Ethereum is gradually moving towards the rollup-centric roadmap. One of the EIPs, which will help in scaling Ethereum is EIP-4844, popularly known as “Proto-Danksharding.” In this blog, we will dive into one pre-requisite of this EIP, the KZG Ceremony.

The Ethereum network, like most blockchain networks, currently faces limitations in terms of scalability. As more and more users join the network and the amount of data on the blockchain grows, the network's ability to process and validate transactions in a timely manner becomes increasingly constrained. This can lead to delays in confirmation times, high transaction fees, and a lack of overall network efficiency. To address these scalability concerns, the concept of sharding came around.

Sharding is a method to split data so that it is easier to handle that data. With time, the overall size of the blockchain increases because blocks keep getting added up to the existing chains. So, in Ethereum, the idea is to split up the amount of processed data into multiple concurrent chains. So as to increase the total throughput of the blockchain. 

Initially, these shards would not just hold data but were also going to perform computation on that data set. Still, the approach introduced some other complexities, such as how cross-shard communication will work in the ecosystem. As the data could have been siloed so, how will the consensus work? So the idea of how to scale Ethereum was altered and now we have Proto-Danksharding, in which instead of having multiple chains, we have one chain, and the node operator is not responsible for the whole chain; he is responsible for part of the chain. 

Furthermore, the computation won’t be taking place on these shards. Instead, rollups will take care of that, as per the rollup-centric roadmap. 

Danksharding

Danksharding is the initial proposal that is too complex to discuss in this blog. So, let’s have a look at the main innovation that came with Danksharding, i.e., the merged fee market. According to this, “one” proposer node is responsible for choosing all transitions and the data to be added in the shards. This will increase the hardware requirements for the node operator. Hence, another concept of propose/builder separation was introduced.  

This requires more time to implement as it has a lot more technical complexities, so now we have a more simplified version, Proto-Danksharding that will be upgraded to danksharding in the future. However, in the short term, this solution will still drastically help with the data constraints we currently have.

Proto-Danksharding

Proto-Danksharding is a forward-compatible implementation for smoothening the implementation of Danksharding. The use of rollups and the merged fee market can improve scalability by offloading computation and data storage to other entities. 

With Proto-Danksharding, we will have a new type of transaction, i.e., “Shard Blob Transaction”, which is like a normal translation with the exception that it will have space for blobs. EVM cannot access the blob data, it can only access commitment to the blob. A blob is a collection of 4096 units of information, each consisting of 32 bytes. With Proto-Danksharding, a maximum of 16 blobs can be stored in each block. With Danksharding, this number increases to 256 blobs, which limits the total number of data transactions that can be processed in a block. This allows for a target block size of approximately 1 MB and a maximum of 2 MB.

Currently, In Ethereum, users pay a one-time fee for some data to be stored, and then the blockchain keeps the data on it forever. One of the ideas behind Danksharding is to give this responsibility to someone else so that the validator nodes don’t have to store this huge amount of data in perpetuity. So, what will happen is the validator will be assigned data that it must download and make it available for everyone. L2 solutions can access this data and download all the relevant portions that they need, and after a certain period, validators will discard this data.

Coming back to the validators, the important thing here is that individual validators won’t be worrying about this anymore. And as more scalability is added to the blockchain, the data that validators need to store will only increase. So, now entities who need the data are going to be responsible. But this is something rollups and protocols can take care of. 

What about normal users? Normal users obviously have the option to trust the sequencers if they have their transactions on L2s. But in the case where they don’t trust the sequencer, they can store data locally. There are more options we can explore about this. On a side note, we will probably see different solutions coming forward to download and keep this data in their own archives nodes, and users will then be able to query data from those archive nodes.

KZG Ceremony

KZG ceremony is a prerequisite for Proto-Danksharding. It will provide the cryptographic foundation via the trusted setup. The KZG ceremony is taking place to create a structured reference string for the Proto-Danksharding. The ceremony is to be held by the Ethereum community and will provide the necessary security for the network.

It uses multiparty computation, as different individuals first set their secret values, each mixed with some randomness. Then each contributor runs a computation to mix it with previous contributions. The output is made public and passed to the next contributor. The ceremony will be live for two months. Anyone can contribute in that time frame.

Why do we need commitment in Proto-Danksharding? So, we already know by now that the blob transaction types will have the data blob in it, which is kind of like a sidecar to the actual data block. To refer to this “sidecar,” Proto-Danksharding uses KZG commitments.

KZG commitment also enables erasure coding, which is useful in case a percentage of the data is lost. 

The KZG ceremony is live for a duration of 2 months. In the KZG ceremony, we have an entity called the sequencer and as the name suggests, is literally to sequence who's next. So, if we have many people trying to contribute, how do we decide the sequence?

Since the computation is sequential and cannot be parallelized, so the sequencer sees if there is a free slot. Then the sequencer gives you the file, and then you add your secret value to the sequence. It combines your Randomness with the randomness of the people that came

before you, and then you send your file back to the sequencer, and then the sequencer checks that you didn't try to lead someone else's secret or do other inaccurate things. Then the file is sent to the next person.

The sequencer can basically see what the ceremony looked like after each contribution, but that is what everyone sees, so it's not like the sequencer has more access to data that could be used to break it. All sequencer has is more control over who goes next.

Sequencers can prevent someone from participating. But even that can be countered, as users can do their computation and send it back to the sequencer. But, again, the sequencer can reject the file by claiming that the file is not correctly computed. The sequencer has to send you the file back with their signature on it. Now, users can take the file to other sequencers and prove that the sequencer is censoring the user.

To avoid this, the Ethereum foundation put the sequencer through some audits. 

Participating In The Ceremony

The Ethereum community has several ways to participate in the creation of the Common Reference String (CRS) that is used to create zk-SNARKs for private transactions on the Ethereum blockchain, as proposed in EIP-4844. The methods for participation range in technical difficulty, from simple browser interfaces to writing your own implementation.

Browser interfaces

One of the easiest ways to participate is through a browser interface, such as ceremony.ethereum.org. To prevent spam contributions, participants will need to provide an Ethereum address (which has sent at least 4 transactions as of 2023/01/13) or GitHub account.

Command line implementations

If you're comfortable using a command line, you can check out some of the CLI implementations to contribute from your local machine.

Generating Entropy

You can generate some randomness using a unique and creative method and use one of the above methods to add it to the ceremony.

Writing Your Own Implementation

For those who want to convince themselves that the secret hasn't been leaked, writing your own implementation using BLS12-381 for the ceremony is possible. There are resources available to make this process as simple as possible.

Note that the sequencer will reject wrong calculations.

If you participate through the browser method. There is no queue. There is a general lobby, and accounts are picked at random from the lobby. This makes it nicer that you just show up to participate. But, the trade-off is that you don't know exactly when you're going to get included. So, the lobby could have thousands of participants and you may have to wait for a while. 

By being in the lobby what essentially happens is time to time, your computer asks a sequencer for the file, then the request is denied or accepted based on the file’s availability status. The file being unavailable just means that someone else is contributing. 

The participation process is quite easy. The trust assumption of the ceremony is based on the concept of "1-of-N," where the security of the entire ceremony relies on the fact that only one participant is honest and hasn’t given out the secret. To compromise the ceremony, each and every participant would have to work together to extract and combine their secrets, or there would have to be a flaw in every single implementation.

In summary, Proto-Danksharding, as outlined in EIP-4844, is a promising solution for addressing scalability limitations on the Ethereum network. Its implementation will greatly improve the scalability and efficiency of the network by splitting data into multiple concurrent chains and utilizing rollups. You can participate in the KZG ceremony for the next 2 months since 13th January 2023.

In this article we will explore the concept behind Layer 2 Solutions and the problems they are solving in blockchain.

Introduction

According to the CAP theorem (also known as Brewer's theorem) first proposed in 1998 by Eric Brewer before Seth Gilbert and Nancy Lynch propounded it in 2002, a distributed system cannot attain consistency, availability, and partition tolerance simultaneously. This same opinion holds sway among blockchain experts for blockchain protocols. The belief often referred to as blockchain trilemma suggests that blockchain cannot achieve three of its core principles: security, scalability, and decentralization simultaneously.

By implication, the blockchain trilemma said, a protocol can achieve decentralization and security while sacrificing scalability and vice versa. The blockchain trilemma provided an answer to why centralized networks can boast thousands of transactions per second and the blockchain networks like bitcoin and Ethereum can only afford a few tens of transactions per second. In that light, the trading system sacrifices decentralization while achieving high throughput, secure and scalable network. To scale up blockchain protocols, developers began looking to salvage the situation.

So far, to solve the trilemma belief, several approaches are taken. The proposed solutions to achieving scalability are Layer 2 and Layer 1 solutions respectively.

Layer-1 and Layer-2 Solutions

Although this article focuses on Layer 2 solutions, it will be necessary to lay a background that includes Layer 1 solutions. It will highlight several Layer 1 and Layer 2 solutions as well as references to top Layer 2 implementations you should know about.

Layer-1 Solutions

Often referred to as on-chain solutions, Layer-1 solutions are the scalability solutions that require redesigning the underlying protocols of the base protocol. Look at the Layer-1 solution as say, redesigning Ethereum or Bitcoin protocols to increase throughput and reduce fees. For instance, Visa, MasterCard, and other payment processors process an average transaction per second of 5000 while Bitcoin and Ethereum process 4 and 15, respectively. Going by the current design of these blockchain networks, as users of the networks grow, the TPS will keep reducing and transactions keep getting unnecessarily slow, hence, the need for a redesign. The Layer-1 solution entails redesigning the underlying protocols of the networks to allow for throughput, energy efficiency, and cheaper transaction fees. 

There are thus several methodologies employed to redesign the base protocols. Although some of them are still at their experimental stage, they include: 

Consensus-Based Protocol Redesign

This consists of redesigning the consensus protocol of the base protocol to scale transactions and efficiency. The leading blockchain networks like Bitcoin and Ethereum have leveraged PoW consensus that allows miners to solve cryptographic puzzles to validate and verify blocks thereby making it energy-demanding and tedious. Nonetheless, PoW systems are secured but often characterized by high transaction fees and low throughput when there is network congestion. To mitigate this risk and achieve a scalable network, PoS consensus becomes a good choice. Instead of miners solving cryptographic puzzles using enormous energy, users stake coins on the blockchain.

PoS consensus is set to cut down the high cost of transaction and throughput of the PoW networks. It is yet in its experimental stage, but some protocols are already developing on it. Among the top projects are Solana, Avalanche, and Ethereum. Ethereum termed its proposed PoS version Ethereum 2.0. From a frontier phase, Ethereum will be going full serenity next year by launching a Proof-of-Stake (PoS) consensus algorithm. Unlike the high cost of transaction and low TPS of Ethereum 1.0, Ethereum 2.0 is expected to dramatically and fundamentally increase the capacity of the Ethereum network while increasing decentralization and preserving network security.

Sharding

Also in an experimental stage, sharding is adapted from distributed databases as one of the Layer-1 scaling solutions. Employing a Sharding Layer-1 scaling solution means breaking the state of the base protocol into distinct datasets called "shards". Here, tasks are managed by shards, simultaneously processed in parallel and they collectively maintain the entire network.

Each node in a network represents a shard instead of maintaining a copy of the entire main chain to allow scalability. Each shard across the network provides proofs to the mainchain and interacts with one another to share addresses, balances, and general states using cross-shard communication protocols. Although in an experimental stage, awaiting its launch in 2022, Ethereum 2.0 is exploring the implementations of shards.

Layer-2 Solutions

Instead of implementing the changes of the parent protocols of the blockchain, Layer-2 solutions took scalability to a whole new height. Layer-2 solutions are those scalability solutions that entail adding a layer to the base protocol to increase throughput. They take transactions off the main chain, hence, are called off-chain solutions. 

The off-chain solution doesn't allow base protocol structural changes since the second layer is added as an extra layer. For that reason, Layer-2 scaling solutions have the potential to achieve high throughput without sacrificing network security.

Layer-2 solutions consist of smart contracts built on top of the main blockchain. Those secondary layers are for scaling payments and off-chain computation. Layer-2 solutions can be achieved in various ways. For example;

Rollups

Rollups are one of the Layer-2 scaling solutions built on the Ethereum blockchain. Unlike the Layer-1 solutions, they are secondary layers that allow users to perform transactions off the main Ethereum chain (Layer-1). It is designed to post transactional data on Layer-1 thereafter, hence, inheriting the security of the base protocol. Rollups possess the following properties:

  1.  Executes transaction outside Layer-1.
  2. Proofs transactions on Layer-1, thereby improving the security of Layer-2.  
  3. Using the transactional data on Layer-1, rollup smart contract in Layer 2 enforces correct transaction execution on it. 
  4. Operators stake a bond on the Rollups smart contract which they get incentivized to verify and execute transactions correctly. 

Rollups can either be zero-knowledge or optimistic Rollups. They both differ in their security model:

Optimistic Rollups

Optimistic rollups is a Layer 2 solution designed to enable autonomous smart contracts using the Optimistic Virtual Machine. By default it doesn't perform any computation, hence, can offer up to 10-100x improvements in scalability depending on the transaction. It sits parallel to the main Ethereum chain on Layer-2. Transactions on Optimistic rollups are written on the main Ethereum chain in form of call data thereby further reducing the gas cost. 

As stated ab initio, Optimistic rollups do compute transactions outside of the main layer in the form of batches and submit only the root hash of the block to the main chain. Hence, the need for a mechanism (fraud proofs) to ensure transactions are legitimate That way, when someone notices a fraudulent transaction, the rollups initiate fraud proofs before running a transactional computation using available state data. By implication, Optimistic rollups take significantly longer to confirm transactions than zero knowledge rollups. 

There are currently multiple implementations of Optimistic rollups that you can integrate into your dApps. They include; OptimismOff-chain Labs Arbitrum RollupFuel NetworkCartesiOMGX

Zero-Knowledge Rollups

This is a type of rollup on the ethereum blockchain. It bundles hundreds of transactions off-chain and generates a cryptographic proof known as Succinct Non-Interactive Argument of Knowledge (SNARK), often called validity proof.

The ZK-rollup smart contract maintains and updates the state of all transfers on Layer 2 with validity proof. Instead of the entire transactional data, the ZK Rollups needs only the validity proof, which goes on to simplify transactions on the network. Validating a block is quicker and cheaper in ZK Rollups because less data is included.

There are multiple implementations of ZK-rollups that you can integrate into your dApps. They include; LoopringStarkwareMatter Labs zkSynczkTubeAztec 2.0, and so on. 

Channels

A State Channel is a Layer-2 scaling solution that facilitates two-way communication between the participants which will allow them to perform transactions off the main blockchain. Typically, for a recurring payment State Channel does not require a recurring validation by nodes of the Layer-1 network to improve overall transaction capacity and speed. The underlying blockchain is sealed off via a set of smart contracts or multi-signature seals off. Leveraging the smart contract pre-defined by participants, they can directly interact with each other without the need of the miners. Upon the completion of the transaction or batch of transactions on a state channel, the final “state” of the “channel” and all its inherent transitions are recorded to the underlying blockchain. Some projects including Liquid Network, Celer, Bitcoin Lightning, and Ethereum's Raiden Network are currently deploying state channels scaling solutions.

Sidechain

A Sidechain is a secondary blockchain linked to the main blockchain via a two-way peg. Like most layer 2 scaling solutions, it uses an independent consensus and contracts to optimize throughput. On the sidechain, the main chain takes up security roles, confirming batched transaction records and resolving disputes.  

They are somewhat similar to channels, however, it differs in how they process transactions and the security impacts. Transactions are recorded publicly on the ledger, unlike the private records of the channels. Sidechains enable tokens and other digital assets to move back and forth freely from the main chain. When the sidechain completes a transaction, a confirmation is relayed across the chains, followed by a waiting period for added security. Due to their allowance to move assets around freely on the new network, a user who wants to send the coins/assets back to the main chain can do that by simply reversing the process.

Plasma

Plasma is a secondary chain on the Ethereum blockchain, proposed by Joseph Poon and Vitalik Buterin in their paper Plasma: Scalable Autonomous Smart Contracts. It comprises Merkel trees and smart contracts which create unlimited smaller versions of the main chain (Ethereum), called child chains. Integrating these child chains enables fast and cheap transactions off the main Ethereum blockchain into child chains.

Users can deposit and withdraw plasma chain funds, enabled by fraud proofs. For such a transaction to go on, there has to be communication between the child chains and the root chain, secured by the fraud proofs. Users deposit by sending the asset on the smart contract, managed by the plasma chain. Then the plasma chain proceeds to assign a unique ID to the deposited assets while the operator generates a batch of plasma transactions received off-chain at intervals. On the other hand, the contract initiates a challenging period during which anyone can use the Merkle branches to invalidate withdrawals if they can. 

Conclusion

Like the CAP theorem in distributed systems, the blockchain trilemma suggests that blockchain cannot achieve scalability, security, and decentralization simultaneously. However, the Layer-2 scaling solutions have come to challenge the thought system. It allows the mainchain to take care of security while maintaining scalable networks in its additional layers.

Also Read Arbitrum: Scaling without Compromise

One who is familiar with digital terms will not be new to the term "Metaverse". Metaverse create physical realities in a virtual world.

Just as there are entertainment Metaverses, there are art, social and medical Metaverses as well.

In fact, several games are built on the concept of Metaverses. Some of these games include FortniteAnimal Crossing, and Roblox. These games and many more present a concept of virtual reality in an augmented superset.

Over the years, several industries are beginning to see reasons to build their applications on the concept of the Metaverse. The government is seeking to hold virtual-physical meetings with leaders from around the world and artists are seeing potential in using the Metaverse to hold concerts too.

What then is the importance of the Metaverse that the crypto world is seeking to adopt? 

This article will extensively discuss all you need to know about Metaverse. We will also discuss it's importance with respect to blockchains and the digital world at large.

But first, what exactly is a Metaverse?

What is a Metaverse?

Simply put, a Metaverse is a concept of creating virtual spaces using a 3D augmented spectrum.

For instance, games that allow one to own lands, build cities, go outside space all operate on the concept of Metaverses. Any concept that presents a realistic virtual world is a Metaverse. This can be seen in plenty of Sci-Fi movies and even in novels.

The word Metaverse was first used in a fiction novel in 1992. The novel – Snow Crash by Neal Stephenson described it as a world outside our world.

Other examples are seen in virtual reality games like the Minecraft. Minecraft presents a unique medium for social interaction and relationships.

Students of the UC Berkeley were able to create a virtual campus on the Minecraft game. The students even conducted a virtual ceremony where each person joined with Minecraft characters.

Another application is the Roblox game. The Roblox game allows developers to create games and receive tokens as incentives. Afterwards, the developers withdraw their tokens outside of the game’s platform.

Furthermore, there is a wide application of Metaverse in the crypto world. There, Metaverses will allow users to own tokens, lands, and assets which can easily be traded while virtual money is converted to real money simultaneously.  

Aside from this, there are other applications of a Metaverse in the crypto world. We’ll discuss these shortly. Before we do, here is what to know about Metaverse basic foundation.

Metaverse Basic Foundation

The basic Metaverse foundation explains the components put together to build a blockchain Metaverse. These components are open standards, the internet, hardware, open programming language, and a decentralized ledger and smart contract.

The Internet

The internet is essential in creating a connection for digital assets. But the internet connection for blockchain Metaverse is highly secured.

Connections between computers on a decentralized network restrict authorized individuals or bodies like the government from gaining access. It only allows users of that network to gain total authority over their decentralized network.

Open Programming Language Standards

Metaverses use programming languages like web XR, javascript, WebAssembly, and HTML. Open standards of the media like 3D audio, images, and texts. It also uses 3D sequences and geometric figures and vectors.

Decentralized Ledger and Smart Contract

Metaverses are incorporated in blockchains, so they exhibit features of blockchain technology. They offer secure and plain transactions as well as public availability and support to the blockchain ecosystem.

Blockchain Metaverse and it's Importance

Many refer to the Metaverse as a replacement for the internet, whereas, it’s in actual sense the successor of the internet. Perhaps, it can be the next trillion-dollar project.

In the crypto world, Metaverses offer new experiences to gamers and creators of NFTs. Even in the decentralized platform, it offers permissionless and transparent transactions at high speed.

NFTs serve a foundational role in a Metaverse as they offer users the complete ownership of their lands. Afterward, one can sell off their virtual properties and exchange their money for real money.

A 259 parcel of virtual land in Sandbox was sold for over $900000 and it’s still the largest to date.

Arthur Madrid says people are easily blown away by the number of money players spend on digital assets. He thinks that making NFTs assets can add a layer to the already existing digital economy.

Mark Zuckerberg even said and I quote, 

"We want to get as many people as possible to be able to experience virtual reality and be able to jump into the Metaverse and to have these social experiences…",

This he said while referring to Horizon - the company’s experimental virtual reality project. Mark Zuckerberg is hoping to explore this using Facebook's oculus headsets.

Here are the main advantages of a Metaverse

Metaverses will allow fans to attend concerts virtually with characters that represent them. In April, Travis Scott helped a convert which had about 1 Million concurrent views. The concert which he held at on a Fortnite with half the attendee using the creative modes. 

While we cannot predict the future of Metaverses in the crypto world, we are certain that they will cause exponential growth in blockchains.

How does a Metaverse Work?

Up till now, the application of Metaverse is not popular among people and only a few projects use them.

Just like decentralized blockchains, Metaverses aren't owned by a single individual. The project is for everyone, and is owned by everyone. So, be sure of secured transactions on the Metaverse.

To own a part of the Metaverse, one has to invest in its architecture, services, and development. 

Since the project is still in its early phase, here is how it works and why it's the perfect successor of the internet.

Portability 

Metaverse creators have been able to create certain items. These items are virtual assets and can be sold and exchanged for real money. 

Likewise, you can transfer these items from one application to another without interference. Hence, the contents of the Metaverse is not "siloed"

Decentralized Nodes

Currently, there are over a thousand nodes that host the Ethereum network. Hence, the ethereum network is not held by an individual. So, one will not need any permission before carrying out any transaction.

The Ethereum network can do this due to its Metaverse projects as it will allow for permissionless transactions; transparent and quick.

And as you'll expect, the decentralized nodes are of great importance to the blockchain Metaverse. It also offers high-level security through its consensus mechanism. 

To Wrap It Up

Blockchain Metaverse is changing the way we interact in the digital world. It's changing the way we carry out virtual activities by providing more acceptable and realistic features to games and apps.

One common app that is looking to adopt this concept is Facebook. And other apps are looking to work with the project as governments are looking to enhance their modes of operation. Government officials are seeking to meet via virtual-physical platforms provided by Metaverse.

The importance of Metaverse on blockchains cannot be undermined. It allows users to transact easily and is permissionless. It also enables users to accrue virtual assets for themselves and exchange them for real money. To top it all, they can transfer assets from one app to another without any interference.

In a nutshell, the essentiality of the Metaverse cannot be undermined.

Also read Loot: The First On-Chain Community-Driven NFT Platform

As the next-generation exchange system, Serum is making waves in proving its credibility in crypto-trading and decentralized finance transactions. It provides faster and frictionless orders with its automated order book system.

Serum provides incentives to its users which in turn favors so many developers. Some of these incentives are Serum Token (SRM) and MegaSerum Tokens(MSRM). With these tokens, one can achieve passive crypto income by staking their tokens on Serum. 

Serum allows every member to stake their tokens. It doesn't only allow members with the highest token to stake, it also allows members with small tokens to stake too. 

Seeing that Serum DEX has so much to offer, there's a need to know so much about it. In this article, we'll extensively discuss Serum DEX and its features. Also, we'll discuss the values and how it relates to other blockchains. Enjoy!

What is Serum?

The Serum is a decentralized exchange system built on the Solana ecosystem to provide unmatched low costs and speedy DeFi transactions. It charges as low as 0.0001 cents for transactions. 

The system aims to offer users faster settlement times and zero centralization. 

In offering a non-centralized side of its architecture, it centralizes price fees even without using Oracles services. Hence, we say the Serum system functions without Oracles. Oracle is a centralized service used by Defi protocols to verify, authenticate and query external data then send them to an already closed system.

Because Serum is based on the Solana blockchain, it offers fully decentralized services that are easy, fast, and affordable to use. 

In Serum DEX, users can easily transfer assets amongst different blockchains and even trade stable coins and wrapped coins or even convert coins from one coin to another. For instance, converting Ethereum to FxT. Some of the projects build on Serum DEX are:

Furthermore, users can create customized financial products as they deem fit. 

The Serum uses native Serum tokens(SRM) as its main governing assets and incentive for its ecosystem. With SRM, users can stake, trade, or participate in burn and buy fee incentives for reduced trading costs.

Also, with the SRM, users enjoy a further reduction in Serum-based transactions.

Aside from all of these, Serum aims to enhance frictionless cross-chain contracts in DeFi while traders trade synthetic assets. It provides many synergies with the Solana blockchain serving as its host application.

Solana Blockchain 

As the fast-growing blockchain system, Solana has secured a spot in the top 10 cryptocurrency projects according to the market cap. Being able to carry out fifty thousand transactions in a second(TPS), Solana blockchain has demonstrated to be the quickest blockchain anywhere on the globe. So, Serum building their project on the Solana network will allow for quick fast transactions on the Serum network. 

Solana, with all of its functions, is a layer-1 blockchain. So, to function effectively, Serum functions solely on a layer-1 solution system without layer-2 solutions. It operates solely on a decentralized clock that monitors time-stamps transactions together with an advanced Proof-of-Stake(POS) mechanism. 

In recent times, blockchain developers have been designing decentralized applications using the Solana blockchain. This widely accepted choice from blockchain developers is due to Solana's reputation in providing fast and scalable smart-contract-enabled blockchain. It's this advanced blockchain system that the Serum network is built on. Clearly, Serum is just a project on the Solana ecosystem.

That said, Serum DEX mirrors the cost and speed of the Solana network. With this, it offers a fully decentralized trading arena with easy trading on centralized exchange systems. It also offers inter-operable features that allow users to exchange assets such as Ethereum (ETH), Bitcoins (BTC), SPL-based tokens, and ERC-based Tokens. 

Serum Token (SRM)

A unique thing about the Serum token (SRM) is its means of collecting values. It accrues values via hyperinflation.

SRM accrues values through adoption and utility. Some are:

That said, most SRM have extensive unlocking terms with all sales fees inclusive. Serum achieves this by locking the tokens. SRM are locked cryptographically in a smart contract. It takes about a year or less to unlock a locked token.

The period where you cannot unlock a locked token is its unlocking period. Most SRM have an unlocking period of one year.

In some cases, some SRM take up to 6 years to unlock. This type equates to 1/2190 SRM in a day.

SRM amount to a maximum of 10 Million tokens, creating about 175 million tokens in its circulation. Because of this high number of tokens in circulation, Serum has been able to provide liquidity to their project. However, several token stakeholders have decided to hold on to a large number of their tokens thereby reducing the number of tokens in circulation. 

Moving on, several traders stake SRM to achieve passive crypto income. They also do this by rescuing fees and staking rewards when trading on Serum DEX. 

Howbeit, traders with SRM can still partake in on-chain governance. Traders who do this will vote on updates to specific markets on the project. 

MegaSerum Tokens (MSRM)

A MegaSerum(MSRM) is equivalent to one million SRM. It means you have to have a million SRM as they'll amount to one MSRM.

MegaSerums are rare and there are only 10%. This is so as there are just fewer users that show belief and commitment to the Serum network. It's just those 10% that can lock their SRM with MSRM.

Project Serum Cryptocurrency Ecosystem 

The project Serum, built on the Solana ecosystem, provides usable services to developers and other users from the start of their project to its deployment. On a large scale, this ecosystem provides a suitable platform for non-technical users planning on delving into Decentralized Finance(Defi). This they can do on Serum's user-friendly App(dApp).

That said, in the Serum ecosystem, developers are automatically eligible for grants once they build on this network. With this, projects receive the support and funding to enhance their user adoption and brand awareness. 

A good example of a project like this is the Phantom project. The Phantom project is a Defi(Decentralized finance) and NFT crypto wallet. Another example is Coin98 that offers users smooth running payment gateway services. 

Also, Project Serum provides developers contact points and resources. With that, you can view on-chain codes, clients codes, and repositories. The project also offers tutorials for developers which can be found on the "Developer Resources" on its website.

Finally, the Project Serum allows users to comprehensively overview all Serum's tokens and integration within its ecosystem. And to top it all, the project provides a link to its whitepaper.

Serum and Staking Nodes

Before one becomes a Serum node, one must take at least 10million SRM including a minimum of 1 MSRM. However, at 100 million SRM or 100 MSRM tokens, nodes stop staking tokens. 

Nodes collect several rewards based on their network participation, the aggregate of activity, and performance within the Serum ecosystem. Generally, nodes are in charge of some blockchain operations like cross-chain settlement validation.

Staking

Oftentimes, traders can't continue the Serum project and earn passive income via Defi because they can't stake 10 million Serum tokens. This shouldn't be a challenge as there are alternatives to this.

Serum token holders can now stake tokens as regards a node. A node is formed by a leader and consists of members of that network. The node leader doesn't necessarily have the highest tokens. But the leader can be the founder of the node and will receive small fractions of node staking fees.

In a node, anyone or the leader can stake a node on behalf of another member. Still, Serum nodes will offer trading fees and governance rights within its ecosystem. 

However, there're mechanisms to provide an overload of tokens in the ecosystem. As many readers stake their SRM tokens, the system cools down following unstacking tokens. This period, known for just a week. 

Node Rewards

In a node, rewards are distributed through native SRM. However, the nodal leaders receive more proportion of the node than other members. Commonly, the leader receives 15% of the rewards while the 85% is distributed among other members. 

Annually, nodes receive a 2% percentage yield (APY) based on their staked funds. However, this percentage can increase to around 13%. This can only be possible if members of a node increase their performance duties and challenges. Also, nodes get special rewards for special challenges. One of these challenges includes providing collateral for SRM tokens. The aim of this is to prevent funds from burning. 

How to Use Serum

Serum exchange doesn't require that users own an account before a transaction. All you need to transact on Serum DEX is an internet connection, a wallet, and some cryptocurrencies. 

First, if you're carrying out a transaction on Serum, you’ll be needing a Solana wallet. Asides from the Solana wallet, there are other wallets that Serum interacts with.

Some are:

To switch between the wallet, click on the change wallet at the top right corner of the interface. Then pick your desired wallet.

Here is a breakdown of how to use the Serum before we delve into each process extensively.

Create a Solana wallet

Seeing that your cryptocurrency has arrived in your Solana wallet, you can add tokens by clicking on the add token feature on the interface. One may choose to add Serum unwrapped Bitcoin to the Sol.

The next thing to do is to find a Serum-based DEX to connect to this wallet.

Connecting your Wallet to Serum DEX 

Connecting your wallet to Serum DEX shouldn’t be challenging provided you follow these easy steps. Below are simple steps on wallet connection.

The Value of Serum

As of the time of writing this article, Serum values was the 11th most trending cryptocurrency. On the other hand, it was 141st on the coin market cap on that same day.

On the coin market, Serum was $8.10, a market price of $404.8 million, and a 24-hour value of $117.71 million.

To Wrap It Up

Serum DEX offers a platform for developers and other users to trade speedily and conveniently. For developers, it provides contact points and resources. Such that, they can view on-chain codes and attend tutorials. All that Serum offers is because of its conjunction with the Solana network. 

Also Read Solana: Exploring the Blockchain

It’s almost impossible for developers to create a protocol with these three important ingredients – security, scalability, and decentralization. These three ingredients, however, exist in ideal cases. Their existence is termed the blockchain trilemma, and this name was given by Vitalik Buterin, the founder of Ethereum.

Since blockchains protocols don’t exist in the real sense but the blockchain trilemma, most blockchains exist as having only two of these three ingredients? That is security and scalability without decentralization or decentralization and security without scalability.

Most blockchains are highly decentralized, but they often face the challenge of overcoming scalability or security.

Bitcoin, for instance, faces a problem of scalability.

However, one blockchain protocol called Mina protocol is promising to solve the problems mentioned above. 

The Mina protocol is a lightweight blockchain that helps to improve the decentralization of codes on the network. Asides from this, the Mina protocol has so many to offer.

In this article, we will be looking at the Mina protocol, its architecture, and the risks associated with the Mina protocol.

Mina Protocol: Architecture and Procedures

Mina protocol is a rebrand from the Coda protocol. It changed its name from Coda protocol to Mina protocol in October 2020.

The Mina protocol is said to be brief, cutting down the numerous requirements for running Dapps effectively. Because Mina Protocol doesn’t require much space, it’s often referred to as the “succinct blockchain”.

Here is a significant problem that the Mina protocol has solved.

Blockchains are developed with high-security measures that protect information locked on the blockchain. These security codes protect transactions on the blockchain too.

Seeing the strong tide of technological advancement, more people have moved to storing and transacting on blockchains.

The sudden influx of users on blockchains has caused a lag in this blockchain technology. This lap is due to the shortening of blockchains sizes due to the high number of users in a blockchain.  

For blockchains like the bitcoin blockchain, larger bandwidth (storage) has been used to accommodate many users on the platform. So, it explains the reason for the large bitcoin blockchain size – 320 GB.

On the other hand, the Mina protocol has a size of 22kb, which is way lower than a bitcoin and other networks. This constant low size of the Mina protocol is attributed to the protocol’s ability to condense its blockchain using zero-knowledge proofs.

Moving on, Mina protocol aims to enhance payment options by advancing its payment system for easy distribution on the platform and the ease of verification of its users. 

On its white paper, you may see this termed as “succinct blockchain”.

Mina Protocol Architecture

A protocol’s architecture will refer to certain rules that the protocol abides by to function. It is these rules that determine the decentralization activity and security efficiency of a blockchain. Just like every other protocol, the Mina protocol has its architecture.

Block Producers

A Mina block producer produces new blocks for the blockchain. In producing new blocks, it validates the current state of the blockchain. 

A Mina block producer aims to provide security and achieve consensus on the blockchain.

On the Mina protocol, blockchain producers are not limited to certain people. Instead, any with the current state of the block can produce a block.

To produce a block ultimately, one must have enough computing power to reduce a blockchain SNARK within the slot time and connect to peers to broadcast the generated block. The developed connection to peers must be within an acceptable time, as the network consensus parameters state.

Stake Delegation

On Mina protocol, it’s possible to delegate funds and undelegated funds. Delegated funds can’t be spent. To undelegate funds, one must re-delegate them to their original account.

The Life Cycle of Payment

Payment is a transaction that transfers value from accounts to accounts with a transaction fee inclusive. The transaction fee is the charge to be paid by the sender to transfer his value to the recipient’s account.

Payment on the Mina protocol passes through various steps before they’re verified. Here are the payment verification steps on the Mina protocol.

Members of the Mina Protocol can create a payment then share it within the network. The Mina network then stamps it with a cryptographic key that validates the transaction from the sender.

The transaction is then sent to the network for processing by peers on the network. On receiving the payment, each peer gets a copy of the transaction in the local transaction pool. The local transaction pool is a memory store that stores all transactions a peer network has processed.

A block producer’s note is picked for a given time slot, with the active block producer choosing an in-flight payment depending on the payment fees. The active block producer then places the transaction fees on a transition block, also a list.

Also, the block producer defines the structure of a transition by generating a SNARK. The producer then transmits this new information for processing by the SNARK workers.

It’s important to note that block producers earn Mina as rewards when they build blocks.

To prove transactions, worker nodes perform SNARK calculations on each transition block.

These proofs emerge as individual proofs and neighboring proofs of payment. In the end, all payments are verified.

By generating proofs, SNARK workers earn currencies from the paid block producers. They then transmit the evidence over the network.

After verifying, the block producer sends out verification to all members of the block. The members then apply the required changes to their accounts before it reflects.

Proof of Stake Mechanism

The Mina protocol proof of stake functions majorly on the Ouroboros protocol. The Ouroboros protocol extends and modifies the Mina protocol blockchain.

Before now, the Ouroboros protocol was an extension of Praos, but now, it is the Ouroboros genesis.

Being a newer extension of Praos, Ouroboros protocol fixes any vulnerability that involves forks long fork attacks.

Scan State

Scan state refers to a data structure that permits transaction SNARKs production to decouple the output from block producers to snark workers. Also, due to the scan state’s data structure, SNARK proof generalization transactions can be completed and parallelized by several snark workers in a competition.  

Furthermore, because block producers don’t need to produce transaction SNARKs, there isn’t a change in the production time of the block. Also, irrespective of the transaction throughput, there is a constant time for block production. 

Scan state is replete with several full-binary trees, with each node present in a tree being worked on by snark workers. Periodically, single proofs from atop a full-binary tree are returned by the scan state. The proof affirms that transactions done at the tree’s base are correct.

Tokens 

Tokens are an avenue for users to issue and create their unique tokens. However, they require users to open a particular token account. 

Mina protocol allows users to mint their tokens which they can send using specialized token accounts. Mina’s command-line interface, also referred to as CLI, is the major way users interact on Mina’s Blockchain with tokens.

CLI offers an interface that encourages the functional creation of a new token account, new tokens, and minting of non-default tokens. Additionally, CLI features advanced daemon and client commands.

Snapps

Being the lightest blockchain in the world, Mina has a new applications category known as Snapps: Snarkified Applications. 

Similar to Ethereum Dapps, snapps are at a higher level due to their unique and specific properties. These properties,

Typically, snapps can be explained as Snapps = Dapps + Privacy + Off-Chain Data + Scalability. It is important to note that Mina’s snapps are way more efficient than Ethereum Dapps. Mina’s snapps benefit from Mina’s Blockchain scalability potential owing to Mina’s succinct nature.

How Mina Works

The Mina protocol runs on two major components - SNARK and Ouroboros Samasika. It is these two components that give the protocol its uniqueness. 

SNARK, for example, allows the protocol to maintain its small size despite the addition of some blocks to the blockchain. 

SNARK is a type of succinct cryptographic proof, and it validates each block after addition to a blockchain. Through this, it’s easy for nodes to store tiny proofs rather than the entire blockchain. 

On the other hand, the Mina protocol uses a unique Pos mechanism known as the Ouroboros Samasika. The Ouroboros Samasika provides bootstrapping via a genesis block. 

Succinct blockchains carry two significant functions; updating and verification.

In verifying, the succinct blockchain verifies blockchain, verifies consensus, and verifies blocks.

On the other hand, the succinct blockchain updates consensus and chain summary.

Asides from all these, the Mina blockchain also optimizes the storing of transactions. This is done by joining unproven blocks and submitting the process to a parallel prover. All of these it does by using a side-by-side scan. 

Risks Associated With Mina Protocol and Their Complications

More often than not, crashing nodes are due to configuration problems. The problem could be incorrect permission on the private key, incorrect characters, and incorrect peering.

To solve this, you can add your current user to the docker group. You can also add a prefix command, but this is not always recommended.

Keys directory has about 700 permissions, with private keys having 600 key files. All of these commands help to update your keys directory in your home directory.

This clearly indicates the absence of a message for twenty-four hours. That is, you have not received any message from your peers in the last 24 hours.

When writing this article, the current network is 128, including a coin base transaction and other fee transfers.

Often, the transaction was stuck and would indicate pending. Afterwards, the transaction will leave the transaction pool. You may try sending it again.

Payments can be canceled before syncing only if the funds are in the ledger.

To Wrap It Up

Mina protocol has stood the test of time, working efficiently, combining ingredients to allow you to transact easily on a blockchain. When writing this article, the current network is 128, including a coin base transaction and other fee transfers.

Mina protocol has solved lagging problems that arise due to the overcrowdedness of users on a blockchain. It was able to do this while still maintaining the decentralization of nodes.

On Mina protocol, transactions are secured on blockchains, and several blockchains can be added. Anyone can create a block; creating a partnership on Mina protocol is not restricted to a set of people.

Looking at the architecture, Mina Protocol has a bright future in blockchain technology.

Also read: Iron Fish: The Private Cryptocurrency

A new technology of blockchain, serving and acting as an optimistic roll-up called Arbitrum, just surfaced in the cryptocurrency world. This system allows Ethereum holders, users, protocols, and participants to participate and settle all transactions on the Ethereum mainnet. This serves as linkup loops to the main Ethereum crypto body. 

Arbitrum, therefore, serves as a Layer 2 cryptocurrency platform. By implication, the security and protection of the Arbitrum interface and network come from Ethereum itself. 

Generally, this makes the transactions scalable, faster, and interoperable, enabling compatibility and bonding of the Ethereum based applications with the Ethereum Cryptocurrency market. 

What is Arbitrum

Arbitrum, based on development, has passed and served as a system that ensured efficiency in the management and marketing of Ethereum amongst other layer 2 solutions. It is achieving several goals through the combination of Virtual machine crypto-architecture, networking design, and incentives. 

It has 4 significant benefits. They include; 

Scalability 

During the regular operation of Arbitrum, decentralized apps (DApps) using Arbitrum only have to navigate the main startup catalog or a chain of startups when they make transactions outside of Arbitrum. This allows ease of expansion and upgrades based on the general demand of the server network, unlike other blockchains. 

Generally, this is an advantage of enabling easy transmission of information from the user network to the server's network. It further lengthens the time and duration of the transactions without issues of connection or 'interface error'. This might arise due to an increase in the level of traffic on the Ethereum mainnet within or beyond the proxy counts. 

Privacy

Only the validated participants can be granted an entry and exit on the DApps, and only such participants need to know what is in the DApps code and storage margin. 

This system of upgrade to Arbitrum has enabled a user-network secure network, and all that is being published within this cryptocurrency margin are recognition of the DApps state. The users enabled sector such that messaging, recordings, messages, and currencies have end-to-end encryption between the network and the user's interface. 

The DApps creator also has free will to allow the user to see the internal server information. This is based strictly on the user demand, and the Arbitrum network verifying information and disclosure is purely optional.

Trust Guarantee

Arbitrum is unlike many other cryptocurrency channels for trading, storage, and transaction of coins such as state channel, sidechain, blockchain, main wallet, or private chain solution. It guarantees an exact, precise, and accurate execution as long as the validator of a DApp, which is usually the user acts honestly. 

No system upgrade allows liquidation of funds or turndown in the rate of transactions and amount of transactions made using Arbitrum.

Interoperability With Ethereum 

Arbitrum is an interoperable and interchangeable system that allows the open-source Arbitrum compiler to generate Arbitrum-ready code. You can also transfer Ether or any other Ethereum based token back and forth within the Ethereum and Arbitrum network. 

Interoperation scaling is enabled as the Ethereum system now runs as a significant interface in the Ethereum network system. This gives an overall boost to the Ethereum mainnet. Consequently, it reduces the cost of operation and gas fee that comes with the rush in the Ethereum mainnet by network users. 

Arbitrum Deployment on Ethereum 

Arbitrum platform is technically designed and centralized, making it better and more reliable than most blockchains. Proof of work platform by leveraging on general accessibility to the public and a lower costs of user-network leverage, this innovation of Arbitrum supports standard EVM contract deployment allowing standard Solidity smart contracts to be deployed on Arbitrum Chains using existing developer tools; an entire interface network of cryptocurrencies and tokens could be deployed but this deployment tool is set on the Arbitrum roll-up only and not the Ethereum.

Arbitrum uses roll-ups (a setup tool) to record batches of transactions on the Ethereum mainstream. The chain and execution of these transactions are on a scalable sidechain, while leverage is placed on the Ethereum network for security and result.

The major reason for Ethereum deployment on Arbitrum is to achieve better throughput and make transactions on the ethereum blockchain cost-efficient. 

This led to the advanced improvement of Ethereum by the community to make it more scalable and deployed on other scaling-solution channels like Arbitrum.

Arbitrum enhancement in Crypto-market

In recent times, cryptocurrencies have gained popularity in the world's exchange market. Unlike the stock exchange market, the crypto market is almost entirely online, and coins, tokens, and artifacts are being traded by various merchants worldwide. However, Arbitrum has solved significant problems in some of this retrospect. Insecurity and lack of fast servers have posed disturbance in the trading and merchanting of cryptocurrency for years till today. This is one of the many problems the Arbitrum helps in the general overview and boost of the system. 

Arbitrum is faster gaining popularity as it now scales 80% of all hurdles posed on using the Ethereum mainnet. This has not only given Ethereum the boost in its exchange as a cryptocurrency but has also helped to increase the general value of the Ethereum coin. 

Infrastructure 

So, many discussions have been done on the centralization and tactical approach of the Arbitrum network in helping to scale Ethereum during an increase in the demand for Ethereum on the main site leading to various cases such as an increase in gas fee and a slower network; however certain infrastructure has been put in place to allow transactions on the Arbitrum Scaling Solution, this infrastructure is basically by the creation of Arbitrum Virtual Machines (VMs). 

The Arbitrum Virtual Machines are first-class actors that perform specific functions logged into the Ethereum network, this form a send-receive network which helps to send and receive funds and messages as well as perform calculations and store data offline according to the code program on the network, generally this is a mechanism that helps reduce gas fee either during an increase in traffic on the Ethereum site or a crashing of the site. 

This infrastructure has made the Arbitrum VMs more scalable and private than the conventional way of implementing smart contracts on other scaling solutions such as Polygon and Optimism. 

Arbitrum manages the VMs off-grid the mainnet with minimal activity online to ensure correct execution. When someone creates an Arbitrum VM, they select a set of operatives responsible for executing the VM. The set of operatives are called Managers. They are responsible for the execution of the VM. Arbitrum thereby guarantees the correct and exact execution [even if other selected managers are corrupt]; because of the low on-chain work, Arbitrum VM is made more private. 

Comparison between Arbitrum and Other Layer 2 Solutions 

Arbitrum has posed many advantages to cryptocurrencies, many of these advantages are listed below; 

To Wrap It Up

Arbitrum has, over some time, gained publicity as a network operative system of Ethereum, leveraging over several system setups that have placed it above many layer 2 solutions and serving as an alternative route during network effect on the Ethereum mainnet.

Arbitrum is not just a solution to the problems posed by the Ethereum mainnet. It is a scaling option that has diverted and enhanced the usage and navigation of Ethereum, geometrically boosting the system by almost 100% and enabling many onsite users of the Ethereum.

Cryptocurrency traders and merchants are advised to engage in the Arbitrum network as more than an alternative but a new phase of Ethereum. 

Also read Casper: The Future-Proof Blockchain

Several blockchains have tried to address several issues that face decentralized transactions but none of them have completely addressed the issue. Only one of these blockchains is close to solving this once and for all. This blockchain is the Iron Fish blockchain.

The Iron Fish blockchain is a layer 1 decentralized blockchain platform that offers top-notch privacy security to users. It helps in overcoming the challenges of creating P2P connections in a node by eliminating any barriers that may be present. Also, it has been able to create connections in any browser and any CLI environment. 

Surprisingly, the Iron Fish project has so many other benefits it offers its users. In this article, we'll be discussing the benefits, networking mechanism as well as unique features of the Iron Fish blockchain. 

What is the Iron Fish Blockchain?

The Iron Fish project is a layer 1 privacy blockchain that offers users strong privacy transactions and wide expansion to the use of cryptocurrency. As a decentralized Proof-of-Work(POW) blockchain, Iron Fish offers users full-private transactions and supports WebRTC. By supporting WebRTC with WebSockets, it reduces the challenge of creating P2P connections. 

The Iron Fish aims to run a full node directly without future iterations in browsers or CLI environments. By doing this, it makes it easy for any person to create a node and join a node. It does so by lowering barriers to entry. 

Like other blockchains, Iron Fish has six ingredients:

Networking

The Networking component of the Iron Fish gives a run of basic networking startups, stacks, messages types, and sequences. Networking provides information about Iron Fish gossip protocol implementation.

Iron Fish Blockchain has a networking system that enables it to perform its unique functions as a blockchain. 

These functions enable it to carry out functions like node interaction, layers transportation, and nodal gossiping.

In building a decentralized blockchain system, creators have not successfully addressed the network address translation {NAT}. It is with the NAT that users can effectively communicate without firewalls and routers. However, by creating sharp accessibility with a combination of Web Sockets and WebRTC, the Iron Fish blockchain has completely addressed the NAT issue.

Asides from the combined action of the Web Sockets and WebRTC, Iron Fish uses an array of techniques to ensure that users connect freely irrespective of their browser and CLI environment. In other words, Iron Fish solves the problem of connection interjection due to technical faults.

That said, once a node is created, there has to be another node ready to connect to the former node. The latter node is known as Bootstrap which, once connected, connects the former node to another peer to form a network. Below, we discuss how nodes form a network in the Iron Fish blockchain.

Startup sequence

Before a network is set up, there has to be a node that initiates a connection or startup. Once the node initiates the startup, the following happens:

Peer connections lifestyle

During a connection, a node maintains a complete knowledge of its peers and other peers connected to it. They do this by occasionally checking for changes in the nodal connections. With that already said, let’s discuss the modality of nodal communication.

Nodal messaging

A nodal message is a unique format member of a group sends messages in a node connection. These messages are usually agreed upon and only peers in a network understand them.

There are different types of messaging with different styles of messaging.

Nodal messaging styles

Gossip

Gossips occur within networks, sending messages from one node to another. Once a node receives gossip, it forwards it to the nearest connected node. The essence of gossip is to propagate changes that occur in a nodal connection.

Direct RPC

This style of messaging helps to send messages to a specifically connected peer and awaits a response. It does this by its Remote Procedure Call {RPC} stream that comprises a request stream and a response stream.

Fire and Forget

The fire and forget style allows users to send messages to connected peers without any confirmation of receipt. This style of messaging is often useful if users need not worry about the recipient receiving the message.

Global RPC

Messages sent here are sent to specific users and other users in the same network. Global RPC resends the message if there are any errors in the message or if the sender doesn’t get a response. However, this style of message favors known peers over unknown peers.

Mining

The mining section in the Iron Fish blockchain describes how the blockchains construct new blocks for their users. In constructing new blocks, they do this randomly for the sake of proof of work and the miners' reward calculation.

Mining in the Iron Fish blockchain is defined by rules that guide the creation of blocks and verification of peers in an incoming block. While on the other hand, miners are nodes that add new blocks to the blockchain. We say a new block is added if a miner finds a hash of a blocker header below a target.

To prevent block accumulation, the Iron Fish block adjusts the difficulty of mining by 15 seconds. This is done if observed blocks are coming in faster or slower.

To mine on the Iron Fish blockchain, your node must know global data structures and must be familiar with the two most recent blocks.

Storage

The storage section helps users understand the basic structures and models of the Iron Fish. Also, it helps users how this layer is accessible in both browser full nodes and CLI.

In discussing an Iron Fish storage system, we’ll be looking at what the system stores and how the system stores.

What does the system store?

Note

A note is a spendable representation of the payment form. It is quite similar to the UTXO of bitcoin. Nodes are referenced privately and are only referenced publicly on two occasions. The first occasion is when the note is severe as an output for a transaction. The second is when the note is in a hashed form. More importantly, notes are always private.

Nullifier

A nullifier is different from a note and it is unlinkable to a note. A nullifier is a distinct identifier to a note and can only be spent if exposed as part of a transaction.

Once exposed, the nullifier is saved on Iron Fish data structures. These data structures help to keep track of all nodes on the Iron Fish blockchain. And there are two of these data structures

Merkel tree notes

The Merkel tree note as an accumulator data structure presents several elements with a tiny identifier. A Merkel note consists of the following

Merkel nullifiers

The Merkel tree of nullifiers functions like the Merkel tree of notes in that it accumulates too but it accumulates are nullifiers. Although, unlike the Merkel note, it accumulates notes in a series of nullifiers.

Also, the Merkel nullifier is used to track all Merkel notes spent and accompanying notes.

How then does the iron fish store data?

In storing data Iron Fish uses a storage layer that works as a Command Line Interface(CLI) tool and a browser.

Account creation

Just like other blockchain accounts, users can create an account on the iron fish blockchain using a Sapling protocol. To better understand how this and other components are necessary for account creation, going through the account creation layer will do.

All transactions on the Iron Fish blockchain are influenced by the Sapling protocol. This section explains the key components of an account.

Secret key

The secret key is necessary for constructing one's wallet and it's a 32-byte random number.

Spending key

The spending is a direct derivation of the secret key. The spending key is used by users to spend notes associated with accounts. The spending key comes in pairs:

Spending authorization key(ask): This private key in this pair is derived by using the modifier Blake2b and placing hands on a secret key. After this, the key is converted into a scalar for the jubjub curve.

Authorization key(ak): The authorization key is a derivation of the public key by the multiplication of the spending authorization key. 

Nullifier keys

The nullifier keys are derived from the secret keys and are necessary for creating nullifiers and spending a note. The nullifiers' keys are into pairs:

The proof authorization key(NSK): The proof of authorization key is the private component on the pair and it's derived by using the modifier Blake2b and placing hands on a secret key. After this, the key is converted into a scalar for the jubjub curve.

The nullifier deriving key: This key is a derivation of the public key by the multiplication of the spending authorization key. 

View key pair

The view key pair comes in two and are:

Outgoing view key(ovk): This key is responsible for the decryption of outgoing transactions. 

Incoming view keys (ivk): The incoming view key allows your decryption of incoming transactions.

Transaction creation

This layer gives a run-through on the applications of zero-knowledge in the Iron Fish blockchain alongside its transaction in conjunction with the Sapling method. Also, it gives a run-through on how to validate and balance existing transactions.

Verification and consensus

This final section simplifies the rules on accepting new block transactions. Oftentimes, this is the layer several users visit the most.

Before now, we discussed how nodes are created but didn't discuss why they're created that way. Nodes are created following the blockchain consensus rules.

The blockchain consensus is a verification layer that sets rules on how nodes accept blocks. This consensus layer is what the Iron Fish blockchain operates on. 

Moving on, the Iron Fish block will be accepted if it has a valid header and body. At high levels, verifying headers will confirm the amount of work behind a header. To confirm the amount of work behind a header, the system checks for a hash numerically lower than the target. 

Moving on, the Iron Fish block will be accepted if it has a valid header and body. At high levels, verifying headers will confirm the amount of work behind a header. To confirm the amount of work behind a header, the system checks for a hash numerically lower than the target. 

Validating a block header

To validate a block header, a receiving block header checks all of the following correctly. 

Validating a block body

To validate a block body, the system validates all transactions in the block. This is done by checking the validity of each transaction.

Iron Fish Gossip Protocol

The Iron Fish gossip protocol broadcasts new transactions and blocks to every peer in a network. To do this, nodes in a network verify incoming transactions, then send them to other peers. After broadcasting the transactions, the nodes validate the incoming blocks before signaling the node’s transaction ledger. The essence of a peer broadcast is that every peer receives messages quickly.

Iron Fish Zero-Knowledge Proof

A Zero-Knowledge proof refers to cryptographic techniques that verify and proof statements without exposing their underlying data. For the Iron Fish blockchain, it can do this by using zk-SNARKs. Essentially, zk-SNARKs shields Iron Fish users’ identities and balances. Because of this, you successfully hide your identity and transaction details.

Unlike bitcoins and ethereum, Iron Fish blockchain transactions are not in the permanent ledger. Instead of this, Iron Fish users can transact without it revealing their balance or their identity. Experts even say the Iron Fish blockchain creates platforms for developers to carry out their work. Most especially, this platform will favor developers who have no foreknowledge of cryptocurrency.

The Iron Fish network uses the sapling protocol created by Zcash to verify transactions on its blockchain. In verifying transactions, they protect their clients and offer better services. 

Not only are they important to developers, but they're also important to cryptographers and enthusiasts in the field. For cryptographers, they can create Rust Coding coinage for their work and other systems. 

To Wrap It Up

The Iron Fish blockchain offers several benefits to its users. One of these is the ease of accessibility into networks for node creation. Another one is the advanced level of its decentralized privacy transactions. 

So, don't be caught in the traps of archaic systems that disallow you from using effective software. It's with effective software that developers develop interesting and mind-blowing software for blockchains as well as platforms related to blockchains. Ensure to update yourself on all of these and enjoy advanced technological solutions. 

Also read: Digital Identification on the Blockchain with Microsoft’s ION 

This article will discuss the Golem Network and how it operates intensively.

Introduction

Blockchain technology has exposed the world to a realm of beautiful creation that we would have thought to be impossible years ago. From a technology built mainly for peer-to-peer transactions in 2009 (bitcoin blockchain), the blockchain has become the technology of choice for many applications such as healthcare, gaming, real-estate, etc. 

Blockchain technology not only allows for creating wealth or enforcing a contract without a third party but also for building supercomputers. The first decentralized supercomputer to be built on the Ethereum network using blockchain technology is the Golem Network.

History of the Golem Network

Golem was co-founded by Piotr Janiuk, Aleksandra Skrzpczak, Julian Zawistowski and Andrzej Regulski in 2016 in Switzerland. After launch, Golem sold 82% of its supply and raised about 820,000 Eth, which amounted to about 8.6 million dollars at that time.

What is Golem Network?

Golem is a decentralized application (dApp) built on the Ethereum network. It is a decentralized supercomputer that connects computers in a peer-to-peer network, thus creating a global market where application developers and users can rent resources (idle computational power) of other user's machines. Users can rent their hardware and be paid in Golem tokens. Those who need computational resources to complete a more complicated task such as CGI rendering, artificial intelligence, etc., can get it and pay for it through the Golem marketplace. The beauty of the Golem Network is that anyone can access it, and its constituents are the combined power of users' machines from personal computers to the whole data centers.

The computational resources supplied by centralized cloud service providers such as Amazon, Google, etc., have limitations such as hard-coded provisioning operations, closed networks, and proprietary payment systems. Golem provided a decentralized marketplace where users can share the computational resources that other users require to carry out their tasks to address these limitations. The users who share their resources to the Golem Network get rewarded in Golem tokens (the native token of Golem).  

Golem functions as the backbone of a decentralized marketplace focused on computing power. Anyone who wants to create and deploy software to the Golem Network can publish the software to the application registry. Developers can use the application registry and transaction framework to extend and customize the payment mechanism, which gives rise to a unique way of monetizing software.

Application Registry and Transaction Framework

The Golem Network has various features that make it unique, but the application registry and transaction framework are essential. The application registry and transaction framework empower developers and create a secure, transparent, and efficient platform. 

What is an Application Registry?

The application registry is simply a register of the basic information of applications and their developers. A smart contract built on the Ethereum blockchain allows developers to integrate their applications into the Golem Network. Anyone can confirm the authenticity of an application by checking the registry; the registry holds information about a trusted application and a non-trusted application. Developers can publish their integrated applications and help users locate the required tools for their needs.

 What is a Transaction Framework?

Picture Credit: Golem Whitepaper

The transactional framework allows developers and providers to decide the payment mechanism and set the price they want for their applications. The transaction mechanism is entered into the application registry and must use an open-source or Ethereum Virtual Machine (EVM) as a deterministic environment. The mechanism also uses GNT (the native token of the Golem Network) and receives community approval. Examples of transaction frameworks are off-chain payment channels, custom receipts, Nano payments, per-unit use of software, payout schemes, etc.

The Working Principle of Golem

Golem provides a platform where providers, software developers, and others share computing power and network resources. The transaction initiates when a requestor (a user who accesses Golem Network to ask for resources) demands computational resources from a provider (a user who sells computing power) through the task template. For instance, instead of paying a centralized cloud-based platform such as Google Cloud for artificial intelligence, which is a computer-intensive process and slow on some occasions, the user can request computation power from a provider in the Golem's peer-to-peer network.

Steps involved in carrying out a task through the Golem Network include the following:

The Architecture of the Task Template and Reputation System

The Golem Network requires the task template (which has the complete computational logic) to execute the request made by the requestor. The computational logic needed to execute the request are:

  1. The source code to be run
  2. Splitting of the task into subtasks and sending it into different nodes
  3. Verification of final results

As soon as a task is completed, Golem immediately grades the requestors and providers that use its marketplace through the reputation system. The network detects malicious nodes and provides an evaluation metric for scoring tasks correctly.

The reputation system monitors the task of the requestors to ensure that it does not contain errors when the provider computes it and monitors the timeline of the requestor's payments.

The reputation system grades a provider because they have computed their task correctly, and the task passed a verification check upon return.

Golem's Use-case

Golem cryptocurrency (GNT) use-case is in the Golem Network. The value of GNT is attached to its use in the Golem Network because it is the coin of choice. Requestors need a GNT token to rent computational resources from a provider who computes the computations. Hence, the requestor will always have to buy GNT to access the Golem Network.

Summary

The Golem Network was created to solve the problems associated with renting computing power from centralized cloud-based providers. It achieved this by allowing users to supply and lease providers' computational resources using a peer-to-peer approach. The network rewards providers of the hardware the requestor rent with GNT. Golem prides itself as the first open-sourced decentralized supercomputer powered by the Ethereum blockchain.

Also read Augur: Your Global, No-Limit Betting Platform

This article describes the concept of digital identification on the blockchain and the working mechanism of Microsoft's ION.

Introduction

From time immemorial, identification has been an integral part of the human race signified by many things such as tribal marks, body piercings, etc. In short, all humans have an identity, but how we identify ourselves has continually changed over the years.

Humans identify themselves through identification cards, which is important to confirm our identity relating to people or organizations. For instance, anyone opening a bank account, checking into a hotel, traveling out of a country, or even applying for a driver's license needs a form of identification card that is personal to the owner.

The advent of technology has reshaped how humans can identify themselves, especially online (digital) identification. As the way to represent identity changed gradually from analog to digital (internet), many people lost the liberty to manage their identity credentials online. This has prompted the belief in some people that blockchain could be the answer to the identity problem created by the internet since it is purely decentralized.

The identification on a blockchain will limit the control of people's identity to their own hands instead of a third party. Hence, they have complete control over their data.

This article goes beyond identity on the blockchain to exploring in detail the Microsoft ION identity solution. It defines identity on the blockchain, discusses how ION works and the various architectures and system features that make it unique from other identity networks on the blockchain. 

What is Digital Identification in Blockchain?

Digital identification in the blockchain uses blockchain principles to create an identity card and provide management in such a way that gives control to the owner rather than a third party. Since the first blockchain implementation in bitcoin, it has been useful in various applications, including identity, healthcare, supply chain, etc.

Thanks to Bitcoin, a decade ago, that aroused the curiosity of developers, cryptographers, and distributed systems engineers to solve the problems associated with centralized identity systems. Today, cryptographers and other distributed system players are deploying identity solutions on various blockchains, viz; Bitcoin's ION, Cardano's Atala Prism, Ethereum's Element, and so on.

The distributed system community, through groups like Internet Identity Workshop IIW, World Wide Web Consortium W3-C, Rebooting Web of Trust RWoT, are exploring the ideas and technical processes of the traditional identity system. Hence, proposing decentralized identities to achieve a fully distributed and decentralized identity. The purpose behind DID, a foundational technical component of decentralized digital identity, is to give ownership and control to individuals.

While many solutions are proffered, the common denominator is finding a scalable, user-owned unique identifier to a set of cryptographic keys and routing endpoints. So many solutions thus far are not focused on achieving a scalable and decentralized network that doesn't require utility tokens, consensus mechanisms, and trusted validator nodes.

In response to the above-stated issue, Microsoft proposed and launched Identity Overlay Network, also known as ION. Before exploring the solutions, architectures, and killer features of Microsoft's ION, it is crucial to discuss in-depth more about identity.

Why Digital Identification on Blockchain?

Digital identification on the blockchain could solve some of the problems associated with our present identification process. These problems are:

Models of Digital Identity Management

What is Self-Sovereign Identity?

Before defining Self-Sovereign Identity, we should understand that the user-centric model cannot give autonomy, which users need. So, the SSI was introduced to provide sovereignty and put total control in the hands of users.

Self-Sovereign Identity (SSI) is a digital identity that people can store on their devices without relying on an external party. The concept of SSI is purely decentralized and gives the power to create and manage an individual's identity to the owner instead of a third party.

The Working Priciple of Digital Identity on the Blockchain

The digital identity in a blockchain is decentralized, and it operates based on the following components:

Advantages of Digital Identification in Blockchain

Blockchain identification has numerous advantages, which are elaborated on below.

What is ION?

The idea behind ION is to achieve a scalable, resilient, user-owned decentralized identity system where users do not need utility tokens, consensus, and trusted validated nodes. By implication, users own and operate their nodes. ION is a layer 2, public, permissionless, decentralized DID overlay network that runs atop the Bitcoin blockchain and leverages a deterministic DPKI protocol called Sidetree.  

Before fully deploying ION in early March, Microsoft started exploring Sidetree between 2017 and 2018. During this period, they determined if it was worth investing in. Upon realization, the team worked in collaboration with SecureKeyMattr, Consensys, Transmute, GeminiBitpayCasa among others to codify Sidetree into a formal specification with the decentralized identity foundation.

ION Architecture

Microsoft ION Architecture

Microsoft's ION comprises a collection of microservices, including a Bitcoin Core, IPFS, and MongoDB (for local data persistence). Simply put, the majority of ION's code comprises Sidetree protocol. As a Sidetree based DID network, it combines Sidetree logic module; a chain-specific read/write adapter, a content-addressable storage protocol (e.g., IPFS), MongoDB, and an existing layer one protocol. 

The content-addressable storage protocol like IPFS helps replicate data between nodes. The above combine to form the Sidetree protocol that enables the creation of layer 2 DID networks that run atop existing blockchains (layer 1) at thousands, or even tens of thousands, of PKI operations per second. The Sidetree requires no additional consensus like several other layer 2 solutions. It simply relies on a decentralized chronological ordering of operations provided by the underlying blockchain. Unlike monetary units and asset tokens, IDs are not intended to be exchanged and traded. To achieve greater scalability without relying on additional layer 2 consensus schemes, trusted validator lists, or special protocol tokens. Also, the Sidetree is designed to allow all nodes of the network to arrive at the same Decentralized Public Key Infrastructure (DPKI) state. This allows an identifier based solely on applying deterministic protocol rules to chronologically ordered batches of operations anchored on the blockchain, which ION nodes replicate and store via IPFS.

ION Working Mechanism

Microsoft ION working

Source

ION leverages a single on-chain transaction, blockchain-agnostic Sidetree protocol to anchor tens of thousands of DID/DPKI operations on a Bitcoin chain. The ION node processes and encodes transactions with a hash used to fetch, store, and replicate the hash-associated DID operation batches via IPFS. Without requiring an additional consensus, the nodes process the hash associated DID operation batches following a DIF's set of deterministic rules, enabling them to independently arrive at the correct DPKI state for IDs in the system. The nodes are designed to fetch, process, and assemble DID states in parallel, and also, the aggregate capacity of nodes can run at tens of thousands of operations per second.

How to Run ION and Create DIDs

To run ION, you need to meet certain hardware and software requirements. 

Hardware requirement; 

Software requirement

Make sure you have running on your machine, Windows, or Linux operating system. Upon meeting the listed prerequisites, follow the below to run ION and create DIDs; 

Conclusion

Though digital identification in the blockchain is a field that is still new, it gives an assurance of more tight and user-centered control of one's data than centralized databases. It reduces the risk of getting people's information to hackers who use it for different nefarious activities. Microsoft proffered a scalable, resilient, user-owned identity management system that doesn't require utility tokens, trusted validator nodes, and additional consensus mechanism through ION, a layer two solution to decentralized identity.

Also read DeFi Lending: A Primer

Introduction

Are you a developer looking for the next best blockchain to host your project? are you a cryptocurrency trader that wants to try other Blockchains? Or are you a trader or investor in cryptocurrency but the gas fee is not friendly to you? whatever your interest is or wherever your interest lies, this article will present the Solana Blockchain, one of the most exciting Blockchain that answers most of your questions.

What Is Solana Blockchain?

Solana is a decentralized Blockchain that is fast, secure, scalable. It is a platform where anyone can build a decentralized app. It is essential to know that the Solana blockchain can run around 50,000 transactions per second (TPS) and have a block time of approximately 40ms. Astonishing, isn't it?
In 2017, Anatoly Yakovenco created the Solana blockchain. He and his team created the blockchain to make transactions fully trustless and solve scalability problems.
Yakovenco did not just build Solana from the blues; he had a lot of experience while working with Dropbox as a software engineer and lastly Qualcomm before making the Solana blockchain.
Today, top organizations such as Qualcomm, Microsoft, Apple, and Google support the project from their wealth of experience.

How Does Solana Work?

You may be wondering about how Solana could achieve scalability with running 50,000 transactions in a second. If you have been wondering about it, wonder no more as the reason for this stunning performance is tied to the working principle of Solana.

To ensure all these work together for good, Solana developed eight important innovations by which it operates. The eight innovations are discussed below.

Proof Of History

Solana uses a proof of stake consensus that works perfectly with proof of history to determine the transaction time in the protocol.

The proof of history is a record that verifies that an event happened within a specific time frame and keeps track of it. This approach assigns a timestamp for any transaction carried out on the blockchain. It also disallows any involvement either by bots or miners in deciding the order in which blockchain records its transactions. It is different from other blockchains in that it does not wait for other validators to confirm a transaction before it is accepted. Solana allows all validators on its platform to confirm transactions immediately without waiting for another. It can achieve this by making use of SHA-256 - it enables hashing a verifiable delay function sequentially (VDF).

Tower PBFT

Byzantine fault tolerance is an agreement that tolerates failure and defends the computing system against corrupt data and malicious attacks. As a result, all the nodes in the system get the same authentic data all the time.
The tower's practical byzantine fault tolerance ensures that all transactions in the system are verified with the lowest processing power possible. It can do this because it uses the proof of history as a clock - a record of the timestamp of past transactions - before achieving consensus. Hence, Solana becomes faster and more efficient than other blockchains.

Turbine

It is a block propagation protocol that makes transmission to the blockchain node easy.

Gulf Stream

Validators on Solana can now execute transactions faster and reduce confirmation time. All thanks to the gulf stream. The transactions are always at the forefront of the system for execution. 

Gulfstream is the mempool-less transaction platform. We must understand what a mempool is to grasp what the Gulfstream entails fully.

What Is A Mempool?

A mempool contains all transactions that are submitted on the blockchain but has not been processed. What these mean is that a mempool is a transaction awaiting confirmation on the blockchain. With this understanding now, we can safely say a Gulfstream is a platform that does not allow delay in a transaction before it's been processed. Interesting right? We will delve into how the gulf stream works and how it helps the Solana network to make faster transactions.

How Does Gulf Stream Work?

In Solana, there is a concept of leader which is the role of a validator when it is appending entries to the ledger. Validators can easily execute a transaction before the set time, reducing the transaction time. This is possible because all validators are aware of the order of upcoming leaders, so they send the transactions to the expected leader before the set time so the leader can process the transactions.

A block occurs on the Solana platform approximately every 800 milliseconds, and it becomes more time-consuming to unfold as they increase. In a worst-case scenario, a fully confirmed block-hashes contains about 32 blocks. A client signs a transaction that points to a recent block-hash that the network has confirmed. The signed transaction is sent to the validators which immediately forward it to the most senior leader in the network. The client knows that the network confirms a transaction and that the block-hash has an expiry time, so the client signs a transaction knowing that it can execute or fail. Immediately the network is ahead of the rollback point, the referenced block-hash expires, and the client knows that the transactions become invalid, never to be executed on the chain.

Sea Level

The sea level is a parallel smart contract runtime. The sea level helps Solana protocol scale across GPUs and SSDs, enabling efficient runtime. In addition, the sea level gives all Solana transactions the ability to run concurrently on the blockchain.

Pipeline

The pipeline mechanism is a processing unit that enables all transactions to be quickly validated, optimized and recurrent across all the nodes in the Solana network. The pipeline follows the outline below to carry out its function.

Cloudbreak

Cloudbreak allows the Solana network to achieve a high level of scalability. Before defining Cloudbreak, let's understand the Solana blockchain scalability.

Cloudbreak And How It Achieves Scalability

Scalability can be achieved without sharding, but more is needed than scaling computations alone because the memory used to monitor accounts can easily be overwhelmed, affecting the size and speed of the network. The network used to achieve scalability must take advantage of the account's concurrent read and write access. RAM and SSDs can be used to achieve scalability without sharding, but they come with a huge disadvantage. To solve the challenges posed by using RAM or SSDs for scalability purposes, Solana designed software that allows 100% utilization without involving the hardware. It does not use a traditional database to address scalability but uses different combinations to provide solutions. The mechanisms are highlighted and discussed below.

How Solana Achieves Scalability

a) Memory-mapped file leverage: a file that has its byte mapped in a process's address (virtual) space. The kernel may or may not store the cached memory in the RAM. Although the RAM does not limit the amount of physical memory, the size of the disk can. The disk performance determines the reads and writes.

b) Faster sequential transactions: Sequential transactions are faster than random operations across all the virtual memory stacks.

The accounts data structure of faster sequential operations are:

i) The RAM stores all index of accounts and fork.
ii) About 4MB of memory-mapped files stores all the account.
iii) A memory map stores an account from a proposed fork.
Random distribution of maps across numerous SSDs.
iv) Semantics (copy-on-write) are used.
v) Writes are assigned randomly to a memory map for the same fork.
vi) After each writes, the index is updated.

Solana gets the privilege to write and scale concurrent transactions sequentially and horizontally across many SSDs because the account updates are copy-on-write and assigned to a random SSD. It is not only the writes that are horizontally scaled but read. Read achieves this because forks states updates occur across numerous SSDs.

c) Garbage collections: As accounts get updated, and forks are finalized after rollback, every old account is collected as garbage and freed from the memory.


d) State updates for fork: horizontally scaled sequential reads that happen across all SSDs help with computing Merkle root of the state updates for a fork.

With Cloud break, Solana achieves scalability without sharding and also scales much more than computations. You can look at it as an optimal data structure for concurrent reads and writes across the network.

Archiver

As the name implies, the archiver in the Solana network is the node for storing data from validators. Therefore, many checks go on in the background to ensure that only valid data are stored on the archivers.

The Solana Ecosystem

Solana has been attracting many projects that build its tech stack due to its fantastic advantage in the current cryptocurrency world. Today there are more than 200 projects built on the Solana protocol. Some of the projects are highlighted below.

The Solana ecosystem is growing very fast, with about two hundred and eighteen (218) projects built. The project cuts across various categories such as Defi, AMM, Stablecoins, Governance, Dex, and NFTs.

Sol Token

SOL is the native token that is used on the Solana protocol. The Sol token has two crucial use cases, which are:

  1.  It is used to cater for transaction fees and smart contract operations on the protocol.
  2. You can also stake the Sol token to earn a profit on the Solana protocol.

To stake sol token, you should follow the steps below:

  1. Get a wallet such as SolFlare and Exodus that supports Sol staking 
  2. Create your staking account by following the instructions on the wallet.
  3. Follow the instructions on the wallet to choose a validator .
  4. Delegate your stake to your chosen validator.

According to coingecko, Sol has a current circulating supply of 272 million out of its maximum store of 488 million. It had an all-time high of $149.91 in September 2021 and currently trades at a value of $142 per Sol token. The current market cap of Sol is around $41,499,887,443.

Conclusion

The Solana blockchain achieves the fastest cryptocurrency transaction per second compared to Ethereum which takes about 15 seconds per block, and bitcoin of 10 minutes per block. Recently, platforms such as OKEx, MXC, and the Solana foundation became partners to launch two new funds that will increase the growth of projects on the Solana ecosystem. If the ecosystem continues this way, it might just become the leading blockchain soon.

Also, read on Stable Coins.

Money is anything that has value and can serve as a source of exchange. Centuries back, the people gave cowries value, and it became money before the introduction of fiat currency. In the 21st century, many people decided to use a digital asset called cryptocurrency as a form of exchange. Cryptocurrency has gained much popularity since its inception in 2009. However, many people still need guidance on how to use it. It is easy to start using cryptocurrency, though you have to get a cryptocurrency wallet. The cryptocurrency wallet works precisely like the wallet in our traditional financial system. In the conventional financial system, you would need a place to store your fiat to preserve it from damage or protect it from theft. Whatever you use to store your fiat is a wallet. The same principle applies to cryptocurrency wallets.

Cryptocurrency Wallet 

A Cryptocurrency wallet is a digital container that stores public and private keys for cryptocurrency transactions. Because cryptocurrency is a digital asset, it cannot be stored in a traditional wallet. A cryptocurrency wallet is a device used to send and receive cryptocurrency. There are thousands of cryptocurrencies, and each has its unique supported wallet. No two cryptocurrency wallets are the same. For example, a bitcoin wallet can only receive or send bitcoin and supported coins, while an Ethereum wallet can only receive and send Ethereum and Ethereum standard tokens called ERC-20. Similarly, there are also wallets for securing Tron-based coins called TRC-20 wallets. 

To accommodate the wide range of crypto assets there comes the need for a multi-assets, standard wallet infrastructure. So far there are multi-assets and standard wallets, namely; Trust Wallet, Ledger, BC Vault, SafePal, MetaMask, and many others. Using this class of wallets is as simple as the others. All you need to do is to select and copy the right wallet address of the asset. 

Working Of Cryptocurrency Wallets

You can liken a cryptocurrency wallet to your traditional bank account number. Ordinarily, when you want to operate a bank account, the bank gives you an account number specific for you. You can share the account number with people. There is no risk attached to sharing your account number with friends, family, and even your enemies. Similarly, a cryptocurrency wallet is similar to an account number, but this time, it comes in randomly generated alphanumeric characters. 

Once you download a wallet, you would get a unique code generated automatically. This code consists of numbers and alphabets. To get funds into your wallet, you can share the unique code attached to your wallet, and you would receive any funds sent into the wallet.

Types Of Cryptocurrency Wallets

There are generally two basic types of cryptocurrency wallets: hardware and software. However, sometimes they are classified into five main types of wallets: mobile wallets, web or online wallets, desktop wallets, hardware wallets, and paper wallets.

Mobile Wallets

Mobile wallets are mobile apps or  DApps which you can download from the Google play store. Similar to other apps, it can be used anywhere with an internet connection. It is specifically used for securing your private and public keys.  

Web Wallets

A web or online wallet is different from a mobile wallet because it runs on the cloud. It could be accessed from any device that is connected to the internet anywhere. Though it is easy and convenient to use, you must be aware that a third party controls your private keys, and it is easier to be hacked and stolen.

For example, a centralized exchange like Hotbit and Binance stores your coins on their server. Any problem with the exchange, such as hacking, can make you lose all your funds. It is advisable to use a web wallet with caution.

Desktop Wallets

As the name implies, desktop wallets are wallets on your computers. Desktop wallets are more secure than mobile wallets or web wallets because they can only be accessed on the computer you downloaded them on. The disadvantage is that your funds can be gone once your computer is misplaced or stolen, or if there is a virus on it.

Hardware Wallets

Hardware wallets are the most secure wallets available. The hardware wallet stores your private and public key on a hardware device offline. You can transfer funds to another person by connecting your device to the internet, after which you disconnect. It is almost impossible for a hacker to infiltrate your wallet because you enter your private key into the device and not the internet. So hardware ensures you keep your fund offline to avoid the danger of losing it.

Paper Wallets

Paper wallets are not mostly talked about, though it is safe and easy to use. A paper wallet refers to a printout of your private and public keys on paper. You can receive crypto to your paper wallet by sending the public address you printed on your paper to the sender. You can also send your crypto to someone else from your paper wallet by entering the keys into a web wallet or by scanning the QR code on the paper. The process of sending crypto from your paper wallet is called sweeping.

Paper wallets are highly secured because they are kept offline and not online; hence no hacker or person can get them online. The only way to get your fund is if another person has access to your paper, thus keys.

Software And Hardware Wallets

Each of the wallets has its advantages and disadvantages. An average cryptocurrency user cares about software wallets without knowing that hackers could strike anytime. On the other hand, a hardware wallet, since it's hardware that houses a user's private keys, had no access to the internet except when it was connected to transfer and swap funds. 

Primarily, software wallets users depend on third parties for fund security because when it is not your keys, it's not your coin. However, it is more accessible and easy to use than hardware wallets.

Cryptocurrency Wallets And Security

Cryptocurrency is a volatile asset and should be kept safe. Please note that securing your private key is the goal of securing your crypto. No matter the wallet you use, your crypto is unsecured once your private key is compromised. Nevertheless, the type of wallet you use is vital as the risk attached to each differs. 

Recall that we discussed the five types of wallets above. The most secure wallets are wallets that are free from the internet. These wallets are paper and hardware wallets. Though wallets that use the internet consistently, like web and mobile wallets, are less secure, you can always ensure you keep them secured by outsmarting hackers.

Hackers can access your funds through malware, phishing, and more. Those who use centralized exchanges and have a web address are at greater risk, as the exchange can make away with their funds. 

Below are some of the things you can do to protect your funds from loss:

    1. Try as much as possible to avoid using centralized exchanges. If you must use it, ensure you keep what you can afford to lose on it. Also, ensure you always log in to the site from secured internet access. Do not use public Wifi to access the site, and ensure you log in to the correct website alone.

    2. Always ensure your device software is up to date to get the latest security support. Old software is an easy target for hackers, and it can easily be compromised.

    3. Consider having a wallet that allows multiple signatures. Multiple signatures mean that you cannot send funds with only one device. You must authenticate transactions using more than one device. Multiple signatures ensure that your funds are secured even if you misplace your device, as the person who has the device cannot use it without the other devices.

    4. Always backup your wallet regularly to regain access to your wallet if there is a crash to your system or hard drive. 

    5. Use complex passwords and authenticators to protect sending your funds to unknown people.

The Best Cryptocurrency Wallet

The best cryptocurrency depends on what you decide. After reading my thoughts above, you should have a better understanding of the cryptocurrency wallets. There are numerous cryptocurrency wallets. We will look into some of them which has good ratings and acceptance.

BC Vault

BC vault is the wallet of choice when we are talking about security. While other cryptocurrency wallets use BIP39 or BIP44 libraries to generate seeds that could be compromised during a leak, BC vault uses a gyro sensor (RNG) to generate separate keys for each user, making them more anonymous. RNG makes your wallet more secure compared to the BIP model. 

There are five layers of security associated with the BC vault. These layers are global password, global pin, the device itself or a backup, wallet password, and wallet pin. BC vault gives you complete access to your keys, and that gives you the power to have your bank in your hand. 

BC vault has support for many coins ranging from bitcoin to ERC-20 tokens. The price is affordable when compared to the security that comes with the wallet.

Ledger Nano S Wallet

Ledger Nano S wallet is a hardware wallet that is highly secured. Once you buy a ledger nano wallet, you get a physical device to store your cryptocurrencies offline. To send crypto to someone, you need to connect the wallet to your laptop, enter your pin and send.

Exodus

Exodus is a free cryptocurrency wallet that supports multiple coins. It is user-friendly and straightforward to use. You can also use this wallet to buy and sell cryptocurrency, and your private keys are secured as no other person has information about it except you.

Bread Wallet

Bread wallet is another free, open-source wallet made to store your cryptocurrency. There is a direct connection between the bread wallet and the bitcoin blockchain. One of the disadvantages of the bread wallet is that it does not support two-factor authentication.

Trust Wallet

Trust wallet is a multi-coin-supported free wallet on mobile. It includes a decentralized application section (dApps). It is easy to use for trading on decentralized platforms such as PancakeSwap, and it is highly secured. You would get a seed phrase after registering on Trust Wallet, which must be kept safe. The seed phrase is the only way you can access your account if you lose or change your phone. You can set a password for all your transactions in the wallet. The password ensures all funds sent from your wallet are with your permission.

Metamask Wallet

Metamask wallet is a crypto wallet that supports multiple coins. It is free and has a dApps section. You would have a seed phrase after registering, which must be kept safe. The seed phrase is the only way you can access your account if you ever lose or change your phone.

Jaxx

Jaxx is a wallet that supports multiple coins. It is accessible by various platforms, with an android device, iOS device, Windows, Linux, Google, and more. It is highly secured, user-friendly, and has excellent user support.

Conclusion

In conclusion, a cryptocurrency wallet is a software or hardware that keeps you in control of your digital funds. Many people are waiting to devour unsuspecting cryptocurrency user's funds. Therefore it is essential that you choose a secure Crypto wallet to be safe. If you have read this article and understood it, you should be more armed with information that would save you from scammers and hackers. In closing, I would like to reemphasize that your top priority is a hardware wallet because it allows you to control your keys, Unlike software wallets that are managed mainly by third parties. For instance, your funds in a centralized exchange, though sometimes trusted, are not in your care, so you should be while using them.

Also read on Ethereum Hard Forks.

Introductions

Before the Ethereum Blockchain could reach its potential, it needed several transformations. Such transformations include migrating to Ethereum 2.0 also known as Serenity. ETH 2.0 is the much-awaited Ethereum upgrade that allows a more scalable, cheaper, decentralized, and secure network.

Ethereum has since chanted the course to migrating from the POW to POS consensus for cheaper transaction costs and better decentralization. Accompanying the upgrades are various hard forks promising various Ethereum Implementation Proposals, EIPs.

By the way, what is a fork, and what exactly is a hard fork? The fork is the process of copying and improving on an existing protocol, similar to the traditional software upgrades.

A fork can be soft, hard, accident, and intentional. It is a hard fork when it changes the rules of the blockchain protocol so that the old blockchain and the resulting blockchain are incompatible.

A hard fork is a radical upgrade that can make previous transactions and blocks either valid or invalid and requires all validators in a network to upgrade to a newer version. It’s not backward-compatible. A soft fork is an upgrade to the software that is backward-compatible and has validators in an older version of the chain that sees the new version as valid.

When two or more miners find a block at the same time, an accidental fork occurs but it is intentional when the rules of the network are being modified.

Ethereum Hard Fork And Others

Similar to other blockchain networks with active communities, Ethereum Blockchain has undergone soft and hard forks over time. For a brief, we need to reference other non-Ethereum hard forks before explaining Ethereum hard forks in detail.

So far, Bitcoin, the first implementation of blockchain launched by Satoshi Nakamoto, a pseudo-anonymous entity, has also undergone several hard forks. The most prominent Bitcoin hard forks are; Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, Segregated Witness (SegWit), Bitcoin Cash, and many others. From records, one common thing about the various hard forks, both Ethereum and Bitcoin hard fork, is that they are geared towards protocol upgrades which are done by network consensus. 

Why Fork Ethereum Blockchain?

Similar to other network and software upgrades, Ethereum concerns birthed the various hard forks. It ranges from security, centralization, fees, scalability, and other Eth 1.0 limitations. For instance, despite having a good run in Q1 and Q2 2021, Ethereum had its highest fees that scare developers. A simple swap on the Uniswap for example is as high as $100 while others could be $16-20. 

While we are set to discuss Ethereum Hard forks fully, it is important to note the Ethereum journey so far and link them to the hard forks accordingly. The journey as referred to here is the Ethereum developmental roadmap. 

Ethereum Developmental Upgrade And Associated Hard Forks

Ethereum has a four-stage development roadmap. They include; frontier, Homestead, Metropolis, and Serenity. Recall that, unlike most POW networks, Ethereum is way beyond currency and has to measure up to accommodate varying use cases and features. Hence, the need for a roadmap. 

Below explains the various journey so far; 

Frontier

The frontier is the first developmental roadmap of the Ethereum blockchain. It went live on July 30, 2015. Although it went live as a beta, it performed better than expectations. Developers began writing smart contracts and decentralized applications to deploy on the Ethereum Blockchain. Shortly after its launch, it experienced a hard fork called Ice Age. 

Ice Age, also known as “Frontier Thawing”, was the first (unplanned) fork of the Ethereum blockchain aimed at providing security and speed updates to the network.

Homestead

While the Frontier phase of Ethereum laid the groundwork for experimenting in Ethereum, the Homestead steps it up to its first production release. Homestead, the second major version of the Ethereum release, comes with several protocol changes and a networking change that provides the ability to do further network upgrades. 

The upgrades changes was activated at Block >= 1,150,000 on Mainnet

Block >= 494,000 on Morden

Block >= 0 on future testnets. The homestead hard forks include:

EIP-2: Main homestead hard fork changes

EIP-7: Hard fork EVM update. DELEGATECALL

EIP-8: devp2p forward compatibility. 

Ethereum Classic Hard Fork

The Ethereum Classic hard fork is a child of necessity after the homestead hard fork. It was in 2016 when hackers exploited DAO, one of the most notable Ethereum projects. As a result, developers initiated the Ethereum Classic hard fork to mitigate the DAO loss. 

The DAO, also called Distributed Autonomous Organization, raised $150m in Ether in a public crowd sale. 

The DAO, in principle, was to operate as a form of decentralized venture capital fund where investors would send Ether to the DAO to receive voting rights, whereafter those who had invested (and voted) would democratically decide on which projects to which the DAO should disperse those funds.

Contrary to the arrangement, the DAO was unable to complete its vision when millions of Ether vanished.

As a response, the Ethereum community moved to recover the funds by voting to change Ethereum’s baseline code to recover the lost funds and reimburse investors. As a result of the majority vote in the favor of this proposal, a hard fork and two separate blockchains were created. 

EtherZero Hard Fork

EtherZero is the second intentional Ethereum hard fork that took place in 2018. The hard fork went live at 4936270 block on 29 Jan 2018. Unlike the Ethereum Classic hard Fork, it was started by a group of tech geeks looking to provide a better platform for creating decentralized applications (dApps) and smart contract deployment. Contrary to other forks, it has no specific interest to speed up transaction rates. Rather, the development team was determined to make transactions completely free.

Metropolis

This is the third phase of the Ethereum upgrade and one of the notable hard forks. It is the forerunner to Serenity in the sense that it lays the background for early proof of stake (POS). Metropolis upgrade includes Byzantium, Constantinople, and early serenity. Byzantium is a backward-compatible upgrade aimed at integrating zero-knowledge protocol and delay of the network difficulty bomb. On the other hand, Constantinople is a non-backward compatible upgrade.

It represents a hard fork deployed to solve a security weakness allowing hackers to access users' funds and integrates a smart contract functionality that enhances the verification process as well as the reduction of gas price. Lastly, as a forerunner to serenity, it made the first attempt of implementing POS and account abstraction.

Serenity

Also known as the Ethereum 2.0, serenity is the latest Ethereum upgrade. It builds and improves on the successes of the previous upgrades and hard forks. The major improvement of the Serenity upgrade is porting from POW to POS fully. 

By implication, serenity increases its transaction capacity, changing gas fees and achieving scalability while achieving more eco-friendly coin generating and validating networks. 

The launch of the Beacon chain is Serenity's first step to revolutionizing the Ethereum network. From the Beacon chain, it pushes through to; Berin hard fork, London hard fork, and the upcoming Shanghai hard fork. 

Berlin Hard Fork

The Berlin hard fork is a forerunner to the London hard fork. It is named after the host city of the inaugural Ethereum Devcon convention. Berlin hard fork incorporates several EIPs which addresses gas price and introduces new transaction types. 

The Berlin hard fork went live at 12,244,000 on April 15 and proposes several EIPs. The EIPs include; EIP 2565, EIP 2718, EIP 2929 and EIP 2930. 

Before the Berlin hard fork went live, several delays were citing possible vulnerabilities and centralization concerns. Some believed the Berlin hard fork will be less impactful in the short term, but will further pave the way for the upcoming London hard fork. 

London Hard Fork

After the Berlin Hard Fork comes London hard fork, scheduled for July before being delayed to August 4. In preparation for the ETH 2.0 launch in 2022, London hard fork makes significant changes to Ethereum’s transaction fee system, which has long been a contentious subject.

Ethereum's London hard fork introduces two new known Ethereum Improvement Proposals (EIP), namely: EIP-1559 and EIP-3238. EIP-1559 is a proposed change to the way users pay gas fees on the Ethereum network. It also proposes a new transaction pricing mechanism that will create a base fee for each block. Usually, users enter a bid to pay their gas fees, but the EIP-1559 allows miners to prioritize transactions based on the fee added and use the fee as a reward for adding it to a block. Now, each block will have a fixed, associated fee instead. The EIP design allows the blockchain to burn the fee, reducing the overall supply of Ether (ETH). Thereby creating deflationary pressure on the cryptocurrency.

Ethereum 1.0 has a difficulty in mining called the difficulty time bomb. As miners reach the difficulty time bomb, it takes longer to mine a new block, and thus reward gets lower as well as slower transaction. To motivate users and encourage them to move to Ethereum 2.0 upon launch, EIP-3238 will delay the time bomb to enable the network to incentivize validators to Ethereum 2.0’s Proof of Stake consensus model at the correct time. It is suspected that if there is no consensus to move to the awaiting Ethereum 2.0, the scenario of Ethereum Classic will happen. Delaying the time bomb will lead to a 30-second block time ice age around Q2 of 2022, therefore, enabling "The merging" of Ethereum 1.0 with Ethereum 2.0.

Shanghai Hard Fork

The upgrade didn't stop at Berlin and London hard Fork. It proceeded to the Shanghai hard fork scheduled for OCTOBER 2021. Shanghai hard fork is promised to include the following EIPs; 

The new opcode BEGINDATA indicates that the remaining bytes of the contract should be regarded as data rather than contract code and cannot be executed.

Conclusion

Ethereum Blockchain so far has been a work in progress. It started from a four developmental roadmap Viz: frontier, homestead, metropolis, and serenity to achieve what we will call ETH 2.0 2022. Every upgrade of Ethereum accompanied an associated hard fork. The major Ethereum hard forks are Ethereum Classic, Shanghai, London, Berlin, Homestead, Constantinople, and Ice Age hard forks. It is expected that the Ethereum network will attain scalability with eco-friendly network fees and better decentralization. The ETH 2.0 is promised to provide a sustainable blockchain network that doesn't compromise any of the above features. 

Over the years, cryptocurrency has grown in leaps and bounds. There has been a significant improvement from the day it was first launched, and today the cryptocurrency space has more than a trillion-dollar market cap. Despite the growth associated with cryptocurrency, its volatility has made it increasingly difficult for new investors to put their money into it. ETF provides safety against risk and volatility. Many investors can invest in cryptocurrency through the ETF. 

What Is An ETF?

An ETF stands for exchange-traded fund. An exchange-traded fund means buying and selling an ETF the same way you buy and sell a stock. An ETF gives you the ability to spread your investment money across many underlying assets rather than have all your investment in one underlying asset. It can be used for diversification and security of investment because you can use it to get many assets. 

An ETF tracks the price of an underlying asset. For example, copper ETF tracks the price of copper. 

What Is A Cryptocurrency ETF?

A cryptocurrency ETF is an exchange-traded fund that tracks the price of the cryptocurrency. Investors can buy or sell a cryptocurrency ETF in the stock exchange the same way they buy and sell other stocks. An investor trades cryptocurrency ETF in the traditional market exchange and not a cryptocurrency exchange. 

How Does Cryptocurrency ETF Work?

The cryptocurrency ETF works the same way as other ETFs. The organization in charge of funds would need to own cryptocurrencies which serve as the underlying assets. The cryptocurrency would serve as shares that investors can buy. Once the investors purchase the shares as ETFs, they already own cryptocurrencies indirectly.

Since you cannot trade a cryptocurrency ETF on the cryptocurrency market exchange, you do not need a wallet to store it. For example, if you want to invest in bitcoin, you can get the bitcoin ETF from the stock exchange, and it would have the same value as the bitcoin. If the price of bitcoin increases, then the price of bitcoin ETF increases. If the price of bitcoin reduces, the price of bitcoin ETF also reduces. In essence, the price of the bitcoin ETF is dependent on the price of bitcoin.

The Top Currency ETF

There are cryptocurrency ETFs, and it is not surprising that the bitcoin ETF was the first. The first country to approve a bitcoin ETF was Canada. The name of the ETF is the purpose Bitcoin ETF and goes by the ticker BTCC on the Toronto Stock Exchange. BTCC was launched in February 2021. Three more bitcoin ETFs have been launched in Canada, bringing the total number of bitcoin ETFs to four.

Presently, Canada has approved four new Ethereum ETFs: CI Galaxy Ethereum ETF, Purpose Ether ETF, Evolve ETF, and Ether ETF. Toronto Stock Exchange is the place where all ETFs are currently trading.

The year 2021 might be the year of the cryptocurrency ETF as countries like the United States of America, Brazil, Chile, and the UAE, are considering launching it. To date, the U.S. Securities and Exchange Commission (SEC) has rejected all proposals to launch a crypto ETF. The reason cited by SEC for the rejection is related to crypto being volatile and non-regulation of the crypto market.

Despite all the rejections, we await a positive announcement from the SEC later by June. There is a high probability that a crypto ETF would be launched then. 

Blockchain ETF

Apart from the cryptocurrency ETF, we also have the blockchains ETF trading on the stock exchange. The popular blockchain ETFs are: 

Advantages Of Cryptocurrency ETF

Ease Of Investing

Cryptocurrency ETF makes it easy to invest in cryptocurrency because you do not need a wallet. You also do not have to sign up on any cryptocurrency exchange market. The use of an ETF reduces the chances of losing your cryptocurrency. And it also reduces the risk associated with having cryptocurrency directly. 

For example, if you store your cryptocurrency in a personal wallet, you could lose it once the password is lost. If a centralized exchange is compromised, you can also lose your funds if you have it there. In summary, a cryptocurrency ETF gives you leverage over the risk and volatility associated with cryptocurrency.

Diversification

It is easy to diversify with an ETF. You could invest in more than one underlying asset from different companies in your ETF.  For example, you could have bitcoin, Ethereum, Google stocks, Tesla stocks, Facebook stocks, Guinness stocks, Coca Cola stocks, and more in your cryptocurrency ETF. The advantage of this ETF is that it helps you to reduce your risk and diversify your portfolio. 

Tax Efficiency

The United States of America Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) regulate financial institutions. Cryptocurrencies are decentralized, and hence, no financial institution regulates them. Cryptocurrency ETF won't trade on decentralized platforms but regulated exchanges such as New York Stock Exchange, making it open to most tax havens and pension funds.

Long Term Return

Investors that want to invest in cryptocurrency and make better long-term returns can use cryptocurrency ETF.

Disadvantages Of Cryptocurrency ETF

Higher Management Fee

There are two ways a cryptocurrency ETF can be managed. It can either be managed actively or passively. An actively managed fund has a higher management fee than a passively managed fund. The management fee is higher for an investor with many cryptocurrency ETFs when compared with those with less.

Limitation To Trading Other Cryptocurrencies

For instance, you can trade bitcoin for Ethereum, but you cant trade bitcoin ETF for Ethereum. It is impossible to trade bitcoin ETF for Ethereum because it is an investment fund and not a cryptocurrency.

Centralized Regulation

Cryptocurrencies were created not to be centrally regulated. They were created to be decentralized and not regulated by any financial institution such as the central banks. Cryptocurrency ETF won't enjoy all these benefits because they are regulated by the financial institution where they are listed.

The Inaccuracy Of ETF

One of the advantages of ETF is the fact that you can use it to diversify your portfolio. The diversification advantage can also be a disadvantage as ETF may not track the accurate price of a cryptocurrency because of the value of its other holdings.

For example, a drop of 5% in Ethereum may not reflect a 5% drop in the price of an ETF that tracks numerous assets.

Inability To Buy Things With Your Cryptocurrency ETF

While you can directly use your cryptocurrency, such as bitcoin, to buy things and make payments, you cannot use your ETF to do such.

Cryptocurrency ETFs And Institutional Investment

For Institutional investors who could not get into the crypto market for many reasons, crypto ETFs could provide an entry point for them to invest.

Conclusion

Cryptocurrency ETF would open up a new era of investment all over the world if it is accepted. It would allow people who have low-risk tolerance to invest in cryptocurrency. However, if you have high-risk tolerance, there might be no need to invest in cryptocurrency ETFs since the return of cryptocurrency is higher than in ETFs.

Also, read about Opyn Protocol.

OpenSea is a decentralized peer-to-peer marketplace to buy, sell and trade non-fungible tokens (NFTs). OpenSea markets itself as the largest NFT marketplace. Therefore, It is worth walking to explore the world of OpenSea and discover what it offers in the trade of NFT.

This article will take you through the questions like what OpenSea is, And what is the user journey in the platform.

What Is OpenSea?

With the surging popularity of CryptoKitties, Devin Finzer and Alex Atallah decided to create a decentralized platform to trade NFT. Hence, in 2018, OpenSea was formed. Since then, OpenSea is witnessing significant growth in the NFT market. Artwork by Beeple for $70 million and flying Pop-Tarts rainbow cat for $600,000 is trading on OpenSea.

The Growth rate of OpenSea is astonishing. OpenSea in March 2021, recorded $82.5 million in transaction volume.

Recently Logan Paul has announced the launch of his first NFT on Twitter, with networth of over $3.5 million. These announcements from influencers are adding fuel to the burning fire. 

NFTs acquire huge significance for Digital art. They are non-replicable digital assets which require a unique marketplace for its trade. Thats where OpenSea came into play. But before we take a deep dive into the OpenSea marketplace. If you still have some ambiguity regarding NFTs you may read more on this.

OpenSea, The Largest NFT Marketplace

OpenSea is like an amazon for NFTs. It has millions of unique digital assets. Besides having digital art it has multiple categories of collectibles, games items, music and other digital representations of physical assets.

Setting Up Your wallet

Wallet is a tool to connect with the blockchain, and to store, buy, and sell NFT. One thing to remember here is that OpenSea doesn’t provide the infrastructure to store the assets. So we need to connect with the external wallet. In this case we are using MetaMask. 

Trading On OpenSea

Trading on OpenSea is more to rely on smart contracts than the counterparty. You don’t need to trust the buyer or the third party. This is because OpenSea uses the Wyvern protocol. This protocol enables the swap to change the state of NFT ownership as soon as the seller receives the cryptocurrency ownership.

Connecting To OpenSea

After setting up the wallet, now it's time to connect with OpenSea and discover the world of it. To do so, click on the top right corner, then my profile, select MetaMask, sign in and follow the instructions in your wallet.

Creating Collections

Your page is empty for now. To create one, you can click on create, fill the description and hit Add. You can now see your collections at the window.

Searching For NFTs On OpenSea

The marketplace option is the heart of OpenSea. You can search for any NFT by typing name or can use various filter options.

Creating NFTs

To create your first NFT, click on the Add new Item. A new window will be open. You can add your metadata such as images/audio/video files with the NFT name below. You can also add external links and descriptions of the NFT.

This method can create only one NFT at a time. However, if you want to make multiple versions of the same artwork you can add the Edition numbers in the stats below.

You can also add unlockable content such as high-resolution files and private keys of Physical assets to ensure security. Once you are satisfied, you click on create and a new window of your NFT statistics will be open.

Buying NFTs On OpenSea

To buy NFT you first need to buy ETHs. Users also need to ensure that they accommodate gas cost by themselves.

Once you have finished purchasing ETH, bid on the NFT you intend to buy. You can also follow the auction. If you are the highest bidder in the auction you’ll get the NFT.

OpenSea Fee

OpenSea claims to charge the lowest fee in the NFT space. They take 2.5% of the sales price. There are no service charges for buyers.  You can learn more about their gas fee structure from here .

The Future Of NFT

The NFT market is growing vigorously and it can only be limited by imagination.There is no doubt that the NFT markets such as OpenSea and Rarible are poised to prosper in future.

Recently, AIRNFTs build on Binance smart chain has also launched. Apart from that Aleph.im has also announced a partnership with the polygon to offer an unstoppable storage solution for NFTs marketplace.

Also read about blockchain architecture.

Hegic protocol is the non-custodial, decentralized, and on-chain Option trading platform built on the Ethereum blockchain. Hegic allows you to buy WBTC and ETH Options or sell ETH Options using the Hegic token. To sell, you have to provide liquidity.

What is an Option?

An Option is a smart contract that gives you the right to buy or sell an underlying asset at a specific price within a certain time frame. There are two types of Options which are the Call and Put Option.

Call Option 

A Call Option is a contract that gives you the right but not the obligation to buy an asset at a certain price on or before a particular date. A buyer is known as a holder. 

Put Option

A Put Option is a contract that gives you the right but not the obligation to sell an asset at a specific price within a particular time frame. A seller is called a writer.

Strike Price

A Strike Price is the fixed price at which you can buy or sell an underlying asset if the Option is exercised (i.e., if you decide to buy or sell an asset). For example, the Strike Price is the buying price for Call Options and the selling price for a Put Option.

Option Premium

The price of an Option contract is called an Option Premium. There are four ways to trade Options, which are:

Buy Call

A Buy Call is a price above the Strike Price that you can exercise your right to buy. You may be wondering why you should buy an asset above the current price. The reason is explained with the example below. A Premium is paid to make a Buy Call. The risk involved with a Buy Call is minimal, as the maximum amount you can lose is the premium paid.

For example, if the Strike Price of Ethereum is $500, you can place a call to buy it at $600 within a week. Instead of paying $500 for the Ethereum now, you will pay $100 (Premium), and once the price gets to $700, you can exercise your right to buy and have made a net profit of $100. Your net profit is $100 because the Premium is subtracted from the total profit.

If the price is at $600 or below at expiration, the Option will expire worthless, and you will lose $100 (Premium) rather than $500 if you had bought without using an Option.

Source: https://www.hegic.co/

Buy Put

A Buy Put is the price below the Strike Price that you can exercise your right to buy. A Premium is also paid to make a Buy Put. The risk involved with a Buy Put is minimal, as the maximum amount you can lose is the Premium paid.

For example, if the Strike Price of Ethereum is $500, and you place a Put-Call at $400 within a week at a premium fee of $10, you can exercise your right to buy once the price gets to $400 or below before the expiry date. You will make a profit of $90 because the Premium will be subtracted from the gain. If the price does not decrease below $500 at the end of the week, you will lose just $10.

Sell Call

A Sell Call is a choice you make to sell a Call Option when the price falls below the Strike Price. A Premium is paid by the buyer of the call to you. Risk is high, as you are obliged to sell at the Strike Price if the buyer exercises the right to buy.

For example, if the Strike Price of Ethereum is $300, and the price falls below the Strike Price at the contract’s expiration. The seller will get a profit from the Premium paid. If the price becomes higher than the Strike Price, the seller will have an obligation to sell Ethereum at $300.

Sell Put

A Sell Put is the choice you make to sell a Put Option when the price falls below the Strike Price. A Premium is paid by the buyer of the call to you. Risk is high, as you are obliged to sell at the Strike Price if the buyer exercises the right to sell.

For example, if the Strike Price of Ethereum is $300, the price rises above the Strike Price at the contract’s expiration. The seller will get a profit from the Premium paid. If the price becomes lower than the Strike Price, the seller will have an obligation to buy Ethereum at $300.

Factors Affecting Option Prices

Three elements affect the Options price. These elements are:

Time to Expiration:

The time remaining for an Option contract to expire is called the Time to Expiration. A holder or writer can decide to exercise the, stop the contract to take profit or loss before the contracts expire, or let the contract expire and become worthless. 

Underlying Asset’s Price:

This is the Strike Price set for an asset. Any price above the underlying asset’s price in the Call Option is called out of the money. At the same time, any price below it is called in the money. The reverse is the case for the Put options. An increase in the underlying asset price causes an increase in the Call Option Premium and a decrease in the Put Option. A reduction in the asset price causes a decrease in the Call Option Premium and an increase in the Put Option. 

Volatility:

This is the extent to which an asset’s price swings. It can be a high volatility asset or a low volatility asset. The higher the volatility, the higher the price, and the lower the volatility, the lower the price. 

Conclusion

In conclusion, Hegic uses the American style Options to exercise your right before the expiration date. This style of usage is an excellent advantage of Hegic over the other decentralized Option trading platform.

Also read about Opium protocol.

Decentralized exchanges have been gaining more and more traction. It has been observed that a total of $1.48 billion in trading volume occured in UniswapV3 alone. Although protocols such as Uniswap, Curve, and SushiSwap significantly provide the exchange services within the Ethereum ecosystem. However, these exchanges do not support the swap between the different blockchain networks. So the question is, is there any way to swap native assets to other blockchains? For example, trade between Binance and Avalanche blockchain. 

Here the THORChain comes as the solution to this.

Introduction To THORChain

THORChain is a decentralized cross-chain liquidity protocol that allows its users to trade digital assets from one blockchain to another in a frictionless, secured and decentralized manner. There are no custodians and wrappings.  Users are paid to stake their assets in the liquidity pool to earn a fee at every swap.

Before we take a deep delve into the mechanics of THORChain, let's have a quick view of its history.

History Of THORChain

THORChain was founded in 2018 in a Binance Chain hackathon by a pseudorandom team. The team hasn’t come up with the real identity until now, but they have continued their research even after the hackathon. Later, advancements in Tenderment, Cosmos SDK, and working implementation of threshold signature scheme- TSS have helped them develop a fully cross-chain decentralized exchange. The TSS here is a cryptographic primitive for distributed key generation and signing. 

THORChain will start by allowing trades of Ether(ETH), Bitcoin(BTC), Litecoin(LTC), and Binance Chain(BNB). But more is coming shortly as a limited mainnet called "Multichain ChaosNet" was also released in April 2021.

Also read about Tendermint and Cosmos SDK.

One important thing to mention here is that the native token of THORChain is RUNE. Every token in the THORChain has an equal value associated with the RUNE token in that blockchain. 

RUNE

RUNE is the native coin of THORChain, which empowers its economic ecosystem while providing incentives to the network. It serves as a settlement asset or liquidity in the network, providing security and governance to the THORChain network. The total supply available of RUNE is $484 million, while 50% of its supply has been burnt.

Roles

The network has specific roles. These are the following roles in the THORChain network.

Liquidity Providers

Liquidity providers are the users who add their assets to the pool to gain incentives and rewards.

Swappers

Swappers use liquidity to swap their asset by paying some amount of fee to the pool.

Node Operators

Node operators are those who validate transactions, reach consensus and add that transaction to the blockchain.

Traders

Traders are responsible for maintaining the pool by paying fees with the intent to earn a profit.

THORChain Technology

Churning

Churning is a mechanism in which only one node is active and can sign the transaction while others are waiting on standby. For every 50,000 blocks, the churning mechanism hits the system to replace the older nodes with the set of standby nodes. It makes sure that each node that fulfills the criteria must have a turn in the system to verify the transactions. Even though a high amount of RUNE is required for a fully functioning node, nodes with less RUNE can still verify the transaction without signing it.

THORNodes

THORNode services the THORChain network. THORChain is designed in such a way that anybody with funds can join the secured network. However, it has taken a step further with a high churn schedule that continuously emits the nodes. THORNodes comprises multiple independent servers which run a full node for each connected chain.

Bifröst Protocol

Bifrost is a protocol that provides the service of connecting each chain. Once all the nodes are in sync, the observer starts monitoring the vault address. Whenever they see any inbound transactions, they validate them and convert them into witness transactions. THORChain observes each transaction and collects it's node signer to confirm that they both are identical. As the nodes reach consensus, the transaction moves from the pending state to the finality state.

Source: https://docs.thorchain.org/technology

THORChain State Machine

The state machine is responsible for performing the finalized transaction's logic and delegating them to the outbound vault. 

Source: https://docs.thorchain.org/technology

Bifröst Signer

As the transaction reaches a finalized state, the signer marks the valid transaction to their respective chains. This transaction is then sent to the TSS module, where it performs key-signing and broadcasts it to their respective chains.

Source: https://docs.thorchain.org/technology

How THORChain Works?

The THORChain protocol is a network built with Tendermint in a Cosmos SDK ecosystem in which the application layer is not attached to the consensus and networking layers. 

The consensus mechanism in THORChain is significant as the nodes inside the protocol must work together to record the transactions coming from different blockchains. To understand how it works, let’s take a simple example over here.

Let’s assume Alice wants to initiate a trade between ETH on the Ethereum network and BNB on the Binance Smart Chain. Alice will send a transaction to her ETH vault, where it keeps being monitored by the THORChain network. Here a Bifrost protocol will act as a connecting layer between the THORChain and the other blockchain networks. Its function is to keep track of the vault address and the inbound transactions. First, ETH is traded to RUNE in the Ethereum network, and as the nodes reach the consensus, the RUNE is then traded into BNB.

One thing which is essential to mention is that if a person wants to trade ETH against BNB. The user will be responsible for paying the ETH gas fee, while the BNB trade fee will be deducted from the outbound.

Source: https://docs.thorchain.org/technology

Conclusion

THORChain envisions empowering its economic ecosystem, and with continuous growth is proving its vision. More and more nodes are adding, increasing the trading volume and total locked value of the network.

Also read ConsenSys Quorum Blockchain

Introduction

Flow is a user-friendly, decentralized, and, scalable Blockchain designed to support the creation of crypto-related games, digital assets, and applications that power them. Flow ensures scalability without sharding which makes it possible to keep transactions atomic, consistent, isolated, and durable (ACID).

Developed in 2018 by dapper labs, the Flow was licensed for use in 2020 for developers interested in creating and trading NFT. It gives the power to control data to the consumers, and it also gives the liberty to create any digital asset that can be traded anywhere in the world. Flow is an open-source Blockchain with its smart contract, which can be used by billions of people to power their applications.

Why Flow?

In 2017, the dapper team launched CryptoKitties on the Ethereum network. CryptoKitties is a crypto-related game that allows you to buy, train, and sell cats online. The game became so popular that it brought congestion to the Ethereum Blockchain, causing it to stop. This event made the dapper’s team develop another Blockchain called FLOW. 

Flow was designed to meet the demand of crypto-games like CryptoKitties and other non-fungible token collectibles.

Working Of Flow Blockchain

Flow uses the multi-approach model to operate. This model is grouped into four pillars.

Multi-role Architecture

The four components that make up the validator node.
Source:https://assets.website-files.com/5f6294c0c7a8cdd643b1c820/5fcff1a16213f9d33a6db5ff_ezgif.com-resize.gif

Traditionally, nodes operate and process Blockchain transactions and carry out all the operations involved in transactions. The roles result in a slow transaction and cause the transaction not to be serialized. Flow was able to solve this problem without compromising scaling productivity with pipelining – a technique used for dividing the roles of the validator nodes into four.

They are as follows:

The consensus and verification nodes handle the security of the Blockchain. The nodes ensure that the network is functional and accountable through the use of crypto-economic incentives. If a faulty collection or execution node introduces erroneous data into the Blockchain, any other honest node can punish and recover from the erroneous data. The consensus and verification node only allows a high level of participation from individuals.

The execution and collection node takes care of the scalability and security of the network. The beauty of the multi-role architecture is that all nodes are accountable and verifiable by one another.

Learn about TRON Blockchain.

Resource-Oriented Programming

Flow uses a high-level programming language called "Cadence". Cadence is easy to read and enjoy because of its ergonomic syntax. It is easy to learn, audit, and highly productive. It was designed to be secure, minimize runtime error, and easy to use to create unique and durable applications. To learn Cadence, visit the Flow playground on play.onflow.org.

Developer Ergonomics

A developer determines the tools that can affect their productivity. The criteria for selecting the tools depends upon the installation process, configuration, administration, usage, and maintenance. Flow has designed open-source tools that meet the above criteria. The tools are:

Also, Flow made it possible for developers that built their smart contracts to deploy it to the mainnet in a ‘beta form'. This gives room to update before releasing it. Once released, the contract becomes immutable. Furthermore, Flow alerts the users that the code is not complete, so they can decide to wait until completion before use. This method of smart contract deployment is a deviation from the previous ways where a smart contract cannot be updated after launch. 

Flow reduces finality i.e. time taken for a transaction to be included in a block permanently - on Blockchains. Finality happens on Flow in seconds, which was previously not possible with other Blockchains.

Consumer-friendly Onboarding

You can pay with fiat, FLOW token or other crypto tokens for you to access the Flow network. Flow also gives the flexibility of owning a smart contract wallet that does not require seed phrases. You can easily create a smart user account on your wallet that is secured and supports automated processes. 

Advantages Of Flow

Conclusion

Flow was designed as a solution to the “slow finality” of the Blockchain without sharding. It had achieved this without compromising the safety and serialization of the Blockchain. The Flow team partnered with the NBA, and this partnership has increased the popularity of the Flow network. Flow has made it possible to build an application that users can enjoy worldwide.

Also, read about Azure Blockchain.

Overview:

The Opium protocol is a robust and universal platform that allows users to create, settle, and trade decentralized derivatives on Ethereum. A token represents every option on Opium, and it can be traded, sent, or stored in cold wallets. The system provides robust and universal financial primitives on-chain. It also allows for more advanced features like order books, combined orders, and market-making features to happen off-chain by leveraging meta-transactions. 

The Opium protocol currently supports two products; swap.rate and opium.exchange. In simple terms, swap.rate enables users to create derivatives. On the other hand, the Opium.exchange is an open trading exchange specifically designed for decentralized derivatives. 

The Background of Opium:

Arjan Van Der Kooij and Andrey Belyakov founded the Opium protocol. Before creating this, Arjan has been a serial entrepreneur and private investor with 20 years of experience in business management. On the other hand, Andrey has been a professional derivative trader with ten years of experience to his belt. He is also a member of the CFA Institute. 

Currently, the financial derivative market is the largest in the market but has always been under the control of banks. Other centralized financial institutions also own a large chunk of the derivative market. These entities provide the clearing, settlement, and trading of derivatives. The goal of the Opium Protocol is to move these traditional functions of centralized entities to the blockchain. By moving these traditional functions to a trustless, distributed, and immutable system, Opium will lower the cost and increase security. It will also make it possible to accommodate unbanked individuals in the world’s financial system. As an Opium user, you can be an investor, a hedger, speculator, margin trader, or arbitrageurs.

In an interview with CoinDesk, Andrey Belyakov said that they created the protocol to solve three specific problems experienced in the traditional derivative market. These problems include:

Why Opium?

There must be a very good reason(s) to make us abandon the traditional players in the derivatives market. What are the things that set the Opium ecosystem apart from the centralized financial entities in the market? The Opium system is built to be compatible with both the DeFi market and the professional market. Most of the derivative protocols we have on the DeFi space today bring theoretical risks with them. They do this by using on-chain liquidity pools or the use of automated market makers (AMMs). Opium provides a robust and simple on-chain infrastructure that users can leverage off-chain. 

The implication of having an alternative to on-chain infrastructure is the presence of more complex features. Some of these features include advanced derivatives, market-making strategies, order books, arbitrage combined orders, etc. All the features mentioned above are implemented at the layer 2 level. As a user, you can create decentralized derivatives benefiting from a risk profile that is more similar to the traditional financial products. However, these products may appeal more to a broader range of users than the on-chain derivatives. 

The Opium protocol is live on the Ethereum mainnet, and SamrtDec audits it. Thus, it gives users the peace of mind necessary to try out new things with DeFi. There are currently at least three working products that are built on the Opium Exchange. These products have been assisting about four independent establishments in bringing their derivatives to the market by leveraging the Opium Protocol.

 

Features and Products of Opium Ecosystem:

Opium.Exchange:

The Opium.Exchange product is a non-custodial platform built for decentralized derivatives. You can trade, hedge, or invest without the need for intermediaries. It also allows you to benefit from high-speed orders on meta-transactions. You will also enjoy secure settlement on-chain. 

ERC-721o Token Standard:

Every position created using the Opium Protocol is represented by ERC-721o tokens. These tokens are specifically designed to help you trade financial instruments. The Opium team created the tokens by combining the ERC-20 and ERC-721 standards with more functionality. Users can combine these tokens into portfolios, and they are backward compatible with the ERC-721stanbdard. The implication is that these tokens can be used in existing ecosystems. The ERC-721o standard has primary portfolio functions which include the following:

A portfolio is composed of the entire portfolio that can be managed or traded as a single ERC-721o token, hence saving gas fees. The portfolio decomposes when the tokens used to compose the portfolio are minted again and stored on your balance. You can recompose a portfolio by removing or adding to/from an already existing portfolio. However, you must ensure that you do that in a gas-efficient way. 

Swap.Rate:

This is a platform designed to help users hedge against or take advantage of the interest rate fluctuations in the DeFi lending and borrowing space. It also allows users to create contracts for interest rate swaps. One stream of future interest payments is swapped for another based on the stipulated principal amount. 

Conclusion:

The Opium Protocol is undoubtedly revolutionizing the derivatives market. Without millions of dollars, you cannot make derivatives, but Opium is changing all that. Now, everyone can run his own derivates in the most efficient way possible. You can follow the Opium project on social to stay up to date with the happenings in the derivatives market. 

You can also read about Compound Defi Protocol.

Introduction:

Since the launch of the first cryptocurrency blockchain, the possibility associated with it has been eternal. One such possibility is the introduction of yield farming – a reward scheme that enables you to get more from decentralized finance (DeFi) -  that gained popularity in 2020. Some years back, a crypto enthusiast could only generate a reward by trading or holding it. Today, the story is different through the power of yield farming. 

Yield farming gives you a new way to generate rewards from crypto. It might be challenging to benefit if you start, or you begin without adequate knowledge about it. Whichever one it is, you don’t have to panic or be scared. You can also benefit from yield farming, and that is why we have written all you need to know about DeFi yield farming below.  

What Is Defi Yield Farming And How Does It Work?

Yield farming is a process where you get rewards from your cryptocurrency by investing it in a DeFi platform. It is simply a process of allowing your crypto to work for you while you earn passively. Sounds lovely right? Yield farming works like a bank loan, where you are paid interest on the money you lent. You can lend out your crypto or borrow crypto from a platform that supports it in yield farming.

Yield farming operates on smart contracts. The majority of yield farming is on the Ethereum network using the ERC-20 tokens. Yield farming is also on the Binance smart chain.  This is possible because the Binance smart chain is compatible with Ethereum Virtual Machine (EVM) and can also operate with the Ethereum native protocols.

Total Value Locked:

Total value locked (TVL) is the sum of all funds locked in the liquidity pool. This is very important to measure how healthy a yield farming platform is. An increase in the total value locked leads to an increase in the yield farming on a platform. The current TVL for DeFi is approximately 77billion dollars. You can monitor the total value locked through Defi Pulse.

Yield Farm Platforms:

There are various platforms where you can farm tokens. They have the same way of operating, though the reward system might be different. Below are some of the yield platforms that run on the ethereum and Binance smart chain.

Compound:

Compound is an Ethereum based protocol that allows borrowing and lending. The lender provides a loan by providing liquidity in terms of assets in the platform. The lender gets an interest in the loan supplied. The supply and demand of crypto determine the interest generated. The compound has a native token called cTokens used to pay interest for users. cTokens can also be used in other applications. For example, if you deposit 5Eth on the protocol, the system automatically generates 5c-Eth for you with interest. You can redeem your c-Eth for Eth at any time plus your stake. The compound protocol uses any ERC-20 token. The compound protocol also has the advantage of moving or trading the c-Tokens on other decentralized apps (dApps).

Aave:

Aave is a smart contract-based protocol that allows borrowers to borrow loans and lenders to lend. All that is required for a lender to do is put their cryptocurrency funds into the liquidity pool. Collateral in terms of cryptocurrency must be provided to borrow from the aave’s protocol. A borrower can only borrow a fraction of the collateral. It boasts a high annual percentage yield (APY) ranging from 6% to 13% on stable coins such as USDT and USDC. 

PancakeSwap:

PancakeSwap is the leading automated market maker on Binance Smart Chain. Though it is an automated market maker, its yield farming has continued to grow and is one of the most used in BSC. Presently, Pancakeswap has more than 10 pairs of cryptocurrency for yield farming.  

Venus:

Venus is now one of the leading Binance smart chain protocols for borrowing and lending assets. Users deposit cryptocurrencies such as BNB, USDT, USDC, and ETH to earn interest. The interest is helpful for other purposes such as minting venus stablecoin called VAI or used as collateral to borrow.

Autofarm:

Autofarm has a total value locked of 1.3billion dollars. It currently has more than 30 liquidity pools and is very good for farming.

Yearn.finance:

Yearn.finance is a platform that chooses the best platform to make a profit. It takes the user’s fund from one protocol, such as Aave, to the other to make a profit. It has a native token called yToken. All deposited funds are automatically converted to the yToken.

Steps on Starting Yield Farming:

  1. Get crypto that is useful in a particular yield farm platform. Widely accepted crypto coins are ETH, BTC, and stable coins such as USDT, DAI, BUSD, and USDC.
  2. Download decentralized wallets such as Trust wallet or MetaMask wallet. Register as prompted. Make sure you keep your seed phrase or keys very secure.
  3. After installing, send your funds to your wallet.
  4. Go to the dApp section of the wallet to start farming.
  5. If you are a beginner, it is advisable to start with the compound platform. 
  6. On the compound, click the button on the top right-hand corner.
  7. You should connect your wallet, select the wallet you are using, e.g., Trust wallet.
  8. Go to the supply page, and then choose the asset you want to supply and the amount. Then click supply
  9. A page shows the supply annual percentage yield (APY) and the distribution APY. You earn from the APY by depositing on the compound platform.
  10. Confirm the transaction. Note that you need ETH as a gas fee on the compound platform. If you are using a Binance smart chain such as venus, you need BNB as a gas fee.
  11. You can now borrow or lend on the platform. 
  12. Viola, you are now a yield farmer. Simple right? Please give it a try now.

Risk of Yield Farming:

Just like everything that has to do with life, yield farming has its own risk. The higher the risk you take, the more profit you make. It is always advisable not to invest more than you can afford to lose.

Liquidity risk: 

Liquidity risk occurs when the price of your loan is greater than the collateral you deposited. You run into loss if this happens. Liquidity risk is familiar with crypto that has high volatility, such as BCH or ETH.

Smart contract risk:

Defi protocols are open-sourced and can be open to bugs. These bugs can affect the token price, causing a high drop in the price of the token. 

Gas fee:

An increased gas fee occurs on the ethereum smart chain. The increase in eth gas fee has been on the rise, which poses a challenge for an average investor.

Composability risk:

Composability risk is also known as “money legos,” which means that all defi applications and platforms can interact without permission; this means that the whole defi platform relies on each of its building blocks. Naturally, composability should not be a risk but an advantage. It is a risk because if any of the building blocks stops working, the whole platform can be down.

Conclusion:

Decentralized finance is a platform that uses technology to remove the intermediary barrier in carrying out a financial transaction. It is simple to use and very efficient when compared with centralized exchanges like banks. To use Defi, you do not need an identity card, social security number, or a KYC. 

There are risks associated with using the DeFi platforms, and as such, you should ensure you research the platform you are using and invest what you can afford to lose. 

You can also read about Curve finance and Uniswap v3 protocol.

What is MakerDAO? 

Most people in the blockchain space know MakerDAO as the protocol behind the stablecoin DAI. DAI is a cryptocurrency that always maintains a 1:1 peg to the United States dollar. You can think of 1 DAI as equivalent to $1. Meanwhile, the interesting thing here is that Ether backs each DAI and not a third party. The volatility of Ether poses some notable challenges in terms of maintaining the peg. 

This MakerDAO project joins a DAO with another crypto-collateralized stablecoin called DAI. The aim is to build a complete, decentralized finance ecosystem that permits loans and savings on the Ethereum blockchain network. The responsibility of creating and developing the Maker Protocol also saddles this project. The Maker Protocol aims to permit and control the emission of DAI anchored to the dollar. All these things happen on a series of smart contracts on the Ethereum blockchain. 

What has made MakerDAO the largest DeFi project in the crypto and blockchain space? How did it come about? What does the future hold for this project? This article will answer all these and many more questions.

The History of MakerDAO

Rune Christensen started the creation of the MakerDAO project in 2015. In his first work on Reddit, Christensen explained his idea of creating a DAO on Ethereum and using it to generate a stablecoin that will be pegged to the dollar. 

Christensen’s idea went further, and led to the formation of the Maker Foundation. The role of the foundation is to direct all developmental and management efforts of the MakerDAO project. In August 2015, the project launched its Maker (MKR) token. The token established the foundation of the government of the Maker Protocol. 

In December 2017, the first stablecoin came into existence, governed by DAO in the crypto space. 

The Vision Behind MakerDAO

According to the whitepaper, the Maker project aims to create an independent system controlled by smart contracts that manage collateralized debt positions (CDPs) using Ether. Thus, issuing a stable currency hinged on the price of the dollar. This offers new financing options in the relatively nascent blockchain ecosystem.  

Creating a decentralized operating and governance infrastructure that enables people to develop a stablecoin with global reach is the main objective of MakerDAO. Also, the project seeks to create a mechanism that gives users access to decentralized finance (DeFi) through the use of cryptocurrency. This mechanism encourages people to convert their Ether to DAI. 

What Is The Maker Protocol, And How Does It Our Work?

The Maker protocol is a built-in smart contract and runs on the Ethereum blockchain network. This protocol allows the operation of a platform specifically for the generation and control of DAI stablecoin. The protocol also handles Maker Vault, Oracles, and voting within the entire system. With the Maker protocol, you can control the fundamental parameters of the whole system. This includes stability fees, interest rates, collateral assets, and many other things. 

The protocol permits a democratized process where most MKR token holders must sanction every proposed change. This process ensures that the system doesn’t fall into a few hands and prevents manipulation in any way.

The DAI Stablecoin  

The DAI stablecoin is the second element that enables the MakerDAO to function efficiently and effectively. You can only generate the DAI stablecoin under certain conditions and with the use of the Maker protocol. The conditions in question are the ones decided by the community governing the protocol. By implication, DAI is an impartial and decentralized stablecoin. 

Unlike most other stablecoins, DAI does not depend on banks, and it also doesn’t have collateral in fiat. It makes use of cryptocurrency as collateral. You can store your DAI in wallets that support the standard ERC-20 tokens. As DAI is built in this standard. If you want to generate DAI, you need to lock Ether or any currency accepted by the protocol within the Maker Vaults. The Maker Vaults will utilize such cryptocurrencies to create a collateralized debt position (CDP), thus generating the corresponding DAI. You can also save it as savings using a Maker protocol known as DAI Interest Rate (DIR). 

The DAI stabelcoin can function as the following:

Collateralization of DAI Stablecoin

Before you can generate, support, and maintain the value of a stable DAI, you must first collateralize its value. To do so, you will use different tokens that can be deposited into the Maker Vaults. The Maker protocol ensures every DAI stablecoin has real value support that permits the supporting and issuance of each DAI within the ecosystem. 

All collaterals accepted on MakerDAO are all tokens that are supported by the Ethereum blockchain network. Initially, collaterals started as something much more straightforward. Ether was once accepted as the only collateral, but it changed in 2019 upon releasing the multi-collateral DAI protocol (MCD). Other tokens began to be accepted. Today, the accepted tokens include all Basic Attention Tokens (BAT), USDC, wBTC, TUSD, KNC, ZRX, MANA, and Ether. 

The collateralization value for every token varies, and the governance of the Maker protocol decides them. 

Also read Ampleforth: A Comprehensive Guide.

The Maker Vaults

In the course of this article, you must have come across Maker Vaults multiple times. They are the storehouses that hold all cryptocurrencies that act as collateral for DAIs. Using the Maker Vaults, you can:

It is important to note that the interaction with the Maker Vault is done without an intermediary. The user interacts with it directly. There are rules of operation guiding the operation of the Maker Vaults. If you send tokens as collateral to a Maker Vault to generate DAI, the collateral will always be available under certain conditions. If the token price fluctuates beyond the “Settlement Ratio,” the system liquates the position. 

It means that the Maker Vault will sell your crypto to maintain the positive and stable relationship of the DAI. What matters most is to avoid losses to the protocol and to the people who support it. The liquidation is executed by the Maker protocol as stipulated in the interaction of users and the Maker Vaults. 

MakerDAO Governance Protocol 

The Maker Governance Framework (MGF) is in charge of handling the governance of MakerDAO. It is based on thoroughly analyzed and reproducible scientific models created by experts with a proven track record. The framework falls into the following components:

Governance Proposals

They are symbolic votes that are used to scrutinize community sentiment towards particular models or data sources. 

Executive Proposals

They help to rectify the Risk Parameters identified by the models and data accepted by the Government Proposals. Executive votes bring about status change within the DAI Credit System, and it happens every quarter.

In the governance of MakerDAO, the role of the Maker Foundation is vital and very fundamental. The foundation directs the development and management efforts of the project. Aside from that, the Maker Foundation is also dedicated to expanding the project and also seeking financial and institutional support for the protocol. 

The governance model of the Maker protocol ensures that neither the MKR holders nor the Maker Foundation has absolute powers to dictate what happens in the system. 

Conclusion

The future looks great for the MakerDAO ecosystem and its users. Today, developers continue to use DAI and the Maker Protocol to create innovative decentralized finance applications. It thus increases the accessibility to users all over the world. Although people can argue that we are still at the early stage of things, the achievements so far are massive. 

Also, read CURVE FINANCE: Let’s Take A Curve Into Defi Of Stablecoins.

Overview

The Cosmos network aims to build an internet of blockchain to enable blockchain networks to communicate with each other. Currently, blockchain systems operate in the form of an “island.” Blockchain networks operate in their world without any form of interoperability amongst themselves. There has been a lot of b bickering and maximalism among supporters of the different blockchain networks. 

Many have asked, can there ever be one blockchain network to unite all other blockchains? This brings us to the Cosmos blockchain network, also called the internet of blockchains. 

What is Cosmos Network?

The Cosmos network is an independent and decentralized network of blockchain systems. Each of these systems is powered by the Byzantine Fault Tolerance (BFT) consensus algorithm. It serves as an ecosystem of blockchains with the ability to scale and interoperate with each other. Before the advent of Cosmos, blockchain networks cannot communicate with each other. They are not easy to build and can only handle quite a small amount of transactions. 

The Cosmos network aims to create a system where a blockchain system can share data, communicate and transact with another blockchain. Cosmos’ inter-blockchain protocol was launched in February 2021. By allowing blockchain interoperability, Cosmos eliminates the need for different blockchain networks to compete ruthlessly to become the best. With Cosmos, many blockchain networks can coexist with one another, while leveraging their individual advantages. And use cases. 

The Cosmos blockchain network goes beyond making it possible for different blockchains to interact and share data. It has also created a streamlined process that makes it possible for developers to create their own custom blockchain. The creation of a functional blockchain system takes years but it can be achieved within months using Cosmos. To showcase the immense power of the Cosmos blockchain network, the team built a copy of Ethereum on Cosmos. The Ethereum copy is known as Ethermint and it works just like the parent Ethereum network. It is also very much compatible with already existing smart contract features and other Ethereum tools like MetaMask. 

The History of the Cosmos Network

In 2017, Interchain Foundation, a non-profit establishment that funds open-source blockchain projects contracted Tendermint Inc. to develop and launch the Cosmos software. The Tendermint platform was founded by Jae Kwon. He developed his own byzantine fault-tolerant (BFT) consensus mechanism. Kwon also contributed to the Cosmos whitepaper as a co-author. 

The Cosmos blockchain network comprises independent blockchains that use the byzantine fault-tolerant (BFT) consensus mechanism. Blockchain networks that do not utilize BFT algorithms connect to the Cosmos blockchain network using “adoptor” blockchains. The Cosmos network wasn’t designed for a particular use case; rather it can adapt to suit multiple use cases. 

Cosmos has two different types of blockchains; the Zones and Hubs. Zones are the regular blockchain while hubs connect zones with one another on the network. Cosmos Hub was the first to be launched in the Cosmos ecosystem. It is a proof-of-stake (PoS) blockchain system with ATOM as the native blockchain. 

The Inter-Bloklchain Communication (IBC) Protocol

Cosmos’ IBC protocol was designed to solve the lack of communication and data sharing between different blockchain networks. For blockchain to enjoy widespread real application, its ability to interoperate and communicate with both external and internal blockchain protocols is very essential. You can imagine a telephone network with the capacity to only communicate with those in its immediate geographical location. It will certainly not last. 

The Cosmos IBC enables makes it possible for several blockchains to communicate seamlessly with one another.

A Deep Dive into the Ontology Network.

The Cosmos SDK

It is an open-source and scalable infrastructure designed in such a way that it builds multi-asset public PoS blockchains. The Cosmos SDK can also be deployed to build permissioned proof-of-authority (PoA) blockchain systems. It also serves as a modular framework that can be used to construct application-based blockchain networks and not virtual machine-based applications. Software engineers always seek simplicity and ease of use when trying to build interoperable and application-specific blockchains. 

Virtual machine-based blockchain networks like Ethereum were built to host application development on existing blockchain as smart contracts. There are certain specific use cases of smart contracts that are beneficial, like in the case of single-use applications. However, they fall short when it comes to the development of complex decentralized networks. Smart contract technology is limited in its versatility, technical performance, and sovereignty. 

With the Cosmos SDK, developers can choose between using pre-built modules and their own custom-built modules. Such a feature allows developers to test their minimum viable product before they launch their mainnet. Additionally, with the Cosmos SDK, users can connect their individual blockchain to the Cosmos network using IBC, increasing liquidity as well as user adoption. Also, the Cosmos SDK has been utilized in creating key blockchain and crypto projects like Binance, Kava, Terra, and IRISNet.

What are ATOMS And What Can You Do With Them?

ATOMs are the native token of the Cosmos Network. The first ATOM tokens were created when the Cosmos mainnet was launched. It was distributed to initial donors, token sale participants, the Cosmos Foundation, and the core developers of the network. Today, new ATOMs are routinely generated as rewards for the network validators. 

Holders of the ATOM token can stake and validate blocks, vote on the governance issues of the network. The holder can also pay for transaction fees on the Cosmos network using the ATOM tokens. You can decide to run your own validator node in order to earn rewards in ATOMs or you can delegate your ATOM coins to a validator. These validators lock their ATOMs as well as run specialized software that helps to maintain the Cosmos network. This is achieved by proposing new blocks and validating transactions. 

Some dApps Built On the Cosmos Network

The Cosmos blockchain network has become the popular go-to place for dApp developers who desire to build efficient cross-chain dApps. Some prominent decentralized applications (dAPPs) currently operating on Cosmos blockchain include:

Conclusion

The Cosmos network is still in its “infant” stage and hasn’t yet realized the vision in the project's whitepaper. However, the network is moving in the right direction and with time, it will certainly realize its full potential in the blockchain space.

Also read about NFTs in this article.

Overview 

You must have heard about non-fungible tokens and wondering what’s all about and their benefits to you. As a Blockchain enthusiast, hearing about a piece of Blockchain news and knowing nothing about it can leave you helpless and thinking. Reading about Beeple making $69 million off something you know nothing about can create a lot of curiosity. 

Recently, the CEO of Twitter put up the first tweet for sale as an NFT. This tells you about the future potential of NFTs. Now, you may be wondering what an NFT is and why there is so much buzz about it. In this post, we shall thoroughly explore and explain the concept of NFTs, and how they are gradually transforming the acquisition of tangible assets.

What are Non-fungible Tokens (NFTs)?

They are cryptographic assets integrated on the Blockchain and can be used to represent real-world items like artworks and real estate. These NFTs come with unique identification codes as well as metadata that sets them apart from each other. They are not like cryptocurrencies that we can trade and exchange at equivalency. Cryptocurrencies are fungible tokens that are identical to each other and can be used for commercial transactions. 

Today, we are seeing how these NFTs are taking the world of digital art and collectibles by storm. We are seeing the lives of digital artists change for the better. Also, many celebrities are joining the fray as they see it as an opportunity to further connect with their fans. You can use these non-fungible tokens to represent any unique asset. It is like a deed for an item in the physical or digital realm. 

NFTs, let us tokenize items like art, real estate, collectibles, etc. There is only one official owner at any given time. The Ethereum Blockchain network secures the NFTs. You cannot modify the record of ownership and neither can you copy/paste a new non-fungible token into existence. Four years ago in 2017, Ethereum Request for Comments 721 (ERC-721) was released as a cryptocurrency standard for non-fungible tokens. The ERC-721 standard makes it much easier for the implementation of NFTS. It wasn’t long after that and NFTs hit the mainstream with CryptoKitties leading the way. The NFT ecosystem has expanded and is constantly growing. Today, there have been several companies finding novel applications of NFTs like domain names. Others utilize them as crypto art museums, physical collectibles, art marketplace, etc. 

How Do Non-Fungible Tokens Our Work?

NFTs are designed to offer you something that cannot be duplicated or copied. For example in the use of NFTs for art or other collectibles, you will retain 100% ownership of the work but the artist will still have the copyright and reproduction rights. This is just like what we experience with physical artworks where anyone can buy a Monet print, but only one person owns the original piece. 

Characteristics of NFTs

The major characteristics of non-fungible tokens include the following:

They are non-interoperable

You cannot use a CryptoPunk character on the CryptoKitties games, and vice versa. It is also the same thing with NFT collectibles like trading cards where you cannot use a Blockchain Heroes card on the Gods Unchained trading card game. 

Indivisible

Unlike bitcoin or other fungible tokens, NFTs cannot be divided into smaller components. You can only get them as a “whole” item and they exist exclusively like that. 

NFTs are indestructible

Since they are stored on the Blockchain, you cannot replicate, destroy, or remove any NFT data. Therefore, all ownership of these tokens is immutable. Thus, gamers and item collectors own their NFTs and not the companies that created them. This is unlike what we experience on iTunes stores where you can buy songs but you don’t own them. You only purchase the license to listen to those songs. 

Non-fungible tokens are verifiable

One of the major characteristics of NFTs is that they can be traced back to the original creator. Therefore, you can authenticate the art or collectibles without the need for third-party verification. 

Also read our article Consensys Quorum Blockchain A Comprehensive Review.

The Importance of NFTs

Today, these NFTs have become so popular in the crypto and Blockchain space due to the way they have revolutionized the collectibles, arts, and gaming industry. Since November 2017, more than $174 million has been spent on NFT projects. The advent of Blockchain technology has made it possible for collectors and gamers to be immutable owners of in-game items and other unique items. 

There have been cases where people create and monetize structures like casinos as well as virtual parks in virtual worlds like Decentraland and Sandbox.

A good example is William Shatner, popularly known as Captain Kirk from “Star Trek.” He ventured into digital collectible last year (2020) and issued about 90,000 digital cards on the WAX Blockchain network. These digital cards showcased different images of himself. Whenever any of those cards are sold, Shatner receives passive royalty income.

Why Non-fungible Tokens Have Value

Like every asset, supply and demand are the key determinants of price. The scarce nature of NFTs and the high demand for them have made them valuable in the market. There are always gamers, collectors, and investors readily prepared to pay huge sums for these NFTs. 

Some of these tokens have the potential to make a lot of money for their owners. A gamer on the Decentraland virtual land platform bought 64 lots and then infused them into one estate. The estate was dubbed “The Secrets of Satoshis Tea Garden” the estate sold out for $80,000 because of its good location and road access. Recently Beeple made a whopping $69 million from an NFT art piece. There was also an investor who paid $200,000 for a segment of the digital Monaco racing track in the Formula 1 Delta Time game. 

Conclusion

The non-fungible token industry is still unfolding and the full potential is yet to be realized. It is certainly opening a new frontier in the crypto space. Time shall tell how this newfound marketplace unravels, but it certainly is a great one. 

Read about Elastic Cryptocurrency, Ampleforth.

Introduction

Curve finance is a decentralized exchange that facilitates the swapping of crypto-tokens. But it is specifically designed for stablecoins like DAI or USDT with low slippage and low transaction fee while using the liquidity pools like those of Uniswap. Let’s back up a little and first clear the basics.

Decentralized Exchanges

Let’s say Alice wants to send money to Bob. She can transfer the assets by going to a bank. Here a bank works as a centralized entity and verifies the transfer but cryptocurrencies are known for being decentralized.

In a decentralized environment, Alice can send Bob assets without the need of a central entity, and a set of independent nodes to verify the transfer.

Representation Of Decentralized Network
Source: https://www.chainbits.com/content/uploads/2018/04/peer-to-peer-transaction.png

What is Compound Chain?

Liquidity

Liquidity is the process where liquidity providers pour in their crypto tokens in a pool and allows others to exchange the tokens. They earn a fee on every swap where slippage is the price change of a token during a transaction.

Liquidity
Source: https://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/ContentImage/MDE-2183-Market-liquidity-explained.png

X * Y = K

Understanding this formula is extremely important as it is widely used in the decentralized exchange world to determine the price of two tokens in a particular pool. The variables x and y in the formula represent the quantities of two tokens and k being the constant.
If the value of one token increases the value of the second token automatically decreases in order to maintain the constant k. However, this formula could be problematic when dealing with stablecoins as the stablecoins should remain constant. Also, while dealing with different flavors of the same tokens, prices have to be the same for each flavor. 

Graph

What is Curve Finance?

The curve finance is a platform for the exchange of tokens rather particularly famous for stable tokens. Stable tokens are tokens whose value does not fluctuate rather remain stable.

It offers different flavors of similar tokens like ETH and BTC while using a formula called the STABLE-SWAP INVARIANT for swapping.
The flat line in the graph ensures the stable swap of two coins. Uniswap uses the x * y = k formula where one token’s price can grow exponentially and the other token can lose its price and the two tokens could be dollars to pennies. Curve introduced the Stable-swap invariant in which both the tokens tend to remain stable.

Explanation

Let’s understand this with the help of an example: 

Suppose, Uniswap pool has a pair of USDT/DAI, both of which are of $1 with a proportion of 50/50. After some swapping the pool becomes unstable now with a proportion of 60/40. Now we have an excess of USDT and a scarcity of DAI. So, the price of USDT will become slightly less than 1$ (0.97$) and DAI will become slightly more expensive than 1$ (1.03$) and the pool becomes lopsided. Here, Curve will incentivize the liquidity providers to pour in DAI thus making the pool stable. The formula handling this is known as the Stable-Swap Invariant.

This is what the Stable-Swap Invariant looks like:

Curve’s Growth

Stablecoins have become an integral part of De-fi with more and more varieties of stablecoins in the market. Which means that there is a bigger space for people trading stablecoins. The curve has captured the market and emerged to become a giant by offering low fees and slippage at the same time. Stablecoins on other exchanges might deviate from their price whereas Curve ensures stability, which is one of the many reasons behind Curve’s success.

Learn about Nexus Mutual, a DeFi Project.

Liquidity On Curve

Liquidity providers can earn rewards by providing liquidity in Curve pools just like Uniswap. Additionally, there is another way liquidity providers can earn extra rewards; by the concept of lending. Curve finance offers lending pools where liquidity providers can lend tokens to other exchanges like Compound. This takes place in the background and liquidity providers earn fees on top of the transaction fee, as some protocols enable lending and borrowing functionality to the users. 

It’s important to note that the rewards are based on the transaction volume; they can be high or low. 

You might be wondering about the security risks that might occur while lending a token to another exchange. Curve solves this issue by wrapping the token as a cToken(wrapped token) and lending it to Compound while backing the cToken to the original token.

With Curve, we can have a pool of three or four tokens as well.

Once you deposit the tokens in, you can split it among all the tokens in the pool or you can add just one token. After adding tokens to the pool you will get LP tokens. These LP tokens represent your share in the pool which can be used to stake and mine new CRV tokens.

 The 3Pool is a pool with 3 tokens DAI, USDC and USDT, it does not matter in what token the user adds the liquidity as the reward generated is the same. You can get the LP tokens in all the tokens or in a single token.

A metapool is a pool where a stablecoin is paired against an LP token from another pool. For example, a liquidity provider can deposit DAI into 3Pool and earn pools liquidity token 3CRV.

Source: https://curve.fi/

CRV Token

CRV is Curve’s native token, which is generated when the user deposits and stakes the tokens on the Curve platform. It is awarded to liquidity providers, proportional to their share from the yields created by their pools. With Curve’s transition to become a DAO, CRV tokens also represent the holders’ rights to take part in its governance mechanism. That way they can make proposals and vote on them with CRV. Their Governance follows a ‘time-weighted’ voting system which simply means that the longer they hold CRVs, the greater their voting power in the DAO becomes.

Conclusion

Curve’s smart contract is audited by Trail of Bits but this doesn’t eliminate risks completely. Curve lends tokens to other exchanges and hence opens up another front to security risks. Curve finance is in the market for around a year and needless to say that hackers for sure have tried their unsuccessful attempts to steal the funds.

Here’s a link to Curve-fi: https://curve.fi/

“Curve is an exchange expressly designed for stablecoins and Bitcoin tokens on Ethereum” 

        - Michael Egorov (Founder and CEO of Curve)

Also read, Uniswap v3: Power To Liquidity Providers.

Overview

The financial industry is considered the first to be disrupted Blockchain technology, and ConsenSys Quorum Blockchain seems to be the culprit. However, we need to understand that emerging technologies often experience slow adoption. The primary reason is that organizations seek to better understand the technology and how to use it better.  

ConsenSys is a Blockchain software technology founded in 2014 by the co-founder of Ethereum Joseph Lubin. It develops decentralized applications and other infrastructure for the Ethereum Blockchain. Some of the applications created by ConsenSys include Metamask, uPort, Gnosis, etc. 

J.P. Morgan developed the ConsenSys Quorum chain. It is one of the significant steps towards the common adoption of Blockchain by financial industries. In this post, we shall explore the ConsenSys Quorum Blockchain, its features, and use cases. 

What Is ConsenSys Quorum Blockchain?

The ConsenSys Quorum chain is an enterprise-focused and permissioned Blockchain network specifically built for financial use cases. It is a fork of “GoQuorum,” a lightweight of geth designed to leverage the R&D inside the Ethereum community. “Geth” is a public Ethereum client. It has lots of protocol-level enhancements created to support business needs. The goal of this Blockchain is to create an enterprise Ethereum client that empowers businesses to adopt and leverage the benefits of Blockchain technology. 

We can also see ConsenSys Quorum as Ethereum-based decentralized ledger technology. It offers a permissioned way to apply the Ethereum network to support the privacy of contracts. The ConsenSys Quorum chain like Ethereum but with minor differences. It differs from Ethereum in:

Read about Binance Ecosystem.

The Features Of ConsenSys Quorum Blockchain

1. Permissioned 

The ConsenSys Quorum chain is designed to be permissioned. It means that all the networks using Quorum will not be open to all, unlike Ethereum. Therefore, permissioned Blockchain networks operate differently. There are completely different expectations of trust between approved nodes in the network compared to permissionless ones. 

In other words, the ConsenSys Quorum Blockchain system is a consortium Blockchain. It is only implemented between participants that have been pre-approved by a designated authority. Although consortium Blockchain systems run in the same manner and with the same features and protocols of a normal Blockchain, it relies only on permitted nodes. The implication is that organizations can consider the feasibility of Blockchain technology without the possibility of failure. 

2. Privacy

Financial institutions have always prioritized the confidentiality of records. This is one of the issues that regular Blockchain systems like Ethereum failed to resolve. When it comes to corporations and industries, the pseudonymous nature of the transaction can be easily undermined. Aside from its permissioned nature, the ConsenSys Quorum chain further improves privacy by integrating private and public on-chain transactions. 

While the public transactions function like that of Ethereum, the private transactions are verified. However, the details of the private transactions are not disclosed. With the use of a system known as Constellation, ConsenSys Quorum is able to manage much of its secure message transfers. In simple terms, Constellation is a general-purpose mechanism that is not entirely Blockchain-related. The ConsenSys Quorum chain owes its superior speed to Constellation and the architecture it supports. 

Aside from the privacy in transactions, it also offers privacy for smart contracts. Smart contracts are something banks and other financial institutions are wary of exposing due to security reasons. These smart contracts could contain sensitive information like investment strategies, transaction data, or internal information. In addition, ConsenSys Quorum has been partnering with Zcash to integrate the zero-knowledge security layer (ZSL) into the ConsenSys Quorum protocol. Both of them have released a proof-of-concept technical design document detailing the project. 

3. The Consensus Mechanism 

Its consensus mechanism is called the ConsenSys QuorumChain. It is initiated inside the genesis block. The ConsenSys QuorumChain is a simple, straightforward majority voting protocol. The fact that consortium chains are permission means there is no need to have an expensive PoW mechanism. However, ConsenSys QuorumChain offers different consensus mechanisms suitable for private Blockchain networks. These mechanisms include the following:

• RAFT-based Consensus

RAFT achieves consensus through an elected leader. The leader is saddled with the responsibility of executing log replication to the followers. In this form of consensus mechanism, the leader can decide on placing new entries and establishment of data flow to other servers without consulting those servers. The leader continues to lead until it fails or disconnects, and then a new leader is elected.

• The Istanbul BFT Consensus:

Since this is a Byzantine fault tolerance algorithm is based on the Practical Byzantine Fault-tolerant (PBFT) consensus algorithm, the PBFT supports immediate transaction finality and provides liveness and safety under the standard Byzantine fault threshold assumptions. 

• The Clique Consensus 

This is a Proof-of-Authority (PoA) consensus algorithm. It is readily available with “geth,” the Go Ethereum client. 

The Use Cases Of ConsenSys Quorum Chain

There are many use cases of the ConsenSys Quorum Blockchain. It is used but not limited to healthcare, identity, payments, property, capital markets, etc. Here is a list of some of the projects and brief descriptions:

• Tokenized Cash

It is a distributed ledger developed by HIS Markit. The project helps you to keep track of all cash movements.

• The JPM Coin

This project is designed to promote the immediate settlement of transactions. The transactions are basically between clients of the financial institution’s wholesale payment business. 

• The Marketplace For Loans

This is a decentralized marketplace where people come to seek access to loans. StreamSource develops the platform. 

• Interbank Information Network (IIN)

The project allows its member banks to exchange information at the same time in order to verify payments.

ConsenSys Quorum Chain Tools And Development 

The ConsenSys Quorum system has a lot of tools that help to improve both user and developer experience. These tools are mainly made up of network management, deploying and monitoring utilities, and others. The tools include ConsenSys Quorum support in truffle, Blockchain explorer for ConsenSys Quorum by Web3 labs, Cakeshop. Also, this Blockchain is available on cloud platforms like Azure and Kaleido. There is also the reporting tool that provides convenient APIs that help to generate reports concerning contracts deployed to a particular network. Some third-party tools like Splunk and Prometheus are also very useful in the deployment of the ConsenSys Quorum Blockchain network. 

Conclusion 

The ConsenSys Quorum Blockchain offers an enterprise-grade Blockchain network with high performance and privacy. Myriads of features made this chain an excellent choice for enterprise use cases. At the moment, ConsenSys Quorum appears to be a great idea and approach that can revolutionize the financial industry. The acquisition of Quorum by ConsenSys is great news to the enterprise Blockchain community. It also reinforces the impact of Blockchain in the financial industry. 

Also read Stellar Payment Network: Detailed Explanation.

Overview

What is Hummingbot? We will answer the question but first, let us have a clear overview of what it is all about. Hummingbot went live on April 4, 2019. Since then, it has been an amazing high-frequency market-making trading bot. The software is available on several platforms like Github and docker. Since its launch, the Hummingbot community has had a massive increase in the number of its members. 

HummingBot is designed for traders, developers, exchanges, and token issuers. According to CEO David Garcia, “Liquidity is a core piece for healthy markets. HummingBot is building the next generation liquidity platform by empowering users and traders to participate in the markets with the right incentives.” 

There have been more than 4,000 unique Github clones as well as Docker downloads. The code has also been forked on Github more than 100 times. 

Crypto exchanges and token projects spend an estimated $1.2 billion yearly on market making. Since, the cost is in the form of rebates, fees, and cost of inventory. As a result of financial and technical requirements, the crypto market makers can be likened to quantitative hedge funds that charge exorbitant fees on and may demand millions worth of inventory. All these necessitated the development of Hummingbot.  

What is the Avalanche Chain?

What Is Hummingbot?

Now, it is time to answer the question we asked in the first sentence of this post. It is an open-source software client that offers users the opportunity to create and monetize automated and algorithmic trading bots. Alternatively, it is an easy-to-use command-line interface that makes it possible for you to configure, customize, and run automated bots and other strategies. With this, users can make markets on both decentralized and centralized digital asset exchanges. Market making is a trading strategy that is previously accessible to only algorithmic hedge funds. 

Market making is a trading strategy where HummingBot continues to post limit bids and ask for offers on the market and then waits for the various market participants to fill their orders. As a market maker, HummingBot quotes two-sided markets by making bids and offers available on the market. If market making is still confusing to you, then consider this example. A shop X buys a product from Mr. A at a cheaper price and sells it to Mr. B at a higher price for a specific amount of profit. The shop X is the market maker in this case. This is exactly what HummingBot does through the use of bots.

Today, anyone can be a high-frequency trader, earning huge profits from market-making. The software enables users with limited technical know-how to engage in out-of-the-box frequency market making. The Hummingbot software is built for institutional-grade performance, and most importantly reliability. 

It is built on technologies like Cython (Python compiled into C). Hummingbot also utilizes low-level programming to optimize the memory-efficient and speed required to carry out high-frequency trading algorithms. It will serve as a base platform where users can customize and build their market-making and trading strategies. The design philosophy of Hummingbot is to fuse simplicity and to make it easy to use with performance and flexibility. Now we have a clear understanding of what Hummingbot is. Let's go-ahead to explore the Hummingbot command-line interface (CLI). 

What is Hummingbot Command Line Interface?

Every user operates Hummingbot through an interactive command-line interface (CLI). It is a text-based interface designed for entering commands. There is a “command” prompt on the CLI and it is displayed whenever the interface is ready to accept a “command.”On the CLI, you can only execute tasks by entering a command. The command-line interface employed by Hummingbot helps users to configure and run the bot. CLI also helps to generate logs of the trades that were executed. The command-line interface (CLI) splits into five panes and they include the following:

In order to start Hummingbot from the source, here are the prerequisites:

The Crypto Inventory

To run a trading bot, users need some inventory of cryptocurrency assets available on the exchange. Or in their Ethereum wallet, if they are using Ethereum-based decentralized exchanges. Every user needs an inventory of both the base asset and the quote asset. The base asset is the asset that you are buying or selling while the quote asset is the one you exchange for the base asset. 

API Keys

To run a bot on centralized crypto exchanges like Coinbase, Binance, etc, users will need to enter the exchange API keys. You will have to do this during the Hummingbot configuration process. 

Ethereum Wallet

For users to be able to earn rewards from liquidity bounties, they will need an Ethereum wallet when running Hummingbot on an Ethereum-based decentralized exchange.

Ethereum Node (Dex only)

When running a Hummingbot on an Ethereum-based decentralized exchange, your wallet will send signed transactions to the blockchain system through an Ethereum node. 

Hummingbot Miner

The Hummingbot Miner is a liquidity mining platform that makes it possible for sponsors to incentivize liquidity provision by leveraging token rewards on order book-based exchanges. If you sign up for the Hummingbot Miner, you can earn token rewards for providing liquidity for some trading pairs. 

Users can set up their liquidity mining on the Miner App in order to see real-time rates of their rewards and performance. It also allows you to keep track of your payouts and check market leaders. Liquidity mining is the term for a community-based and data-driven approach to market-making. Here, a token issuer or an exchange rewards a pool of miners to ensure liquidity is available for a particular token. 

It is open, hence anyone can participate and you can track your earnings every minute. Also, it is non-custodial meaning that the platform doesn’t have control over your token. To start as a liquidity provider on Humminmgbot, you will need two sets of API Keys. Also, you can use your own trading bots and strategies to take part in liquidity mining. For those that don’t have their own trading bots, Hummingbot allows them access to quant/algo strategies. 

What is Tendermint Core?

Hummingbot Supported-Installation Environments

PlatformBinaryDockerSource
Windowsyesyesyes
macOSyesyesyes
Linux-yesyes
Raspberry Pi-yesyes

For experienced and technical users, it is advisable you set up a cloud instance, then install the Docker version or from the source. Doing this enables the Hummingbot software to run 24/7. You can use Hummingbot as a long-running service using cloud platforms like Google Cloud Platforms, Amazon Web Services, and Microsoft Azure.

 

Hummingbot Strategic Partnership

Hummingbot is in collaboration with many well-known decentralized finance (DeFi) platforms. They received a development grant from 0x, a leading open-source protocol for DEXs. The grant was to support the 0x ecosystem with Hummingbot. Hummingbot’s collaboration with 0x will help lower the barriers to providing liquidity in the 0x ecosystem. 

What Does The Future Hold For Hummingbot Protocol?

The team plans to continue to build additional capabilities on the Hummingbot network to maximize its utility for the growing users. They also, intend to continually roll-out more exchange connectors to help link Hummingbot to more exchanges. Also, there is a constant tweaking of the graphical user interface (GUI) to make it more user-friendly. 

Conclusion 

In this article, we have taken time to answer the question, “what is Hummingbot?” The article also explores other functions and capabilities of this open-source protocol for crypto traders. The platform is also seeking partnerships with cryptocurrency exchanges. It also welcomes the token issuers with interest in the professional deployment of Hummingbot. 

Learn about Phantasma Chain in our article.

Overview

Many analysts have dubbed the Avalanche chain as the new DeFi Blockchain. The launch of the Avalanche platform has attracted attention from DeFi community enthusiasts. Avalanche features 3-built-in Blockchain networks, and all three are secure and validated by the main network. The main network of the Avalanche platform functions as a special subnet. Every member of all custom subnets must be a member of the main network. They can do that by staking at least 2,000 AVAX, which is the native token of the Avalanche Blockchain network. 

In this article, we shall explore the Avalanche network and what you should all expect. 

What is Avalanche Chain?

It is a relatively new Blockchain network and boasts of sub-second transaction times and low transaction fees. The platform was developed by Ava Labs under the leadership of Emin Gun Sirer. Avalanche’s mainnet was launched in September 2020. The project raised $18 million from notable investment firms like Andreesen Horowitz and Polychain Capital. They also raised another $42 million with the public launch of the native token (AVAX) in July 2020. Their goal is to be better than ETH 2.0 in terms of throughput and latency. 

The subnets or subnetworks are a special set of validators that works together to achieve consensus on the condition of a set of Blockchain systems. One subnet validates a particular Blockchain network. A node can belong to many subnets, and every subnet manages its own membership. However, it may require that the constituent validators have certain properties. 

How Does The Avalanche Platform Our Work?

The Avalanche chain is made up of multiple Blockchain networks. It makes use of a novel proof-of-stake consensus mechanism to reach a high throughput. The platform is estimated to execute more than 4500 transactions per second. According to the team behind the project, Avalanche combines the benefits of “Nakamoto consensus” and “Classical Consensus". The Nakamoto consensus involves robustness, scalability, and decentralization. Also, the Classical consensus involves speed, quick finality, and energy efficiency. Both the Classical and Nakamoto consensus mechanisms combine to create a revolutionary consensus engine. 

According to Emin Gun Sirer, “only three times in the 45-year-old history of distributed systems have we had a new family emerge. Avalanche is a brand new family, as big of a breakthrough as Satoshi’s protocol was. It combines the best of Satoshi and the best of classical in scales like no other that allow anyone to integrate themselves into the consensus layer.” 

In the Avalanche model, each chain is a separate representation of a virtual machine. It supports multiple custom machines like Ethereum virtual machine (EVM) and WASM, thus allowing chains to imbibe case-specific functionality. Each of the virtual machines is deployed on a custom Blockchain network known as a subnet. The subnet consists of a special set of validators that work together to achieve consensus. Each of the subnets has its own incentive mechanisms to ensure the validators are honest in their activities. 

It is not out of place to call the Avalanche chain a “platform of platforms".The network consists of thousands of subnets that come together to form one interoperable network. 

Optimistic Rollups: What are They?

What’s the Avalanche-Ethereum Bridge?

Ava Labs, through its accelerator, Avalanche-X is investing in grants to DeFi projects. ChainSafe got one of these grants to develop a cross-chain Ethereum bridge. The Avalanche-Ethereum Bridge was set in motion last month, and it functions as a two-way token bridge. It allows for seamless ERC-20 and ERC-721transfers between the Avalanche Chain and Ethereum network. To use Ethereum-based assets with dApps on the Avalanche network, users will have to lock the asset in the ChainBridge contract, and then mint an equivalent token on the Avalanche Blockchain. 

Therefore, you can bridge ETH and ERC-20 tokens between the Avalanche and Ethereum networks. Many benefits come with the Avalanche-Ethereum Bridge. It represents a step towards redeploying Ethereum’s slow and expensive DeFi infrastructure to the faster and cheaper Avalanche Blockchain. On the Avalanche network, transaction fees are rarely more than a few cents. On the other hand, the cost of complicated computations is always in the single-digit dollar range, and the execution is significantly faster.   

The 3-Built-In Blockchain Networks On Avalanche

The Exchange Chain (X-Chain)

The X-Chain functions as a decentralized network for creating and trading digital assets. It is a representation of a real-world resource such as bonds and equity with specific rules that govern their actions. Whenever you initiate a transaction on the Avalanche blockchain, you get to pay a fee in AVAX. The Exchange Chain is an example of the Avalanche Virtual Machine (AVM). Clients can create and trade assets on the X-Chain and other examples of the AVM with the help of the X-Chain API. 

The Platform Chain (P-Chain)

It is the metadata Blockchain on the Avalanche Blockchain network and coordinates validators. The P-Chain also keeps track of active subnets and allows the creation of new ones. It implements the Snowman consensus protocol. The P-Chain API also allows users to create subnets, add validators to the subnets, and build Blockchain networks. 

The Contract Chain (C-Chain)

With the C-Chain API, clients can create smart contracts. It is an example of the Ethereum Virtual Machine that is powered by the Avalanche Chain. The C-Chain also serves as the default smart contract blockchain of the Avalanche chain. C-Chain is also very compatible with the Solidity smart contract as well as Ethereum tooling. Therefore, it makes it easy for Ethereum developers to easily port applications into the Avalanche chain.

The Primary Network

Meanwhile, there is the primary network that validates all the three built-in blockchains of Avalanche. Every member of the Avalanche network must be part of the primary network. Before any of the Subnets can become a member of the network, it must stake some AVAX tokens

Ever heard about Defi protocol "Compound"?

The Implication Of The Avalanche Chain Network On the Blockchain Space

The impact of the Avalanche network and that of the Avalanche-Ethereum Bridge is far-reaching, to say the least. Here are some of the possible ways the Avalanche network can impact the Blockchain space:

Accessibility

The low cost of transactions on the platform means that it will be more financially viable for small trades. Therefore, it will open up the DeFi ecosystem to smaller players as well as entry-level investors. Although the user experience is still complex and is a significant barrier to entry, improvement in this area can lead to an increased number of participants in the DeFi space. 

Low Slippage

With the faster transaction and higher throughput of the Avalanche Blockchain system, price slippage reduces significantly. Therefore, the network ensures instant trades while also bringing the experience of trading on decentralized exchanges closer to centralized counterparts.

Conclusion

The Avalanche chain is revolutionary and is on the right track to transforming the DeFi space. A day after the launch of the Avalanche Bridge contract, more than $30 million worth of Ethereum-based assets were locked up. This is evidence of the strong adoption of the Avalanche network. 

Learn about Ampleforth

Phantasma Chain is a fast, scalable, and highly secure blockchain network. Its governance token called SOUL and energy token KCAL powers it. Although the Phantasma blockchain system maintains a decentralized governance protocol, it also offers interoperability with other blockchain systems. The innovative mechanism employed by Phantasma Chain such as dual token system and advanced non-fungible tokens (NFTs) makes it possible for users to have digital goods and services. 

Some of such digital goods and services include communication, entertainment, the marketplace, and storage. The ecosystem consists of active block producers, block verifiers, and standby block producers who serve as backups. Also, the Phantasma Chain has high transaction per second (TPS) and low transaction fees for better communication and entertainment.

Learn about Architecture Of Stellar Network.

Features of the Phantasma Ecosystem

Here are some of the great benefits of the Phantasma Chain in the blockchain space:

Proof-Of-Stake (PoS) Consensus Mechanism.

Phantasma blockchain system adopts a special proof-of-stake. Here, users who desire to be validators will have to put a stake in the Phantasma network. As an incentive for this task, the transaction fees will be shared amongst the validators. The master nodes or block producers for the Phantasma network use a rotational scheduling side-chain to identify an active validator. 

This process occurs in parallel, hence it allows for horizontal scaling and boosting of the theoretical transaction per second (TPS). An active validator node is saddled with the responsibility of accepting transactions from Phantasma users. The validator verifies signatures and transaction contents. If the transaction is accepted, it will be the job of the validator to add it to the next block. 

Smart Contract Languages 

Phantasma network recently launched the Phantasma SDK with support for C# and Javascript languages. It also has support for a chain node, smart contract compiler, block explorer, wallet, and lots of applications. Finally, the full mainnet of the Phantasma chain supports Solidity, Python, and C#. 

Non-fungible Token Support

This is another great feature of the Phantasma network, especially when NFTs could be an important component of the digital economy. Having a token that represents digital goods makes it more convenient to buy or sell digital goods using blockchain technology. The Phantasma platform allows the trading of NFTs from different chains supported by the Phantasma network. Since, in the coming years, non-fungible tokens have the potential to be the driving force of blockchain. 

Multiple Side Chains 

The Phantasma Chain has infinite side chains made possible due to its new PoS+ mechanism. As each of these side chains retains its 5k transactions per second. Therefore, the benefit of these multiple side chains is that they provide a solution to the scalable issues of blockchain networks. To know the total TPS of the Phantasma ecosystem, multiply the total number of chains available with 5k TPS. 

By leveraging the inter-chain technology and the connectivity of the side-chains, developers can build revolutionary dApps. 

Cosmic Swaps Framework

This is a system within the Phantasma blockchain network. It is an on-chain liquidity sharing system that allows users to connect to the decentralized exchange system of the Phantasma network. These users can benefit from the same liquidity pool. With the cosmic swaps framework and the custom-built connection, the network offers token and coin swaps in the App. Therefore, users don’t have to go through an exchange to get tokens or coins. Companies seeking to develop decentralized exchanges on Phantasma can connect directly to the same liquidity pool managed by Phantasma. 

An Integrated Name System

Phantasma system deploys an integrated name system at a time that most of the known blockchain systems use archaic systems.  Other blockchain systems require users to public addresses to receive coins or tokens. Meanwhile, the Phantasma Chain has a built-in protocol that allows people to use username as their public address.The network seeks to offer the best user experience possible and position for the mainstream adoption of blockchain. 

Anonymous Transfers 

The Phantasma network has the Ghost Mode feature which allows users to send private transactions. Therefore, private transactions are made possible by the Phantasma protocol. However, there are two separate levels of privacy covered in the Ghost Mode feature. These different layers are dependent on the size of groups in the ring signatures. A higher group size results in more privacy, and more privacy means higher network fees.

Decentralized Storage Solution

phantasma Chain also has a free decentralized solution for its users. The decentralized file storage is available from the mainnet launch day. Meanwhile, a storage dApp will be launched soon after the mainnet.

What is Ampleforth?

Notable Phantasma Chain Partnership

Phantasma blockchain team aims to make the system a one-stop blockchain for all daily activities and interactions. They are focused to achieve this goal and are currently closer than ever before. However, achieving great in the crypto space often always requires collaborations and integrations. There is currently a chain swap partnership between NEO and the Phantasma Chain which is already live. The partnership was vital for the launching of the Phantasma blockchain. 

Another blockchain that will soon be added to the chain swaps is the Ethereum blockchain. This swap partnership makes it possible to swap ETH and some other coins with Phantasma. The swapped coin can be spent within the Phantasma ecosystem. Phantasma Chain swap works in both directions, thus, making it possible for the team to introduce an ERC-20 SOUL token. The major benefit of the swap partnership with Ethereum is that it makes it possible for Phantasma to penetrate the Ethereum market and decentralized exchanges. 

This makes it possible for Phantasma to be in a better position to leverage Ethereum dApps for collaborations. Therefore, the team prioritizes the chain swaps between the Ethereum blockchain and Phantasma Chain. The launch of the Ethereum chain swaps will also ensure that non-fungible tokens (NFTs) are swappable. Users of the Phantasma ecosystem can swap Phantasma NFT on Ethereum protocol and can trade on Ethereum NFT platforms. It will ensure that Phantasma NFTs are readily accessible to more buyers and traders. Ethereum users can also swap their NFTs for Phantasma, while also leveraging the Phantasma marketplace’s low transaction fees for trading. 

Conclusion  

The Phantasma Chain is a revolutionizing ecosystem and has many things in stock for all blockchain enthusiasts. Phantasma may be the missing link that the current blockchain systems need for mass adoption. We will all have the answer with time. 

Also read about Binance Ecosystem.

Many people have been asking what is Ampleforth and how does it come into play in decentralized finance? Some protocols like Compound, MakerDao, and Aave have introduced a new dimension of financial possibilities in recent times. These financial possibilities were supply-based interest rates, flash loans, and crypto-collateralized stablecoins. Among these game-changing protocols, Ampleforth has recently taken the spotlight, and many believe it is for a good reason. 

Ampleforth aims to redefine how money works. It combines the best of Bitcoin and stablecoins. In this post, we are going to explore all there is about Ampleforth and its impact on the decentralized finance industry. 

What Is Ampleforth? 

In simple terms, Ampleforth is a cryptocurrency that is trying to reinvent money. Technically, Ampleforth is a decentralized finance (DeFi) protocol that seeks to completely overhaul how money is designed both inside and outside of cryptocurrency. By creating a stable but flexible currency that can accommodate both inflation and deflation, Ampleforth addresses the problems of traditional finance and decentralized finance. 

As a cryptocurrency, Ampleforth can adjust its supply based on demand. It is built on the Ethereum blockchain, and its token is AMPL, an ERC-20 token. When there is an increase in demand, the total supply of AMPL increases. Also, when the demand goes down, AMPL's total supply decreases. It is adaptive money that adjusts supply based on market conditions. The essence of this is to maintain purchasing power irrespective of economic power. AMPL supply adjustments are made directly to all AMPL wallet balances. This helps to maintain the same percentage of total AMPL supply no matter the raw numerical change. 

Many people make the mistake of thinking that Ampleforth is a stablecoin like DAI, Tether, etc. Although the purpose of Ampleforth is to provide the same function as a stablecoin, US dollars do not back Ampleforth. Ampleforth is an adaptive base-money that only seeks to reduce volatility. 

Read about Tendermint Core.

How Does Ampleforth Our Work?

Ampleforth's smart contract automatically decreases or increases its money supply based on the market conditions. The interesting part is that the system does this without the control of a "central bank." Therefore, wallet balances increase or decrease when the demand is high or low, respectively. This doesn't mean that Ampleforth is dilutive in any way. 

When central banks flood the market with the different currencies, they dilute the money supply with inflation. As a holder of the AMPL token, you cannot be diluted by supply inflation. The reason is that adjustments occur proportionally across all users' balances. Therefore, with Ampleforth, your percentage ownership always remains fixed. 

For example, let's say you are a whale who owns 15% of the network. In this case, you will always own 15% until you decide to sell your stake. The supply of AMPL can expand and contract out of your wallet. This means that the number of AMPL you own can change depending on the market condition. However, your network percentage remains the same. This daily supply adjustment is known as rebasing. 

Token Dynamics of AMPL Token

We have already answered the question, what is Ampleforth? Let's go on to look into the unique token dynamics of the AMPL token. The demand and supply mechanics are what make AMPL token different from other crypto primitives. Primitives are the basis for building a complex system. For example, bitcoin is the base primitive for a censorship-resistant payment rail. However, Ethereum took it a step further by integrating smart contracts to run over the network. 

Rebasing is one of the unique attributes of the Ampleforth platform. The AMPL token is a "supply elastic" token. Therefore, the supply of the town changes in response to the price per unit. This price adjustment happens every night at exactly 7 pm Pacific time. This process of supply adjustment is known as rebasing. However, rebase is non-dilutive in the sense that it doesn't change the percentage of the token you hold in your wallet.

According to economists, when demand and supply in a market are in perfect balance with each other, they are in a state of equilibrium. In the case of Ampleforth, equilibrium is attained when a change in demand gives rise to a one-for-one change in supply. For example, if there are 50,000 AMPLs and the price increases from $1 to $2 due to an increase in market demand, the network will set its target price at $1 and expand supply by 100,000 AMPL. The process whereby the supply would increase from 50,000 AMPLs to 100,000 AMPLs is called a "rebase." 

Most people think that rebase dilutes existing token holders, but that's not the case. It would be best if you thought about it as owning a fixed amount of the network instead of a fixed amount of tokens. The process is executed in a decentralized manner leveraging the unique capabilities of ERC-20 tokens. Therefore, without the Ampleforth system stealing market share from any holder, these 150,000 AMPLs created by the protocol will be proportionally shared to all AMPL holding addresses. Equilibrium will be achieved when a proportionate 2× decrease in price meets the 2× increase in supply. This keeps the market capitalization stable at $100,000, from our cited example. 

By creating a financial incentive for users, Ampleforth helps the network to reach equilibrium. However, the network relies on profit-seeking traders to ensure equilibrium is returned on the demand side immediately the change in supply goes through. The AMPL token is an asset whose price is determined by the free market. Arbitrageurs can sell their newly acquired AMPLs for $2, thus creating market pressure and returning AMPL's cost to equilibrium at the initial $1. 

The Use Cases of Ample Token

We have known what Ampleforth and its token dynamics are. Do we have any use for AMPL tokens? The answer is a big yes. AMPL tokens serve as a medium of exchange. Ampleforth can scale its supply to meet the demands of billions of users worldwide. However, it can also contract supply if it is only serving a paltry number of 1,000 users.

Due to its elastic supply, Ampleforth is an ideal asset to build a digital economy around. In this form, it can become the perfect collateral for DeFi. The countercyclical behavior of Ampleforth makes it an excellent addition to a crypto portfolio. From a broader perspective, Ampleforth aims to offer an independent alternative to central bank money. This is a long-term goal, and Ampleforth must first gain the trust of the community. It has to prove its utility as a reliable medium of exchange and store of value. Ampleforth also aims to become a multichain asset in the future. A multichain platform helps in the creation and deployment of private blockchains. 

Also read Nexus Mutual: A Deep Dive.

The Key Takeaways From Understanding What Is Ampleforth

Conclusion 

Knowing what Ampleforth is and its use cases are essential for every DeFi enthusiast. Although the project is still in its experimental stage, the potential is vast. For the project to achieve its goals, the broader crypto market needs to accept that it is primitive that offers value to users. The project is currently a high-risk play with an immense payoff provided the network achieves its vision. 

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