Let's Talk Bitcoin! #433 Coronavirus Impacts and Improving ...

Minimum Viable Issuance - Why Ethereum’s lack of a hard cap on ETH issuance is a good thing.

This post will explain how the argument used by the average Bitcoin maximalist, thinking that they have found Ethereum’s achilles heel when talking about issuance is actually highlighting one of Ethereum’s strong points and one of the main threats to the longevity of the Bitcoin network.
So first let’s answer the question which I know many people have about Ethereum:

What is Ethereum’s ETH issuance schedule?

Ethereum has an issuance policy of Minimum Viable Issuance. So what does this mean exactly? It means that the issuance of ETH will be as low as possible while also maintaining a sufficient budget to pay miners (and soon to be stakers) to keep the network secure. For example, if ETH issuance was halved, miners would drop off the network and stop mining as it is no longer profitable for them to mine. As a result, the network would be less secure as it would cost less money for an attacker to control 51% of the hash power and attack the network. This means that the Ethereum community plans to change ETH issuance as time goes on to maintain a reasonable security budget which will keep the network secure but will also keep inflation in check. We have done this twice in the past with EIP-649 and EIP-1234 which reduced block rewards from 5 ETH per block to 3 ETH and from 3 ETH to 2 ETH respectively. I previously made a graph of ETH issuance over time here: https://redd.it/it8ce7
So while Ethereum doesn’t have a strictly defined issuance schedule, the community will reject any proposals which either put the security of the network at risk such as the recent EIP-2878, or we will reject proposals which will lead to excessive network security and therefore an unnecessarily high inflation rate (or we will accept proposals which reduce issuance after price rises and therefore the security budget rises). This means that when Bitcoiners accuse the Ethereum Foundation of being no better than a central bank because they can “print more Ether”, this is completely untrue. Any proposals made by the EF which would increase issuance unnecessarily would be rejected by the community in the same way that a proposal to increase the supply of Bitcoin from 21 million to 22 million would be rejected. There is a social contract around both Bitcoin’s and Ethereum’s issuance schedules. Any networks or proposals which break the social contracts of 21 million Bitcoins and minimal viable issuance of Ether would be a breach of these contracts and the new proposed network would be labeled by the community as illegitimate and the original network would live on.

So why is minimum viable issuance better than a hard cap?

Minimum viable issuance is better than a hard cap because it puts the most important part of the network first - the security. MVI ensures that the Ethereum network will always have a security budget which keeps the cost of a 51% attack impractically high. Bitcoin on the other hand, halves its security budget every 4 years until eventually only the transaction fees pay for network security. This means that every 4 years, the amount of money paying for network security halves until eventually, the value of attacking the network becomes greater than the security budget and someone performs a 51% attack (technically the security budget only halves if terms of BTC not in dollars. However, even if the price of Bitcoin more than doubles in the time that the security budget halves, the ratio of security budget to value secured on the network still halves, doubling the financial viability of performing a network attack). The strategy to pay for the security budget once Bitcoin issuance stops is for transaction fees to secure the network since transaction fees are paid to miners. Not only does this have its own security problems which I won’t detail here, but unless Bitcoin scales on layer 1 (layer 2 scaling solutions have their own security mechanisms separate from L1), then fees would have to cost well in the thousands of dollars to secure a trillion dollar market cap Bitcoin that is secured by nothing but fees. If Bitcoin maximalists want a 10 trillion or 100 trillion dollar market cap then expect fees to go up another 10 or 100 times from there.
Ethereum on the other hand, will be able to keep its network secure with approximately 1-2% annual issuance being paid to stakers under ETH 2.0. This is because not all of the network will be staking, so if 33 million of the approximately 110 million Ether in existence stakes under ETH 2.0, then paying this 33 million Ether 6% a year (a very decent yield!) would cost just under 2 million ETH per year which would equate to less than 2% annual ETH inflation. This is also before considering EIP-1559 which will burn a portion of transaction fees which will counter the effect of this inflation and potentially even make ETH deflationary if the sum of all burned transaction fees are greater than the annual inflation. Also, under ETH 2.0, an attacker performing a 51% attack would get his funds slashed (they would lose their funds) if they attack the network, meaning that they can only perform a 51% attack once. However, in Bitcoin, anyone who controls 51% of the mining hash power could perform multiple 51% attacks without losing everything like they could in ETH 2.0.
So in conclusion, while Ethereum doesn’t have the guaranteed anti-inflation security of a hard cap, it does have the guarantee of always paying it’s miners (or stakers under ETH 2.0) enough to keep the network secure. In contrast, while Bitcoin’s social contract may guarantee a hard cap of 21 million, it cannot simultaneously guarantee network security in the long run. Eventually, its users will have to decide if they want a secure network with more than 21 million coins or a tax to pay for security or an insecure network with super high fees and a hard cap of 21 million Bitcoin.
Disclaimer: The details I covered around 51% attacks and network security are simplified. I am not an expert in this field and things are a lot more nuanced than I laid out in my simplifications above.
submitted by Tricky_Troll to ethfinance [link] [comments]

0xMonero, summary of findings

Edit: There was prior work by Artemiscult I didn't know about from a month ago!
Hi, this is a summary of my findings on 0xMonero, which claims to be "a mineable privacy focused project".
The contract was deployed on April 18th of this year, verified on Etherscan the same day, announced on Twitter soon after. It was announced on Bitcoin Talk about ten days later. 0xMonero's contract is an uncredited rip of 0xBitcoin's with only very small changes. The mining software recommended by 0xMonero was written for 0xBitcoin. There are two other more modern miners written for 0xBitcoin, but up until recently, they have only supported pool mining, not solo. My suspicion for why 0xMonero recommends the older miner is that they don't have anyone competent to run a mining pool.
Here's 0xMonero's stats page, and here's 0xBitcoin's. Look familiar? 0x1d00ffff wrote that page for 0xBitcoin about a month after the 0xBitcoin project started in February 2018. Here's the initial commit, and here are the changes 0xMonero made. When 0xMonero ripped it, at least they left the author's Etherscan link at the bottom.
Here's 0xMonero's official GitHub. As of now, there are 20 repos, but they are all forks, zero original repos. I've been told that 0xMonero has ten developers. When I asked to see their GitHub accounts, I was told that they were all too concerned with privacy. That doesn't make sense to me, since I've been doing anonymous development under various identities for years. Here's the account associated with my work for 0xBitcoin, and here's another project I work on with other anonymous developers.
Why does 0xMonero make reference to Monero? I don't know. As far as I can tell, 0xMonero has nothing to do with Monero. I can say with certainty that since 0xMonero's contract is an almost identical copy of 0xBitcoin's, and 0xBitcoin deliberately did not include privacy features, there are no privacy features in the 0xMonero contract. They would have to be elsewhere. But as far as I know, there is no other code to look at.
Here's a piece-by-piece analysis of the claims on 0xMonero's site:
Here's a thread started by DigitalInvestments2 who claims to be a top holder of 0xMonero. In that thread, I asked many direct questions, and was not able to receive any clarification or substantiation of any aspect of what 0xMonero says they are working on.
When I couldn't get answers in that thread, I reached out twice to the official 0xMonero Twitter account asking them to start a thread where it would be possible to get answers. I got blocked. At the same time, I was blocked by another related Twitter account. Here's that account lying about 0xMonero's (nonexistent) privacy features.
I started talking about this stuff on 0xMonero's Bitcoin Talk thread about a week ago. I have been unable to get any answers there, either. But someone in that thread reported me. For what, I don't know.
I think that's it for what I know about 0xMonero at the moment. Please let me know what you think. Thanks.
Edit: Here's that related Twitter account lying about 0xMonero's nonexistent privacy features again.
Edit: lying about 0xMonero's nonexistent privacy features again, and AGAIN. Suggesting to people that 0xMonero is somehow private is dangerous.
Edit: ... lying about privacy again.
Edit: agreement about 0xMonero most likely being a complete scam from a second source: https://twitter.com/CryptoScamCases/status/1292753105097031680
Edit: lying about privacy again. Noticing a trend with 0xMonero and lying?
submitted by 0xBrian to CryptoMoonShots [link] [comments]

A theory of why Ethereum is perhaps better "sound money" than Bitcoin.

The idea of Bitcoin's supremacy as "sound money" is very frequently thrown around by the biggest talking heads in the crypto world. I know I will get a lot of hate for suggesting that this theory is not only flawed, but it is straight up wrong. As unintuitive as it may sound to Bitcoin maximalists (no offense intended) I believe Ethereum is on the path to becoming the global leading asset and model for sound money... give me a chance to explain why.

  1. The idea that nothing can change Bitcoin's issuance schedule is a myth. There is absolutely no divine power controlling the supply of Bitcoin. Contrary to what is commonly asserted, Bitcoin's issuance protocol is not primarily driven by what is currently implemented. The real driver is consensus: the majority of network participants must agree that what is currently defined cannot be changed. There is an underlying assumption that the consensus would never want to change Bitcoin's issuance. On the surface this makes for a nice "sound money" narrative, but it is false premise and sticking to it could be ultimately detrimental. It presents a long term sustainability issue (the hope that somehow Bitcoin's base layer will scale enough to maintain security entirely through fees). It also completely dismisses the possibility that an unforeseen event could create pressure to change the issuance. If Bitcoin managed to create a consensus mechanism that did not rely on mining, it is very likely there would be consensus to reduce issuance. On the other hand, if some potentially catastrophic event would create incentives to increase the issuance, it would only make sense for the network to do so.
  2. Issuance flexibility is not fundamentally bad. Etheruem's approach to adjust the issuance according to the contextual circumstances has resulted in a faster rate of issuance reduction than what was originally defined in the protocol. The rate of issuance will continue to decrease as new developments allow for it to happen without compromising the network security. There is a very high probability that Ethereum will achieve a lower issuance rate than Bitcoin in the next two years, and it could possibly achieve zero issuance in the next five years. This would be a result of a successful implementation of PoS, sharding and EIP-1559.
  3. The root of all evil is Proof of Work. PoW is by far the primary cost of operating the Bitcoin network. It is the primary determinant of how much issuance is needed as a financial incentive to keep miners doing their thing. The very mechanism that secures the network's decentralization is unfortunately quite wasteful. The degree of decentralization is a direct result of how much random mathematical operations are being done by miners.
  4. There is a better way. Some people will take offense by the use of the word wasteful, and they claim that it is not because those mindless calculations are what is actually securing the network. However, its wasteful aspect becomes clear if there is a different way to achieve equal or superior decentralization without the need to crunch difficult computational problems. This just so happens to be embodied in Ethereum's design of Proof of Stake. It will drastically reduce the cost of securing the network, while providing at least 2-3% annual returns for the ownership of Ether. When Ethereum's issuance becomes lower than its staking rewards, it will effectively have achieved the same effect as having zero (or possibly negative) issuance.
  5. The value proposition of Ethereum 2.0 is unmatched. There is just absolutely no asset in the world that has a 2-3% self-denominated annual returns and just so happens to be rapidly appreciating. When wall-street's greed sees this, it will create the mother of all bubbles.
  6. Don't dismiss the flippening. On February 01 2018 Ethereum reached 70% of Bitcoin's marked cap (it was even closer if you account for the amount of lost bitcoins). That happened before DEFI, before proof of staking was within reach, before multiple effective layer 2 solutions were a thing, before wrapped Bitcoins and before the first signs of mass adoption were on the horizon (like integration with Reddit , VISA and potential to compete with SWIFT). Utility is a huge factor in driving prices, lets not forget how Silk Road played a key role into propelling Bitcoin's value. Yes, Ethereum crashed hard after the peak in 2018, but perhaps it is simply manifesting a higher volatility pattern that is reminiscent of Bitcoin's early years. Bitcoin's first 5 years were characterized by aggressive price swings, why should it be different for Etheruem (considering it is about 5 years younger than Bitcoin)? If the volatility patterns stands on this bull market, we will see a flippening.
So... do I think Etheruem will flip? Yes I do, but I still hold Bitcoin. No one has a crystal ball, and nothing is certain. Perhaps Etheruem will crash and burn, perhaps Bitcoin will become the next Yahoo, and perhaps they will both thrive in this new exciting crypto world.
submitted by TheWierdGuy to ethereum [link] [comments]

How does cryptocurrency works?

How does cryptocurrency works?
When we were a much smaller society, people could trade in the community pretty easily, but as the distance in our trade grew, we ended up inventing institutions such as banks, markets, stocks etc. that help us to conduct financial transactions. The currencies we are operating with nowadays are bills or coins, controlled by a centralized authority and tracked by previously mentioned financial institutions. The thing is, having a third party in our money transactions is not always what we wish for. But fortunately, today we have a tool that allows us to make fast and save financial transactions without any middlemen, it has no central authority and it is regulated by math. Sounds cool, right? Cryptocurrency is this tool. It is quite a peculiar system, so let’s take a closer look at it.
by StealthEX

Layers of a crypto-cake

Layer 1: Blockchain

First of all – any cryptocurrency is based on the blockchain. In simple words, blockchain is a kind of a database. It stores information in batches, called blocks that are linked together in a chronological way. As the blockchain is not located in one place but rather on thousands of computers around the globe, the blockchain and the transactions thus are decentralized, they have no head center. The newest blocks of transaction are continuously added on (or changed) to all the previous blocks. That’s how you get a cryptocurrency blockchain.
The technology’s name is a compound of the words “block” and “chain”, as the “blocks” of information are linked together in a “chain”. That’s how crypto security works – the information in the recently created block depends on the previous one. It means that no block can be changed without affecting the others, this system prevents a blockchain from being hacked.
There are 2 kinds of blockchain: private and public. Public, as goes by its name, is publicly available blockchain, whereas private blockchain is permissioned, which only a limited number of people have access to.

Layer 2: Transaction

In fact, everything begins with the intention of someone to complete a transaction. A transaction itself is a file that consists of the sender’s and recipient’s public keys (wallet addresses) and the amount of coins transferred. The sender begins by logging in into his cryptocurrency wallet with the private key – a unique combination of letters and numbers, something you would call a personal password in a bank. Now the transaction is signed and the first step which is called basic public key cryptography is completed.
Then the signed (encrypted) transaction is shared with everyone in the cryptocurrency network, meaning it gets to every other peer. We should mention that the transaction is firstly queued up to be added to the public ledger. Then, when it’s broadcasted to the public ledger, all the computers add a new transaction to a shared list of recent transactions, known as blocks.
Having a ledger forces everyone to “play fair” and reduce the risk of spending extra. The numbers of transactions are publicly available, but the information about senders and receivers is encrypted. Each transaction holds on to a unique set of keys. Whoever owns a set of keys, owns the amount of cryptocurrency associated with those keys (just like whoever owns a bank account owns the money in it). This is how peer-to-peer technology works.

Layer 3: Mining

Now let’s talk about mining. Once confirmed, the transaction is forever captured into the blockchain history**.** The verification of the block is done by Cryptocurrency Miners – they verify and then add blocks to the public ledger. To verify them, miners go down on the road of solving a very difficult math puzzle using powerful software, which is that the computer needs to produce the correct sequence number – “hash” – that is specific to the given block, there is not much chance of finding it. Whoever solves the puzzle first, gets the opportunity to officially add a block of transactions to the ledger and get fresh and new coins as reward. The reward is given in whatever cryptocurrency’s blockchain miners are operating into. For example, BTC originally used to reward miners in 50 BTC, but after the first halving it decreased to 25 BTC, and at present time it is 6.25 BTC. The process of miners competing against each other in order to complete the transactions on the network and get rewarded is known as the Proof-of-Work (PoW) algorithm, which is natural for BTC and many other cryptocurrencies. Also there are another consensus mechanisms: Proof-of-Stake (PoS), Delegated Proof-of-Stake (dPoS), Proof-of-Authority (PoA), Byzantine Fault Tolerance (BFT), Practical Byzantine Fault Tolerance (pBFT), Federated Byzantine Agreement (FBA) and Delegated Byzantine Fault Tolerance (dBFT). Still, all of them are used to facilitate an agreement between network participants.
The way that system works – when many computers try to verify a block – guarantees that no computer is going to monopolize a cryptocurrency market. To ensure the competition stays fair, the puzzle becomes harder as more computers join in. Summing it up, let’s say that mining is responsible for two aspects of the crypto mechanism: producing the proof and allowing more coins to enter circulation.

Types of cryptocurrency

In the virtual currency world there are a bunch of different cryptocurrency types with their own distinctive features.
The first cryptocurrency is, of course, Bitcoin. Bitcoin is the first crypto coin ever created and used. BTC is the most liquid cryptocurrency in the market and has the highest market cap among all the cryptocurrencies.

Altcoins

The term ‘altcoins’ means ‘alternatives’ of Bitcoin. The first altcoin Namecoin was created in 2011 and later on hundreds of them appeared in crypto-world, among them are Ravencoin, Dogecoin, Litecoin, Syscoin etc. Altcoins were initially launched with a purpose to overcome Bitcoin’s weak points and become upgraded substitutes of Bitcoin. Altcoins usually stand an independent blockchain and have their own miners and wallets. Some altcoins actually have boosted features yet none of them gained popularity akin to Bitcoin. More about altcoins in our article.

Tokens

Token is a unit of account that is used to represent the digital balance of an asset. Basically tokens represent an asset or utility that usually are made on another blockchain. Tokens are registered in a database based on blockchain technology, and they are accessed through special applications using electronic signature schemes.
Tokens and cryptocurrencies are not the same thing. Let’s explain it more detailed:
• First of all, unlike cryptocurrencies, tokens can be issued and managed both centralized and decentralized.
• The verification of the token transactions can be conducted both centralized and decentralized, when cryptocurrencies’ verification is only decentralized.
• Tokens do not necessarily run their own blockchain, but for cryptocurrencies having their own blockchain is compulsory.
• Tokens’ prices can be affected by a vast range of factors such as demand and supply, tokens’ additional emission, or binding to other assets. On the other hand, the price of cryptocurrencies is completely regulated by the market.
Tokens can be:
• Utility tokens – something that accesses a user to a product or service and support dApps built on the blockchain.
• Governance tokens – fuel for voting systems executed on the blockchain.
• Transactional tokens – serve as a unit of accounts and used for trading.
• Security tokens – represent legal ownership of an asset, can be used in addition to or in place of a password.
Tokens are usually created through smart contracts and are often adapted to an ICO – initial coin offering, which is a means of crowdfunding. It is much easier to create tokens, that is why they make a majority of coins in existence. Altcoin and token blockchains work on the concept of smart contracts or decentralized applications, where the programmable, self-executing code is ruling the transactions within a blockchain. By the way, the vast majority of tokens were distributed on the Ethereum platform.

Forks

Generally a fork occurs when a protocol code, on which the blockchain is operating, is being changed, modified and updated by developers or users. Due to the changes, the blockchain splits into 2 paths: an old way of doing things and a new way. These changes may happen because: a disagreement between users and creators; a major hack, as it was with Ethereum; developers’ decision to fix errors and add new functionality. The blockchain mainly splits into hard forks and soft forks. Shortly speaking, coin hard forks cannot work with older versions while soft forks still can work with older versions.
Hard fork – after a hard fork, a new version is completely separated from the previous one, there’s no connection between them anymore, although the new version keeps the data of all the previous transactions but now on, each version will have its own transaction history. In order to use the new versions, every node has to upgrade their software. A hard fork requires majority support (or consensus) from coin holders with a connection to the coin network. If enough users don’t update then you will be unable to get a clean upgrade which could lead to a break in the blockchain.
Soft fork – a protocol change, but with backward compatibility. The rules of the network have been changed, but nodes running the old software will still be able to validate transactions, but those updated nodes won’t be able to mine new blocks. So to be used and useful, soft forks require the majority of the network’s hash power. Otherwise, they risk becoming set out and anyway ending up as a hard fork.

Stablecoins

As it comes from the name, stablecoins are price-stabilized that are becoming big in the crypto world. Still enjoying most of the “typical-cryptocurrency” benefits, it is standing out as a fixed and stable coin, not volatile at all. Stablecoins’ values are stabilized by pegging them to other assets such as the US Dollar or gold.
Stablecoins include Tether (USDT), Standard (PAX), Gemini Dollar (GUSD) which are backed by the US Dollar and approved by the New York State Department of Financial Services.

Conclusion

Now that we hacked into cryptocurrency, you probably understand that it is much less mysterious than it first seemed. Nowadays, cryptocurrencies are making the revolution of the financial institution. For example, Bitcoin is currently used in 96 countries and growing, with more than 12,000 transactions per hour. More and more investors are involved, banks and governments realize that these cutting edge technologies are prone to draw their control away. Cryptocurrencies are slowly changing the world and you can choose – either stand beside and observe or become part of history in the making.
And remember if you need to exchange your coins StealthEX is here for you. We provide a selection of more than 300 coins and constantly updating the cryptocurrency list so that our customers will find a suitable option. Our service does not require registration and allows you to remain anonymous. Why don’t you check it out? Just go to StealthEX and follow these easy steps:
✔ Choose the pair and the amount for your exchange. For example BTC to ETH.
✔ Press the “Start exchange” button.
✔ Provide the recipient address to which the coins will be transferred.
✔ Move your cryptocurrency for the exchange.
✔ Receive your coins.
Follow us on Medium, Twitter, Facebook, and Reddit to get StealthEX.io updates and the latest news about the crypto world. For all requests message us via [[email protected]](mailto:[email protected]).
The views and opinions expressed here are solely those of the author. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Original article was posted on https://stealthex.io/blog/2020/09/29/how-does-cryptocurrency-works/
submitted by Stealthex_io to StealthEX [link] [comments]

Ethereum centralization concerns

Apologies if this has been addressed elsewhere, or if the information I'm responding to here is out of date.
tldr: Are Ethereum (full, validating) nodes incentivized to vote no on gas limit increases that would lead to centralization?
Context:
I just read this old post, its follow up post, and this response post all discussing whether or not Ethereum will trend towards centralization over time. As far as I can tell, all of that long discussion really boils down to disagreements about this paragraph from Gustav's post:

As miners are incentivized to act in ways that maximize the value of the tokens they receive in each mined block, they are unlikely to vote for a blocksize increase that would break the network. If the author trusts Bitcoin miners to act in ways that maximize the value of their bitcoins (such as not censoring transactions, generally prioritizing txs by their fee and otherwise act in ways that are beneficial for the network) the author should trust Ethereum miners to only vote for block sizes that can be handled by reasonable hardware, as the decentralized verification done by full nodes underpins the security of the network.
StopAndDecrypt replies:
The network doesn’t break because validators drop off and peers are lost. The network functions with two datacenters. What breaks is decentralization. The connected nodes have no incentive to care about other less-connected nodes validation abilities.
[...]
Vitalik even agreed that [the number of full validating nodes] would shrink over time if the gas limits kept going up, and there’s nothing stopping that from happening. Right now miners are being altruistic, but what happens when mining doesn’t even exist? What happens when it’s just staking and the people doing it don’t care about other people’s blocks getting orphaned? Why would they keep the gas limit down? Remember they can manually adjust this, so why would they intentionally keep it low if they’re hyper-connected to each other and fully capable of processing that data? What happens when they start compounding their staking earnings, setting up more nodes, and gain more control of the network?
Summary:
As block sizes increase, the number of full validating nodes decreases. Bitcoin solves this by simply saying block sizes never go up, period, and if that limits the amount of TPS the L1 layer can handle, so be it; just scale on L2. Ethereum's answer according to Vitalik is the gas price limits (and indirectly through that block size limits) that each individual minevalidator enforces. Implicit in this I believe is that sooner or later the block size limit has to stop growing (approximating the bitcoin approach), at least until hardware costs drop enough. This relies on an incentive mechanism in place to prevent validators from constantly increasing gas limits per block and letting the network trend towards centralization. Without such an incentive mechanism, I'd think each individual validator wouldn't necessarily care if increasing block sizes caused other validators to drop off the network, so long as they are able to keep up, which does indeed seem like it would eventually lead to a small number of powerful validators controlling the base layer.
Core issue and my actual question:
So I think the real question at the core of this disagreement is: in what cases would (full, validating) nodes reject a block due to it being too big (using too much gas)? What are the incentive mechanisms that keep individual validators aligned with the goal of keeping the core validator pool decentralized?
Please note I'm only talking about the centralization of fully validating nodes with the power to reject new blocks, light clients don't help, and sharding helps by a constant factor in the short term but doesn't address the fundamental long term trends. PoW vs PoS is orthogonal and doesn't really affect the issues being discussed here .
Thanks!
submitted by stbrody to ethereum [link] [comments]

Minimum Viable Issuance - Why Ethereum’s lack of a hard cap on ETH issuance is a good thing.

This post will explain how the argument used by the average Bitcoin maximalist, thinking that they have found Ethereum’s achilles heel when talking about issuance is actually highlighting one of Ethereum’s strong points and one of the main threats to the longevity of the Bitcoin network.
So first let’s answer the question which I know many people have about Ethereum:

What is Ethereum’s ETH issuance schedule?

Ethereum has an issuance policy of Minimum Viable Issuance. So what does this mean exactly? It means that the issuance of ETH will be as low as possible while also maintaining a sufficient budget to pay miners (and soon to be stakers) to keep the network secure. For example, if ETH issuance was halved, miners would drop off the network and stop mining as it is no longer profitable for them to mine. As a result, the network would be less secure as it would cost less money for an attacker to control 51% of the hash power and attack the network. This means that the Ethereum community plans to change ETH issuance as time goes on to maintain a reasonable security budget which will keep the network secure but will also keep inflation in check. We have done this twice in the past with EIP-649 and EIP-1234 which reduced block rewards from 5 ETH per block to 3 ETH and from 3 ETH to 2 ETH respectively. I previously made a graph of ETH issuance over time here: https://redd.it/it8ce7
So while Ethereum doesn’t have a strictly defined issuance schedule, the community will reject any proposals which either put the security of the network at risk such as the recent EIP-2878, or we will reject proposals which will lead to excessive network security and therefore an unnecessarily high inflation rate (or we will accept proposals which reduce issuance after price rises and therefore the security budget rises). This means that when Bitcoiners accuse the Ethereum Foundation of being no better than a central bank because they can “print more Ether”, this is completely untrue. Any proposals made by the EF which would increase issuance unnecessarily would be rejected by the community in the same way that a proposal to increase the supply of Bitcoin from 21 million to 22 million would be rejected. There is a social contract around both Bitcoin’s and Ethereum’s issuance schedules. Any networks or proposals which break the social contracts of 21 million Bitcoins and minimal viable issuance of Ether would be a breach of these contracts and the new proposed network would be labeled by the community as illegitimate and the original network would live on.

So why is minimum viable issuance better than a hard cap?

Minimum viable issuance is better than a hard cap because it puts the most important part of the network first - the security. MVI ensures that the Ethereum network will always have a security budget which keeps the cost of a 51% attack impractically high. Bitcoin on the other hand, halves its security budget every 4 years until eventually only the transaction fees pay for network security. This means that every 4 years, the amount of money paying for network security halves until eventually, the value of attacking the network becomes greater than the security budget and someone performs a 51% attack (technically the security budget only halves if terms of BTC not in dollars. However, even if the price of Bitcoin more than doubles in the time that the security budget halves, the ratio of security budget to value secured on the network still halves, doubling the financial viability of performing a network attack). The strategy to pay for the security budget once Bitcoin issuance stops is for transaction fees to secure the network since transaction fees are paid to miners. Not only does this have its own security problems which I won’t detail here, but unless Bitcoin scales on layer 1 (layer 2 scaling solutions have their own security mechanisms separate from L1), then fees would have to cost well in the thousands of dollars to secure a trillion dollar market cap Bitcoin that is secured by nothing but fees. If Bitcoin maximalists want a 10 trillion or 100 trillion dollar market cap then expect fees to go up another 10 or 100 times from there.
Ethereum on the other hand, will be able to keep its network secure with approximately 1-2% annual issuance being paid to stakers under ETH 2.0. This is because not all of the network will be staking, so if 33 million of the approximately 110 million Ether in existence stakes under ETH 2.0, then paying this 33 million Ether 6% a year (a very decent yield!) would cost just under 2 million ETH per year which would equate to less than 2% annual ETH inflation. This is also before considering EIP-1559 which will burn a portion of transaction fees which will counter the effect of this inflation and potentially even make ETH deflationary if the sum of all burned transaction fees are greater than the annual inflation. Also, under ETH 2.0, an attacker performing a 51% attack would get his funds slashed (they would lose their funds) if they attack the network, meaning that they can only perform a 51% attack once. However, in Bitcoin, anyone who controls 51% of the mining hash power could perform multiple 51% attacks without losing everything like they could in ETH 2.0.
So in conclusion, while Ethereum doesn’t have the guaranteed anti-inflation security of a hard cap, it does have the guarantee of always paying it’s miners (or stakers under ETH 2.0) enough to keep the network secure. In contrast, while Bitcoin’s social contract may guarantee a hard cap of 21 million, it cannot simultaneously guarantee network security in the long run. Eventually, its users will have to decide if they want a secure network with more than 21 million coins or a tax to pay for security or an insecure network with super high fees and a hard cap of 21 million Bitcoin.
Disclaimer: The details I covered around 51% attacks and network security are simplified. I am not an expert in this field and things are a lot more nuanced than I laid out in my simplifications above.
submitted by Tricky_Troll to ethtrader [link] [comments]

All you need to know about Yield Farming - The rocket fuel for Defi

All you need to know about Yield Farming - The rocket fuel for Defi
Source
It’s effectively July 2017 in the world of decentralized finance (DeFi), and as in the heady days of the initial coin offering (ICO) boom, the numbers are only trending up.
According to DeFi Pulse, there is $1.9 billion in crypto assets locked in DeFi right now. According to the CoinDesk ICO Tracker, the ICO market started chugging past $1 billion in July 2017, just a few months before token sales started getting talked about on TV.
Debate juxtaposing these numbers if you like, but what no one can question is this: Crypto users are putting more and more value to work in DeFi applications, driven largely by the introduction of a whole new yield-generating pasture, Compound’s COMP governance token.
Governance tokens enable users to vote on the future of decentralized protocols, sure, but they also present fresh ways for DeFi founders to entice assets onto their platforms.
That said, it’s the crypto liquidity providers who are the stars of the present moment. They even have a meme-worthy name: yield farmers.

https://preview.redd.it/lxsvazp1g9l51.png?width=775&format=png&auto=webp&s=a36173ab679c701a5d5e0aac806c00fcc84d78c1

Where it started

Ethereum-based credit market Compound started distributing its governance token, COMP, to the protocol’s users this past June 15. Demand for the token (heightened by the way its automatic distribution was structured) kicked off the present craze and moved Compound into the leading position in DeFi.
The hot new term in crypto is “yield farming,” a shorthand for clever strategies where putting crypto temporarily at the disposal of some startup’s application earns its owner more cryptocurrency.
Another term floating about is “liquidity mining.”
The buzz around these concepts has evolved into a low rumble as more and more people get interested.
The casual crypto observer who only pops into the market when activity heats up might be starting to get faint vibes that something is happening right now. Take our word for it: Yield farming is the source of those vibes.
But if all these terms (“DeFi,” “liquidity mining,” “yield farming”) are so much Greek to you, fear not. We’re here to catch you up. We’ll get into all of them.
We’re going to go from very basic to more advanced, so feel free to skip ahead.

What are tokens?

Most CoinDesk readers probably know this, but just in case: Tokens are like the money video-game players earn while fighting monsters, money they can use to buy gear or weapons in the universe of their favorite game.
But with blockchains, tokens aren’t limited to only one massively multiplayer online money game. They can be earned in one and used in lots of others. They usually represent either ownership in something (like a piece of a Uniswap liquidity pool, which we will get into later) or access to some service. For example, in the Brave browser, ads can only be bought using basic attention token (BAT).
If tokens are worth money, then you can bank with them or at least do things that look very much like banking. Thus: decentralized finance.
Tokens proved to be the big use case for Ethereum, the second-biggest blockchain in the world. The term of art here is “ERC-20 tokens,” which refers to a software standard that allows token creators to write rules for them. Tokens can be used a few ways. Often, they are used as a form of money within a set of applications. So the idea for Kin was to create a token that web users could spend with each other at such tiny amounts that it would almost feel like they weren’t spending anything; that is, money for the internet.
Governance tokens are different. They are not like a token at a video-game arcade, as so many tokens were described in the past. They work more like certificates to serve in an ever-changing legislature in that they give holders the right to vote on changes to a protocol.
So on the platform that proved DeFi could fly, MakerDAO, holders of its governance token, MKR, vote almost every week on small changes to parameters that govern how much it costs to borrow and how much savers earn, and so on.
Read more: Why DeFi’s Billion-Dollar Milestone Matters
One thing all crypto tokens have in common, though, is they are tradable and they have a price. So, if tokens are worth money, then you can bank with them or at least do things that look very much like banking. Thus: decentralized finance.

What is DeFi?

Fair question. For folks who tuned out for a bit in 2018, we used to call this “open finance.” That construction seems to have faded, though, and “DeFi” is the new lingo.
In case that doesn’t jog your memory, DeFi is all the things that let you play with money, and the only identification you need is a crypto wallet.
On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name.
I can explain this but nothing really brings it home like trying one of these applications. If you have an Ethereum wallet that has even $20 worth of crypto in it, go do something on one of these products. Pop over to Uniswap and buy yourself some FUN (a token for gambling apps) or WBTC (wrapped bitcoin). Go to MakerDAO and create $5 worth of DAI (a stablecoin that tends to be worth $1) out of the digital ether. Go to Compound and borrow $10 in USDC.
(Notice the very small amounts I’m suggesting. The old crypto saying “don’t put in more than you can afford to lose” goes double for DeFi. This stuff is uber-complex and a lot can go wrong. These may be “savings” products but they’re not for your retirement savings.)
Immature and experimental though it may be, the technology’s implications are staggering. On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name.
DeFi applications don’t worry about trusting you because they have the collateral you put up to back your debt (on Compound, for instance, a $10 debt will require around $20 in collateral).
Read more: There Are More DAI on Compound Now Than There Are DAI in the World
If you do take this advice and try something, note that you can swap all these things back as soon as you’ve taken them out. Open the loan and close it 10 minutes later. It’s fine. Fair warning: It might cost you a tiny bit in fees, and the cost of using Ethereum itself right now is much higher than usual, in part due to this fresh new activity. But it’s nothing that should ruin a crypto user.
So what’s the point of borrowing for people who already have the money? Most people do it for some kind of trade. The most obvious example, to short a token (the act of profiting if its price falls). It’s also good for someone who wants to hold onto a token but still play the market.

Doesn’t running a bank take a lot of money up front?

It does, and in DeFi that money is largely provided by strangers on the internet. That’s why the startups behind these decentralized banking applications come up with clever ways to attract HODLers with idle assets.
Liquidity is the chief concern of all these different products. That is: How much money do they have locked in their smart contracts?
“In some types of products, the product experience gets much better if you have liquidity. Instead of borrowing from VCs or debt investors, you borrow from your users,” said Electric Capital managing partner Avichal Garg.
Let’s take Uniswap as an example. Uniswap is an “automated market maker,” or AMM (another DeFi term of art). This means Uniswap is a robot on the internet that is always willing to buy and it’s also always willing to sell any cryptocurrency for which it has a market.
On Uniswap, there is at least one market pair for almost any token on Ethereum. Behind the scenes, this means Uniswap can make it look like it is making a direct trade for any two tokens, which makes it easy for users, but it’s all built around pools of two tokens. And all these market pairs work better with bigger pools.

Why do I keep hearing about ‘pools’?

To illustrate why more money helps, let’s break down how Uniswap works.
Let’s say there was a market for USDC and DAI. These are two tokens (both stablecoins but with different mechanisms for retaining their value) that are meant to be worth $1 each all the time, and that generally tends to be true for both.
The price Uniswap shows for each token in any pooled market pair is based on the balance of each in the pool. So, simplifying this a lot for illustration’s sake, if someone were to set up a USDC/DAI pool, they should deposit equal amounts of both. In a pool with only 2 USDC and 2 DAI it would offer a price of 1 USDC for 1 DAI. But then imagine that someone put in 1 DAI and took out 1 USDC. Then the pool would have 1 USDC and 3 DAI. The pool would be very out of whack. A savvy investor could make an easy $0.50 profit by putting in 1 USDC and receiving 1.5 DAI. That’s a 50% arbitrage profit, and that’s the problem with limited liquidity.
(Incidentally, this is why Uniswap’s prices tend to be accurate, because traders watch it for small discrepancies from the wider market and trade them away for arbitrage profits very quickly.)
Read more: Uniswap V2 Launches With More Token-Swap Pairs, Oracle Service, Flash Loans
However, if there were 500,000 USDC and 500,000 DAI in the pool, a trade of 1 DAI for 1 USDC would have a negligible impact on the relative price. That’s why liquidity is helpful.
You can stick your assets on Compound and earn a little yield. But that’s not very creative. Users who look for angles to maximize that yield: those are the yield farmers.
Similar effects hold across DeFi, so markets want more liquidity. Uniswap solves this by charging a tiny fee on every trade. It does this by shaving off a little bit from each trade and leaving that in the pool (so one DAI would actually trade for 0.997 USDC, after the fee, growing the overall pool by 0.003 USDC). This benefits liquidity providers because when someone puts liquidity in the pool they own a share of the pool. If there has been lots of trading in that pool, it has earned a lot of fees, and the value of each share will grow.
And this brings us back to tokens.
Liquidity added to Uniswap is represented by a token, not an account. So there’s no ledger saying, “Bob owns 0.000000678% of the DAI/USDC pool.” Bob just has a token in his wallet. And Bob doesn’t have to keep that token. He could sell it. Or use it in another product. We’ll circle back to this, but it helps to explain why people like to talk about DeFi products as “money Legos.”

So how much money do people make by putting money into these products?

It can be a lot more lucrative than putting money in a traditional bank, and that’s before startups started handing out governance tokens.
Compound is the current darling of this space, so let’s use it as an illustration. As of this writing, a person can put USDC into Compound and earn 2.72% on it. They can put tether (USDT) into it and earn 2.11%. Most U.S. bank accounts earn less than 0.1% these days, which is close enough to nothing.
However, there are some caveats. First, there’s a reason the interest rates are so much juicier: DeFi is a far riskier place to park your money. There’s no Federal Deposit Insurance Corporation (FDIC) protecting these funds. If there were a run on Compound, users could find themselves unable to withdraw their funds when they wanted.
Plus, the interest is quite variable. You don’t know what you’ll earn over the course of a year. USDC’s rate is high right now. It was low last week. Usually, it hovers somewhere in the 1% range.
Similarly, a user might get tempted by assets with more lucrative yields like USDT, which typically has a much higher interest rate than USDC. (Monday morning, the reverse was true, for unclear reasons; this is crypto, remember.) The trade-off here is USDT’s transparency about the real-world dollars it’s supposed to hold in a real-world bank is not nearly up to par with USDC’s. A difference in interest rates is often the market’s way of telling you the one instrument is viewed as dicier than another.
Users making big bets on these products turn to companies Opyn and Nexus Mutual to insure their positions because there’s no government protections in this nascent space – more on the ample risks later on.
So users can stick their assets in Compound or Uniswap and earn a little yield. But that’s not very creative. Users who look for angles to maximize that yield: those are the yield farmers.

OK, I already knew all of that. What is yield farming?

Broadly, yield farming is any effort to put crypto assets to work and generate the most returns possible on those assets.
At the simplest level, a yield farmer might move assets around within Compound, constantly chasing whichever pool is offering the best APY from week to week. This might mean moving into riskier pools from time to time, but a yield farmer can handle risk.
“Farming opens up new price arbs [arbitrage] that can spill over to other protocols whose tokens are in the pool,” said Maya Zehavi, a blockchain consultant.
Because these positions are tokenized, though, they can go further.
This was a brand-new kind of yield on a deposit. In fact, it was a way to earn a yield on a loan. Who has ever heard of a borrower earning a return on a debt from their lender?
In a simple example, a yield farmer might put 100,000 USDT into Compound. They will get a token back for that stake, called cUSDT. Let’s say they get 100,000 cUSDT back (the formula on Compound is crazy so it’s not 1:1 like that but it doesn’t matter for our purposes here).
They can then take that cUSDT and put it into a liquidity pool that takes cUSDT on Balancer, an AMM that allows users to set up self-rebalancing crypto index funds. In normal times, this could earn a small amount more in transaction fees. This is the basic idea of yield farming. The user looks for edge cases in the system to eke out as much yield as they can across as many products as it will work on.
Right now, however, things are not normal, and they probably won’t be for a while.

Why is yield farming so hot right now?

Because of liquidity mining. Liquidity mining supercharges yield farming.
Liquidity mining is when a yield farmer gets a new token as well as the usual return (that’s the “mining” part) in exchange for the farmer’s liquidity.
“The idea is that stimulating usage of the platform increases the value of the token, thereby creating a positive usage loop to attract users,” said Richard Ma of smart-contract auditor Quantstamp.
The yield farming examples above are only farming yield off the normal operations of different platforms. Supply liquidity to Compound or Uniswap and get a little cut of the business that runs over the protocols – very vanilla.
But Compound announced earlier this year it wanted to truly decentralize the product and it wanted to give a good amount of ownership to the people who made it popular by using it. That ownership would take the form of the COMP token.
Lest this sound too altruistic, keep in mind that the people who created it (the team and the investors) owned more than half of the equity. By giving away a healthy proportion to users, that was very likely to make it a much more popular place for lending. In turn, that would make everyone’s stake worth much more.
So, Compound announced this four-year period where the protocol would give out COMP tokens to users, a fixed amount every day until it was gone. These COMP tokens control the protocol, just as shareholders ultimately control publicly traded companies.
Every day, the Compound protocol looks at everyone who had lent money to the application and who had borrowed from it and gives them COMP proportional to their share of the day’s total business.
The results were very surprising, even to Compound’s biggest promoters.
COMP’s value will likely go down, and that’s why some investors are rushing to earn as much of it as they can right now.
This was a brand-new kind of yield on a deposit into Compound. In fact, it was a way to earn a yield on a loan, as well, which is very weird: Who has ever heard of a borrower earning a return on a debt from their lender?
COMP’s value has consistently been well over $200 since it started distributing on June 15. We did the math elsewhere but long story short: investors with fairly deep pockets can make a strong gain maximizing their daily returns in COMP. It is, in a way, free money.
It’s possible to lend to Compound, borrow from it, deposit what you borrowed and so on. This can be done multiple times and DeFi startup Instadapp even built a tool to make it as capital-efficient as possible.
“Yield farmers are extremely creative. They find ways to ‘stack’ yields and even earn multiple governance tokens at once,” said Spencer Noon of DTC Capital.
COMP’s value spike is a temporary situation. The COMP distribution will only last four years and then there won’t be any more. Further, most people agree that the high price now is driven by the low float (that is, how much COMP is actually free to trade on the market – it will never be this low again). So the value will probably gradually go down, and that’s why savvy investors are trying to earn as much as they can now.
Appealing to the speculative instincts of diehard crypto traders has proven to be a great way to increase liquidity on Compound. This fattens some pockets but also improves the user experience for all kinds of Compound users, including those who would use it whether they were going to earn COMP or not.
As usual in crypto, when entrepreneurs see something successful, they imitate it. Balancer was the next protocol to start distributing a governance token, BAL, to liquidity providers. Flash loan provider bZx has announced a plan. Ren, Curve and Synthetix also teamed up to promote a liquidity pool on Curve.
It is a fair bet many of the more well-known DeFi projects will announce some kind of coin that can be mined by providing liquidity.
The case to watch here is Uniswap versus Balancer. Balancer can do the same thing Uniswap does, but most users who want to do a quick token trade through their wallet use Uniswap. It will be interesting to see if Balancer’s BAL token convinces Uniswap’s liquidity providers to defect.
So far, though, more liquidity has gone into Uniswap since the BAL announcement, according to its data site. That said, even more has gone into Balancer.

Did liquidity mining start with COMP?

No, but it was the most-used protocol with the most carefully designed liquidity mining scheme.
This point is debated but the origins of liquidity mining probably date back to Fcoin, a Chinese exchange that created a token in 2018 that rewarded people for making trades. You won’t believe what happened next! Just kidding, you will: People just started running bots to do pointless trades with themselves to earn the token.
Similarly, EOS is a blockchain where transactions are basically free, but since nothing is really free the absence of friction was an invitation for spam. Some malicious hacker who didn’t like EOS created a token called EIDOS on the network in late 2019. It rewarded people for tons of pointless transactions and somehow got an exchange listing.
These initiatives illustrated how quickly crypto users respond to incentives.
Read more: Compound Changes COMP Distribution Rules Following ‘Yield Farming’ Frenzy
Fcoin aside, liquidity mining as we now know it first showed up on Ethereum when the marketplace for synthetic tokens, Synthetix, announced in July 2019 an award in its SNX token for users who helped add liquidity to the sETH/ETH pool on Uniswap. By October, that was one of Uniswap’s biggest pools.
When Compound Labs, the company that launched the Compound protocol, decided to create COMP, the governance token, the firm took months designing just what kind of behavior it wanted and how to incentivize it. Even still, Compound Labs was surprised by the response. It led to unintended consequences such as crowding into a previously unpopular market (lending and borrowing BAT) in order to mine as much COMP as possible.
Just last week, 115 different COMP wallet addresses – senators in Compound’s ever-changing legislature – voted to change the distribution mechanism in hopes of spreading liquidity out across the markets again.

Is there DeFi for bitcoin?

Yes, on Ethereum.
Nothing has beaten bitcoin over time for returns, but there’s one thing bitcoin can’t do on its own: create more bitcoin.
A smart trader can get in and out of bitcoin and dollars in a way that will earn them more bitcoin, but this is tedious and risky. It takes a certain kind of person.
DeFi, however, offers ways to grow one’s bitcoin holdings – though somewhat indirectly.
A long HODLer is happy to gain fresh BTC off their counterparty’s short-term win. That’s the game.
For example, a user can create a simulated bitcoin on Ethereum using BitGo’s WBTC system. They put BTC in and get the same amount back out in freshly minted WBTC. WBTC can be traded back for BTC at any time, so it tends to be worth the same as BTC.
Then the user can take that WBTC, stake it on Compound and earn a few percent each year in yield on their BTC. Odds are, the people who borrow that WBTC are probably doing it to short BTC (that is, they will sell it immediately, buy it back when the price goes down, close the loan and keep the difference).
A long HODLer is happy to gain fresh BTC off their counterparty’s short-term win. That’s the game.

How risky is it?

Enough.
“DeFi, with the combination of an assortment of digital funds, automation of key processes, and more complex incentive structures that work across protocols – each with their own rapidly changing tech and governance practices – make for new types of security risks,” said Liz Steininger of Least Authority, a crypto security auditor. “Yet, despite these risks, the high yields are undeniably attractive to draw more users.”
We’ve seen big failures in DeFi products. MakerDAO had one so bad this year it’s called “Black Thursday.” There was also the exploit against flash loan provider bZx. These things do break and when they do money gets taken.
As this sector gets more robust, we could see token holders greenlighting more ways for investors to profit from DeFi niches.
Right now, the deal is too good for certain funds to resist, so they are moving a lot of money into these protocols to liquidity mine all the new governance tokens they can. But the funds – entities that pool the resources of typically well-to-do crypto investors – are also hedging. Nexus Mutual, a DeFi insurance provider of sorts, told CoinDesk it has maxed out its available coverage on these liquidity applications. Opyn, the trustless derivatives maker, created a way to short COMP, just in case this game comes to naught.
And weird things have arisen. For example, there’s currently more DAI on Compound than have been minted in the world. This makes sense once unpacked but it still feels dicey to everyone.
That said, distributing governance tokens might make things a lot less risky for startups, at least with regard to the money cops.
“Protocols distributing their tokens to the public, meaning that there’s a new secondary listing for SAFT tokens, [gives] plausible deniability from any security accusation,” Zehavi wrote. (The Simple Agreement for Future Tokens was a legal structure favored by many token issuers during the ICO craze.)
Whether a cryptocurrency is adequately decentralized has been a key feature of ICO settlements with the U.S. Securities and Exchange Commission (SEC).

What’s next for yield farming? (A prediction)

COMP turned out to be a bit of a surprise to the DeFi world, in technical ways and others. It has inspired a wave of new thinking.
“Other projects are working on similar things,” said Nexus Mutual founder Hugh Karp. In fact, informed sources tell CoinDesk brand-new projects will launch with these models.
We might soon see more prosaic yield farming applications. For example, forms of profit-sharing that reward certain kinds of behavior.
Imagine if COMP holders decided, for example, that the protocol needed more people to put money in and leave it there longer. The community could create a proposal that shaved off a little of each token’s yield and paid that portion out only to the tokens that were older than six months. It probably wouldn’t be much, but an investor with the right time horizon and risk profile might take it into consideration before making a withdrawal.
(There are precedents for this in traditional finance: A 10-year Treasury bond normally yields more than a one-month T-bill even though they’re both backed by the full faith and credit of Uncle Sam, a 12-month certificate of deposit pays higher interest than a checking account at the same bank, and so on.)
As this sector gets more robust, its architects will come up with ever more robust ways to optimize liquidity incentives in increasingly refined ways. We could see token holders greenlighting more ways for investors to profit from DeFi niches.
Questions abound for this nascent industry: What will MakerDAO do to restore its spot as the king of DeFi? Will Uniswap join the liquidity mining trend? Will anyone stick all these governance tokens into a decentralized autonomous organization (DAO)? Or would that be a yield farmers co-op?
Whatever happens, crypto’s yield farmers will keep moving fast. Some fresh fields may open and some may soon bear much less luscious fruit.
But that’s the nice thing about farming in DeFi: It is very easy to switch fields.
submitted by pascalbernoulli to Yield_Farming [link] [comments]

Earning money with Bitcoins: “QashBits”!

One of the latest innovations in the cryptocurrency faucet sector. A site with a classic structure to earn money with Bitcoins.
In this article we will talk again about a direct faucet that will make you earn money with Bitcoins by means of a proven structure, very similar to that of the faucet described in a previous article. QuashBits is shown with a main screen always made up of 2 menus, one at the top and one on the side, all well organized. To register, use a personal Bitcoin address also registered on FaucetPay.

Earning money with Bitcoins
Let's now proceed with the list of components of the central menu.

EARN BITS, earn Bitcoin:
- Faucet, which takes you back to the dashboard, is the classic claim that can be made every 60 minutes. The cryptocurrencies earned are called Bits and the award released will depend on the Lucky Number obtained. Occasionally some pop-up pages may open.

- Shortlinks, divided in turn into 2 submenus. Visit Shortlinks, whose links lead to advertising pages in which one or more Captchas must be resolved, which is why they notoriously pay more than the classic Claim. Pop-up pages may open. Shortlinks Contest instead shows the weekly ranking of users who have solved the highest number of Shortlinks.

- PTC Ads, this section is now inevitable on faucet sites and allows you to earn crypto by viewing advertising pages. It is not mandatory to keep the mouse on the page as it will be sufficient to let the required time pass. The main tool for earning money with Bitcoins.

- Jobs, an interesting section where you are rewarded very well by performing "social" tasks. Definitely recommended for its originality.

- Referrals, where you will be shown your referrals URL. You will get, with the basic subscription, from your subscribers a 10% on all claims. The percentages will increase by subscribing to a higher Membership subscription.

- Achievements displays the list of rewards that are received after reaching a certain number of Claims and Shortlinks, dedicated to large users of faucets.

- CPU Mining, where you will be paid 1 Bit every 60000 Hash. Recommended only for those with powerful enough PCs.

- Investment Game, practically a bet on the Bitcoin trend in the next 5 minutes after your bet. You will be free to invest the desired amount.

- Redeem coupon, if you have a code to use as a coupon. You will be given a small amount of crypto as a gift.


Not just EARNS:
MEMBERSHIP, various paid membership levels that will increase your earnings percentages.

LOTTERY, the BitsFree lottery. The cost of the ticket is 100 Bits / Satoshi.

CONTESTS, which each month will reward users with the highest number of subscribers and the largest amount of Shortlinks and Offers completed.

OFFERS, which includes surveys, bonuses for viewing videos and the most varied tasks. Several Dogecoins will be obtained but not always proportionate to the time spent since the surveys have a very low percentage of reliability.

BLOG, the section with the latest news on BitsFree.

MORE, in turn divided into several parts:

- Account settings, in which to enter the Bitcoin or FaucetPay address to which to transfer the balance and change the registration email and password.

- Withdrawals History and Deposits History, shows the last 25 transfers to your external wallets and all the deposits made on the site.

The side menu
The menu on the left contains many links to the sections previously described. From top to bottom you can change your account details, exit the site (Logout) or make the transfer (Withdraw). Just below the Bitcoin countervalue of the Bits you have available on the site is shown. Following is the Advertise section which offers the opportunity to earn crypto through links and banners directly on your site. This is a paid service and using the Deposit button you can send the funds you want to dedicate to it.

Even further below, your referral URL.

In the lower part of the dashboard, the left part is dedicated to all the information on crypto (Bits) earned while the right part allows, thanks to the Share button, to share your referral URL on major social networks.

We remind you that the transfer of earned Bits (Withdraw) can be converted into Bitcoin on your personal wallet or on FaucetPay. The minimum threshold in the first case is 50,000 Satoshi while for the second it is 4000 Satoshi.

See you soon for a new article on how to earn Bitcoins!

If you liked this article and would like to contribute with a donation:

Bitcoin: 1Ld9b165ZYHZcY9eUQmL9UjwzcphRE5S8Z
Ethereum: 0x8D7E456A11f4D9bB9e6683A5ac52e7DB79DBbEE7
Litecoin: LamSRc1jmwgx5xwDgzZNoXYd6ENczUZViK
Stellar: GBLDIRIQWRZCN5IXPIKYFQOE46OG2SI7AFVWFSLAHK52MVYDGVJ6IXGI
Ripple: rUb8v4wbGWYrtXzUpj7TxCFfUWgfvym9xf

By: cryptoall.it
Telegram Channel: t.me/giulo75
Netbox Browser: https://netbox.global/PZn5A
Horizen Faucet: https://getzen.cash/auth/register?ref=153228
submitted by Giulo75 to u/Giulo75 [link] [comments]

Building an Ethereum Mining Rig - Part 2

First update to the guide "Building a 6Gpu Mining Rig for Ethereum" - Let's talk about Claymore.
This update supplements and does not replace the Guide to Build a 6GPU Mining Rig for Ethereum published on our site.

The substantial differences are due to the installation of the latest version of the Windows 10 Operating System, the mining on the Ethermine pool (in our opinion simpler than Dwarfpool) and the use of the XFX RX 580 8gb GPUs.

The first variant is found in Part 4 of the guide: the environment variables are not to be entered as they will be integrated directly into the bat file to start mining.

The second variant is found in Part 7 of the guide and leads us to "mine" on a different pool using the Claymore software.
Download the latest version at the following link: https://github.com/Claymore-Dual/Claymore-Dual-Miner

Once downloaded, unzip everything on a folder on your desktop and open the start.bat file with notepad. Clear the contents and copy the following command:

start config.dll -epool eu1.ethermine.org:14444 -ewal "your ETH wallet address" -epsw x -worker "worker"
EthDcrMiner64.exe

Where instead of "your wallet address" you will have to put your Ethererum wallet - obviously without the quotes - and instead of worker you will put an identification number in case you build more RIGs (such as RIG1, RIG2, etc ...). We opted for the eu1 pool even if some on the discussion forums believe that the us1 is more profitable.

At the following link, many other useful commands for your Rig:
https://github.com/Claymore-Dual/Claymore-Dual-Miner


The Ethermine pool offers a very well crafted and descriptive interface. In the Payouts section, after only 5 minutes of mining, you can decide the minimum amount of Ether to be transferred to your wallet by simply entering the IP address of the RIG.

We have decided to mine directly on the Ethereum address of our Exodus wallet. It is not recommended to mine directly on Coinbase, as reported on the site itself. Sin.

Nothing should be left to chance when you decide to build a mining rig for Ethereum.
The third variant is the most difficult of all. Once you have reached Part 5 of the guide, you can decide whether to continue or follow this update / variant. If you are here it is probably because you have run into some problem that the guide does not allow you to solve.

With the latest version of Windows 10, you may run into a kernel conflict between the operating system and AMD's Radeon Software Crimson ReLive Edition Beta for Blockchain Compute drivers. This conflict will prevent you from using Atiflash after installing the drivers.

Important: Before making any changes to the BIOS, please backup each GPU.

Important: first of all flash the GPUs with the original bios if for any reason you are forced to reinstall the operating system.


Still on Atiflash.
The advice would therefore be to flash the GPUs and then install the AMD drivers. Let's say it would be because you may run into another problem this time related to the GPUs themselves. Since each video card is different from any other, the bios mod of the GPU could crash the operating system showing the classic blue screen and displaying an error related to the Atimkdag.sys file.

This could be due to the fact that some GPUs have significantly higher performance in the calculation phase than others. We could call it a factory overclock but not using them for gaming we cannot say it with absolute certainty.

Having assessed these two drawbacks, the only safe solution is to flash all the GPUs, disconnect them except for the first one, install the Blockchain drivers (plus Atimkdag patch) and launch the mining command verifying that the operating system does not go into crash in the next 5 minutes.

Turn off the rig again and connect the second GPU so on up to the sixth. In the event that one or more video cards should crash the system, disconnect them. After that, it uses DDU from the provisional mode and flashes these GPUs with their original bios. At this point, connect them again, reinstall the Blockcain drivers (plus Atimkdag patch) and start mining definitively.

All the operations related to the use of Atiflash, DDU and driver installation are reported in Part 5 and Part 6 of our guide.
A little bit of Overclocking.
You will certainly find significant differences in performance between the GPUs.

At this point all that remains is to "operate" with an overclocking software. We opt for OverdriveNtool. Our constantly updated guide is available at the following link: https://www.cryptoall.it/2019/10/12/complete-guide-to-overdriventool/

Link to the official YouTube channel for verification: https://www.youtube.com/channel/UCdE9TTHAOtyKxy59rALSprA

GPUs with modified bios will not leave much room for modification. You will have to proceed with the most extreme overclocking on those that mount the original bios; obviously always in small steps by saving the profile for each GPU. Our guide explains in detail how to do it.

Hoping to have been of help, we give everyone an appointment for the second part of the update on how to build an Ethereum mining rig in which we will explain in detail the dual mining on the Ethermine pool.

See you soon.


If you liked this article and would like to contribute with a donation:

Bitcoin: 1Ld9b165ZYHZcY9eUQmL9UjwzcphRE5S8Z
Ethereum: 0x8D7E456A11f4D9bB9e6683A5ac52e7DB79DBbEE7
Litecoin: LamSRc1jmwgx5xwDgzZNoXYd6ENczUZViK
Stellar: GBLDIRIQWRZCN5IXPIKYFQOE46OG2SI7AFVWFSLAHK52MVYDGVJ6IXGI
Ripple: rUb8v4wbGWYrtXzUpj7TxCFfUWgfvym9xf

By: cryptoall.it Telegram Channel: t.me/giulo75 Netbox Browser: https://netbox.global/PZn5A
submitted by Giulo75 to u/Giulo75 [link] [comments]

Why Ethereum Problems Make UMI the Flagship Among the New Generation Cryptocurrencies

Why Ethereum Problems Make UMI the Flagship Among the New Generation Cryptocurrencies

https://preview.redd.it/8skuypxp9lj51.jpg?width=1023&format=pjpg&auto=webp&s=ba5a38ba592428f92dc7c1943a780ff127132875
Ethereum cryptocurrency that comes second in terms of capitalization on the crypto market is traditionally seen as fast and profitable. However, over the last few weeks it's had a rough patch. Since early August, the network has had huge queues of transactions pending processing while fees have skyrocketed and surpassed the historical high.
The main issue though is that even fees of a few dollars per transfer don't help get rid of the“traffic jams”. The cause of this is numerous DeFi projects and a huge number of financial pyramids based on the Ethereum platform. Both generate excessive load on the network.
The situation is downright unpleasant, and our users might question whether the UMI network could face a similar challenge? We'd like to assure you it could not. The UMI network is by default protected against these problems — it cannot have “traffic jams”, fees or financial pyramids. But first things first.
How has the Ethereum network ground to a halt?
In its report dated August 4, Arcane Research that provides analysis within the field of cryptocurrency stated that over the previous week the daily size of transaction fees in the Ethereum network has surged up to a record high for over two and a half years. On August 3, the median value #%D0%9F%D1%80%D0%B8%D0%BC%D0%B5%D1%80_%D0%B8%D1%81%D0%BF%D0%BE%D0%BB%D1%8C%D0%B7%D0%BE%D0%B2%D0%B0%D0%BD%D0%B8%D1%8F)of the fee amounted to $0.82, with the overall amount of transaction fees totaling $2 mln. However, it only signaled the start of real problems.
Over the next week, fees continued to grow and by August 11 the median fee value almost doubled equaling $1.57. Larry Cermak, an expert at a big analytical and news-making crypto portal The Block, wrote in his August 15 tweet that over a week the total amount of transaction fees in the Ethereum network totaled $34.5 mln, having surpassed its historical high. Meanwhile, in the Bitcoin network that is seen as too expensive the fees were almost four times lower at $9 mln.
The total fee amount paid by cryptocurrency users over a week:
  • Ethereum — $34.5 mln;
  • Bitcoin — $9 mln;
  • Monero — $2,240;
  • Tezos — $1,876;
  • Cardano — $1,615;
  • XRP — $1,138;
  • BSV — $1,102;
  • Stellar — $1,059;
  • Bitcoin Cash — $1,027;
  • UMI — $0. Let's talk about it a little later.

https://preview.redd.it/z9azd9v6alj51.png?width=1600&format=png&auto=webp&s=25c365d6e14665ecda4a2b8d19b2fc57dd5cde1e
Historical Growth Chart for Ethereum Fees. Source
The existing situation shows that Ethereum is actually not as fast and profitable as commonly cited. Additionally, this could happen to almost any cryptocurrency except UMI that charges no fees whatsoever. We will tell you why.
Why have these problems emerged?
There is nothing unoriginal: the Ethereum network simply can't handle an increased load. Arcane Research analysts consider that a principal cause of this situation is the constantly increasing number of the DeFi ecosystem projects built on the Ethereum blockchain. Their number is growing all the time which causes the overload of the network. As of August 12, the total amount of funds in DeFi applications reached $4.3 billion which is 19.5% higher than that in the past week. At the time of writing this article, the amount surged to $6.21 billion. You can see the current data here. What is the most unpleasant about DeFi protocols is that a lot of them are scam projects.
Which is not the worst part though. There is also another factor that significantly slows down the Ethereum network. There are a lot of pyramid-like projects that are built on the EOS platform and use smart contracts. One of them is SmartWay Forsage, which regularly overloads the network with a large number of transactions, causes traffic jams, and, consequently, leads to increased fees (keep in mind that Ethereum miners choose transactions with a higher commission). Vitalik Buterin, the co-founder of Ethereum, revealed his disapproval of the SmartWay Forsage methodology and asked them to "leave and not pollute Ethereum ecology in the future". However, the project is slow to do this — it continues to deceive users.
This is only the tip of the iceberg of scam projects which abounds on the EOS network –– they continually emerge, work for a while, then go down as scams and are replaced with new ones. This never-ending stream of "investment projects" based on the Ponzi scheme overloads the system. This is the reason why Adam Back, a pioneer of the crypto industry and founder of the technology company Blockstream, equated Ethereum with such infamous projects as Onecoin and Bitconnect. Adam Back's solid dig at Ethereum became the subject of much debate among crypto enthusiasts.
Of course, it all doesn't mean that Ethereum is a bad cryptocurrency. On the contrary, it has a lot of advantages over other coins. But all that has happened exposes Ethereum's faults which must be eliminated. The problem is that they may not be fixable. It is far from certain that the developers will be able to get rid of all the defects as the system has huge scalability problems.
The crypto community has to admit that Ethereum, like other first-generation cryptocurrencies, has issues with capacity, fees, and scalability and is gradually becoming obsolete.
2020 is the time for young innovative cryptocurrencies such as UMI.
UMI is the flagship of new-generation cryptocurrencies.
In real fact, any cryptocurrency could face it. Each cryptocurrency charges fees which typically surge when the network is overloaded or the price is going up. Everyone will remember 2017 when in line with price growth and the network's overload Bitcoin transaction fee reached a high of around $40.
But when it comes to UMI, it works the other way round. The UMI network's advantages are high capacity, no fees, and scaling possibilities. It uses the best and fastest crypto industry solutions and excludes all inefficient methods by default. Smart optimization in combination with the Proof-of-Authority technology operating on the master node basis enables almost instant payments.
At the stage of network testing, an incredibly high capacity was achieved:
  • up to 4,369 transactions per second;
  • up to 262,140 transactions per minute;
  • up to 15,728,400 transactions per hour;
  • up to 377,481,600 transactions per day.
Ethereum processes about 20 transactions per second. It means that the UMI network can process transactions that Ethereum processes over a year in 1 to 5 days — and with no fees.
https://preview.redd.it/rwohnov3alj51.png?width=1125&format=png&auto=webp&s=4329b75c0bd8b7a22276b529f5ca433d17a0874f
The UMI network can process transactions that Ethereum processes over a year in a few days and with no fees. More details
What is more important is that less than 0.001% of the network's overall potential is used now. The UMI network has a lot of reserve capacity and can handle hundreds of thousands of times heavier load. Moreover, with scaling possibilities, UMI can keep up with the times. The UMI code ensures the safe introduction of any upgrades — the network can be easily modified and scaled with cutting edge technology solutions. In other words, traffic jams will never pose a problem for us. UMI will instantly process all transactions, with no fees. Always.
https://preview.redd.it/t0068th0alj51.png?width=544&format=png&auto=webp&s=019f46ec8c093480c4638cf098312a5a146134a8
A real-time speedometer displays the number of transactions processed by the UMI network per second. Link
Additionally, unlike Ethereum and other cryptocurrencies, the UMI's staking smart contract prevents possibilities of any pyramid schemes, meaning eliminates their negative influence. Our staking is completely safe and secured against scammers. Read more about this in our article. Any UMI staking structure could work forever. In other words, you can multiply your coins at a rate of up to 40% per month for an indefinitely long period of time.
UMI doesn't inherit the disadvantages of the first-generation cryptocurrencies. This is an innovative, carefully designed network based on state-of-the-art technologies. UMI is an ambitious step toward the future. And we're making it together right now!
Sincerely yours, UMI team
submitted by UMITop to u/UMITop [link] [comments]

Earning Crypto: “BitsFree” Faucet

One of the best Bitcoin faucets. Earning Crypto has never been easier.
In this article we will talk more about a direct faucet that will make you earn crypto easily thanks to a proven structure, very similar to that of the faucet described in a previous article. BitsFree is shown with a main screen also composed of 2 menus, one at the top and one on the side, all always well organized. To register, enter a personal Bitcoin address registered also on FaucetPay.

Earn Crypto
Let's now proceed with the list of components of the central menu.

EARN BITS, many ways to earn:
- Faucet, which takes you back to the dashboard, is the classic claim that can be made every 60 minutes. The cryptocurrencies earned are called Bits and the award released will depend on the Lucky Number obtained. Occasionally some pop-up pages may open.

- Shortlinks, divided in turn into 2 submenus. Visit Shortlinks, whose links lead to advertising pages in which one or more Captchas must be resolved, which is why they notoriously pay more than the classic Claim. Pop-up pages may open. Shortlinks Contest instead shows the weekly ranking of users who have solved the highest number of Shortlinks.

- PTC Ads, also this section by now inevitable in faucet sites allows you to earn crypto by viewing advertising pages. It is not mandatory to keep the mouse on the page as it will be sufficient to let the required time pass.

- Jobs, an interesting section where you are rewarded very well by performing "social" tasks. Definitely recommended for its originality.

- Achievements displays the list of rewards that are received after reaching a certain number of Claims and Shortlinks, dedicated to large users of faucets.

- CPU Mining, where you will be paid 1 Bit every 60000 Hash. Recommended only for those with powerful enough PCs.

- Investment Game, practically a bet on the Bitcoin trend in the next 5 minutes after your bet. You will be free to invest the desired amount.

- Redeem coupon, if you have a code to use as a coupon. You will be given a small amount of crypto as a gift.


Not only REFERRALS:
REFERRALS, where you will be shown your referrer URL. With the basic subscription, you will get 10% on all claims, 5% on Offerwalls and 3% on Shortlinks from your subscribers. The percentages will increase by subscribing to a higher Membership subscription. It is possible to purchase referrals at the price of 10,000 Satoshi.

LOTTERY, the BitsFree lottery. The cost of the ticket is 100 Bits / Satoshi.

CONTESTS, which each month will reward users with the highest number of subscribers and the highest amount of Shortlinks and Offers completed.

OFFERS, which includes surveys, bonuses for viewing videos and the most varied tasks. Several Dogecoins will be obtained but not always proportionate to the time spent given that the surveys have a very low percentage of reliability.

BLOG, the section with the latest news on BitsFree.

MORE, in turn divided into several parts:

- Membership, by signing up for a paid subscription you can level up within the site (Silver, Gold and Diamond), obtaining more rewards and services in exchange.

- Account settings, in which to enter the Bitcoin or FaucetPay address to which to transfer the balance and change the registration email and password.

- Withdrawals History and Deposits History, shows the last 25 transfers to your external wallets and all the deposits made on the site.

The side menu
The menu on the left contains many links to the sections previously described. From top to bottom you can change your account details, exit the site (Logout) or make the transfer (Withdraw). Just below the Bitcoin countervalue of the Bits you have available on the site is shown. Following is the Advertise section which offers the possibility of earning crypto through links and banners directly on your site. This is a paid service and using the Deposit button you can send the funds you want to dedicate to it.

Even further below, your referral URL.

In the lower part of the dashboard, the left part is dedicated to all the information on crypto (Bits) earned while the right part allows, thanks to the Share button, to share your referral URL on major social networks.

We remind you that the transfer of earned Bits (Withdraw) can be converted into Bitcoin on your personal wallet or on FaucetPay. The minimum threshold in the first case is 50,000 Satoshi while for FaucetPay it is 4000 Satoshi.

See you soon for a new article on how to earn free crytpo!
If you liked this article and would like to contribute with a donation:

Bitcoin: 1Ld9b165ZYHZcY9eUQmL9UjwzcphRE5S8Z
Ethereum: 0x8D7E456A11f4D9bB9e6683A5ac52e7DB79DBbEE7
Litecoin: LamSRc1jmwgx5xwDgzZNoXYd6ENczUZViK
Stellar: GBLDIRIQWRZCN5IXPIKYFQOE46OG2SI7AFVWFSLAHK52MVYDGVJ6IXGI
Ripple: rUb8v4wbGWYrtXzUpj7TxCFfUWgfvym9xf

By: cryptoall.it
Telegram Channel: t.me/giulo75
Netbox Browser: https://netbox.global/PZn5A
submitted by Giulo75 to u/Giulo75 [link] [comments]

Comprehensive Introduction of Polkadot - Cross-Chain Composability (2)

Comprehensive Introduction of Polkadot - Cross-Chain Composability (2)

https://preview.redd.it/h3y5u24iqdg51.jpg?width=1200&format=pjpg&auto=webp&s=a36a9f79e71eaed7991aed07ed954a68fd463062
Review:
Comprehensive Introduction of Polkadot-Overview (1)

We mentioned in previous article that Polkadot is like a foundation. All blockchains built on this foundation can realize business exchanges and can connect to already built blockchains such as Bitcoin and Ethereum. So, starting today, I will systematically introduce Polkadot with straightaway language. Today we will talk about the cross-chain composability of Polkadot. cross-chain composability.

1. The Concept of Cross-chain
Yesterday, someone asked me how Polkadot allows business transactions between different blockchains. There is a professional name, which many friends should be aware of, that we call the communication of data and assets between different blockchains and the interoperability as cross-chain.

Here are the key points: true cross-chain must contain the following functions:
  • Cross-chain Data
  • Cross-chain Asset
  • Interoperability

For example, if Bitcoin and Ethereum have achieved cross-chain through Polkadot, then:
  • The transaction records on the Bitcoin chain can be transferred to the Ethereum chain through Polkadot (cross-chain data)
  • The BTC on the Bitcoin chain can also be transferred to the Ethereum chian via Polkadot (cross-chain asset)
  • Smart contracts on Ethereum can control the transfer of BTC through Polkadot (interoperability).

Some people have always thought that the so-called cross-chain is asset swap. For example, 1BTC is exchanged for 10ETH, so the assets on the chain are swapped, which is so wrong! And I have to clarify here that asset swap has nothing to do with cross-chain. What is the difference between asset swap and trading on a centralized exchange? Even if it is traded on a decentralized exchange (DEX), this is not cross-chain at all! Some teams claim to do cross-chain projects and advocate that asset swap is cross-chain, but in fact it is just an exchange. Do not confuse the concept.

2. The Cross-chain Architecture of Polkadot
Polkadot is like a foundation, so Polkadot's main chain is like a foundation which many blockchains can be added. We call Polkadot's main chain a relay-chain, and the added blockchain is called a parachain.

In order to allow more blockchains to join, the relay-chain will have a lot of slots on it. As mentioned before, the established blockchains like Bitcoin and Ethereum cannot be directly inserted into the slots, and they can only connect to Polkadot through bridges. We call these the parachain bridges. Let me draw a picture for you to demonstrate and help you better understand:

https://preview.redd.it/ntizvnv0tdg51.png?width=1127&format=png&auto=webp&s=fb3786f56160b5cbf3e246be1aa3b0854f148050
In the picture, the Polkadot relay-chain is a big ring with many small holes as slots. Other blockchains can be inserted into the slots to become parachains, while Bitcoin and Ethereum cannot be directly inserted into the slots and they need the parachian bridge to help connect.

3. How Polkadot Achieves Cross-chain
In the picture above, the Polkadot relay-chain is like a plug-in strip. Different blockchains can be inserted into the slot to become its parachain. Then this plug-in strip has a function for data transmission. We call it the XCMP protocol.
It is precisely because of the XCMP protocol that it is as if a telephone line is connected between the parachains that the parachains inserted into the slots can send messages and communicate with each other to realize data cross-chain.

So how does Bitcoin get transferred to Ethereum? Many people find it inconceivable as I do. When it is only data be transferred across chains, how can assets be exchanged across chains as well? Here I illustrate as follow:

https://preview.redd.it/s84dogoivdg51.png?width=693&format=png&auto=webp&s=2c8795d7ef4b4f3fc70a1afa5ed04597b1886dc3
Mr. Wang owns 1 BTC, and he wants to transfer this BTC to Ethereum to participate in Ethereum's decentralized financial activities. So first, he will transfer 1BTC to the BTC address of the parachain bridge. The parachain bridge will lock the BTC after receiving it to make sure no one can transfer the BTC anymore. Mr. Wang will also need to submit an Ethereum address.

Immediately afterwards, the parachain bridge will pass the data of the locked BTC and the Ethereum address submitted by Mr.Wang through the Polkadot XCMP protocol to the Ethereum parachain bridge.

"Hi, Ethereum parachain bridge, I have successfully locked the BTC, please answer when you receive the message! Mr. Wang's Ethereum address is xxxxx"

https://preview.redd.it/welvadcwydg51.jpg?width=693&format=pjpg&auto=webp&s=5305d363576c3d5c5055794bb92bda4031bb0c05
The Ethereum parachain bridge received a message and reply: "Known that the BTC is locked, and I have received Mr. Wang’s Ethereum address here."

Everyone knows that the smart contract on Ethereum can issue tokens. Therefore, after the parachain bridge on the Ethereum side receives the message, it immediately issues an Ethereum token of XBTC through the smart contract and sends it to Mr. Wang’s Ethereum address.

This XBTC token represents the BTC locked by the BTC parachain bridge. Then the user (Mr.Wang) can transfer this XBTC token to the Ethereum ecosystem and participate in various decentralized financial activities. In this way, Bitcoin is transferred to Ethereum, realizing asset cross-chain.

The parachain bridge is like a pawnshop. Mr. Wang has pledged gold (BTC) at the pawnshop in China (BTC parachain bridge). Then the pawnshop in China will notify the pawnshop in the United States (Ethereum parachain bridge), and Mr. Wang can go to the pawnshop in the United States and get the gold bill (XBTC). Gold bills represent the gold pledged by Chinese pawnshops, which can be consumed like gold. From China to the United States, it is cross-chain.

What if a user wants to redeem the BTC on his Bitcoin chain? In fact, it is also very easy to achieve. The user only needs to transfer XBTC tokens back to the parachain bridge of Ethereum and submit an BTC address to receive bitcoin. After the parachain bridge receives the XBTC tokens, it will destroyed the tokens through the smart contract immediately.

Similarly, through the Polkadot XCMP protocol, the message of destruction is transmitted to the Bitcoin parachain bridge, unlocking and releasing the BTC to the Bitcoin address provided by the user, so that the user gets the original BTC.

It was as if Mr. Wang didn't want to stay in the United States, so he returned the gold bill (XBTC) to the pawnshop in the United States, the pawnshop tore the bill in person, and then notified the pawnshop in China. After receiving the news that the bill was torn up, the Chinese pawnshop returned the pledged gold to Mr. Wang, who then took back the original gold (BTC) in China.

4. How to Ensure the Safety of the Parachain Bridge
It can be seen that the cross-chain transactions of Bitcoin and Ethereum mainly relies on the parachain bridge. Someone would ask, what should I do if the parachain bridge runs away or does not work?

In fact, the parachain bridge is not centralized. It is also a decentralized blockchain with collators. Each parachain has its own collators. These collators collect data of parachains and send to the relay-chain for verification. So that the relay-chain can monitor the parachains and prevent the occurrence of malicious incidents.

To become a collator, you need to pledge a certain amount of the tokens of the parachain. For example, as a collator of a Bitcoin parachain bridge, you need to pledge BTC. If the collator node goes offline or commits evil, the system will punish the pledged BTC. Of course, if the collector performs well, the system will also have a reward as an incentive for the collector.

Therefore, in the parachain bridge of Bitcoin and Ethereum, the transaction of asset across chains will be charge some commission fee. These fees are used as a reward for the collators. For example, a user transfers to the parachain bridge to lock 1 BTC, and he may only receive 0.99 XBTC tokens in the Ethereum parachain bridge, and the deducted 0.01 BTC is used as a reward for the collator, so that the security of the parachain bridge can be guaranteed through this decentralized method.

5. Conclusion

I wonder if you have discovered what is the core part of Polkadot's entire cross-chain system. I believe that the core of Polkadot's cross-chain system is the XCMP protocol. In fact, the so-called cross-chain asset trading is also realized through the data transactions across chains. Through the cross-chain communication of data, the process of locking, unlocking, mining and burning of assets between two different blockchains is operated.
Just like Chinese pawnshops and American pawnshops, they pledge gold, issue gold bills, destroy gold bills, and release gold. These operations all need to communicate via telephone (XCMP protocol). Without a telephone, they cannot cooperate.

Back to the title of this article: cross-chain composability, what does composability mean? In fact, Polkadot has a very wide range of parachains, including public chains, private chains, consortium chains, and not even a blockchain. As long as the technology of the chain is excellent enough to add new functions to the prosperity of Polkadot’s ecology, it can be added in this huge cross-chain system of Polkadot. All the parachains under the Polkadot ecology can communicate with each other, transfer assets, and interoperate with each other.

As we defined Polkadot in the end of the previous article:


So what you say Polkadot is, it is nothing, but if there are more blockchain projects join in, it will be everything.


——END

My name is Joie. I am a big fan of Polkadot and I founded the Polkadot New Era community. My Twitter account is @ joieCui, If you support me, you can nominate my node:
15DLJZ4ceN58vEgDiQjK8JsSJuLNBqhUnQ6QCY1QNSjrQntm

I made a website about Polkadot, which will be launched this month, please stay tuned.

Thanks for your support !
submitted by polkadotnewera to u/polkadotnewera [link] [comments]

A theory of why Ethereum is perhaps better "sound money" than Bitcoin.

The idea of Bitcoin's supremacy as "sound money" is very frequently thrown around by the biggest talking heads in the crypto world. I know I will get a lot of hate for suggesting that this theory is not only flawed, but it is straight up wrong. As unintuitive as it may sound to Bitcoin maximalists (no offense intended) I believe Ethereum is on the path to becoming the global leading asset and model for sound money... give me a chance to explain why.
  1. The idea that nothing can change Bitcoin's issuance schedule is a myth. There is absolutely no divine power controlling the supply of Bitcoin. Contrary to what is commonly asserted, Bitcoin's issuance protocol is not primarily driven by what is currently implemented. The real driver is consensus: the majority of network participants must agree that what is currently defined cannot be changed. There is an underlying assumption that the consensus would never want to change Bitcoin's issuance. On the surface this makes for a nice "sound money" narrative, but it is false premise and sticking to it could be ultimately detrimental. It presents a long term sustainability issue (the hope that somehow Bitcoin's base layer will scale enough to maintain security entirely through fees). It also completely dismisses the possibility that an unforeseen event could create pressure to change the issuance. If Bitcoin managed to create a consensus mechanism that did not rely on mining, it is very likely there would be consensus to reduce issuance. On the other hand, if some potentially catastrophic event would create incentives to increase the issuance, it would only make sense for the network to do so.
  2. Issuance flexibility is not fundamentally bad. Etheruem's approach to adjust the issuance according to the contextual circumstances has resulted in a faster rate of issuance reduction than what was originally defined in the protocol. The rate of issuance will continue to decrease as new developments allow for it to happen without compromising the network security. There is a very high probability that Ethereum will achieve a lower issuance rate than Bitcoin in the next two years, and it could possibly achieve zero issuance in the next five years. This would be a result of a successful implementation of PoS, sharding and EIP-1559.
  3. The root of all evil is Proof of Work. PoW is by far the primary cost of operating the Bitcoin network. It is the primary determinant of how much issuance is needed as a financial incentive to keep miners doing their thing. The very mechanism that secures the network's decentralization is unfortunately quite wasteful. The degree of decentralization is a direct result of how much random mathematical operations are being done by miners.
  4. There is a better way. Some people will take offense by the use of the word wasteful, and they claim that it is not because those mindless calculations are what is actually securing the network. However, its wasteful aspect becomes clear if there is a different way to achieve equal or superior decentralization without the need to crunch mathematical problems. This just so happens to be embodied in Ethereum's design of Proof of Stake. It will drastically reduce the cost of securing the network, while providing at least 2-3% annual returns for the ownership of Ether. When Ethereum's issuance becomes lower than its staking rewards, it will effectively have achieved the same effect as having zero (or possibly negative) issuance.
  5. The value proposition of Ethereum 2.0 is unmatched. There is just absolutely no asset in the world that has a 2-3% self-denominated annual returns and just so happens to be rapidly appreciating. When wall-street's greed sees this, it will create the mother of all bubbles.
  6. Don't dismiss the flippening. On February 01 2018 Ethereum reached 70% of Bitcoin's marked cap (it was even closer if you account for the amount of lost bitcoins). That happened before DEFI, before proof of staking was within reach, before multiple effective layer 2 solutions were a thing, before wrapped Bitcoins and before the first signs of mass adoption were on the horizon (like integration with Reddit , VISA and potential to compete with SWIFT). Utility is a huge factor in driving prices, lets not forget how Silk Road played a key role into propelling Bitcoin's value. Yes, Ethereum crashed hard after the peak in 2018, but perhaps it is simply manifesting a higher volatility pattern that is reminiscent of Bitcoin's early years. Bitcoin's first 5 years were characterized by aggressive price swings, why should it be different for Etheruem (considering it is about 5 years younger than Bitcoin)? If the volatility patterns stands on this bull market, we will see a flippening.
So... do I think Etheruem will flip? Yes I do, but I still hold Bitcoin. No one has a crystal ball, and nothing is certain. Perhaps Etheruem will crash and burn, perhaps Bitcoin will become the next Yahoo, and perhaps they will both thrive in this new exciting crypto world.
submitted by TheWierdGuy to CryptoCurrency [link] [comments]

Polkadot Launch AMA Recap

Polkadot Launch AMA Recap

The Polkadot Telegram AMA below took place on June 10, 2020

https://preview.redd.it/4ti681okap951.png?width=4920&format=png&auto=webp&s=e21f6a9a276d35bb9cdec59f46744f23c37966ef
AMA featured:
Dieter Fishbein, Ecosystem Development Lead, Web3 Foundation
Logan Saether, Technical Education, Web3 Foundation
Will Pankiewicz, Master of Validators, Parity Technologies
Moderated by Dan Reecer, Community and Growth, Polkadot & Kusama at Web3 Foundation

Transcription compiled by Theresa Boettger, Polkadot Ambassador:

Dieter Fishbein, Ecosystem Development Lead, Web3 Foundation

Dan: Hey everyone, thanks for joining us for the Polkadot Launch AMA. We have Dieter Fishbein (Head of Ecosystem Development, our business development team), Logan Saether (Technical Education), and Will Pankiewicz (Master of Validators) joining us today.
We had some great questions submitted in advance, and we’ll start by answering those and learning a bit about each of our guests. After we go through the pre-submitted questions, then we’ll open up the chat to live Q&A and the hosts will answer as many questions as they can.
We’ll start off with Dieter and ask him a set of some business-related questions.

Dieter could you introduce yourself, your background, and your role within the Polkadot ecosystem?

Dieter: I got my start in the space as a cryptography researcher at the University of Waterloo. This is where I first learned about Bitcoin and started following the space. I spent the next four years or so on the investment team for a large asset manager where I primarily focused on emerging markets. In 2017 I decided to take the plunge and join the space full-time. I worked at a small blockchain-focused VC fund and then joined the Polkadot team just over a year ago. My role at Polkadot is mainly focused on ensuring there is a vibrant community of projects building on our technology.

Q: Adoption of Polkadot of the important factors that all projects need to focus on to become more attractive to the industry. So, what is Polkadot's plan to gain more Adoption? [sic]

A (Dieter): Polkadot is fundamentally a developer-focused product so much of our adoption strategy is focused around making Polkadot an attractive product for developers. This has many elements. Right now the path for most developers to build on Polkadot is by creating a blockchain using the Substrate framework which they will later connect to Polkadot when parachains are enabled. This means that much of our adoption strategy comes down to making Substrate an attractive tool and framework. However, it’s not just enough to make building on Substrate attractive, we must also provide an incentive to these developers to actually connect their Substrate-based chain to Polkadot. Part of this incentive is the security that the Polkadot relay chain provides but another key incentive is becoming interoperable with a rich ecosystem of other projects that connect to Polkadot. This means that a key part of our adoption strategy is outreach focused. We go out there and try to convince the best projects in the space that building on our technology will provide them with significant value-add. This is not a purely technical argument. We provide significant support to projects building in our ecosystem through grants, technical support, incubatoaccelerator programs and other structured support programs such as the Substrate Builders Program (https://www.substrate.io/builders-program). I do think we really stand out in the significant, continued support that we provide to builders in our ecosystem. You can also take a look at the over 100 Grants that we’ve given from the Web3 Foundation: https://medium.com/web3foundation/web3-foundation-grants-program-reaches-100-projects-milestone-8fd2a775fd6b

Q: On moving forward through your roadmap, what are your most important next priorities? Does the Polkadot team have enough fundamentals (Funds, Community, etc.) to achieve those milestones?

A (Dieter): I would say the top priority by far is to ensure a smooth roll-out of key Polkadot features such as parachains, XCMP and other key parts of the protocol. Our recent Proof of Authority network launch was only just the beginning, it’s crucial that we carefully and successfully deploy features that allow builders to build meaningful technology. Second to that, we want to promote adoption by making more teams aware of Polkadot and how they can leverage it to build their product. Part of this comes down to the outreach that I discussed before but a major part of it is much more community-driven and many members of the team focus on this.
We are also blessed to have an awesome community to make this process easier 🙂

Q: Where can a list of Polkadot's application-specific chains can be found?

A (Dieter): The best list right now is http://www.polkaproject.com/. This is a community-led effort and the team behind it has done a terrific job. We’re also working on providing our own resource for this and we’ll share that with the community when it’s ready.

Q: Could you explain the differences and similarities between Kusama and Polkadot?

A (Dieter): Kusama is fundamentally a less robust, faster-moving version of Polkadot with less economic backing by validators. It is less robust since we will be deploying new technology to Kusama before Polkadot so it may break more frequently. It has less economic backing than Polkadot, so a network takeover is easier on Kusama than on Polkadot, lending itself more to use cases without the need for bank-like security.
In exchange for lower security and robustness, we expect the cost of a parachain lease to be lower on Kusama than Polkadot. Polkadot will always be 100% focused on security and robustness and I expect that applications that deal with high-value transactions such as those in the DeFi space will always want a Polkadot deployment, I think there will be a market for applications that are willing to trade cheap, high throughput for lower security and robustness such as those in the gaming, content distribution or social networking sectors. Check out - https://polkadot.network/kusama-polkadot-comparing-the-cousins/ for more detailed info!

Q: and for what reasons would a developer choose one over the other?

A (Dieter): Firstly, I see some earlier stage teams who are still iterating on their technology choosing to deploy to Kusama exclusively because of its lower-stakes, faster moving environment where it will be easier for them to iterate on their technology and build their user base. These will likely encompass the above sectors I identified earlier. To these teams, Polkadot becomes an eventual upgrade path for them if, and when, they are able to perfect their product, build a larger community of users and start to need the increased stability and security that Polkadot will provide.
Secondly, I suspect many teams who have their main deployment on Polkadot will also have an additional deployment on Kusama to allow them to test new features, either their tech or changes to the network, before these are deployed to Polkadot mainnet.

Logan Saether, Technical Education, Web3 Foundation

Q: Sweet, let's move over to Logan. Logan - could you introduce yourself, your background, and your role within the Polkadot ecosystem?

A (Logan): My initial involvement in the industry was as a smart contract engineer. During this time I worked on a few projects, including a reboot of the Ethereum Alarm Clock project originally by Piper Merriam. However, I had some frustrations at the time with the limitations of the EVM environment and began to look at other tools which could help me build the projects that I envisioned. This led to me looking at Substrate and completing a bounty for Web3 Foundation, after which I applied and joined the Technical Education team. My responsibilities at the Technical Education team include maintaining the Polkadot Wiki as a source of truth on the Polkadot ecosystem, creating example applications, writing technical documentation, giving talks and workshops, as well as helping initiatives such as the Thousand Validator Programme.

Q: The first technical question submitted for you was: "When will an official Polkadot mobile wallet appear?"

A (Logan): There is already an “official” wallet from Parity Technologies called the Parity Signer. Parity Signer allows you to keep your private keys on an air-gapped mobile device and to interactively sign messages using web interfaces such as Polkadot JS Apps. If you’re looking for something that is more of an interface to the blockchain as well as a wallet, you might be interested in PolkaWallet which is a community team that is building a full mobile interface for Polkadot.
For more information on Parity Signer check out the website: https://www.parity.io/signe

Q: Great thanks...our next question is: If someone already developed an application to run on Ethereum, but wants the interoperability that Polkadot will offer, are there any advantages to rebuilding with Substrate to run as a parachain on the Polkadot network instead of just keeping it on Ethereum and using the Ethereum bridge for use with Polkadot?

A (Logan): Yes, the advantage you would get from building on Substrate is more control over how your application will interact with the greater Polkadot ecosystem, as well as a larger design canvas for future iterations of your application.
Using an Ethereum bridge will probably have more cross chain latency than using a Polkadot parachain directly. The reason for this is due to the nature of Ethereum’s separate consensus protocol from Polkadot. For parachains, messages can be sent to be included in the next block with guarantees that they will be delivered. On bridged chains, your application will need to go through more routes in order to execute on the desired destination. It must first route from your application on Ethereum to the Ethereum bridge parachain, and afterward dispatch the XCMP message from the Polkadot side of the parachain. In other words, an application on Ethereum would first need to cross the bridge then send a message, while an application as a parachain would only need to send the message without needing to route across an external bridge.

Q: DOT transfers won't go live until Web3 removes the Sudo module and token holders approve the proposal to unlock them. But when will staking rewards start to be distributed? Will it have to after token transfers unlock? Or will accounts be able to accumulate rewards (still locked) once the network transitions to NPoS?

A (Logan): Staking rewards will be distributed starting with the transition to NPoS. Transfers will still be locked during the beginning of this phase, but reward payments are technically different from the normal transfer mechanism. You can read more about the launch process and steps at http://polkadot.network/launch-roadmap

Q: Next question is: I'm interested in how Cumulus/parachain development is going. ETA for when we will see the first parachain registered working on Kusama or some other public testnet like Westend maybe?

A (Logan): Parachains and Cumulus is a current high priority development objective of the Parity team. There have already been PoC parachains running with Cumulus on local testnets for months. The current work now is making the availability and validity subprotocols production ready in the Polkadot client. The best way to stay up to date would be to follow the project boards on GitHub that have delineated all of the tasks that should be done. Ideally, we can start seeing parachains on Westend soon with the first real parachains being deployed on Kusama thereafter.
The projects board can be viewed here: https://github.com/paritytech/polkadot/projects
Dan: Also...check out Basti's tweet from yesterday on the Cumulus topic: https://twitter.com/bkchstatus/1270479898696695808?s=20

Q: In what ways does Polkadot support smart contracts?

A (Logan): The philosophy behind the Polkadot Relay Chain is to be as minimal as possible, but allow arbitrary logic at the edges in the parachains. For this reason, Polkadot does not support smart contracts natively on the Relay Chain. However, it will support smart contracts on parachains. There are already a couple major initiatives out there. One initiative is to allow EVM contracts to be deployed on parachains, this includes the Substrate EVM module, Parity’s Frontier, and projects such as Moonbeam. Another initiative is to create a completely new smart contract stack that is native to Substrate. This includes the Substrate Contracts pallet, and the ink! DSL for writing smart contracts.
Learn more about Substrate's compatibility layer with Ethereum smart contracts here: https://github.com/paritytech/frontier

Will Pankiewicz, Master of Validators, Parity Technologies


Q: (Dan) Thanks for all the answers. Now we’ll start going through some staking questions with Will related to validating and nominating on Polkadot. Will - could you introduce yourself, your background, and your role within the Polkadot ecosystem?

A (Will): Sure thing. Like many others, Bitcoin drew me in back in 2013, but it wasn't until Ethereum came that I took the deep dive into working in the space full time. It was the financial infrastructure aspects of cryptocurrencies I was initially interested in, and first worked on dexes, algorithmic trading, and crypto funds. I really liked the idea of "Generalized Mining" that CoinFund came up with, and started to explore the whacky ways the crypto funds and others can both support ecosystems and be self-sustaining at the same time. This drew me to a lot of interesting experiments in what later became DeFi, as well as running validators on Proof of Stake networks. My role in the Polkadot ecosystem as “Master of Validators” is ensuring the needs of our validator community get met.

Q: Cool thanks. Our first community question was "Is it still more profitable to nominate the validators with lesser stake?"

A (Will): It depends on their commission, but generally yes it is more profitable to nominate validators with lesser stake. When validators have lesser stake, when you nominate them this makes your nomination stake a higher percentage of total stake. This means when rewards get distributed, it will be split more favorably toward you, as rewards are split by total stake percentage. Our entire rewards scheme is that every era (6 hours in Kusama, 24 hours in Polkadot), a certain amount of rewards get distributed, where that amount of rewards is dependent on the total amount of tokens staked for the entire network (50% of all tokens staked is currently optimal). These rewards from the end of an era get distributed roughly equally to all validators active in the validator set. The reward given to each validator is then split between the validators and all their nominators, determined by the total stake that each entity contributes. So if you contribute to a higher percentage of the total stake, you will earn more rewards.

Q: What does priority ranking under nominator addresses mean? For example, what does it mean that nominator A has priority 1 and nominator B has priority 6?

A (Will): Priority ranking is just the index of the nomination that gets stored on chain. It has no effect on how stake gets distributed in Phragmen or how rewards get calculated. This is only the order that the nominator chose their validators. The way that stake from a nominator gets distributed from a nominator to validators is via Phragmen, which is an algorithm that will optimally put stake behind validators so that distribution is roughly equal to those that will get in the validator set. It will try to maximize the total amount at stake in the network and maximize the stake behind minimally staked validators.

Q: On Polkadot.js, what does it mean when there are nodes waiting on Polkadot?

**A (Will):**In Polkadot there is a fixed validator set size that is determined by governance. The way validators get in the active set is by having the highest amount of total stake relative to other validators. So if the validator set size is 100, the top 100 validators by total stake will be in the validator set. Those not active in the validator set will be considered “waiting”.

Q: Another question...Is it necessary to become a waiting validator node right now?

A (Will): It's not necessary, but highly encouraged if you actively want to validate on Polkadot. The longer you are in the waiting tab, the longer you get exposure to nominators that may nominate you.

Q: Will current validators for Kusama also validate for Polkadot? How strongly should I consider their history (with Kusama) when looking to nominate a good validator for DOTs?

A (Will): A lot of Kusama validators will also be validators for Polkadot, as KSM was initially distributed to DOT holders. The early Kusama Validators will also likely be the first Polkadot validators. Being a Kusama validator should be a strong indicator for who to nominate on Polkadot, as the chaos that has ensued with Kusama has allowed validators to battle test their infrastructure. Kusama validators by now are very familiar with tooling, block explorers, terminology, common errors, log formats, upgrades, backups, and other aspects of node operation. This gives them an edge against Polkadot validators that may be new to the ecosystem. You should strongly consider well known Kusama validators when making your choices as a nominator on Polkadot.

Q: Can you go into more details about the process for becoming a DOT validator? Is it similar as the KSM 1000 validators program?

A (Will): The Process for becoming a DOT validators is first to have DOTs. You cannot be a validator without DOTs, as DOTs are used to pay transaction fees, and the minimum amount of DOTs you need is enough to create a validate transaction. After obtaining enough DOTs, you will need to set up your validator infrastructure. Ideally you should have a validator node with specs that match what we call standard hardware, as well as one or more sentry nodes to help isolate the validator node from attacks. After the infrastructure is up and running, you should have your Polkadot accounts set up right with a stash bonded to a controller account, and then submit a validate transaction, which will tell the network your nodes are ready to be a part of the network. You should then try and build a community around your validator to let others know you are trustworthy so that they will nominate you. The 1000 validators programme for Kusama is a programme that gives a certain amount of nominations from the Web3 Foundation and Parity to help bootstrap a community and reputation for validators. There may eventually be a similar type of programme for Polkadot as well.
Dan: Thanks a lot for all the answers, Will. That’s the end of the pre-submitted questions and now we’ll open the chat up to live Q&A, and our three team members will get through as many of your questions as possible.
We will take questions related to business development, technology, validating, and staking. For those wondering about DOT:
DOT tokens do not exist yet. Allocations of Polkadot's native DOT token are technically and legally non-transferable. Hence any publicized sale of DOTs is unsanctioned by Web3 Foundation and possibly fraudulent. Any official public sale of DOTs will be announced on the Web3 Foundation website. Polkadot’s launch process started in May and full network decentralization later this year, holders of DOT allocations will determine issuance and transferability. For those who participated in previous DOT sales, you can learn how to claim your DOTs here (https://wiki.polkadot.network/docs/en/claims).


Telegram Community Follow-up Questions Addressed Below


Q: Polkadot looks good but it confuses me that there are so many other Blockchain projects. What should I pay attention in Polkadot to give it the importance it deserves? What are your planning to achieve with your project?

A (Will): Personally, what I think differentiates it is the governance process. Coordinating forkless upgrades and social coordination helps stand it apart.
A (Dieter): The wiki is awesome - https://wiki.polkadot.network/

Q: Over 10,000 ETH paid as a transaction fee , what if this happens on Polkadot? Is it possible we can go through governance to return it to the owner?

A: Anything is possible with governance including transaction reversals, if a network quorum is reached on a topic.
A (Logan): Polkadot transaction fees work differently than the fees on Ethereum so it's a bit more difficult to shoot yourself in the foot as the whale who sent this unfortunate transaction. See here for details on fees: https://w3f-research.readthedocs.io/en/latest/polkadot/Token%20Economics.html?highlight=transaction%20fees#relay-chain-transaction-fees-and-per-block-transaction-limits
However, there is a tip that the user can input themselves which they could accidentally set to a large amount. In this cases, yes, they could proposition governance to reduce the amount that was paid in the tip.

Q: What is the minimum ideal amount of DOT and KSM to have if you want to become a validator and how much technical knowledge do you need aside from following the docs?

A (Will): It depends on what the other validators in the ecosystem are staking as well as the validator set size. You just need to be in the top staking amount of the validator set size. So if its 100 validators, you need to be in the top 100 validators by stake.

Q: Will Web3 nominate validators? If yes, which criteria to be elected?

A (Will): Web 3 Foundation is running programs like the 1000 validators programme for Kusama. There's a possibility this will continue on for Polkadot as well after transfers are enabled. https://thousand-validators.kusama.network/#/
You will need to be an active validator to earn rewards. Only those active in the validator set earn rewards. I would recommend checking out parts of the wiki: https://wiki.polkadot.network/docs/en/maintain-guides-validator-payout

Q: Is it possible to implement hastables or dag with substrate?

A (Logan): Yes.

Q: Polkadot project looks very futuristic! But, could you tell us the main role of DOT Tokens in the Polkadot Ecosystem?

A (Dan): That's a good question. The short answer is Staking, Governance, Bonding. More here: http://polkadot.network/dot-token

Q: How did you manage to prove that the consensus protocol is safe and unbreakable mathematically?

A (Dieter): We have a research teams of over a dozen scientists with PhDs and post-docs in cryptography and distributed computing who do thorough theoretical analyses on all the protocols used in Polkadot

Q: What are the prospects for NFT?

A: Already being built 🙂

Q: What will be Polkadot next roadmap for 2020 ?

A (Dieter): Building. But seriously - we will continue to add many more features and upgrades to Polkadot as well as continue to strongly focus on adoption from other builders in the ecosystem 🙂
A (Will): https://polkadot.network/launch-roadmap/
This is the launch roadmap. Ideally adding parachains and xcmp towards the end of the year

Q: How Do you stay active in terms of marketing developments during this PANDEMIC? Because I'm sure you're very excited to promote more after this settles down.

A (Dan): The main impact of covid was the impact on in-person events. We have been very active on Crowdcast for webinars since 2019, so it was quite the smooth transition to all-online events. You can see our 40+ past event recordings and follow us on Crowdcast here: https://www.crowdcast.io/polkadot. If you're interested in following our emails for updates (including online events), subscribe here: https://info.polkadot.network/subscribe

Q: Hi, who do you think is your biggest competitor in the space?

A (Dan): Polkadot is a metaprotocol that hasn't been seen in the industry up until this point. We hope to elevate the industry by providing interoperability between all major public networks as well as private blockchains.

Q: Is Polkadot a friend or competitor of Ethereum?

A: Polkadot aims to elevate the whole blockchain space with serious advancements in interoperability, governance and beyond :)

Q: When will there be hardware wallet support?

A (Will): Parity Signer works well for now. Other hardware wallets will be added pretty soon

Q: What are the attractive feature of DOT project that can attract any new users ?

A: https://polkadot.network/what-is-polkadot-a-brief-introduction/
A (Will): Buidling parachains with cross chain messaging + bridges to other chains I think will be a very appealing feature for developers

Q: According to you how much time will it take for Polkadot to get into mainstream adoption and execute all the plans set for this project?

A: We are solving many problems that have held back the blockchain industry up until now. Here is a summary in basic terms:
https://preview.redd.it/ls7i0bpm8p951.png?width=752&format=png&auto=webp&s=a8eb7bf26eac964f6b9056aa91924685ff359536

Q: When will bitpie or imtoken support DOT?

A: We are working on integrations on all the biggest and best wallet providers. ;)

Q: What event/call can we track to catch a switch to nPOS? Is it only force_new_era call? Thanks.

A (Will): If you're on riot, useful channels to follow for updates like this are #polkabot:matrix.org and #polkadot-announcements:matrix.parity.io
A (Logan): Yes this is the trigger for initiating the switch to NPoS. You can also poll the ForceEra storage for when it changes to ForceNew.

Q: What strategy will the Polkadot Team use to make new users trust its platform and be part of it?

A (Will): Pushing bleeding edge cryptography from web 3 foundation research
A (Dan): https://t.me/PolkadotOfficial/43378

Q: What technology stands behind and What are its advantages?

A (Dieter): Check out https://polkadot.network/technology/ for more info on our tech stack!

Q: What problems do you see occurring in the blockchain industry nowadays and how does your project aims to solve these problems?

A (Will): Governance I see as a huge problem. For example upgrading Bitcoin and making decisions for changing things is a very challenging process. We have robust systems of on-chain governance to help solve these coordination problems

Q: How involved are the Polkadot partners? Are they helping with the development?

A (Dieter): There are a variety of groups building in the Polkadot ecosystem. Check out http://www.polkaproject.com/ for a great list.

Q: Can you explain the role of the treasury in Polkadot?

A (Will): The treasury is for projects or people that want to build things, but don't want to go through the formal legal process of raising funds from VCs or grants or what have you. You can get paid by the community to build projects for the community.
A: There’s a whole section on the wiki about the treasury and how it functions here https://wiki.polkadot.network/docs/en/mirror-learn-treasury#docsNav

Q: Any plan to introduce Polkadot on Asia, or rising market on Asia?

**A (Will):**We're globally focused

Q: What kind of impact do you expect from the Council? Although it would be elected by token holders, what kind of people you wish to see there?

A (Will): Community focused individuals like u/jam10o that want to see cool things get built and cool communities form

If you have further questions, please ask in the official Polkadot Telegram channel.
submitted by dzr9127 to dot [link] [comments]

A theory of why Ethereum is perhaps better "sound money" than Bitcoin.

The idea that Bitcoin's supremacy as "sound money" is very frequently thrown around by the biggest talking heads in the crypto world. I know I will get a lot of hate for suggesting that this theory is not only flawed, but it is straight up wrong. As unintuitive as it may sound to Bitcoin maximalists (no offense intended) I believe Ethereum is on the path to becoming the global leading asset and model for sound money... give me a chance to explain why.
  1. The idea that nothing can change Bitcoin's issuance schedule is a myth. There is absolutely no divine power controlling the supply of Bitcoin. Contrary to what is commonly asserted, Bitcoin's issuance protocol is not primarily driven by what is currently implemented. The real driver is consensus: the majority of network participants must agree that what is currently defined must not be changed. There is an underlying assumption that the consensus would never want to change Bitcoin's issuance. On the surface this makes for a nice "sound money" narrative, but it is false premise and sticking to it could be ultimately detrimental. It presents a long term sustainability issue (the hope that somehow Bitcoin's base layer will scale enough to maintain security entirely through fees). It also completely dismisses the possibility that an unforeseen event could create pressure to change the issuance. If Bitcoin managed to create a consensus mechanism that did not rely on mining, it it very likely there would be consensus to reduce issuance. On the other hand, if some potentially catastrophic event would create incentives to increase the issuance, it would only make sense for the network to do so.
  2. Issuance flexibility is not fundamentally bad. Etheruem's approach to adjust the issuance according to the contextual circumstances has resulted in a faster rate of issuance reduction than what was originally defined in the protocol. The rate of issuance will continue to decrease as new developments allow for it to happen without compromising the network security. There is a very high probability that Ethereum will achieve a lower issuance rate than Bitcoin in the next two years, and it could possibly achieve zero issuance in the next five years. This would be a result of a successful implementation of PoS, shading and EIP-1559.
  3. The root of all evil is Proof of Work. PoW is by far the primary cost of operating the Bitcoin network. It is the primary determinant of how much issuance is needed as a financial incentive to keep miners doing their thing. The very mechanism that secures the network's decentralization is unfortunately quite wasteful. The degree of decentralization is a direct result of how much random mathematical operations are being done by miners.
  4. There is a better way. Some people will take offense by the use of the word wasteful, and they claim that it is not because those mindless calculations are what is actually securing the network. However, its wasteful aspect becomes clear if there is a different way to achieve equal or superior decentralization without the need to crunch mathematical problems. This just so happens to be embodied in Ethereum's design of Proof of Stake. It will drastically reduce the cost of securing the network, while providing at least 2-3% annual returns for the ownership of Ether. When Ethereum's issuance becomes lower than its staking rewards, it will effectively have achieved the same effect as having zero (or possibly negative) issuance.
  5. The value proposition of Etheruem 2.0 is unmatched. There is just absolutely no asset in the world that has a 2-3% self-denominated annual returns and just so happens to be rapidly appreciating. When wall-street's greed sees this, it will create the mother of all bubbles.
  6. Don't dismiss the flippening. On February 01 2018 Ethereum reached 70% of Bitcoin's marked cap. That happened before DEFI, before proof of staking was within reach, before effectrive layer 2 was a thing, before wrapped Bitcoins and before the first signs of mass adoption use cases were actually on the table (like integration with Reddit, VISA). Utility is a huge factor in driving prices, lets not forget how Silk Road played a key role into propelling Bitcoin's value. Yes, Etheruem crashed hard after the peak in 2018, but perhaps it is simply manifesting a higher volatility pattern that is reminiscent of Bitcoin's early years. Bitcoin's first 5 years were characterized by aggressive price swings, why should it be different for Etheruem (considering it is about 5 years younger than Bitcoin)? If the volatility patterns stands on this bull market, we will see a flippening.
So... do I think Etheruem will flip? Yes I do, but I still hold Bitcoin. No one has crystal ball, and nothing is certain. Perhaps Etheruem will crash and burn, perhaps Bitcoin will become the next Yahoo, and perhaps they will both thrive in this new exciting crypto world.
submitted by TheWierdGuy to ethtrader [link] [comments]

Cryptocurrency Mining Cost Breakdown SUNDAY NIGHT CHARTS - LET'S TALK BITCOIN, LITECOIN, ETHEREUM Let's talk Bitcoin! Ethereum Litecoin & Cryptocurrency Market predictions & other Crypto updates Ethereum to Outperform Bitcoin in Next Two Months? Let's talk ETH/BTC Lets Talk About Virtual Mining Coin

Now, let’s talk about the differences between the two. We will be mainly focussing on the following categories: Purpose; Mining; Gas vs Transaction Fees. Block Size #1 Bitcoin Cash VS Ethereum: Purpose. As we have briefly touched on before, Bitcoin cash and Ethereum are both driven by two entirely different purposes. Many people tend to wrongly group them together as “cryptos.” Let’s ... Let's Talk Crypto - Bitcoin, Blockchain and Cryptocurrency: Sponsored by SchoolOfCrypto.com. Summary: Have you ever heard of digital currencies like bitcoin, ethereum, and buzzwords like blockchain, cryptocurrencies and mining? Don’t know what it all means or how to get started? Well, at Let's Talk Crypto we break it all down in easy to understand terms and help you learn and earn in the age ... There are limited options for Ether cloud mining contracts. If nothing on the list below meets your needs, you can buy Bitcoin cloud mining contracts (listed above) and simply convert the bitcoins you earn to ether. Hashflare Review: Hashflare is a large Ether cloud mining provider with reasonably priced Ethereum cloud mining contracts. Just finished listening to Episode 112 of Let's Talk Bitcoin. Ethereum Community Forum. Discussions ; Activity; Best Of... Sign In · Register. Home › Watercooler. Howdy, Stranger! It looks like you're new here. If you want to get involved, click one of these buttons! Sign In Register. Quick Links . Categories; Recent Discussions; Activity; Unanswered ; Best Of... Categories. 17.3K All ... Let's Talk About Mining - Cryptocurrency Revisited Astute readers of the site might remember the original story we did on Bitcoin mining in 2011, the good

[index] [5511] [23862] [17667] [32350] [46306] [6778] [37436] [35648] [17176] [26045]

Cryptocurrency Mining Cost Breakdown

Let's talk Bitcoin! Ethereum Litecoin & Cryptocurrency Market predictions & other Crypto updates Ethereum Litecoin & Cryptocurrency Market predictions & other Crypto updates Jose Arteaga Let's Talk ETC! provides timely news about ETC and related technologies including: Ethereum, Bitcoin, blockchains and more. Feel free to leave requests, questions and comments below. 6 GPU MSI GAMING X RX580 8GB MINING RIG - 174MH/s 790 WATTS MINING ETHEREUM ETC UBIQ DBIX - Duration: 3:46. crypto 43,413 views We discuss how mining in bitcoin works and the differences between SOLO MINING VS MINING POOLS. Hope this video brings you a lot of value! Let´s keep on learning! LET'S TALK ABOUT THE BITCOIN HALVING!! REAL TALK.. BITCOIN, LITECOIN, ETHEREUM, DIGIBYTE UPDATE!! Not Financial Advice! Entertainment only! BTC Address for those who want to support my work ...

#