Consensus algorithms are designed so that members of a blockchain come to an agreement to validate a transaction on the network, change network parameters, decide which nodes are trustworthy to process new blocks, and other important functions.

Don’t let the technical nature of this article throw you off– finding “consensus” is around us everywhere– it’s a very human notion, but just applied to something that can be automated. 

For starters, in centralized systems, consensus tasks are carried out by a central authority. 

In decentralized systems like Bitcoin, we have a network composed of hundreds, thousands, and even hundreds of thousands of miners or nodes that join to perform one or multiple tasks and provide a reliable and efficient ecosystem.

Thinking about the decentralized consensus with this example, suppose you’re in a group of four friends, and one of the members, Alex, introduces a fifth person, Bob. When Bob leaves, most likely, the group will start talking about Bob (this is the protocol) to see if they liked him (the result will be the “consensus”) 

José: “Bob seems like a cool guy.”

Kevin: “Yeah, cool guy. How’d you meet him?”

Alex: “He was in one of my finance classes back in college; we would share crypto trading tips, and he ended up being a pretty funny guy.”

Kevin: “Nice, but his memes were just super weird.”

John: “You just don’t get meme culture.”

José: “Yeah you don’t spend a lot of time scrolling through TikTok—I thought they were pretty funny.”

In this example, a “consensus” was reached on whether Bob integrates well into the friend group. There is often a necessary consensus of opinion even absent of specific commitments or contracts made. One participant, Kevin, is reluctant about letting Bob into the group, but José, Alex, and John are cool with Bob.

In this case, if we were to codify the above example into a consensus algorithm: Then it will be 3 “he’s cool” and 1 “he’s cool but I’m unsure about XYZ” still results in a “he’s cool.” The majority wins, so Bob will get to hang out with the cool kids despite Kevin’s opinion. 

Bitcoin, for example, is built to find consensus on whether new transactions are valid (“cool”) or not. 

Here we’ll review the most popular —and not so popular— types of blockchain consensus algorithms across public and private networks.

What is Proof of Work?

Proof of Work (PoW) is the most popular and oldest consensus algorithm that came with the creation of Bitcoin in 2009 by Satoshi Nakamoto. A PoW system consists of a global network of miners —called network nodes— that compete to solve mathematical puzzles. The miner that successfully solves the puzzle wins the right to add a new block to the blockchain and receives a reward paid in newly-created cryptocurrency. 

Proof of work is basically a miner’s way of showing evidence that they have provided computational power to achieve network consensus and validate the authenticity of each block. Further, each block (transaction) is arranged in sequential order, eliminating the risk of double spending.

So far, PoW has been the most secure consensus mechanism for cryptocurrency blockchains. Altering the network would require an attacker to re-mine all existing blocks in the chain. The more the blockchain grows, the harder it’s to monopolize the network’s computing power since it would require enormous energy consumption and expensive equipment.

Once a miner solves a puzzle, he finds a nonce (short for number used once) that produces a hash with a value lower than or equal to that set by the network difficulty. 

The nonce is a central part of PoW systems since it will allow the miner to create a block header hashed with the SHA-256 hash function, which means putting a reference number for a block in a chain. The block header also contains a timestamp and the hash of the previous block.

The Cons of PoW

Miners need to provide considerable computational power to solve the puzzles. But since the computations are complex, the amount of energy that a single S9 Antminer consumes is usually between 1400 – 1500 watts per hour for a hashrate of 14.5 TH/s. The S19, a more powerful version, consumes 3250 watts per hour at a hashrate of 110 TH/s. 

With some math, we can calculate the amount of energy that data centers or mining companies consume with hundreds or thousands of mining rigs in a single location daily. High energy consumption and environmental damage is the main criticism drawn from proof of work. 

To put this in perspective, Before Ethereum switched to Proof of Stake, Ethereum miners worldwide were consuming around 10 TWh/yr, the same as the Czech Republic.

The loud noise also harms human hearing levels —above 80 dBa. This is why mining rigs are usually kept in basements or mining facilities to avoid disturbing everyday activities.

What is Proof of Stake?

Proof of Stake (PoS) is the second most popular consensus algorithm. Instead of miners, PoS blockchains have network validators who use their coins/tokens as evidence of their commitment to the network rather than computing power. 

Staking means “locking” crypto assets for a period in a blockchain platform, which, in return, rewards users with more cryptocurrency. 

PoW vs. PoS: Main Differences

In PoS, users can stake a portion of their assets for the sole purpose of generating passive income. The other option is becoming a validator. Unlike PoW systems, validators do not compete to create new blocks since they are randomly chosen by an algorithm. The more coins/tokens a user stake, the greater their chances of becoming a validator and creating new blocks in the blockchain. 

In PoW systems, the time for generating new blocks is determined by the mining difficulty; the more participants join the network, the bigger the hashpower, i.e., the computational power required to mine new blocks. By contrast, PoS blockchains have a fixed block generation time divided into slots —the time it takes to create a block— and epochs, which are units of time consisting of slots. 

To explain this better, a slot in Ethereum consists of 12 seconds, which is the amount of time it takes the network to create a block, and 32 slots create an epoch. Therefore, one epoch is 6.4 minutes. Each slot in a PoS blockchain has a predetermined number of validators who vote on the validity of the block being proposed. If the block is valid, it’s added to the chain, and the block proposer and the attestors receive rewards in ETH.

PoS blockchains punish malicious actors for attacking the network with 51% style attacks, which is called slashing, where honest validators eject the malicious validator from the network and drain their balance. This discourages malicious actors from attacking the network since the required number of staked funds is considerably high. In the case of Ethereum, 32 ETH.

Pros of PoS:

• Less energy intensive compared to PoW
• More suitable to work with layer-2 solutions than PoW
• Capable of achieving a higher throughput since consensus is established before blocks are passed.
• Less expensive than PoW blockchains since it doesn’t require elite hardware to create new blocks.

Cons of PoS

• PoS systems are still subject to centralization if validators with a large number of staked tokens can influence the network. 
• Less proven in terms of security compared to PoW blockchains.

What is Proof of History?

Proof of History (PoH) is a consensus algorithm presented by the Solana blockchain and consists of placing a timestamp to all events on the network to prove they took place at a given time. PoH can be described as a cryptographic clock that confirms transactions in sequential order. 

Solana combines its PoH approach with PoS. Therefore, network participants have to stake SOL to become validators and process new blocks, and the PoH mechanism verifies the validity of those transactions taking place in real-time. In other words, PoH maintains security, while PoS brings a network of validators that can verify the timestamps and confirm the transactions.

However, Solana sacrifices decentralization to provide lightning-fast transaction throughput. The blockchain relies on a semi-centralized architecture in which a single node is elected as the leader who’s in charge of implementing a single source of time, i.e., the PoH clock, and all other nodes must follow the sequences of time accordingly. Leaders are periodically elected via PoS elections.

While Solana is one of the fastest blockchains in the industry, it does regularly suffer from downtimes. Since its launch in 2020, the network has suffered roughly ten downtimes, five of which occurred in 2022. The main reason for these outages is a “misconfigured node.”

What is Delegated Proof of Stake?

Delegated Proof of Stake (DPoS) is a variation of the PoS concept in which the community plays a centric role.

In DPoS blockchains, the community members stake their cryptocurrencies to vote for the next witnesses or delegates for block production. To do this, users must pool their tokens into the blockchain’s staking pool and then link the funds to a specified delegate. 

DPoS was developed by former EOS CTO Dan Larimer, who implemented the algorithm on BitShares in 2015. Larimer and other DPoS proponents have said that DPoS broadens the democratic scope since it’s the community that chooses the next validator. Today, blockchains like TRON and Cardano use DPoS. 

However, the criticism for DPoS is that its methodology favors wealthy users. Those with a large number of tokens can have a bigger influence in the network. Vitalik Buterin was one of the first DPoS detractors, claiming in a blog post that this consensus algorithm incentivizes witnesses to form cartels and bribe voters for support.

What is Proof of Authority?

Proof of Authority (PoA) is a consensus algorithm in which only permissioned members can interact with the blockchain, perform transactions, make or suggest network parameter changes, review transaction history, etc. 

The term was coined by Gavin Wood, a blockchain developer who co-founded Ethereum, Polkadot, and Kusama Network.

In a PoA blockchain, everything is about reputation —network participants are staking their identities instead of coins. They provide a higher level of scalability and throughput since it only relies on a limited number of validators. We may think this is a heavily centralized model, but PoA blockchains are usually private and fit better with enterprises and organizations that use blockchain technology to enhance businesses and operational systems. 

What is Proof of Elapsed Time?

Proof of Elapsed Time (PoET) is another consensus algorithm that works best with private blockchains.

The PoET algorithm was first presented by Intel software developers and implemented to Hyperledger Sawtooth, targeted at private blockchains and institutions.

The algorithm might not be as popular as other blockchains since it wasn’t adequately defined. But the idea was to present a ready-made, Nakamoto-style engine that allowed private blockchains to choose the next block producer. And how do they differ? Well, the algorithm generates a “random wait time” for each network node, and during that time the node must “sleep.” The node with the shortest wait period wakes up first and wins the right to produce a block in the chain. 

So, the main difference is that miners in PoET are not running 24/7 and consume less energy. Further, in a PoW network, miners compete to hash the next block header, whereas in PoET it’s more of a random selection system.

Consensus Algorithms FAQ: 

Will Ethereum become faster now that it has transitioned to PoS?

A common misconception is that Ethereum will automatically scale now that it’s a PoS-based blockchain. However, this transition was made to enhance Ethereum by:

• Lowering energy consumption
• Lowering barriers to entry by eliminating hardware requirements
• Allowing economic penalties for node misbehavior
• Introducing a new model for token emissions 
• And a better infrastructure to work with Ethereum Layer-2 solutions.

What are permissionless and permissioned blockchains?: 

A permissionless blockchain refers to a public blockchain in which anyone can make transactions, review transaction history, stake coins, become a validator, etc. On the other hand, in permissioned (private) blockchains, only members with permission can access the network to make transactions, interact with network nodes, track on-chain activity, etc.

Is PoW the most secure consensus algorithm? PoW has its fair share of disadvantages, but so far, it has been the most proven and trusted way to maintain a network’s consensus and security in a blockchain.

Final Thoughts: consensus algorithm explained

Blockchain is a technology capable of solving many challenges and pain points within different industries, not just banking and finance. However, it has its own share of setbacks. Hence, developers have created multiple types and versions of consensus algorithms to tackle common problems, such as centralization, lack of scalability, and low throughput. 

But to talk about the future of blockchain algorithms is difficult due to one challenge: The Blockchain Trilemma. First outlined by Vitalik Buterin, it states the incapability of blockchain networks in providing two of three benefits: decentralization, security, and scalability. There are several blockchain platforms, like Fantom and Solana, that have implemented their own hybrid versions of consensus algorithms in an attempt to solve the blockchain trilemma, but none has been really successful so far. 

Other technical approaches have been made to enhance the properties of the blockchain, and one of the most popular is layer-2s, which are chains connected to a layer-1, e.g., Arbitrum with Ethereum, and sharding, which divides the whole blockchain into many smaller networks. Buterin deems sharding as the best approach to provide the three properties of a perfect blockchain.

The post The Different Types of Consensus Algorithms appeared first on CoinCentral.

Generally, oracles are incentivized using the platform’s native token, Chainlink’s $LINK, for example, for following the platform’s rules and retrieving reliable and useful data. 

The more adoption we see for blockchain oracles, the higher the perceived utility of their respective native token, consequently increasing their value and rewards for oracles.

There are dozens of blockchain oracles competing to be the best solution for on-chain data reliability. With so many options, it might be overwhelming for developers and companies to choose a solid option. Worry not – this article compiles the top blockchain oracles dominating the industry in 2022.

1. Chainlink

Chainlink (LINK) is the largest blockchain oracle in the industry and the only one ever to reach a market capitalization sitting over the billion-dollar mark, according to data from CoinGecko. 

Chainlink provides off-chain data to a wide range of blockchain-based ecosystems: layer-1s. Layer-2s, sidechains, and all kinds of DApps running on smart contracts. It was launched as an Ethereum-based oracle in 2019 by SmartContract, a San Francisco-based software company. In December 2021, Eric Schmidt, former CEO of Google, joined Chainlink as a strategic advisor for future projects. 

Chainlink provides on-chain services to hundreds of blockchain platforms and software firms, including Avalanche, Aave, Ampleforth, Compound, Swisscom, T-Systems, and the Associated Press.

Overall, Chainlink is a highly secure multi-chain platform offering real-time on-chain services to hundreds of blockchain projects and software firms. Two of its most popular features are:

• Chainlink Verified Random Function (VRF): a protocol that generates a set of random values, and cryptographic proof of those values was determined. This function is mainly used by smart contracts running DApps that rely on unpredictable outcomes.
• Chainlink Automation: formerly Chainlink Keepers, it helps smart contracts with maintenance tasks, such as harvesting, liquidating, rebase, and setup costs and risks when accessing off-chain markets.
  

2. Universal Market Access – Best for Developers

Universal Market Access (UMA) is an Ethereum-based oracle that provides users with smart contract templates to create synthetic assets and financial contracts. 

Synthetic financial contracts are tokenized versions of real-world products, such as derivatives, that replicate and track their performance and price using smart contracts, allowing average investors to gain exposure to a market with a high entry barrier.

With UMA’s user-friendly platform, users can digitize any existing real-world financial products: CFD (Contracts for Difference), commodities, and even cryptocurrencies. This way, DeFi markets can have broader exposure to the real world. When it comes to crypto, UMA allows users to own Bitcoin without actually holding the coin by creating a tokenized version of BTC or other cryptos.

UMA is open-source and decentralized —all smart contracts are run and governed by the UMA community, who use the UMA token to vote and submit proposals. Users can also earn rewards by the amount of activity they spend and the number of tokens staked in the protocol.

3. API3 

API3 is a community-governed oracle that allows users and developers from blockchain apps or businesses to connect their Web3 apps to the platform to receive streams of off-chain data from multiple markets, including stocks, commodities, cryptocurrencies, and more. 

API3 uses dAPIs, decentralized application programming interfaces, to feed data directly from first-party sources, unlike other oracles, which use oracle nodes as the intermediaries to search, query, and deliver data.

Another vital feature of API3 is Airnode, a Web3 middleware that connects web APIs directly to any blockchain app; this allows any API to be compatible with blockchain technology. 

Some organizations working with API3 are Fantom, Polygon, Digital Currency Group, AllianceBlock, and more.

The API3 token powers the API3 platform, used by holders to stake and win voting rights in the API3 DAO (Decentralized Autonomous Organization). The pool of staked tokens allows API3 to offer “Service Coverage” to customers in case of malfunctioning dAPIs, which helps them to mitigate risk. Not all oracles provide this feature in case of malfunctioning or unreliable oracle nodes.

4. Band Protocol

Band Protocol is a cross-chain oracle built on Cosmos, an ecosystem of interoperable networks, that provides tamper-resistant data feeds into smart contracts using its public blockchain, BandChain.

BandChain’s validators request data from APIs or other web and relay that data to users and entities. The protocol can send data to multiple blockchains thanks to Cosmos’ IBC (Inter-Blockchain Communication) protocol. Users can also write their own oracle scripts to receive data streams from the real world, from multiple markets such as stocks, assets, commodities, and crypto, to real-life events such as weather, sports, and more.

Band Protocol uses a Delegated Proof-of-Stake (DpoS) consensus algorithm. When smart contracts request data, the protocol chooses a random validator with a high amount of staked $BAND to take on the job. Validators must stake $BAND, the protocol’s inflationary token, before retrieving data, and other validators vote on the authenticity of said data.

Some of Band Protocol’s notable backers and integrations are Binance, Fantom, Moonriver, and Iron Bank.

5. Nest Protocol

NEST Protocol is built on the Ethereum network and describes itself as the “truly decentralized oracle out there.”

The NEST network uses a reference system called “quotation mining” to obtain accurate off-chain information, which is a straightforward process and divides network participants into three:

• Price callers: users or entities who pay a fee to use the NEST protocol 
• Miners: provide price quotations to smart contracts
• Verifiers: accept price quotation

Further, all developers on NEST use the NEST Probabilistic Virtual Machine (PVM), a type of virtual machine similar to EVM in the sense that it provides a library of basic functions for developers to assemble as many projects and stochastic assets, which are on-chain assets that can be issued or destroyed in response to random information flows.

The NEST token powers the NEST ecosystem and works as an economic incentive for network participants. Miners and verifiers must stake a certain amount of NEST tokens before providing and verifying data for smart contracts.

6. XYO Network

XYO Network is an Ethereum-based protocol that uses a network of anonymous and decentralized devices to provide accurate information on an object or person’s geospatial location. This allows apps to execute smart contract transactions based on location confirmation.

XYO Network uses proof-of-origin as its consensus algorithm, which allows the protocol to confirm the location of a specific person or object by collecting, verifying, and storing information based on “bound witness” interaction. These interactions occur among XYO’s four physical and decentralized components:

• Sentinels: devices that act as location witnesses, creating ledgers to temporarily solve heuristics —which are methods to solve problems and deliver reliable results.
• Bridges: devices that interpret geospatial data and transmit the information within the ledgers from the sentinels to archivists.
• Diviners: devices that analyze heuristics and are rewarded for providing an accurate analysis.
• Archivists: devices that store raw data from bridges and make it available to diviners and are compensated only when the data is retrieved.

XYO Network was created in 2018 alongside a partnership with Spaceflight, an in-space transportation services provider, which used XYO’s devices to communicate the position of satellites. Since its launch, oracle has formed partnerships with several technology and software firms, including Chainlink, Microsoft, and Deo Digital.

7. iExec RLC

iExec can be described as the Amazon Web Services (AWS) of the DeFi sector. This oracle offers a marketplace of cloud computing services that can connect Web2 businesses and apps with Web3.

iExec offers a user-friendly set of APIs that even developers with little to no blockchain knowledge can use to build their own oracles and power up their Web3 apps. 

Users can also rent out their apps or datasets to other users and get rewarded for their computing services while maintaining ownership and privacy of these assets. These assets can solve specific problems within several industries, including supply chain, healthcare, B2B, and more.

8. WINkLink

WINkLink is a straightforward and simple-to-use blockchain oracle solution built on the TRON network. It allows users to create customized network oracles to search, query, and feed real-world data to smart contracts. This data can range from crypto, stocks, and NFTs to weather information, sports, real estate, and more.

9. Tellor

Tellor is a permissionless oracle that allows DApps to access off-chain from across multiple industries. It was built by Daxia, a derivatives platform built on Ethereum. 

Tellor uses a reporting client —a system that relies on a network of reporters that search, query, verify and validate data. It has two types of data feeds; SpotPrice, which provides market data from existing APIs, and Custom Price, which modifies data according to clients’ needs.

10. DIA

DIA (short for Decentralized Information Assets) is a multi-chain community-governed oracle solution for Web3 apps. DIA is available across several blockchains, from layer-1s to layer-2s, including Solana, Ethereum, Avalanche, Fantom, Arbitrum, Aurora, and Polygon.

DIA provides enterprise-grade data feeds for entities looking to track traditional and digital financial applications, such as asset prices, lending rates, metaverse data, NFTs, cryptocurrencies, and more. These data feeds are fully customizable, allowing users to create specific feeds depending on their needs by configuring the sources and methodologies.

Final Thoughts: Why are Blockchain Oracles So Critical for Web3?

Oracles are vital for the Web3 ecosystem since they broaden the scope for the utility of blockchain-based applications. Without oracles, smart contracts would have limited capabilities outside of the blockchain world. One common misconception is that an oracle is a data source itself. This is incorrect since an oracle is a layer that sources and verifies external information.

The post Top 10 Blockchain Oracles: Which Oracles are Dominating the Market? appeared first on CoinCentral.

Today,  buying crypto is as simple as signing up for an exchange, going through the basic KYC (Know Your Customer) questions that exchanges must collect by law, linking your payment information, and buying your crypto of choice. You don’t need a high degree of sophisticated crypto and blockchain knowledge to purchase Bitcoin or any other coin.

When evaluating places to buy cryptocurrency today, you should consider the following factors:

1. Can you trust the exchange? Most popular exchanges today are trustworthy, but things can get a bit seedy if exploring the more unknown exchanges. Coinbase, Gemini, Kraken, and UpHold are all solid options.
2. How many different types of cryptocurrencies does the exchange offer? Some exchanges only offer a few dozen, whereas others offer hundreds of cryptocurrencies.
3. What are the transaction fees?
4. Sign-up bonus offers? Why not make some extra money signing up for a platform you want to use anyway? Don’t get too excited though, most of these are just like $10 to $20 or so.

In this article, we’ll guide you through some of the easiest ways on how to buy crypto and how to store your funds and keep them safe and sound.  The most common way to start is through a cryptocurrency service platform, such as a centralized crypto exchange; we’ll review a few.

Before You Buy Crypto 

The crypto market has thousands of different cryptocurrencies for buying, selling and trading. If you’re starting your crypto journey, the vast majority are a hard skip. 

Lesser-known coins are subject to more extreme volatility and can be wiped out of the market in a blink. A large chunk of them might act as the flagship token of unreliable and unknown projects that serve no real purpose to the sector besides being a get-rich-quick scheme. On the other hand, the top 10 currencies have the largest market caps and the strongest communities.

How to Buy Crypto Using a Crypto Exchange

One of the easiest ways to buy crypto is through a well-established cryptocurrency exchange, like Binance or Coinbase. 

Crypto exchanges allow users to buy, sell and trade digital assets. Some of these might have a broader display of products/services, such as staking, yield farming and crypto lending. But these companies are more directed towards experienced users as they convey a higher level of risk. For now, you should stick with more beginner-friendly exchanges such as Coinbase.

Before opening an account in any exchange, make sure it has a solid reputation in the space. You can narrow down if the platform is right for you by reviewing certain factors including:

1. Security: has the exchange been hacked before? What security methods does it leverage? Does it have insurance/has most assets in cold storage (storing funds offline to mitigate cyber-attack risks)?
2. Fees: does the exchange has simple and transparent fees? Or rather a complicated fee structure or hidden costs? How competitive are these fees compared to others?
3. Supported assets: This shouldn’t be an issue for beginners, but it’s good to know how many currencies the exchange supports since not all list the same assets.

Now that we have that in mind, it’s time to open your account.

All exchanges have different registration protocols, so the information you need to provide varies. Generally, you need to provide your email and full name, type a password, and submit a government-issued document, like a passport, social security number or an ID card, to verify the account.

After your account is fully verified (some exchanges first require proper verification to allow you to start placing orders), you must link a payment method. 

You can connect your bank account or use credit or debit cards (if the exchange supports their card deposits). Both options carry an underlying transaction fee (some exchanges may charge a deposit fee) though bank transfers are usually cheaper than card deposits.

Once you have funds in your account, you can place a buying order. This process differs depending on the exchange. Generally speaking, most platforms will allow you to use your USD funds to buy Bitcoin, Ethereum, or any other available crypto by simply entering the amount in dollars you want to buy in crypto. 

Some other exchanges, like Kraken and Binance, present more buying options such as limit orders and market orders. The first allows you to place a purchasing order when the cryptocurrency hits a specific price, while the latter means you’re purchasing the asset at the current market price.

How to Buy Crypto With PayPal

PayPal allows users to buy crypto assets. You can purchase crypto directly via in-app using your PayPal balance, bank account or debit card linked to your PayPal account. Another way is sending funds from an external wallet. 

For example, you can send crypto from your Binance account to your PayPal account: 

• First, head to the Crypto Hub section on PayPal and copy the address from one of the available cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash and Litecoin.
• Once you have selected the currency you want to receive, paste the address onto Binance and confirm the transfer of tokens.

It’s the same process the other way around:

• On your Binance account, head over to Wallet and click on Deposits.
• Copy the Binance address of the cryptocurrency you want to receive.
• Go to PayPal’s crypto section, choose the asset you want to send, paste the Binance address, and click Send.

Note that PayPal generates a new address for each deposit. You could reuse an old address to send and receive crypto. However, it’s not recommended due to privacy and security reasons. For example, since the blockchain is transparent, a hacker could know the number of funds you have if you constantly use the same address, who you frequently transact with, and more. So an attacker might attempt to steal your private keys using several hacking methods. 

Alternative Ways to Buy Crypto

There are a few ways to buy Bitcoin or other cryptocurrencies besides cryptocurrency exchanges and payment processors.

P2P (peer-to-peer) marketplaces are a popular way to buy Bitcoin but without the anonymity of decentralized exchanges. In a P2P marketplace such as LocalBitcoin, users can choose from a list of buyers and sellers and pick the person they wish to transact with directly.

Another method is buying crypto through online brokers such as Robinhood. But keep in mind some brokers that support crypto might not allow you to send your funds to an external wallet. This means your broker holds the private keys —a secret alphanumeric code that proves ownership of an asset— of your crypto and not you. This poses a risk —no matter how safe your broker, centralized or decentralized exchange is, they are always subject to cyber-attacks. We’ll expand on this point in another section.

Storing your Crypto Safely

If you bought Bitcoin or crypto, the best security practice is to store them outside any institution or protocol. Crypto wallets are usually the way to go, but it’s wise to differentiate between a hot wallet (online) and a cold wallet (offline).

Hot wallets (software wallets) connect to the internet via devices such as smartphones or computers. They are convenient to buy, sell, swap and store crypto assets directly on your phone or pc as they generate the private keys within those devices. However, hot wallets require implementing numerous security protocols since they pose several risks. For instance, your phone, computer or tablet gets stolen, hacked, or lost 2) the hot wallet suffers a security breach and your funds get compromised.

Cold wallets (hardware wallets) are small devices similar to a pen drive that doesn’t need an internet connection to store your crypto. Therefore they are usually considered the safest method to safeguard your crypto and stand far away from cyber-attacks. Some popular options are Trezor and Ledger, the leading hardware wallets in the market.

Remember the old crypto adage: not your keys, not your coins.

Final Thoughts: How Easy is to Buy Crypto?

If you’re new to the crypto space and you want to get your hands on some cryptocurrency, you might feel overwhelmed by the number of crypto assets and the technical jargon in the market. But it’s way easier than it seems. As we previously said, you don’t need a high level of knowledge on all things crypto —just some basic guidelines to start your crypto journey.

Whether you choose to buy Bitcoin or any other coin, you should always do some research about the exchange or platform. Ask yourself: 

• Does the firm allow you to send your funds to external wallets?
• Has it been hacked before?
• Do they provide cold storage or leverage industry-standard security protocols?

It’s important to learn how to use a hardware wallet as it can help you in the future if you decide to move your funds offline.

Frequently Asked Questions (FAQ)

Can I Buy Crypto With Credit Card?: Buying with a credit card is the same as using a debit card or automated clearing house (ACH) transfers. Just enter your credit card info and authorize the transaction. But not many exchanges allow users to buy crypto using credit cards since card transactions are more expensive since they have several underlying processing fees which the platform passes on to you.

Is cold storage better than hot storage?: software wallets, while they can run multiple security protocols to safeguard your account, are always at risk of falling against sophisticated hacks and other types of attacks that could compromise users’ funds. Hardware wallets provide a higher level of security since they stand far from cyber-attacks.

Why is it discouraged to buy lesser-known assets?: If you’re a beginner in the crypto space, you’re exposed to several risks: people shilling worthless tokens, scammers trying to lure you into Ponzi schemes, and more. Most people in the crypto industry would advise you to go with the projects and cryptos that already have a proven record of transparency in the space, and have a product/service that provides something valuable to the industry instead of mere marketing strategies to get rich quick.

What are some of the most trusted cryptocurrencies in the market?: pinpointing the previous question, you can find a diverse library of crypto assets that are trusted by the crypto community in general. Some of them are:

• Bitcoin (BTC)
• Ethereum (ETH)
• Cardano (ADA)
• Solana (SOL)
• Binance Coin (BNB)
• Polygon (MATIC)
• Avalanche (AVAX)
• Aave
• Polkadot (DOT)

What are the best exchanges to buy crypto from?: There are several cryptocurrency exchanges with a solid reputation in the industry, such as Kraken, Coinbase, OKX, Gemini, and Huobi.

The post What Are the Best Ways to Buy Crypto in 2024 appeared first on CoinCentral.

Today, we’ll be looking at the top 6 of the best exchanges currently available in Europe, and whether they may be right for you. 

1. Coinbase: A Top Global Exchange, Available in Europe

Coinbase is a leading cryptocurrency exchange co-founded by Brain Armstrong in 2012. It’s the most popular exchange in the United States, and also allows users from the UK, Italy, Ireland, and several other European countries to buy, sell and trade cryptocurrencies, including various DeFi tokens and stablecoins. 

Coinbase currently supports more than 100 tradable cryptocurrencies and its interface is user-friendly. For more professional and institutional traders, the exchange offers Coinbase Pro, which has a more advanced charting interface and all the necessary tools and resources for high-level trading.

If you want to use Coinbase on the go, the exchange also has a mobile version for iOS and Android devices where you can easily manage your portfolio and buy and sell digital assets. 

Additionally, Coinbase offers a hot storage wallet: Coinbase Wallet, where besides storing your crypto funds, you can also save your NFT (Non-Fungible Token) assets and explore a broad selection of decentralized applications (dApps). 

Pro tip: use Coinbase Pro for lower fees. It’s the same functionality, just a different interface with a wider array of assets.

Pros & Con of Coinbase:

Pros:

• User-friendly
• Secure platform with 2FA verification
• Advanced charting and trading tools for professional traders
• High liquidity
• Has a mobile app 

Cons:

• Fees are usually high compared to competitors
• Poor customer support

CoinCentral readers can earn a sign-up reward upon creating a new Coinbase account.

2 – Gemini: NYC-Based, Safe Crypto Exchange for Europeans

Gemini is always a popular mention when it comes to security. The exchange was founded in 2014 by Cameron and Tyler Winklevoss, the popular twins who shared classes at Harvard with Mark Zuckerberg. Gemini currently supports a broad selection of 100+ cryptocurrencies, including DeFi, NFT, and gaming tokens.

Beginners might find Gemini’s interface is user-friendly, with simple buy and sell options. It also has a support page with answers to common questions and customer support is relatively decent. Professional traders might want to switch to Gemini’s ActiveTrader platform, which has a more advanced charting platform and features multiple order options and margin and derivatives trading.

One of the primary focuses of Gemini is user security, allowing users to enable 2FA, pin codes, and Face ID for iOS and Android users. Additionally, Gemini offers two wallets: one is a hot storage wallet for individual accounts and a cold storage wallet for institutional accounts.

Gemini has expensive fees, however, and you should also note that Gemini’s fee structure is rather complicated compared to competitors. If you check out Gemini’s Fee Schedule page, you’ll find 10 different sections talking about the different fees for each product or service on the exchange, which looks something like this:

Pros & Cons of Gemini

Pros:

• Offers trading education for beginners and a help section
• Allows staking and lending
• User-friendly
• Highly secure
• Supports several crypto-related products

Cons:

• Complicated fee structure
• Expensive fees

CoinCentral readers can earn a sign-up reward upon creating a new Gemini account.

3. Kraken: User-Friendly & Powerful Crypto Exchange

Kraken is a widely trusted cryptocurrency exchange, suitable for both beginners and advanced traders. While it boasts a user-friendly interface, it also provides a powerful charting platform and trading tools to take your trading to the next level. Compared to Coinbase, Kraken has a slightly bigger margin of supported cryptocurrencies —over 120, including DeFi tokens and stablecoins.

Like its peers, Kraken also has a mobile version available for iOS and Android devices and Kraken Pro, which is a more advanced platform for trading a variety of instruments, including margin trading and derivatives, such as futures and perpetual contracts. It also has lower fees compared to the regular platform.

Kraken also offers a built-in digital wallet so users can store their funds. As a fun fact: the exchange prompts its customers to store their funds off exchanges and keep them in cold storage for better security.

Pros and Cons of Kraken

Pros:

• Supports an extensive selection of cryptocurrencies
• Highly secured platform
• Has a mobile app
• Relative low fees
• User-friendly

Cons:

• No credit/debit card deposits
• Customer support is rather slow
• Slow verification process

4. Bitpanda: Suitable For Buying Several Crypto Assets

BitPanda, an Austria-based broker, was one of the first Bitcoin exchanges to be established in Europe in 2014. The exchange now boasts a massive list of over 1000 cryptocurrencies, so if you’re looking for a diversified library of digital assets, Bitpanda is a good option.

As of February 2022, BitPanda has been the host for more than 3 million active users on its platform, which is easy to navigate, and the trading interface is suitable for beginners. Of course, for professional traders, there’s Bitpanda Pro which, as you might have guessed by now, features a more advanced charting platform where you can place multiple order options and trade traditional and crypto derivatives.

The exchange also offers BitPanda Go —a service that allows users to buy crypto directly with cash. It’s quite ideal if you’re an Austrian customer, as you can buy coupon codes using cash at a local post office and then redeem them for crypto. However, keep in mind BitPanda Go fees, currently at 3%

Like its competitors, BitPanda features a mobile version for iOS and Android users, which is available for download on the exchange’s website. There you can easily buy, sell, hold and trade cryptocurrencies seamlessly.

Pros & Cons of BitPanda

Pros:

• Secured, trusted platform
• Wide range of tradable cryptocurrencies
• Mobile version available

Cons:

• High fees compared to other exchanges
• Additional costs for deposits
• Doesn’t support staking or lending

5. FTX: Best For Diversifying Your Portfolio

Founded by Sam Bankman-Fried, CEO and also the founder of Alameda Research, FTX is one of the biggest centralized exchanges by trading volume. FTX offers a wide range of financial instruments for all of its customers, from simply buying and selling stocks or digital assets to trading derivatives products, forex, commodities and more.

There are over 300 cryptocurrencies available on FTX, including high-market cap assets like Bitcoin, Ethereum and DeFi, gaming, NFT tokens and stablecoins. The exchange also has its own NFT marketplace and NFT wallet.

Trading fees on FTX are relatively low, but you should expect deposits/withdrawal fees as well. One downside of the exchange is that its customer support is quite limited —you can only contact support via tickets, while phone support and live chat are not available.

Pros & Cons of FTX

Pros:

• Extensive selection of financial instruments
• Wide range of cryptocurrencies supported
• Secured and trusted platform
• Supports staking, NFTs, and leverage trading
• Fees are relatively low
  

Cons:

• Limited customer support
• Not user-friendly

Other Crypto Exchanges in Europe to Consider

You may be thinking, what about Binance? 

Binance is one of the leading cryptocurrency exchanges by trading volume in 2022. However, it has had a rough time offering its services in Europe due to the regulatory landscape, which is quite a disaster by now. The good news is that Binance is stepping up its plans to enter the European scene, as it recently received approval from the Organismo degli Agenti e dei Mediatori (OAM) to open an office in Italy and expand its services across the country. 

Another country that recently gave the green light to Binance is France, which granted full permission to the exchange to offer its services within the country. The crypto community has seen these last two news as a step forward in bringing digital assets into the European Union.

Final Thoughts: What Crypto Exchange Suits You Best?

There are a handful of crypto exchanges offering a wide array of products for European users. In the meanwhile, the European Union is yet to define a proper regulatory framework for the cryptocurrency industry.

Whether you want to make a passive income through staking, lend your crypto assets, or simply purchase and sell cryptocurrencies, it’s optimal to compare the available exchanges and decided which one suits best for you.

As a final note: remember you should only invest capital you can afford to lose. Cryptocurrencies are volatile and thus subject to massive price swings, so as the old saying goes, don’t put all your eggs in one basket.

The post Top Crypto Exchanges in Europe 2023 appeared first on CoinCentral.

Unlike centralized lenders, such as BlockFi and Celsius —who declared bankruptcy and froze user withdrawals in 2022—users don’t need to sign up with the typical CeFi log-in credentials; Venus Protocol users connect crypto wallets like MetaMask. 

The following guide explores the Venus Protocol in-depth, but if you’re looking for the best alternative centralized crypto lenders, check out these 5 crypto interest accounts that could fill the void left by Celsius.

What is Venus Protocol?

Venus is the second-largest lending protocol in the BNB Chain —only topped by accounting for roughly 30% of the total market share in terms of total value locked (TVL). 

As of December 2022, the protocol has lent over $450 million in assets, and its TVL has been floating north of $700 million since mid-2022.

Venus Protocol’s standout advertised  features include: 

• Lending and borrowing loans in a matter of seconds
• Staking and earning rewards in crypto, up to 20%
• Liquidity pools offering up to 30% APY
• Mint synthetic stablecoins
• Participate in the community DAO

Disclaimer: Cryptocurrency, and especially DeFi protocols like Venus Protocol are very risky. The following article is not and should not be considered a substitute for investment advice.

How Does Venus Protocol Work?

Venus was built exclusively for the BNB Chain (formerly known as the Binance Smart Chain (BSC)), therefore its native currency, XVS, uses the BEP-20 standard. 

Venus supports multiple types of cryptocurrencies and stablecoins that can be used as collateral to borrow from the protocol’s pools or earn rewards by becoming a liquidity provider.

How to Borrow on Venus Protocol

Loans are over-collateralized, meaning users who wish to borrow must pledge collateral with a ratio depending on the current governance proposal, but they usually range from 50% to 70%. So, to hypothetically borrow $10,000, you’d need to post $15,000 of collateral, for example.

This collateral is then locked in a Venus Protocol smart contract for a specified period. 

In the Market section, choose an asset, and you’ll be able to see the collateral factor (as well as market liquidity, number of suppliers and borrowers, APY, and more.)

Lending on Venus

Users can lend assets to Venus to earn yield, which varies on the type of asset.When a user loans cryptocurrencies to Venus, the funds are added to the lending pools. In exchange, depositors receive vTokens (for example, deposited BUSD becomes vBUSD). 

Users can redeem these tokens for the underlying token.

Minting Stablecoins

Users can mint VAI, a synthetic stablecoin fixed at 1 USD (price will still fluctuate depending on market demand). This asset can be used for yield farming on other DEXs in the BNB ecosystem. Users can mint VAI using up to 50% of the remaining collateral value from previous vToken deposits. 

The interest rates of VAI have yet to be determined (they are known as stability fees in other lending protocols like MakerDAO), so it depends on Governance and what the new V4 upgrade will bring.

Venus Protocol: History & Founders 

The project was developed by Swipe, a cryptocurrency credit card issuer, officially launch in 2020. The team delegated control to the XVS community holders. Since then, multiple proposals have been submitted and put forward to change, upgrade and improve the Venus protocol. 

Venus was born as a fork of Compound (COMP), a popular crypto lender built on the Ethereum network, and also took some inspiration from MarkerDAO. The protocol is essentially a mix of the two systems and their respective benefits. It was also audited by blockchain security firm CertiK in December 2020.

The team didn’t run a pre-mine for founders or the community. The only way to earn XVS was through the Binance LaunchPool project or by providing liquidity to the protocol during the early days.

Venus V4 Release

In November 2022, the Venus DAO unveiled its V4 upgrade after months of discussions. The upgrade seeks to enhance the network in three key areas: 

• Risk management. 
  • Isolated markets: introduce new tokens of all kinds but pooled into their respective, separate lending pools. This has two significant benefits: 1) it protects users and the ecosystem from disaster since they are essentially segregating assets with potential risk into isolated pools; 2) it allows users to pick which pools to participate depending on their appetite for risk.

• • Stable interest rate borrowing: a mechanism that will set stable interest rates for loans across all markets.

• • Better risk management mechanisms: will provide a mechanism that will provide shortfall coverage for users, and a stability fee to keep VAI pegged to USD. This is especially important, as in 2021, VAI lost is peg due to oversupply and experienced a massive market sell-off.

• Decentralization
  
  • Improved governance system: new governance roles have been assigned, longer intervals for contract upgrades and role reassignments, 

• • Price Feed Redundancy: allows Venus to support multiple blockchain oracles to avoid single points of failure.
• User experience:
  
  • Partnership with DEXs: Venus has partnered with multiple DEXs in the BNB ecosystem, including PancakeSwap, to allow users to freely move funds between multiple protocols without leaving Venus. This makes Venus a DEX in which borrowing, lending, and swaps across multiple DEXs happen in a single UI.
• New tokenomics: 
  • Tokenomics 3.0: will bring new financial mechanisms to incentivize protocol retention. XVS becomes the core utility token, XVS emissions are cut, value is reinvested, and shortfall defense is added. 

• • The protocol will introduce the Venus Prime Soulbound Token (SBT), which users can earn if they stake a minimum of 1,000 tokens for 90 days in the Venus vault. The benefits of SBT are that it provides users with exclusive access to better yield across different markets, and dividends can be paid out in the supplied currency.

Venus Protocol: Tokenomics

XVS is the protocol’s utility token based on the BEP-20 token standard. XVS’s main uses cases are:

• Staking
• Voting
• Pay for transaction fees

The token has a max supply of 29 million tokens and a circulating supply of 12 million (or 41% of the total supply.)

XVS & Venus Governance

The Venus community runs a simple governance system: delegated and direct on-chain voting, where 1 XVS token = 1 vote. Whenever a protocol proposal is submitted through a Venus Improvement Proposal (VIP (similar to Ethereum’s EIP)), users can vote directly or delegate their voting rights to another user. 

Proposals cost 300,000 XVS, which currently amounts to nearly $1 million. Once proposed, voting is active for three days. To be approved, the proposal must reach a voting quorum of 600,000 XVS. If successful, the proposal is timelocked for two days before implementation. 

Final Thoughts: Future of Venus Protocol)

Venus Protocol has a TVL of $710 million, currently boasting $1 billion in liquidity as per its website and has borrowed over $450 million since its relatively short time in the industry. 

Despite these numbers, Venus Protocol doesn’t really attract the same attention as platforms like PancakeSwap. Still, the protocol has managed to thrive along with the DeFi ecosystem, and the V4 upgrade brings better tokenomics, more risk management tools such as isolated pools, and an improved governance system to solidify decentralization.

The post What is Venus Protocol? appeared first on CoinCentral.

Today, dYdX is one of the largest DEXs for high-level trading with over $400 million in total value locked (TVL) and trading volumes reaching the billion-dollar roof daily. It’s available in nine languages, including English, Portuguese, Japanese, French, Spanish and Turkish.

In addition to being a  derivatives trading platform, dYdX offers:

• Perpetuals trading and cross-margin with up to 20x leverage
• Over 30 supported pairs including BTC/USD, ETH/USD, LINK/USD, AAVE/USD
• NFT trading on the exchange’s Hedgies marketplace
• A testnet for projects seeking to build using the DEX’s development tools
• An academy with thorough educational content about derivatives trading and the ecosystem in general

History of dYdX

The DEX was founded by Antonio Juliano, and officially launched in July 2017. The company is based in San Francisco, California, and has a small team of around 40 employees, according to Crunchbase.

Perpetuals are financial contracts that an investor can buy at a predetermined price. But unlike traditional futures contracts, they don’t have an expiry date, so there’s no final settlement for the trade and the investor can go as long as they want in their positions.

Not many DeFi platforms offer these and other types of complex financial instruments. Further, most DEXs today emulate the same features and mechanisms from CEXs (centralized exchanges), like spot trading, asset swap, automated market makers (AMMs) instead of order books, etc. But the derivatives market has been largely overlooked by the DeFi industry. 

Only a few DEXs offer derivatives trading besides dYdX, like GMX and Gains Network. 

dYdX takes a different approach– it mixes decentralized infrastructure with centralized counterparts, while also offering NFT trading, and a Goerli testnet with developer tools to test the DEX’s core products and build trading strategies.

Spot Margin and Trading (Legacy)

dYdX offered spot and margin trading on its layer-1 UI (Ethereum), but the service was shut down in November 2021 as most of the money flow was concentrated on the derivatives side of the exchange. The DEX soon faced some of Ethereum’s old problems: high fees and network congestion, which led it to move to StarkWare, a layer-2 scaling solution that uses Zero-Knowledge rollups built on top of Ethereum. 

However, as part of the V4 upgrade, dYdX will move in early 2023 to Cosmos, a decentralized network composed of independent and interoperable blockchain protocols. 

dYdX V4

The V4 upgrade is set to release in Q2 2023 and seeks to bring multiple features and benefits for users, such as creating SubDAOs, which will allow the community to better manage internal operations.

The migration to Cosmos will allow the protocol to create a proper layer-1 for itself, called dYdX Chain. This will also enable validators to run an off-chain orderbook, which, according to the proposal, will increase throughput with orders being matched by the network in real time and trades occurring on-chain in each block.

dYdX Trading & User Interface

Below is dYdX’s main trading interface. As you can see, it offers a wide range of trading features, like stop loss and limit orders, indicators, and analytic tools to trade crypto derivatives with leverage. 

But the main perk is that you don’t need to sign up with your credentials —just connect your Web 3 wallet, like MetaMask, TrustWallet, or Coinbase Wallet. You can also deposit with fiat via Banxa, a Canadian fiat-to-crypto payment gateway solution.

What you might notice is the order book, which is atypical for a decentralized exchange. dYdX decided to go with an order book since it was an already established model for liquidity and is less capital-intensive compared to AMMs, according to the team. The liquidity for perpetuals comes from the exchange itself, and uses “cryptographically-signed off-chain messages to establish an orderbook.” 

The team said spot and margin trading, together with lending and borrowing, are expected to be resumed once it moves to Cosmos. 

dYdX’s lending system was simple and pretty much the same as other platforms; lenders on dYdX earned interest rates based on supply and demand, while borrowers could ask for loans by pledging low collateral.

Other dYdX features include:

• Documentation: allows users to trade using the exchange’s APIs (Application Programming Interface), and check out and test developer tools and private and public HTTP APIs as well
• GitHub: allows users to review the exchange’s smart contracts, python and Typescript clients for developers, which allow programmatic use of dYdX, and more
• Status: monitor the DEX’s status in real-time, such as uptime over the past 90 days and past incidents
• dYdX Academy: to help spread education on dYdX and the ecosystem, such as how to set up an account, establish stop market and stop limit, how to trade cross margin, isolated margin, etc.

dYdX Hedgies

Hedgies is an NFT collection of 4,200 of mammals minted on the Ethereum blockchain and were distributed to the dYdX community, and are up for bids on secondary marketplace OpenSea.

DYDX Token

The DYDX token was launched in August 2021 alongside a $100k airdrop for users with the highest trading volumes.

The token is used to:

• Reward traders on the layer-2 (utility will remain the same once it moves to Cosmos), which will depend on users’ trading activity, and those with over 10,000 DYDX enjoy a 15% trading fee discount
• Staking to earn rewards in the Liquidity Pool and Safety Pool (APY depends on market conditions)

The token is inflationary, having a fixed inflation rate of 2% per year. It has a max supply of 1 billion DYDX which will be distributed over the next five years to:

• 50% to the community, including traders, stakeholders, liquidity providers, etc 
• 15% to dYdX founders, contributors, members, and overall team.
• 10% to reserve for future employees.
• 25% to previous active users who completed certain milestones

As of December 2022, only 7% of the supply is in circulation.

dYdX Foundation

In August 2021, The team announced the launch of the dYdX Foundation, an independent organization based in Zug, Switzerland, that supports the growth and further development of the DEX.

The foundation oversees and finances projects building on dYdX, research, and development activities, and also pushes for educational content for the public about the protocol and the overall ecosystem. The foundation is also in charge of forming partnerships, engaging with various businesses, talking to regulators —and any third party that could benefit the ecosystem. 

So far, dYdX has achieved massive support from various hedge funds and institutions, including Andreessen Horowitz, Paradigm, Polychain, Dragonfly Capital, and investors such as Brian Armstrong, Fred Ehrsam, and Naval Ravikant. In mid-2021, the DEX raised over $80 million in at least 4 funding rounds.

dYdX Governance

The protocol is governed by DYDX holders and delegates. There are two types of governance powers: 

• Proposing power: allows users to create proposals
• Voting power: allows users to vote for or against a proposal

Users will have governance power depending on the amount of DYDX they have staked or have tokens delegated.

Similar to many other DeFi protocols, all proposals on dYdX must go through a dYdX Improvement Proposal (DIPs).

Flow chart of DIPs. Source: dYdX community

Final Thoughts: dYdX and Its Future

What dYdX brings value to the DeFi community with an exchange that’s much more than just swapping crypto and yield farming. It brings two of the best worlds by mixing certain features of centralized platforms, like an order book, with a decentralized infrastructure governed by its community.

dYdX’s 2022 roadmap brought multiple features for the exchange, including increased IMF for multiple blockchain ecosystems, a new UI with new swapping features, fiat on-ramp with a credit card and bank transfer, and much more. That’s to say, eyes open for what the DEX does in 2023.

The post What is dYdX? Exploring the Leading Crypto Derivatives Platform appeared first on CoinCentral.

Web3, NFTs, and the Metaverse took over the many of the convention halls, art spaces, and music venues in the city of Miami –there was even an NFT wedding.

Here’s a look at what went down at Art Basel 2022, the bedrock of the Miami Art Week, in which thousands of artists, brands, content creators and digital fashion houses gathered to support the digital landscape, and of course, display their artwork —some in NFTs and some in physical form. 

The genesis collection and exhibition of @MediciRoyal – so many amazing artworks, some available both as NFT and physical. Proud to be a part of this together with an incredible selection of artists ❤️🙏🏼 Skillfully curated by @entrup pic.twitter.com/Qn9MkbvSXe

— Maria Fynsk Norup 💎🍂 eth/tez (@mariafynsknorup) December 6, 2022

Out here peeping the 👟 art at #ArtBaselMiami 👀 pic.twitter.com/QcUzSY0bYw

— Sneaks (@sneaks_nft) December 2, 2022

Number of Attendees in Art Basel Doubles

Nearly 80,000 attendees participated —which is double the amount compared to 2021—, including Miami’s crypto-friendly mayor, Francis Suarez, who attended Keith Grossman’s dinner to celebrate his exit from Time Magazine to become president of crypto payment service MoonPay.

Mayor Suarez also had a few words for the over 100 attendees at the dinner:

“When we’re creating, there are going to be car crashes. But it’s wonderful to have a network of people who are here supporting you, have incredible knowledge of this nascent technology, and are going to pave the way for the future.”

There were a large number of Web3-related events hosted in Art Basel, which fortunately met with a high number of crypto enthusiasts, showing a positive sign of high morale in the community despite the crypto winter. 

TIMEPieces, a web3 community and initiative by TIME Magazine, set up a gallery of physical artwork by some of their supported artists at Art Basel. The gallery of over 100 photographers was curated by John Knopf, an Emmy-nominated photographer and NFT enthusiast.

Incredible appreciation & gratitude to @JohnKnopfPhotos, who curated an incredible gallery of 100 amazing photographers for @TIMEPieces at Art Basel.

Your love for uplifting other photographers is beautiful, John.

On behalf of @missmayad, @DrBanman & the whole team at TIME: TY! pic.twitter.com/P53ehHrSSL

— Keith A. Grossman (@KeithGrossman) December 1, 2022

Digital fashion also had a role in Art Basel with the Metaverse Fashion Week brunch, hosted by Megan Kaspar, director of crypto investment firm Firstlight and founder of Fashion house Red DAO.

What Made Art Basel Different This Year?

Simple: eccentric NFTs and degenerate holders who made their fortunes buying and selling overpriced Bored Apes were not the main center of attention.

Compared to last year, we can now fully see the larger collision and acceptance of the two worlds: the digital and the traditional world of art, both blended in a single cultural conversation and space. And what reinforced this acceptance was the much more professional tone of the web3 and NFT related events. 

Instead, deals were getting done. Alo Yoga, the athleisure wear brand, set up a facility with all the comforts where the biggest names of the Web2 and Web3 industries were making business.

Overall, interest wasn’t shifted heavily towards the latest NFT projects and artwork showcased in the galleries, but more towards the utility of  NFTs and the current state of Web3, and what’s currently the roadmap for the industry.

NFTs have expanded their range of utility rather than just representing ownership of Apes and pixelated punks. We can now see them in action IRL as real-world apartments being sold as NFTs, organizers and promoters tokenizing tickets, NFTs in healthcare —the list goes on, and it’s all thanks to the immutable technology of blockchain.

This is a real ATM at Art Basel that puts your bank account balance & photo on a leaderboard for all to see 👀 pic.twitter.com/ZaZ7evp5Hc

— Joel Franco (@OfficialJoelF) December 1, 2022

The Gateway: A Web3 Metropolis

Talking about MoonPay, the company also powered The Gateway 2022 edition —the first-ever Web3 metropolis hosted by NFT Now and Mana Common. The 5-day event took over 12 buildings and 2 city blocks in Downtown Miami to host leading NFT artists, collectors, influencers, and Web3 builders gathered to support and discuss the current state and future of all things crypto. 

The Gateway’s speakers line-up was a mix of artists, influencers, executives and web3 developers, including Roger Dickerman, founder of ARTIFEX, and Raf Grassetti, Studio Art Director at Sony SMS, known for developing the video game series God of War. 

Without @nftnow The Gateway, how would NFT Art Basel 2022 be remembered?

Its aesthetic and scale were impressive, and it gave artists, collectors, and community members an irreplaceable home during the week's events. pic.twitter.com/aTWV6CtnnJ

— RD (@RogerDickerman) December 5, 2022

“Without Royalties, We Rely on Institutions”

The Gateway panel not only focused on the logistics and utility part of NFTs in real life, but also on how it can bring new opportunities for visionary artists to launch their projects through NFT royalties. 

Joining The Gateway panel was Julie Pacino, a filmmaker who financed $1 million for her film —I Live Here Now— using an NFT project called “Keepers of the Inn,” consisting of 3,356 photos taken during the rehearsal process. This allowed Pacino to finally launch her film, which was a raw representation of the realities of the Colombian city of Medellin across 16 communes.

Further, royalties were talked about as a way for artists to better connect with their audience and defend their work. Aussie NFT artist Betty, Founder of NFT project Deadfellaz, sat with Matt Medved, co-founder, and CEO of NFT Now. She stated that without royalties, artists would have to rely again on institutions.

“It takes our power away which disproportionately affects marginalized creators. I’m here to protect those people and champion those people.”

Rug Radio Drops NFT Collection for Its Beloved Community

Rug Radio, a decentralized social media platform with the motto “own the narrative” made its presence known in the event, hosting a party and dropping a few announcements for its community, with Rug Radio’s founder Farokh unveiled a new PFP collection with art by NFT content creator Cory Van Lew.

When asked what inspired him to launch the collection, Farokh said: “for me, this is just to give something to our holders. I’d like to think that people are proud to be part of our community.” 

Here’s a recap of the NFT Now event where @farokh announces Rug Radio is dropping a PFP collection with @coryvanlew! @girl_intheverse pic.twitter.com/vSo0nd5CoA

— Rug Radio (@RugRadio) December 1, 2022

DCentral 2022 Takes Over Miami Art Week With Ten Discussion Panels

DCentral, one of the largest Web3 events hosted in Miami, had to book double the capacity to account for over 10,000 attendees compared to last year’s. 

✨️Thank you Miami & @DcentralCon community! Another one for the books.

See you next year.🕺 #artbasel #web3 #miami pic.twitter.com/wS6kGndpDT

— Justin Wu (@hackapreneur) December 6, 2022

The event took place on November 29 during the Miami Art Week, with ten talks and panels to cover multiple stages, including Web3, NFTs, DeFi, and digital fashion. To say that the speaker line-up this year was interesting is an understatement. It included Web3 executives, NFT artists, crypto influencers and even rappers, NBA players and UFC fighters.

One of the major announcements came from American record producer Timbaland with his upcoming NFT project TimboLand.

🔥🔥Timbaland takes over Mainstage with Stockz, Zayd, and Jesse at @DcentralCon

Dcentral brings legends all together in Web3. #artbasel #web3 #dcentral #web3miami #miamiweb3 pic.twitter.com/wgmtypnOf0

— DCENTRAL Conference (@DcentralCon) November 29, 2022

Final Thoughts: Despite Market Downturn, NFT Morale Is High

The current events surrounding the crypto market have made investors, retailers, and the general audience loses trust and faith in the industry. Still, the morale remains high, as proven by double the number of attendees across the three events.

This year was filled with speakers of all backgrounds: executives, artists, content creators, musicians, and fashion designers exploring and supporting the next roadmap for the Web3 industry. But what really set the tone higher is the professional tone set by NFT and Web3 organizers with multiple stages talking about the future of the industry, instead of overpriced and hyped-up projects taking over the stage. 

Overall, we could say that NFTs have reached a maturity point, evolving into something much more useful, and, therefore more valuable than just extravagant pieces of art.

The post Miami Art Week 2022: NFTs and Web-3 Deepen Their Roots appeared first on CoinCentral.

The term canary network stems from coal miners carrying canaries into coal mines. Should the birds stop singing in their cages, it was a warning sign of a possible gas leak, and the birds died thereafter. 

In Kusama, developers test early-stage projects to correct development mistakes to avoid harming the Polkadot ecosystem. 

No birds were harmed during the creation of Kusama, we assume.

Our Kusama guide explores the network’s core infrastructure, including consensus algorithm and main chain, its governance system, and the utility of the KSM token. 

How Does Kusama Network Work?

Despite some misconceptions, Kusama is not a layer-2 —it’s an autonomous blockchain with its own coin, KSM, which is used to participate in the Kusama governance system. Kusama can be described as Polkadot’s sister, and they are practically the same in terms of blockchain design similarities.

Several concepts explained here are interchangeable for both networks.

The Relay Chain

Kusama shares Polkadot’s Relay Chain feature. The Relay Chain is the network’s main chain that records and settles transactions and connects multiple blockchain, allowing them to communicate with each other and the Kusama network.

Parachains are layer-1 platforms that run either on Polkadot or Kusama. 

During Polkadot’s 2021 Parachain auction wars, blockchain projects would compete to lease a spot on the Relay Chain by bonding (staking) DOT or KSM and hopefully win the parachain slot.

Nominated Proof of Stake (NPoS)

Instead of validators staking their tokens to be eligible to validate and process transaction blocks in PoS platforms, it’s KSM stakeholders who vote on which validator participates in the block validation process and earn rewards.  

Blockchains like Cosmos, EOS, and Polkadot use the NPoS algorithm. While they might do it differently, the main goal is combining stakeholder voting with the benefits of PoS. There are two ways to participate, which might seem obvious now —to become a validator or a nominator.

• Nominators play the vital role of determining with their votes which nodes will validate blocks in the blockchain. Nominators must have a specified amount of tokens to participate, and they can generally choose up to 16 validators.
• Validators (network nodes) verify and validate the production of new blocks in the network. They can also verify the reliability of parachains added to the blockchain. Like Nominators, they must stake tokens before participating. But dishonest behavior will result in token slashing, which is a mechanism that takes away a percentage of a validator’s staked tokens to discourage such behavior. Validators are paid rewards in the platform’s native asset, like KSM, and they share a portion of rewards with nominators.
  

Kusama’s Governance System: Entities and On-Chain Accounts

Since Kusama allows for more roles than just validators within the blockchain, its governance system comprises three different entities: 

• The Council —an elected body that represents stakeholders in Polkadot or Kusama. These members are on-chain accounts with three tasks: proposing referenda, banning malicious referenda, and electing the Technical Committee. The Council is currently made up of 19 members.
• Technical Committee —a body composed of development teams building their projects on Kusama. Each group can propose network changes or updates.
• Public Referenda Chamber —any KSM token holder can propose and vote in the Kusama/Polkadot ecosystem as long as they provide a certain amount of tokens as bonds. The public referenda go through an extensive voting process before execution.

Kusama is also significantly cheaper and faster than the main Polkadot network; its governance protocol is faster as well since it only takes seven days to vote on protocol proposals and eight to implement changes, while Polkadot takes a month.

Another important aspect of the Kusama governance system is that the network allows users to create on-chain identities with their personal information. Once the user provides the information, they can request to be judged by a Registrar. Registrars charge a fee for verifying users’ legal names, emails, and GPG keys, which are a type of private keys with encrypted data.

The Kusama Treasury

The Treasury contains the funds collected from on-chain activities, including:

• Transaction fees: a portion of a block’s transaction fees goes to the treasury while the remainder goes to the validator node.
• Staking inefficiency: KSM is an inflationary token with an inflation rate of 10% yearly, similar to DOT, and portions of inflation go to validators and the treasury, depending on the number of tokens that are staked; Kusama says 50% of the total supply should be locked in staking. But if the staking rate is higher than 50%, then the excess goes to the Treasury.
• Slashing: A portion of slashed tokens go to the treasury and the remainder to the reporter who spotted the malicious actor. An offense can vary in terms of slashed tokens; the greater the offense and the number of reporters, the bigger the number of slashed tokens.

The Treasury funds can only be spent if a stakeholder submits a spending proposal, but all stakeholders must bond at least 5% of the proposed spending. This means if their proposal is rejected, the Council slashes the funds, which consequently go to the Treasury. But if approved, it’s returned to the stakeholder.

Kusama Tokenomics: KSM Token

KSM is Kusama’s native cryptocurrency, and it’s identical to DOT in terms of use cases and functionalities. 

The initial distribution of KSM mirrored that of DOT. However, there is a discrepancy when we check both networks’ circulating supply; DOT has over 1 billion DOT tokens, while Kusama has 8 million. This is because Polkadot redenominated new DOTs to be 100x smaller than the original sale. Therefore there are more DOTs in circulation but with a smaller value. 

Despite the supply discrepancy, both cryptocurrencies have an inflation rate of 10%. Since Polkadot has more coins, users have more coins to stake, and the rewards are higher. Kusama does not generate as many rewards, but the epochs of generation of rewards are sped up 4X.

Final Thoughts: Kusama as Polkadot’s Testing Ground

Since the launch of Polkadot, Kusama has been pretty much a battleground for crypto projects on Polkadot, where trial and error occurs every day.

In other words, Kusama is essentially the same as the Ethereum Test Network, where hundreds of blockchain applications are tested before launching on Ethereum. Kusama is useful since development teams can test, build, rebuild and fix bugs and errors over and over and rule out any bugs that potentially harm the Polkadot ecosystem. But only a few projects end up launching on Polkadot since it’s a chaotic environment where only the best teams will thrive. This is why its tagline is “expect chaos.”

 However, it’s not just trial and error for cryptocurrency enthusiasts. Developers on Kusama are constantly working on new features and resources to try them out on the blockchain and implement them on Polkadot.

The post What is Kusama? The Battleground for Polkadot Developers appeared first on CoinCentral.

Our Curve Finance guide will break down everything Curve Finance for you; we’ll walk through how Curve functions, what liquidity pools and AMMs are, how users make money with Curve, and how the platform compares to other decentralized exchanges. 

However, it’s important to be clear that cryptocurrency is inherently risky, and DeFi products such as Curve are novel and experimental in nature. The technology is very interesting and can be disproportionately ruinous or lucrative– acknowledge the risks moving forward. 

Explaining Curve Finance

Curve is a decentralized exchange that allows users to swap multiple stablecoins, that much we already know. 

While two or more stablecoins should be in the same dollar range (1 USDC = 1 USDT), there’s always some level of slippage when swapping between two of them. The larger the quantity, the higher the slippage. 

For example, if you want to trade 100,000 USDT for 100,000 USDC, you may only end up with 99,900 USDT due to slippage.

Curve uses the Curve Constant formula, similar to that of Uniswap’s, to minimize slippage and trading fees. 

The other side of Curve is the liquidity protocol, and it’s better to understand what automated market makers (AMMs) are and how they work in decentralized exchanges:

• Curve relies on an AMM, which is a software mechanism that quotes prices between two different assets using a mathematical formula. In the case of Curve, it quotes prices between two stablecoins or wrapped versions of cryptocurrencies, like wrapped Bitcoin (wBTC) and wrapped Ethereum (wETH).
• AMMs are different from order books, which are typically used by centralized exchanges (CEX), in the sense that they rely on liquidity providers, which are the users, and other DEXs. Both users and DEXs deposit cryptocurrencies into one or multiple liquidity pools to reflect a balanced price between one or various assets.
• In contrast, a centralized exchange using the “order book” methodology will have a deep pool of assets in its custody if needed to provide liquidity for various trading pairs.

Liquidity providers are the backbone of decentralized exchanges; without them, a DEX would be illiquid and unable to fulfill trades at reasonable prices. Since a DEX doesn’t hold custody of its users’ assets, it must provide incentives for them to provide liquidity. 

Yield farming is the act of providing liquidity —depositing funds— into a liquidity pool so other users can make trades with multiple assets. The protocol then pays a percentage of trading fees to liquidity providers as an incentive.

Like most liquidity protocols, the amount of fees ( the average is 0.04%) paid out to liquidity providers depends on trading volume; the higher the volume, the higher the fees, and therefore the higher the APY (Annual Percentage Yield). 

Curve’s website looks like a simple Web1 interface from the late 90s, but it’s relatively easy to navigate once you get used to it. 

To use Curve, you need to connect your cryptocurrency wallet, like MetaMask, Coinbase Wallet, or WalletConnect. 

The first section we’ll see is Quick Swap , which allows you to swap over 100 assets including stablecoins and wrapped coins.The section will show you the exchange fees, and the pool in which the exchange will take place. For example, if we swap USDT to USDC, the protocol will route it on 3pool, which has the largest volume and TVL (Total Value Locked) for DAI, USDC, and USDT.

To inject liquidity to a pool, simply choose a pool from the list and click on Deposit. A deposit interface will appear with different coins to deposit. The protocol rewards you with a deposit bonus if you provide liquidity to the cryptocurrency with the lowest balance. In this example, DAI.

There are two ways of depositing: normal deposit, and stake & gauge, which stakes your tokens without lock-up periods, so you can unstake them whenever you wish to. This option allows you to earn CRV tokens as reward, but you still receive a portion of trading fees.

Curve vs. Balancer

Both Curve and Balancer work as decentralized exchanges and AMMs with rebalancing mechanisms. The main difference between the two is that Curve uses stablecoins and wrapped versions of Bitcoin and Ethereum.

When a user deposits a DAI to a USDT/DAI pool, then the pool becomes unbalanced since the DAI balance is bigger than USDT. The protocol then sells DAI at a slight discount in regards to USDT to balance the USDT to DAI ratio. In this example, volatility and impermanent loss are minimized since the protocol is working with stablecoins.

On the other hand, users deposit two or more cryptocurrencies into a Balancer liquidity pool wanting to maximize returns with the inherent risk of volatility. Balancer pools can be composed of up to eight cryptocurrencies, while Curve pools usually host three stablecoins.

The CRV Token & Ways to Earn Yield by Staking, Vote Locking, and Voting

CRV is an ERC-20 token that has three main uses:

• Staking: users lock up CRV to earn trading fees from the Curve protocol. The general APY is 4%
• Vote locking: locking up CRV for a specific period and receiving vote-escrowed CRV (veCRV), which are tokens that give users voting power and a boost of up to 2.5x on the liquidity they provide to Curve’s liquidity pools.
• Voting: The Curve DAO is where users vote on network parameter changes or submit their own proposals.

The CRV initial supply is 1.3 billion tokens, and the total supply is capped at 3.03 billion tokens. 

The distribution of CRV is as follows:

• 30% to the development team and investors
• 60% to liquidity providers
• 5% to pre-CRV liquidity providers, 1-year vesting
• 5% to the community reserve

Curve’s Main Competitors

Balancer: a self-balancing asset management platform that works similarly to a traditional index fund but with decentralized features. Its pools are divided into public, private, and smart categories and can accommodate up to eight cryptocurrencies.

SushiSwap: a leading decentralized exchange built on the Ethereum network and a fork of a well-known DEX in the DeFi space, Uniswap. 

PancakeSwap: a DEX built on top of the Binance Smart Chain (BSC), and supports other networks such as Ethereum and Aptos. It also integrates a marketplace where users can list, buy, sell and trade non-fungible tokens (NFTs)

Osmosis: a popular DEX and development platform built on the Cosmos blockchain, allowing users to transact cryptocurrencies through different blockchains and to build Web3 applications using SDK and other developer resources. 

Curve’s Founding Team

Michael Egorov created Curve in January 2020. Before Curve, he created and led NuCypher and LoanCoin. However, details about the development team are scarce, so no one really knows in-depth who else worked on the creation of Curve.

Curve is one of the largest automated market makers (AMM) by market cap, sitting at the fourth spot with a market cap of over $510 million, according to CoinGecko. 

Final Thoughts: Ahead of the Curve

Yield farming is a popular practice in the DeFi space, where liquidity providers look to put their tokens to work by depositing them into liquidity pools. But in DeFi, with great APY comes great risk, such as volatility, impermanent loss, price crashes, platform meltdown, and even hacks. 

Therefore, since Curve favors stability over volatility, those who want to jump in on the crazy world of yield farming but have a lower appetite for risks can find Curve as a practical option to starting point.

The post What is Curve Finance?: The Stablecoin Liquidity Protocol appeared first on CoinCentral.

Ampleforth uses Chainlink as its blockchain oracle to supply real-time price data and determine if the AMPL supply needs adjustments. Therefore, users who have AMPL in their wallets will always see their balance change every day at 2:00 UTC in response to the current price and economic state of the network.

Ampleforth was built in 2018 by a development team formerly called Fragment Inc., who now has the same name as the protocol. They created Ampleforth in 2018 as a chain-agnostic system, this means the protocol is compatible with various blockchain networks, including layer-2 solutions. By 2021, Ampleforth integrated AMPL with Avalanche to bring an alternative stablecoin to the AVAX ecosystem.

How Does Ampleforth Work? 

Let’s first introduce the three types of stablecoins to understand the Ampleforth system better.

• Fiat-backed or commodity-backed stablecoins, like USDT and USDC, have cash reserves, commodities, and cash equivalents to back their stablecoins. In case of a massive liquidation, both protocols would be able to withdraw those reserves to defend the peg.
• Crypto-backed stablecoins are backed by excess reserves of cryptocurrencies. In other words, they are over-collateralized. For example, the MakerDAO, issuer of the DAI Stablecoin, has an Ethereum reserve that largely exceeds the number of DAI issued.
• Algorithmic stablecoins rely on a two-token mechanism and a pre-programmed supply system to match buyers and sellers. In simpler words, one is a stablecoin, and the other is a cryptocurrency, and the equilibrium between the two is maintained by a smart contract in case of price divergences.

Ampleforth, on the other hand, is a one-of-a-kind in the stablecoin market due to its dynamic rebasing system. Ampleforth’s stablecoin has both an elastic and non-dilutive supply. This means that, as the Ampleforth protocol modifies the AMPL supply, users still own the same amount of stablecoins. The rebasing system adjusts the supply of AMPL every 24 hours to maintain price stability. 

The three stages of the AMPL supply are as follow:

• Expansion: if the price of AMPL is greater than 1 USD, the protocol introduces new AMPL tokens to lower the price.
• Contraction: if the price of AMPL is below 1 USD, the protocol removes AMPL from circulation to help stabilize the price back to 1 USD.
• Equilibrium: 1 AMPL is exactly 1 USD.

Ampleforth targets the 2019 CPI dollar, a pricing pressure metric in the US. The protocol uses the CPI as its target price, which is $1.009. This metric determines if the protocol needs a rebasing process to increase or decrease the AMPL price. In other words, the rebase function, also called the equilibrium threshold, ensures that if AMPL is 5% above or below the price target, then it needs an adjustment.

This percentage is one of the two main parameters of the Ampleforth ecosystem. The second one is the dampening factor, whose main task is to avoid abrupt supply changes with a supply spread of 10 days. For example, if the rebase function increases or decreases by 50%, this percentage would have to be spread over ten days, so a 5% supply increase/decrease from day 1. 

AMPL and FORTH

Ampleforth has two tokens: AMPL and FORTH. Both are ERC-20 tokens designed with different functions. 

AMPL is the unit of account stored in users’ cryptocurrency wallets and decreases or increases based on demand. AMPL also has a wrapped version called WAMPL, which are used to facilitate cross-chain transactions on centralized and decentralized platforms and are redeemable for AMLP tokens. 

FORTH is Ampleforth’s governance token, which has a max supply of 15 million tokens and a circulating supply of 8 million. It’s an inflationary token with an inflation rate of 2% per year. 

Users with FORTH tokens can vote on network parameter changes or submit their own proposals, lend their tokens to a DEX or DeFi platform that requires liquidity —a process called liquidity mining— and manage the DAO treasury in their spending efforts to enhance mechanisms in the elastic supply of AMPL.

The FORTH DAO has a five-step consensus protocol that consists of:

• Discussion: Regarding the DAO governance community and its channels across social media, network changes and suggestions, forums, etc.
  
• Proposals: if an idea has enough support, the person who created the discussion can submit an AIP, Ampleforth Improvement Proposal (AIP), or Configuration Change Proposal (ACCP), which are simply formal documents that clearly outline the proposal for network changes.
• Targeted Discussion: Each proposal has a dedicated forum where users can ask questions about the proposal, resolve pending issues, provide constant feedback, and finally reach off-chain consensus.
• Off-chain Signaling: token holders vote to express sentiment regarding a proposal and its possible outcome if off-chain consensus wasn’t possible during the previous step.
• Technical Development: developing the code, launching it on testnet, and auditing for security.
• Deployment: users vote on-chain on the deployment of new protocol contracts or changing the state of current ones, for example.

Geyser Program

In order to incentivize liquidity providers and accelerate adoption, Ampleforth developed the Geyser program, which allows liquidity providers on Uniswap’s AMPL/ETH pool to stake their tokens and receive additional AMPL.

How is AMPL Different from Luna/Terra?

When it comes to stablecoins that determine their value algorithmically, we must address the elephant in the room: LUNA & Terra (UST). In the case of Ampleforth, it uses three tokens: one is the stablecoin, the other is an inflationary governance token with a fixed supply, and the other is a wrapped version that facilitates cross-chain transfers.

Terra was a stablecoin project that had a stablecoin, UST, and a native inflationary cryptocurrency, LUNA. If UST was trading at $0.90, traders could buy it at that price and then sell it for 1$ of LUNA, shrinking the UST supply and increasing its value. Conversely, when UST traded above $1, they could mint UST by burning LUNA, returning UST to 1$, while also shrinking the LUNA supply and therefore increasing its value. At least theoretically.

When it comes to Ampleforth, the protocol introduces new AMPL tokens to lower the price of AMPL if it is greater than 1 USD, or removes AMPL from circulation to help stabilize the price back to 1 USD if the price is below 1 USD.

AMPL isn’t the first (or likely the last) project to introduce a stablecoin token paired with an inflationary “stabilizer token” —that’s just the nature of algorithmic stablecoins thus far. 

Final Thoughts: What are the Risks of Ampleforth?

Ampleforth has stated that its main interest is to follow “true decentralization” since most stablecoins have to rely on a central bank for their USD deposits. Ampleforth introduces a rebasing system that expands or contracts the supply depending on market demand. 

While Ampleforth has achieved a certain level of stability with this mechanism, it has previously shown signs of weakness. In 2020, speculators decided to trade the supply changes using leverage, causing its price to drop by 20%. As the price was in freefall mode, thousands of investors flooded out of Ampleforth, causing a sharper decline.

The post What is Ampleforth?: The Stablecoin With Elastic Supply appeared first on CoinCentral.