limit order on Aldrin?

    To place a limit order, select the ‘Limit’ tab then input the amount you would like to buy or sell and the price you want to buy or sell it at.

    Aldrin Limit Order Step 1
    Aldrin Limit Order Step 1

    Once you have submitted the trade, you can go into the Open Orders tab to view all your orders.

    Aldrin Limit Order Step 2: View Order
    Aldrin Limit Order Step 2: View Order

    If you wish to cancel the order before it executes, you can do so by clicking on the Cancel button.

    Staking on Aldrin

    Staking is a passive way to grow your crypto holdings by securely locking up your selected crypto holding in return for tokenized rewards. The more tokens you stake, the more rewards you can earn. Aldrin allows you to stake RIN and mSOL tokens.

    Head over to the Staking tab to access this feature. Make sure your wallet is connected.

    Aldrin Staking Step 1
    Aldrin Staking Step 1

    Click on View to select the token you would like to stake.

    Aldrin Staking view order
    Aldrin Staking view order

    You will be able to see the estimated staking rewards, in this case it is 35.66% APR (Annual Percentage Rate). Below it, you can see the APR amount is split into two. The first APR is calculated based on fixed treasury rewards and the second APR is calculated based on the current token price and the average AMM fees.

    Enter the amount of tokens you would like to offer and click on Stake. The entered amount will show up in your Total Staked. Staking rewards are generated hourly and you can see the accumulation in the Rewards section. 

    Staking lockup lasts for one hour from the time of deposit. You will not be able to withdraw your tokens until the lock is lifted. You may click on Unstake All to enable termination. 

    Staking rewards are calculated hourly. These are then accumulated and paid out on the 27th of each month along with AMM fee revenue. You can add these new funds to your wallet by clicking the Claim button.

    Conclusion: Main features and advantages of Serum DEX

    Serum DEX is a very exciting project on the DeFi scene with a lot of promise. It has several advantages over other DeFi-based exchanges at the moment, which include:

    • Lightning fast speed
    • Low cost fees
    • Full decentralization
    • Cross-chain support
    • Fantastic user interface (UI) and user experience (UX)

    It is also more scalable than almost any other DeFi platform in existence, made possible by the Solana blockchain. As more users join the Serum ecosystem, it will be interesting to see where this project can go and the innovations that will arise from it. 

    To learn more about Serum, check out our Serum DEX guide and review. 

    Sources

    What is Serum? A DeFi Derivatives DEX Guide

    https://docs.aldrin.com/rin-token/how-to-stake-rin

  • Blockchain Crypto Browsers: What Are They & Our Top Picks (2022)

    Blockchain Crypto Browsers: What Are They & Our Top Picks (2022)

    Web browsers have become an integral part of life — without them, there would be no easy way to navigate the internet. Even if you are not familiar with the term “browser,” you have definitely used one before. Google Chrome, Apple Safari, Mozilla Firefox, and Brave are just some of the major browsers available today. 

    When you visit a website, your browser sends a request to the server where that website is located. The server sends back the content you see on your screen. Seems simple enough. But then what about crypto browsers? 

    What is a Crypto Browser?

    If you have not heard of a crypto browser, it is likely because many people also refer to them as blockchain browsers. Both terms refer to any web browser that supports Web 3.0 technologies, such as blockchain. More specifically, these browsers bridge the gap between today’s Web 2.0 experience and the decentralized internet envisioned by Web 3.0 enthusiasts. By making decentralized protocols accessible through a familiar interface, crypto browsers provide a critical gateway to the decentralized ecosystem, especially for newcomers.

    Almost all crypto browsers integrate a crypto wallet that allows you to buy, sell, or store your cryptocurrencies. While some of these crypto wallets are built into the browser (aka “browser-native”), many operate as extensions. For example, the MetaMask and Phantom browser extension wallets facilitate crypto transactions on the Ethereum and Solana blockchains, respectively. 

    In addition to crypto wallets, some crypto browsers integrate marketplaces for decentralized applications (dApps). Finally, certain crypto browsers also provide incentives that reward everyone who uses their browser. These incentives include crypto payments and mining rewards.

    How Crypto Browsers and dApps Interact

    Decentralized applications (dApps) are similar to the centralized apps found on your computer and mobile device. However, unlike centralized platforms such as Apple Music or Spotify, dApps are built on decentralized blockchain networks. Instead of using the HTTP internet language to communicate with the web, dApps communicate with the blockchain using smart contracts.

    Browser-based crypto wallets have become a common portal to Web 3.0 because they facilitate convenient dApp interactions. These dApps can be games, decentralized exchanges (DEXs), decentralized finance (DeFi) protocols, and more. Most of the dApps you access through a crypto browser will look like a regular website. However, you cannot interact with these platforms without a crypto browser. For example, the Uniswap DEX looks like a typical website on the front end, but to access the back end dApp, you will need an Ethereum-compatible crypto browser.

    It is important to note that browser crypto wallets are compatible with a specific blockchain. For example, MetaMask will interact with dApps built on Ethereum, while Phantom only connects with dApps on Solana. As a result, you may have to install more than one wallet extension on your crypto browser. If you prefer a more secure option, select a browser with a built-in wallet that is compatible with the dApps you will use most often.

    DApps That Can Be Accessed Using Crypto Browsers

    So you now know that crypto browsers allow you to interact with Web 3.0 technologies using a familiar interface. However, you might be wondering what kind of dApps you can access with your crypto browser — let’s take a closer look at some examples.

    Decentralized exchanges (DEXs) 

    DEX protocols such as Uniswap (Ethereum) and Pancake Swap (Binance Smart Chain) can communicate with crypto browser wallets. This functionality lets you hold crypto in a non-custodial wallet while keeping your funds available for trading.

    Borrowing and lending protocols 

    Similar to DEXs, borrowing and lending protocols can communicate with your crypto browser wallet. For example, if you connect your non-custodial wallet to the Compound protocol, you gain the ability to borrow or lend several different cryptocurrencies.

    Payment networks 

    Protocols like xDai Bridge and OmniBridge allow you to “wrap” cryptocurrency so you can use it on a faster, Layer 2 blockchain network. For example, you might connect your wallet to xDai Bridge to convert ether ($ETH) to wrapped ether ($wETH) on xDai.

    Games and non-fungible tokens (NFTs) 

    Crypto browsers can also enable access to gaming dApps and NFT marketplaces. For example, you might use your non-custodial wallet to visit the OpenSea marketplace to purchase an Ethereum-based NFT or the Binance Chain Wallet to play My DeFi Pet.

    Qualities of a Good Crypto Browser

    When it comes to cryptocurrency, privacy and security are the most important qualities to look out for. The platform you use for dApps and trading crypto carries most of the responsibility of keeping your wallet and identity safe. But you still need a secure browser that protects your passwords and browsing history.

    When deciding which crypto browser is best for you, consider the following questions. Does the crypto browser integrate privacy features like ad blocking, tracker blocking, or a VPN? In addition, does the crypto browser use a built-in wallet or rely on extension wallets? Finally, does the crypto browser issue incentives as crypto or mining rewards?

    • Built-in VPN  —  Several crypto exchanges, including popular ones like Binance and Kucoin, already let you trade crypto anonymously. If you want to take things a step further, getting a browser with a built-in VPN is a smart choice. The VPN hides your actual IP address and encrypts the traffic from your device.

    If your preferred browser does not come with its own VPN, you can always install one as an extension. Just make sure to install one with a solid reputation.

    • Built-in Wallet  —  For now, having a browser with a built-in wallet is more of a convenience than a necessity. You can store and keep track of your coins within the browser, saving you from sharing your data with another platform. 

    Do you want a browser that is an active part of your crypto operations instead of a conduit to a crypto platform? Getting one with a built-in wallet helps. But you should know that this is an emerging feature, and there are not many browsers that carry this feature yet. You will have to choose from a pool with limited options if this is important to you.

    • Fast  —  In trading, when the difference between profit and loss can be quick decisions during market changes, you do not want to be stuck with an unreliable, unresponsive browser. You need something fast and dependable. Thankfully, a lot of browsers are great at this. Several of them are built on the Chromium engine, the fastest in the world.
    • Tab Stacking  —  Another non-technical quality that serves cryptocurrency operations is tab stacking. Your research on different assets involves opening multiple tabs. It is easy to lose track of the exact website for a piece of information. 

    With tab stacking, you can arrange every tab according to your preference. You can open a stack that contains multiple tabs about Ethereum and another on Bitcoin. That way, if you need to find a piece of information, you know where to find it.

    The Best Crypto Browsers in 2022

    Knowing the essential qualities you should keep an eye for in a crypto browser, let’s explore some of the best browsers that fit the criteria.

    Brave

    Brave boasts two things: speed and privacy. Both result from its ad-stripping strategy. Even for non-crypto traders, Brave has emerged as a solid competitor among legacy browsers. What sets Brave apart is its aggressive anti-ad attitude. The browser was built to strip online ads from websites and its maker’s business model relies not only on ad blocking, but on replacing the scratched-out ads with advertisements from its own network. 

    Brave also eliminates all ad trackers — the page components advertisers and site publishers deploy to identify users so that they know what other sites those users visit or have visited. Trackers are used by ad networks to show products similar to ones purchased, or just considered. This is why you sometimes keep seeing the same ad no matter where you navigate.

    The Chromium-based browser calls its built-in ad and cookie blocker Brave Shield. It also allows you to choose if you want websites to recognize your device and script blocking. This ad-blocking feature not only makes the browser secure, but it also makes it faster. Since ad scripts are not allowed, websites tend to load faster. There is a built-in VPN too if you want to take your privacy to the next level.

    Aside from general security and privacy, Brave has a crypto wallet built into the browser. You do not have to install an extension or go to a website to access your coins. It also means you are not susceptible to phishing scams. Brave Wallet is CoinGecko sourced and has support for multiple coins, NFTs, and Web 3.0 dApps. If you already have assets in other wallets, such as Metamask, Ledger or Trezor, you can import them to Brave Wallet.

    Brave Rewards: Earn while you browse

    Brave browser’s Brave Rewards program lets you earn Basic Attention Token ($BAT) for free. Whilst Brave already has industry-leading ad and tracker removing features, it has a choice to allow users to view Brave Private Ads.

    Brave Private Ads are advertisements on the Brave browser that users can opt-in to view. Some examples of ads include BlockFi, Verizon, Etoro and Bitpay. These ads will be either a background image on a new tab, a card on your Brave News feed or push notification. But unlike other web browsers out there, Brave will reward users for viewing these ads.

    Users get the Basic Attention Token ($BAT) for viewing these ads. $BAT can be traded on exchanges with other cryptocurrencies and stablecoins, exchanged for gift cards, for tipping websites/content creators and more.

    Crypto Browser Project

    Crypto Browser Project is a brand-new browser dedicated to cryptocurrency launched by Opera. The Crypto Browser Project is currently available in beta on Windows, Mac, and Android, with an iOS version coming soon. The browser has Web 3.0 integration at its core to make it easier to interact with blockchains, providing features like a built-in crypto wallet, easy access to cryptocurrency/NFT exchanges, support for decentralized apps (dApps) and more. The aim is to simplify the Web 3.0 user experience that is often bewildering for mainstream users.

    A key feature is the built-in non-custodial wallet that will support blockchains including Ethereum, Bitcoin, Celo and Nervos from the get-go. The project has also announced partnerships with Polygon and other networks. The idea is to let you access your crypto without the need for any extensions, with the option of using third-party wallets as well. You can purchase cryptocurrencies via a fiat to crypto on-ramp, swap crypto directly in-wallet, send and receive it and check your wallet balance. It even has a secure clipboard that ensures your data security when you copy and paste.

    Another stand-out feature of the new browser is its “Crypto Corner,” which contains all the latest blockchain news, crypto-related podcasts, and vlogs and keeps track of upcoming airdrops and crypto events. The Crypto Browser Project also comes with a sidebar that takes you to Crypto Twitter, Discord, Reddit, and more, as well as Telegram and Whatsapp.

    Opera has said that the browser will be released as open source soon, adding that the goal is to “integrate these blockchains and decentralized domain naming systems into our crypto browsers, allowing you to enjoy them all.”

    Osiris

    Osiris is a blockchain-based browser that emphasizes easy access to decentralized apps and acts as a link between different blockchains. It comes with all the basic functions, clean and easy-to-use interface, and focuses on privacy. Osiris also supports peer-to-peer (P2P) file hosting similar to Brave browser. It is the world’s first web browser to work on its blockchain network. 

    Osiris browser comes with its unique crypto wallet called Metawallet. Not to be confused with the Metamask wallet, this wallet is embedded in the browser and only available on Osiris.

    The main advantage of Metawallet is that it acts as a layer 2 solution, allowing faster transaction speeds. It will also act as a link between different blockchains- all this without excessive transaction fees. It currently supports ETH, TRX, and ACE, with DOT and BSC coming soon.

    Osiris Armor is an in-built ad blocker that blocks intrusive ads on websites and YouTube videos. It will block all data collection and tracking scripts present in cookies. You can see all the ads and cookies it has blocked so far- the implementation works well and helps improve privacy. By blocking ads, Osiris is able to offer fast page loading and reduced mobile data charges while allowing users to access content without interruption.

    The Osiris browser supports various search engines that are interchangeable according to your preference. You can also personalize your browser with bookmarks and extensions without having to worry about personal data collection.

    Osiris also features optimized support for dAppstore. This is a marketplace where you can easily find and access various decentralized apps and projects. This integration with the Osiris browser allows these projects to reach a wider audience. It allows easier access while eliminating any security threats and issues.

    Opera Reborn 3

    Opera is a familiar name in web browsers. It is fast and helps save a lot of data which is why it has a very large user base. It also comes with a built-in ad blocker and personalized browsing that helps provide a better and tailored browsing experience. Opera recently launched a new version of its browser called the Reborn 3 with a built-in crypto wallet, a free unlimited VPN, and a Web 3 explorer for accessing blockchain apps.

    Opera Reborn 3’s multi-wallet allows you to store and swap tokens and cryptocurrencies. This wallet will act as your online identity on decentralized platforms where you can link your wallet address to sign in. Currently, this wallet supports networks like ETH, TRX, and CBK. Support for more networks will be added in time.

    Opera Reborn 3 also supports access to decentralized apps and websites, including the dAppstore, which is a huge marketplace for decentralized apps. These features are also available on mobile for Android and iPhone users.

    Tor

    Before cryptocurrency went mainstream, Tor had a bulletproof reputation as a private and secure web browser. It does not function like a typical browser. Instead, it routes your data through the Onion network (a series with random nodes), making your traffic untrackable and anonymous.

    Tor also encrypts your traffic thrice during this process. So, not only are you untraceable, no one can learn your identity or track your online behavior. This means that on top of using an anonymous exchange like Binance, no one can track your browsing history and traffic.

    The security features do not end there. Tor also comes with HTTPS Everywhere, ensuring you always open the safer version of any website you visit. This reduces the chances of you opening a fake crypto exchange or wallet site via phishing. There is also NoScript, a program that blocks Flash and Javascript, which hackers can use to attack you.

    Tor does not save your browsing data because it deletes them after every session. Also, every window acts as a separate private browser, so no data is shared between different windows. All of these features make Tor the best option if your priority is security and privacy. 

    That being said, Tor is slower than most browsers since it routes your traffic through multiple network nodes. It can take up to 30-40 seconds for a page to load. Not unusable, but not excellent either. It is also limited to trading functions on centralized pages and does not have the ability to interact with decentralized apps.

    If those tradeoffs are something you are willing to compromise, then you can rest easy knowing that your coin assets are safe, and everything about your online behavior is secure, down to your searches. Tor uses DuckDuckGo, a privacy-focused search engine that does not collect or share your data.

    Conclusion

    Cryptocurrencies are rising in relevance as a store of value and mode of payment. Since they are entirely digital, holders need trustworthy, safe, and convenient web browsers that allow users to access them easily. 

    Development in Web 3.0 is also going on very fast, with more products adopting the decentralized web, sidelining the current-gen Web 2.0. Hence, we will likely see more Web 3.0 products and services emerge this year.

    Web 3.0 users might have different criteria while selecting their favorite browser, but it is common understanding that a good browser has to provide convenience, privacy, and most importantly ensure asset security. The Internet is a common good and the browser is the key to freely open doors within it.

    Sources:

    https://medium.com/acent-tech/comparison-of-top-3-browsers-osiris-opera-brave-edfc3d74fda3

    https://blogs.opera.com/crypto/2022/01/opera-crypto-browser-project-web3/

    https://brave.com/learn/what-are-crypto-browsers/

    https://browsertouse.com/blog/5783/open-email-links-in-gmail-mac-windows/

    https://rigorousthemes.com/blog/best-browsers-for-cryptocurrency/

  • Spool: Weaving funds out of diverse threads of income

    Spool: Weaving funds out of diverse threads of income

    Spool is a Decentralized Finance (DeFi) protocol geared towards ordinary users who want to earn yield on their own terms in a simple and straightforward way.

    Background

    DeFi has been an exciting avenue in the field of cryptocurrencies. Based on the Ethereum blockchain, it uses smart contracts, which are automated agreements used to automatically enforce transactions without the need for a government or a bank. 

    A vast new set of Ethereum-based protocols have emerged, giving rise to decentralized financial products that automate loans, savings and even insurance. According to Nottingham Trent University associate professor of Cyptofinance and Digital Investment Jeremy Eng-Tuck Cheah, the total value locked up in DeFi contracts grew rapidly from US$2.1 million to US$6.9 billion from September 2017 to August 2020, and continues to rise.

    spool
    Spool: Yield for the world, Fuel for DeFi

    What is Spool?

    Luke Lombe, a founding partner of Australian digital asset management firm Faculty Group and Spool contributor, describes Spool as DeFi infrastructure that allows users to create a fully diversified, yield optimised, auto-compounding and risk mitigated DeFi portfolio – in a simple and straightforward manner.  

    According to Lombe, these portfolios, called Spools, cover complex tasks such as risk evaluation, risk/reward based portfolio construction and rebalancing to deliver an investment’s most optimal yield from the custom strategies deployed based on the user’s indicated risk tolerance.

    Arguably, Spool has three synergistic features. The first is accessibility. Its straightforward set-up won’t repel users who might not have otherwise delved into DeFi. The second is diversification. Spools allow diverse portfolio management automatically, easing workloads and reducing barriers for entry. Thirdly is economies of scale. With the automation, having more users simply makes Spool more cost effective to run.   

    How to set up a Spool?

    With just one stablecoin deposit and five more steps done via a simple interface, a user can set a Spool up, which contributor Phil Zimmerer describes as a “vault”. And then the user kicks back as the Spool does the work. The steps are as follows.

    Step One: Choose a preferred deposit currency 

    “We’re starting with stablecoins, essentially USDC, USDT or DAI. That will expand to capture more volatile assets like Bitcoin or Ethereum, which are all subject to DAO (Decentralized Autonomous Organization) vote,” says Lombe.

    Lombe goes on to explain that Spool is by its very nature a DAO first and foremost, which will vote on various proposals, including choices of new currencies before they are enacted. Stablecoins are likely chosen because they are, well, relatively stable cryptocurrencies, as they derive their value from an underlying external asset, like a national currency or gold. USDC and USDT (also known as Tether) are pegged to the US Dollar, for instance.

    how the Spool token works
    How the Spool token works

    Step Two: Choose a risk model

    Lombe describes a risk model as essentially a set of criteria that a user would use to assess risk in DeFi. For example, a risk model could factor in Time on Market, as the longer a protocol has been around, the safer it’s likely to be. 

    From this, Spool creates a risk score for each protocol. For instance, Aave might get a 7.5 out of 10 or Curve a 6.8. This helps the user in figuring out how to diversify their portfolio. He goes on to explain how the nature of DeFi investment makes risk-assessed diversification crucial: 

    “I imagine people would understand DeFi risk as pretty binary. It’s either your money’s safe or your money’s gone (laughs). Generally it’s a matter of a smart contract failure as opposed to an exploit or a hack or potentially a rug pull.” 

    Step Three: Choose some protocols 

    Choosing a risk model allows a user to then select various protocols, such as the ones mentioned in the beginning of this article, that they can place their funds in. 

    “So Curve, Compound, Aave. All the ones we know generally are included in this list. More will be added subject to DAO vote. So you basically create your ideal portfolio based on the protocols that you like and know,” adds Lombe.  

    Protocols such as Compound and Aave allow users to trade loans and earn interest via smart contracts, while Curve allows for stablecoin transactions at optimised rates. 

    Spoolnomics in a nutshell
    Spoolnomics in a nutshell

    Step Four: Select Risk Tolerance 

    Next, a user chooses their Spool’s risk tolerance from a sliding scale. According to Lombe, Spool’s own protocol will factor in the selected risk tolerance level as well as the yield and risk for each of the chosen protocols and then dynamically shape a user’s portfolio and re-weight it according to the parameters set by the user. 

    “But it’s not static. As the yield changes (which it does on a daily basis), the algorithm will essentially rebalance your portfolio to ensure that you’re constantly getting the most risk-optimised or yield-optimised and risk-mitigated return.” 

    Spool’s adjustments do this under efficiencies. Ethereum’s gas fees, or the compensated cost of energy used to compute a transaction, can be quite high, as is the cost of rebalancing a portfolio to account for them. So Spool uses economies of scale to mitigate such costs. As Lombe states:  

    “For example, if your Spool algorithm says ‘move your funds from Curve to Compound’, and mine says ‘move from Compound to Curve’, a tracer smart contract simply reassigns the assignment, so the funds stay where they are. Just like if you’re transferring money to someone at the same bank, the bank doesn’t move anything, it just moves the number from one to the other. 

    Lombe adds that more likely, funds moving in the same direction will be batched together, sharing the cost of transaction fees. With numerous other efficiencies in mind, more users actually makes Spool more energy efficient.

    Spool gets more efficient with more capital
    Spool gets more efficient with more capital

    Final Step: Name Your Spool

    Finally, a user simply has to name their Spool and assign a performance fee, if desired. This fee sets how much the user is paid by anyone who uses their Spool to invest. Lombe states that: 

    “You can say, ‘I’ve created a fully diversified portfolio, it’s going to be automatically managed and optimised for you. All you have to do is click on this link’, and they deposit their funds and then you get a small fee, essentially. And that’s only a performance fee, so the user’s actual initial contribution won’t be diluted at all.”

    By creating a Spool and sharing it with others, it allows people intimidated by DeFi choices to join in. This then increases economies of scale. Essentially, an end user becomes a kind of “sub-broker” within the Spool network. Major contributor to Spool Phil Zimmerer explains:

    “There are going to be users who don’t want to do due diligence, are not able to or it’s simply not worth their time. They’re more likely to trust a person or a group or a friend. And I’m uncomfortable giving financial advice. I think this resonates with a lot of people. So you can create your own “vault” and front load all your decision making with your knowledge and then you can share that schooling with people.”

    SDK

    However, what’s really interesting about Spool is that on top of what it can already do is its potential to be used as an SDK, or a software developer kit. As Lombe explains:

    “Essentially, it’s a DeFi middleware. Not only can you create these DeFi portfolios, you can fire an SDK useful as a backend for white label services. Essentially, use whatever user interface you have on the front end and create your own DeFi products.” 

    These third party DeFi products could be websites or wallet apps running Spool in the background unnoticed. This could mean a lot of development work saved on such products. 

    When combined with the ability to share Spools, the automation of diversification and yield optimization as well as the efficiencies that work on economies of scale, Spool looks to be a particularly powerful piece of middleware within the Ethereum ecosystem.

    Perhaps more importantly for ordinary people, it allows for better governance of finance – a thing that traditional finance seems to be failing at. As Zimmerer states:

    “Traditional finance is stacked against those who are uninterested in it. It’s sort of kept boring so that people don’t really care about it and don’t really know what’s happening. A very concrete example of this we can see is Covid hits the economy really hard, and then you would also assume that the financial markets should also tank. And what happens is central banks are printing a lot of money and obviously now as a lagging effect we are starting to feel it in terms of inflation.”

    economy reeling because of Covid
    economy reeling because of Covid

    Zimmerer sees inflation as a kind of tax on laypeople, where traditional finance’s lack of accessibility means fewer to offset the same inflation that will not affect traditional finance’s participants. 

    “For me, it’s because we kind of live in a world that forces you to think about the economy. We see a lot more, at least in my social circle, people getting interested in investing and managing their finances. And on a systemic level, even if you’re just a regular person with a regular job, it’s not just enough to dump it into a high-yield savings account, because those yield very little compared to the yields you can get in the rest of the financial market.”

    Cheah notes that the pandemic has driven global interest rates even lower, stating that some jurisdictions, such as the Eurozone, are now in negative territory and others such as the US and UK could follow. Meanwhile Lombe also notes that central banks have had to print more money in the advent of economic collapse, and this drives inflation even higher, eating away at savings yields.

    The people at Spool seem to have an understanding about how serious world affairs influence the lives of ordinary people, and seek to use DeFi to provide solutions to these specific problems. 

    In this climate, DeFi simply looks more profitable. Protocols such as Compound have delivered yields as high as 6.75% for those who save with Tether. But Lombe says that Spool’s role is different. Rather than try and be a new competitor seeking to dominate market share within the Ethereum space, he says Spool is more concerned with what can be seen as the greater good.   

    “What Spool is trying to do is essentially not try to compete with the other farms out there because we’re not a farm, we’re an aggregator of sorts. We’re not trying to take the piece of the existing pie. We’re trying to grow the pie.”

    Spool Token Staking Guide

    The purpose and benefit of staking SPOOL token is to obtain more SPOOL and the voSPOOL governance token. The voSPOOL tokens are distributed to stakers based on the amount of time continuously staked, capped at a maximum of the total number of SPOOL tokens staked. The distribution is calculated based on a weekly epoch up to a maximum of 156 weeks. However, if the staker stops staking their SPOOL tokens at any time, the calculation of the time spent continuously staking resets to 0- this means that their voSPOOL distribution will correspondingly be reset to 0. Here’s a step by step guide on how to stake your SPOOL tokens.

    Step 1: Obtain the SPOOL token. $SPOOL can be purchased on exchanges like Uniswap. To get started with Uniswap, check out our Uniswap review and tutorial.

    Step 2: Go to spool.fi and launch the Spool App on your web browser by clicking on the “Open App” button on the top right hand corner of the page.

    Step 3: Click on “Connect Wallet” to connect your web3 wallet to the app. You can choose which wallet to connect such as Metamask, Ledger, Trezor, Coinbase Wallet etc.

    Step 4: On the app, click the “Spool Staking” tab.

    Step 5: On this page, you can see the amount of SPOOL tokens in your wallet and total SPOOL staked. You can also see the amount of claimable voSPOOL rewards earned and choose to either claim the rewards or stake these rewards. Furthermore, you can use your voSPOOL for voting on governance proposals on this page.

    Step 6: To stake your SPOOL tokens, click “Stake” which will bring up a separate staking window.

    Step 7: Input the amount of SPOOL tokens that you wish to stake, alternatively you can also click “max” which will stake the entirety of the SPOOL tokens in your wallet.

    Step 8: Click “Approve” on both the app page and on your web3 wallet. This will allow the contract to interact and manage your SPOOL tokens.

    Step 9: Click “Stake” to stake your SPOOL tokens and wait for the transaction to be completed. Note that this transaction will cost gas fees. Once your SPOOL tokens are staked, you can unstake them at any time.

    Step 10: Once the transaction is completed, your $SPOOL tokens will be staked. We suggest you then refresh the page to see the updated amounts staked or remaining in your wallet.

    Step 11: On the app, you can click on the “Platform Summary” tab to check the amount of $SPOOL tokens staked, the amount of voSPOOL accumulated, and the claimable staking emissions.

    Step 12: On the app, you can also click on the “SPOOL Staking” tab to see the updated $SPOOL staking rewards.

    Step 13: To claim all your rewards, click on “Claim All Rewards”. A pop-up window will then appear which shows both the SPOOL emission rewards as well as the voSPOOL emission rewards. Click “Claim” to claim these rewards.

    Step 14: Wait for the transaction to be confirmed. Once completed, the SPOOL tokens will be sent to your web3 wallet. Note this will also cost gas fees.

    Step 15: Clicking on “Stake Emissions Rewards” allows you to stake the rewards you have earned. A pop up window will appear and shows all the rewards that can be claimed and staked for both SPOOL and voSPOOL emissions. Click on “Claim and stake” to both claim your rewards and stake them in 1 transaction.

    Step 16: Wait for the transaction to be confirmed. Once completed, the SPOOL tokens will be sent directly to staking and your balance will be updated. Note that this transaction will cost more gas than simply claiming the staking rewards.

    Step 17: Once the transaction has been confirmed, it is suggested to refresh the page to see the updated amounts of staked or claimed SPOOL tokens.

    REFERENCES:

    Spool Official Website (https://www.spool.fi/)

    Ethereum Official Website (https://ethereum.org/en/defi/)

    Jeremy Eng-Tuck Cheah. 26 August, 2020. The Conversation. What is DeFi and why is it the hottest ticket in cryptocurrencies? (https://theconversation.com/what-is-defi-and-why-is-it-the-hottest-ticket-in-cryptocurrencies-144883)

    Coach K. 14 Dec 2021. YouTube. The easiest DeFi tool ever created: SPOOL the e-toro of crypto. (https://www.youtube.com/watch?v=tNzqNoTCXPI&t=42s)

    Boxmining. 2 Dec 2021. YouTube. Game Changing DeFi: Earn Yield On Your Own Terms (Spool). (https://www.youtube.com/watch?v=L0b4nvxPnbI&t=603s)

    Lombe, Luke. 10 June, 2021. Medium. Spool: Infrastructure for Composable Capital Deployment. (https://medium.com/spoolfi/spool-infrastructure-for-composable-capital-deployment-3a86b2fac798)

    Diversification. Investopedia. (https://www.investopedia.com/terms/d/diversification.asp)

    Economies of Scale. Investopedia. (https://www.investopedia.com/terms/e/economiesofscale.asp)

    Decentralized Autonomous Organization (DAO). Investopedia. (https://www.investopedia.com/tech/what-dao/)

    Julian Dossett. Stablecoins: What they are, how they work and how to buy them. 6 Dec 2021. CNET. (https://www.cnet.com/personal-finance/crypto/stablecoins-what-they-are-how-they-work-and-how-to-buy-them/)

    USDC Official Website. (https://www.circle.com/en/usdc)

    Tether Official Website. (https://tether.to/)

    Aave Officail Website. (https://aave.com/)

    Curve Offical GitBook resources. (https://resources.curve.fi/base-features/understanding-curve)

    Software development kit. Wikipedia. (https://en.wikipedia.org/wiki/Software_development_kit)

    FAQs

    What is Spool?

    Spool is a Decentralised Finance (DeFi) application that allows users to create a fully diversified, yield optimised, auto-compounding and risk mitigated investment portfolio – in a simple and straightforward manner. It is also middleware, and can be used to power other applications.

    How is it used? 

    With just one stablecoin deposit and five steps done via a simple interface, a user can set up this automated DeFi portfolio, or Spool up. Choose a preferred currency, a risk model, some protocols to invest in, your risk tolerance, name the Spool and then set a performance fee to charge others than invest in your Spool (in that order). And then, just leave it alone to do its job.

    Why use it?   

    DeFi yields currently seem to be doing better than traditional finance. Amid the global pandemic, inflation threatens to devalue returns from traditional savings. And while getting into Defi could be complicated, Spool is relatively simple and straightforward to use for beginners, and very easy to deal with for experts who are tired of manually managing their portfolios. As more users use it, the more stable it gets, and others can invest in your Spool without having to create their own for the said small performance fee.

  • The Pros and Cons of Stablecoins: Why You Need To Know How They Work

    The Pros and Cons of Stablecoins: Why You Need To Know How They Work

    Stablecoins are under the microscope right now following the collapse of Luna and UST, the stablecoin of the Terra ecosystem.

    In this article, we look at the history of stablecoins, its pros and cons, why they are needed, and what are the risks are of utilizing them.

    What is a Stablecoin?

    A stablecoin is a cryptocurrency that maintains a fixed value because it is backed by reserves of other assets such as fiat currencies, securities, gold or precious metals, property, or any other assets as collateral.

    There are four main types of stablecoins: 

    • Fiat-Collateralized: Fiat-backed stablecoins are backed by real-world currencies such as US Dollars or British Pounds at a 1:1 ratio.
    • Commodity-Backed: Backed by precious commodities like gold, platinum, or real estate.
    • Crypto-Backed: Backed by other cryptocurrencies which are kept as a reserve to ensure price stability in the event of price fluctuations. Smart contracts can also be coded to ensure no trust is needed in third parties.
    • Algorithmic: These involve adjustments in the algorithm for controlling the supply and demand of stablecoins, usually in the form of two tokens: one a stablecoin and the other a cryptocurrency that backs the stablecoin.

    Cryptocurrencies are decentralized and not controlled by centralized entities such as governments or regulatory bodies. They operate on supply-and-demand principles in a free market and can be volatile in nature. 

    Simply put, stablecoins allow investors and traders to ‘cash out’ of risky investments into another crypto coin that will not fluctuate wildly in value during times of market volatility.

    History of Stablecoins

    Stablecoins actually have a very long history, having been around since 2014 with BitUSD. BitUSD was created in July 2014 backed by the $BTS token and created by Dan Larimer and Charles Hoskinson, both pioneers in the cryptocurrency who went on to create EOS and Cardano ($ADA), respectively.

    However, even the world’s first stablecoin was not without its issues. In late 2018, BitUSD lost its peg to the US Dollar, resulting in huge criticism from the cryptocurrency community. BitUSD is no longer commonly used, and many cryptocurrency exchanges no longer support this stablecoin.

    The next stablecoin to be launched was NuBits in September 2014 and was functional for 3 years. Eventually, this stablecoin also fell- suffering 2 major crashes during which the peg was broken for an extended period of time. The first of these crashes was in 2016 when NuBits was depegged from the US Dollar for 3 months. This was likely because holders of NuBits suddenly sold their substantial holdings for Bitcoin, resulting in NuBits being unable to handle the large volumes of sell-offs and losing its peg. Surprisingly, after the 2016 crash, the marketcap of NuBits shot up by 1,500%. This was caused by people buying millions worth of NuBits in late December 2017 owing to concerns about the stability of Bitcoin, whilst the NuBits team was unable to print new coins to keep up with the demand, thereby driving up prices.

    The second, and final major crash suffered by NuBits was in March 2018 which was caused by insufficient reserves of the coin, meaning that the NuBits team were unable to protect the coin when there was a dip in demand. Of course, large cryptocurrency holders immediately noticed the drop in NuBits prices and panic sold their positions, causing an even greater slide in price.

    After the second NuBits depeg, the stablecoin had lost credibility with cryptocurrency investors. Some holders even threatened legal action against the NuBits team or went into Tether ($USDT) and/or TrueUSD instead.

    Tether $USDT however has also weathered a few storms of its own, facing legal battles with the Securities and Exchange Commission (SEC), which also shook the confidence of the market. The legal action was eventually settled in 2021 with the parent company of Tether paying nearly US$60 million.

    Despite this, cryptocurrency keeps evolving with each passing year as new innovations that were once met with speculation and distrust eventually become trusted by the market. Today there are many other stablecoin options out there such as USD Coin (USDC), Binance USD (BUSD), MakerDAO (DAI), Paxos Standard (PAX), and Gemini Dollar (GUSD) that provide alternatives to USDT. 

    Pros of Stablecoins

    There are several reasons and numerous benefits to using stablecoins. In general, they are simply faster, cheaper, transparent, borderless, and programmable compared to fiat currencies. Some more benefits are listed below.

    1. Stablecoins allow a quicker and easier way for investors to enter the crypto market by bridging fiat into stablecoins, which act like fiat currencies on exchanges.
    1. Stablecoins are more efficient than fiat because they have the digital properties of other crypto tokens and can be moved around quicker and more efficiently than fiat money.
    1. Stablecoins can be held as capital in non-custodial wallets such as Metamask, thus removing the need for third parties to intermediate.
    1. Stablecoins allow for quicker, immediate peer-to-peer payments abroad that are semi-anonymous with much lower fees than fiat currencies.
    1. Stablecoins can be used for holding, trading, borrowing, and lending abroad. When fiat-related regulatory processes are involved, even better.
    1. Stablecoins can be staked to earn a higher yield than traditional finance in DeFi applications. When adding liquidity to protocols, they also minimize the risk of impermanent loss due to their price stability.
    1. Blockchain data and tracking allows for a more transparent view of the market, giving investors more information on liquidity flows and thus greater decision-making power.
    1. Many sectors of the economy and the unbanked population are benefiting from the use of stablecoins in remittance, escrow, payroll, settlement, and alternative banking that is self-custodial, cutting out intermediaries.

    Cons of Stablecoins

    Stablecoins used to be more controversial in the earlier days of crypto but have garnered more regulatory approval in recent years, minimizing many of the negative aspects.

    1. Stablecoins usually require trust in a third party to ensure the coins are backed by the stated assets, which also means external audits are needed to ensure assets are accounted for.
    1. There are lower yields on stablecoins in DeFi applications than on regular cryptos, however, these yields are still significantly higher than the interest rates offered by traditional banks.
    1. Stablecoins utilized in DeFi applications are subject to the usual risks involved with unregulated cryptocurrency projects. The TerraLuna disaster was a perfect example of an extreme worst-case scenario for an algorithmic stablecoin.
    1. Trial and error. Due to the relative infancy of stablecoins and the experimental nature of new technologies within crypto, there is still a risk when getting involved with newer projects or protocols.
    1. Regulatory scrutiny. As the stablecoin market keeps growing and adding billions of dollars in value to the crypto market, it will generate increased interest from authorities. This can also be seen as a positive.

    Conclusion

    Stablecoins and their rapid proliferation across all blockchain protocols have brought more flexibility and adoption to the cryptocurrency industry. They are now embedded in the fabric of the market and are here to stay. 

    The onus remains on the individual investor to do your own research (DYOR) when deciding which stablecoin to hold. Find out who created it, whether it’s a trusted centralized business or a decentralized protocol managed by smart contracts. All the options are open to you when it comes to the safer management of risk in the crypto market.