|submitted by badaccountant28 to CryptoCurrency [link] [comments]|
suddenly be incentive to hold iota?to generate Mana
It's still possible to send transactions even without mana - mana is only used in times of congestion to give the people that have more mana more priorityu/Hans Moog [IF] Im sorry Hans, but this is false in the current congestion control algorithm. No mana = no transactions. To be honest, we havent really tried to make it work so that you can sent transactions with no mana during ties with no congestion, but I dont see how you can enable this and still maintain the sybil protection required. u/Luigi Vigneri [IF] What do you think?📷
Sourcesubmitted by pascalbernoulli to Yield_Farming [link] [comments]
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.
Where it startedEthereum-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 Superb_Recognition to algorand [link] [comments]
IntroductionThe ‘Trilemma’ of Blockchain space - Scalability, Security, and Decentralization - are the three things every blockchain is trying to solve simultaneously. But it’s easier said than done, as proven by the scalability issue faced by Ethereum. Higher scalability transcends to higher market adoption.
This is where Cardano and Algorand have come into the picture. They have their similarities and differences that seem to work for them for now. Rather than telling you which one has more potential, it’s better to present the entire case and let you decide how they fare against each other.
Star Player of the TeamAnyone would agree that having a renowned and accomplished team player always gives a boost to the project.
Cardano’s Charles HoskinsonIf the name seems familiar, that’s because he is also the co-founder of Ethereum. A tech entrepreneur and mathematician with an interest in analytic number theory, Charles Hoskinson moved into blockchain space in 2013. He co-developed the Ethereum blockchain with Vitalik Buterin before leaving the project in June 2014.
Hoskinson joined crypto and blockchain research firm IOHK to develop Cardano and since then has sponsored various blockchain research labs at the Tokyo Institute of Technology and the University of Edinburgh. He also founded Invictus Innovations.
Hoskinson was the founding chairman of the education committee of the Bitcoin Foundation and established the Cryptocurrency Research Group in 2013. His current focus lies in educating people on the use of crypto and decentralization.
Algorand’s Silvio MicaliUnlike the innovators of other blockchain projects, Silvio Micali is already a famous name in cryptography long before he started developing Algorand. Deemed as one of the top cryptographers, he is a recipient of the prestigious Turing Award in 2012 and RSA prize for cryptography, Gödel Prize (theoretical computer science) in 1993, and ACM fellowship in 2017.
Micali’s work spans around public-key cryptosystems, pseudorandom functions, digital signatures, oblivious transfer, and secure multi-party computation among others. In 1989, he co-invented Zero-Knowledge Proofs with Shafi Goldwasser and Charles Rackoff. He also developed Peppercoin, a cryptographic system for processing micropayments.
A professor at MIT’s electrical engineering and computer science department since 1983, Silvio Micali is also working as a computer scientist at MIT Computer Science and Artificial Intelligence Laboratory. His doctoral students include Shai Halevi, Mihir Bellare, Rafail Ostrovsky, Bonnie Berger, Rafael Pass, Chris Peikert, and Phillip Rogaway - each renowned in their respective fields.
Project Partners and CollaboratorsFor any business, partnerships and collaborations are the most important aspect since they drive growth and innovation.
Cardano PartnershipsCardano has formed 17 partnerships so far that either enhance its capabilities or grow its business.
Algorand PartnershipsAlgorand’s innovativeness and potential to be the blockchain leader has helped it bag a plethora of valuable partnerships across the world. Here are a few partnerships out of the 17 -
Consensus AlgorithmBoth Cardano and Algorand use PoS or Proof of Stake consensus mechanism at their heart, but that’s where the similarity ends. Each of them has its own spin to it.
In the PoS mechanism, a person can validate a block depending on how many stakes or coins he holds. The stake quantity determines the amount of mining power one has. So how does each of them differ?
CardanoCardano’s version is called Ouroboros PoS.
AlgorandThe version Algorand uses is called PPoS (Pure Proof of Stake) consensus mechanism.
Algorand’s PPoS has embraced a more egalitarian ecosystem to negate the wealth gap present in traditional PoS.
CardanoCurrently, Cardano offers 50-250 TPS. But with incorporating sharding technology in its Ouroboros Hydra version, the scalability can increase to one million TPS theoretically. The processing speed will increase as more users or nodes join the network.
AlgorandIn Algorand, every lottery takes just a microsecond to run. Since such lotteries run independently of each other, multiple lotteries can run simultaneously. This inherently makes PPoS highly scalable. The mainnet itself has the capability to handle 1000 TPS.
ConclusionBoth Cardano and Algorand have sound tech and teams that believe in extensive research and meticulously designed products. Having an early start, there’s no denying that Cardano has established itself in a superior position thanks to the technological achievement, consistency, and transparency it has showcased.
But with Algorand’s ecosystem growing fast, the competition has intensified. Algorand’s aim to bring full transparency, technological innovation, and successful partnerships just within a year have made it a prime challenger to Cardano.
While referring to Algorand, Cardano chief Hoskinson voiced similar opinion - “... they are another one of the science coins and we all kind of support each other. Even though we get academically competitive, we're able to reference each other's work and learn from each other and grow from each other.”
submitted by BU-BCH to btc [link] [comments]
IntroductionAs promised in our previous article, we wanted to provide some extra clarity on Bitcoin Unlimited financial choices. We wanted to do this as there has been a lot of confusion and misinformation within the community as to the reasons behind these choices.
It has been claimed by a small number of influential people in the ecosystem that Bitcoin Unlimited does not support BCH (see the previous article debunking this claim) and that BU’s holdings are supposedly evidence of this. Background Bitcoin Unlimited was founded in 2015, and was set up as a response to the Bitcoin block size debate. More specifically, it was created to provide software that allowed on-chain scaling as originally proposed by Satoshi Nakamoto. As we all know, on-chain scaling is a vital component required for peer-to-peer electronic cash to serve the world’s population. Without it Bitcoin would be limited to serving only a small number of people willing and able to pay exorbitantly high fees. Our organisation was created to make Bitcoin unlimited. This prediction of high fees and limited capacity was played out in the BTC we know today as we predicted.
Bitcoin Unlimited received a large anonymous donation in BTC in 2016 from supporters of the ‘on-chain scaling’ movement. This donation allowed our organisation to remain independent and focussed on building software that allows on-chain scaling.
As you all know, in August of 2017, Bitcoin Cash was created after an unsuccessful multi-year effort to allow Bitcoin (BTC) to scale on-chain. Bitcoin Cash was created with the goal of on-chain scaling to support the world’s population right at its heart and BU has been supporting it since the idea was originally formulated.
Once Bitcoin Cash was created it also meant that all funds Bitcoin Unlimited held (BTC) were forked into two equal sets of coins, BTC and BCH. This put BU into a position where we had to make an important decision on how to handle these funds in a way that was in the interest of both BCH and BU.
Financial PrudenceAny organisation that wants to be effective in its goals must aim to always be financially sustainable. Without money, achieving anything becomes significantly more difficult. Cryptocurrencies only magnify this issue even further. Highly volatile asset values, opaque and dynamic tax and regulatory environments, and the unique properties of cryptocurrencies all contribute towards making the financial operations of an organisation an extreme challenge to say the least. Navigating this challenging landscape is a necessary requirement for the success of any organisation within our industry though.
While Bitcoin Unlimited’s primary goal is to make sure peer-to-peer electronic cash (as set out in the Bitcoin white-paper) becomes a reality, a secondary goal must be to make sure that it has the resources required to make its primary goal achievable, and an important part of these resources are its funds.
After Bitcoin forked into BTC and BCH, Bitcoin Unlimited then held an equal number of both. Although a BUIP was passed to authorize some extra conversion, significant practical obstacles to doing so exist (although this is still being worked on). However, since the overarching reason to convert a significant number of BTC to BCH is to maintain financial prudence based on the reasons outlined below and the poor BCH price performance has heavily skewed our holdings, we do anticipate some rebalancing when these obstacles are resolved.
We will further expand on these reasons below. Historic Volatility It is a fact that BCH has historically been more volatile than BTC. An organisation that wishes to maintain a lower level of risk must aim to hold a majority of funds in assets which will maintain their value over time, i.e. be less volatile in their price. It is unfortunately true that BCH has been a more volatile asset than BCH since its creation. While there has been lots of progress and maturation of the BCH ecosystem, this price volatility is likely due to BCH still being a smaller and less developed ecosystem than BTC. The graphs below show levels of volatility in the two coins compared.
This higher volatility in BCH has meant that to significantly increase BU’s holdings of BCH would expose the organisation to a higher level of risk for ideological reasons. BTC is already a high-volatility asset and to expose the organisation funds to even higher volatility and further risk is a decision that should not be taken based on simplistic ideology, but rather with the strategy of maximising the ability for the organisation to achieve its primary goals. This meant making the decision to not take on a higher exposure to price volatility, and instead maintain a more conservative risk profile.
Lack Of Say In The ProtocolOne argument that has been put forward to suggest that this decision does not make sense because it is analogous to a CEO of a company holding more shares in their competitor’s company. This analogy does not accurately reflect the current scenario for BU or BCH. In this analogy BU is the CEO and BCH is the company. Ignoring the shareholders, A CEO is able to have the largest impact on a company compared to any other stakeholder. Their actions have a direct impact on operations of the company and therefore its value and the value of the shares.
Unfortunately, Bitcoin Unlimited currently has little to no input on the BCH protocol. It has no way to directly influence the direction or success of BCH. There are two reasons for this. Firstly, BCH has a mining software homogeneity that is as centralised as BTC (i.e. essentially all miners and pools run a single client, BitcoinABC). This means that, all though BU has a slight majority in non-mining and in-consensus nodes, BU has no say in protocol decisions unless a collaborative and decentralised development model were to be used by BitcoinABC. This is an unfortunate situation considering the fact that the community split from BTC for this very reason and is strongly in support of decentralised development. Secondly, BitcoinABC does not take a collaborative approach to development. All decisions and features are dictated by BitcoinABC.
In fact the situation is unfortunately even worse than this. BitcoinABC has decided to take an actively hostile position against Bitcoin Unlimited (and many other valuable participants in the ecosystem) and would rather that it did not exist at all.
These three voting records show members of BitcoinABC voting for the purchase of BSV coin, voting for an unfeasibly large block size increase (10TB), and voting for implementation of and miner-activation of BSV features into the BU client. None of these actions were implemented in the ABC client, and the inclusion of BSV features is likely the single biggest criticism certain ABC affiliated people have made against BU, yet members of BitcoinABC voted for it.
While it is important to assume good faith, under no interpretation can this be seen as anything other an act of bad will towards BU. Unfortunately this kind of behaviour is rather the rule than the exception and has likely been a major factor in BCH’s struggle to attract quality developers into the ecosystem.
Regardless of the hard work done by members of BU to create useful software for Bitcoin Cash, and its continued commitment towards peer-to-peer electronic cash for the past 5 years, ABC will unfortunately never allow any of BU’s work to go into the BCH protocol willingly.
If BU were to invest all its funds into BCH it would be making a highly risky bet on BitcoinABC’s leadership, a leadership that has not only been historically unsuccessful (when looking at the price of BCH since its creation, both in dollar terms and BTC/BCH ratio terms), but also actively hostile to our organisation. A more cautious approach that takes these factors into account is to keep the funds held where there has been less volatility.
Regardless of all of this, BU is still 100% committed to supporting Bitcoin Cash.
Game Theory: The Strategy of Betting Against YourselfCounter intuitively, a strategy where you bet against yourself can provide a beneficial low-risk profile. When you bet against yourself, if you lose you win and if you win you win. With BU’s current asset holdings of BCH and BTC the organisation is financially hedged in a way that it wins if BCH wins, and if BTC wins then BU lives to fight another day for worldwide peer-to-peer electronic cash.
If BTC goes down and BCH goes up then it means BCH is succeeding, and our funds in BCH will sustain us for longer. Not only that, but there would likely be more funds available for BCH development in this scenario. If BTC goes up and BCH goes down then BU will be sustained for longer to continue the fight for BCH and peer-to-peer electronic cash.
This is very similar to the strategy of BCH-supporting miners mining on BTC and then converting the BTC block rewards into BCH in an effort to use BTC gains to support BCH price. BU is similarly using its gains in BTC and converting them to efforts and initiatives in support of BCH. In doing so Bitcoin Unlimited is able to turn any BTC win into a positive for BCH.
IncentivesIt has been suggested that the situation created by holding a larger portion of funds in BTC than in BCH creates negative incentives that push BU towards supporting BTC. It is important to keep in mind that Bitcoin Unlimited is not a profit driven organisation. While an increase in value of its assets is of course beneficial to the organisation, our primary goal is to accelerate the global adoption of peer-to-peer electronic cash as described in the Bitcoin white-paper, and the officials, membership and founding articles of Bitcoin Unlimited are the driving force for this.
It is also important to point out that there is no evidence to support the claim that BU is in support of BTC (or BSV). In fact the voting record clearly shows the opposite of this. BU has continually worked in support of peer-to-peer electronic cash, and specifically in support of BCH since it was created. This is thanks to the strong commitment by the BU officials and members, all of whom are long time Bitcoiners and supporters of the ‘on-chain scaling’ movement. The only members who receive any payment from the organisation are those who provide significant value in the form of various skilled services, and all of these are voted on by the membership. The BUIP record also shows that compensated individuals are often compensated at far under market rates for developers of their caliber. Should the price of BTC increase, no member receives any direct benefit from this beyond any appreciation in value of any BTC they privately hold. Therefore there are no strong incentives for BU to drive the price of BTC up and push the price of BCH down as this would be counter to our primary goal.
Has This Strategy Been Successful?Bitcoin Unlimited and its members, all being long-time Bitcoiners, are acutely aware of the need to play the long game to make sure a globally adopted peer-to-peer electronic cash becomes a reality. BU is the oldest entity within the BCH ecosystem and with good reason. The financial strategy of BU to date has been highly effective in sustaining the organisation over a long period of time, and allowing it to independently support BCH development initiatives. This is made clear by the fact that BU continues to have enough funding to provide value to the BCH ecosystem for the foreseeable future.
Had BU converted all funds to BCH at, or at almost any point after, the time of the BCH/BTC fork in August 2017, then for much of the time since it would have been forced to either scale back operations or shut down support for BCH developers completely. We now see development teams such as BitcoinABC facing the prospect of being unable to fund their development of BCH, and their financial strategy may have contributed to this reality. This is despite the fact that nearly all the funds donated in the recent community funding drive sponsored by bitcoin.com were directed towards BitcoinABC.
Lack of a sustainable funding model also seems to have been a major factor in pushing BitcoinABC to make the highly controversial decision to support a change to the BCH protocol that would divert 12.5% of the block reward to themselves. Being financially prudent and sticking to its principles (as defined in the founding Articles of Federation has allowed Bitcoin Unlimited to steer clear of any conflicts of interest such as this.
SummaryThrough its financial strategy Bitcoin Unlimited has been able to maintain its independence and financial sustainability and has therefore remained in a strong position to support Bitcoin Cash. BU’s officials and membership have continually made good decisions that have allowed BU to provide long-term support for the Bitcoin Cash ecosystem.
submitted by CelesOS to u/CelesOS [link] [comments]
The consensus mechanism is one of the important elements of the blockchain and the core rule of the normal operation of the distributed ledger. It is mainly used to solve the trust problem between people and determine who is responsible for generating new blocks and maintaining the effective unification of the system in the blockchain system. Thus, it has become an everlasting research hot topic in blockchain.
This article starts with the concept and role of the consensus mechanism. First, it enables the reader to have a preliminary understanding of the consensus mechanism as a whole; then starting with the two armies and the Byzantine general problem, the evolution of the consensus mechanism is introduced in the order of the time when the consensus mechanism is proposed; Then, it briefly introduces the current mainstream consensus mechanism from three aspects of concept, working principle and representative project, and compares the advantages and disadvantages of the mainstream consensus mechanism; finally, it gives suggestions on how to choose a consensus mechanism for blockchain projects and pointed out the possibility of the future development of the consensus mechanism.
First, concept and function of the consensus mechanism
1.1 Concept: The core rules for the normal operation of distributed ledgers
1.2 Role: Solve the trust problem and decide the generation and maintenance of new blocks
1.2.1 Used to solve the trust problem between people
1.2.2 Used to decide who is responsible for generating new blocks and maintaining effective unity in the blockchain system
1.3 Mainstream model of consensus algorithm
Second, the origin of the consensus mechanism
2.1 The two armies and the Byzantine generals
2.1.1 The two armies problem
2.1.2 The Byzantine generals problem
2.2 Development history of consensus mechanism
2.2.1 Classification of consensus mechanism
2.2.2 Development frontier of consensus mechanism
Third, Common Consensus System
Fourth, Selection of consensus mechanism and summary of current situation
4.1 How to choose a consensus mechanism that suits you
4.1.1 Determine whether the final result is important
4.1.2 Determine how fast the application process needs to be
4.1.2 Determining the degree to which the application requires for decentralization
4.1.3 Determine whether the system can be terminated
4.1.4 Select a suitable consensus algorithm after weighing the advantages and disadvantages
4.2 Future development of consensus mechanism
Last lecture review: Chapter 1 Concept and Function of Consensus Mechanism plus Chapter 2 Origin of Consensus Mechanism
Last lecture review: Chapter 3 Common Consensus Mechanisms
Chapter 3 Common Consensus Mechanisms (Part 2)
Figure 6 Summary of relatively mainstream consensus mechanisms
Source: Hasib Anwar, "Consensus Algorithms: The Root Of The Blockchain Technology"
The picture above shows 14 relatively mainstream consensus mechanisms summarized by a geek Hasib Anwar, including PoW (Proof of Work), PoS (Proof of Stake), DPoS (Delegated Proof of Stake), LPoS (Lease Proof of Stake), PoET ( Proof of Elapsed Time), PBFT (Practical Byzantine Fault Tolerance), SBFT (Simple Byzantine Fault Tolerance), DBFT (Delegated Byzantine Fault Tolerance), DAG (Directed Acyclic Graph), Proof-of-Activity (Proof of Activity), Proof-of- Importance (Proof of Importance), Proof-of-Capacity (Proof of Capacity), Proof-of-Burn ( Proof of Burn), Proof-of-Weight (Proof of Weight).
Next, we will mainly introduce and analyze the top ten consensus mechanisms of the current blockchain.
Delegated Byzantine fault tolerance. The improved Byzantine fault-tolerant algorithm makes it suitable for blockchain systems. The system consists of nodes, delegators (who can approve blocks), and speakers (who proposes the next block). It is a consensus algorithm that guarantees fault tolerance implemented inside the NEO blockchain.
In this mechanism, there are two participants: the professional bookkeeper "bookkeeping node" and the ordinary users in the system.
Ordinary users vote based on the proportion of holding stake to determine the bookkeeping node. When a consensus is required, a spokesperson is randomly selected from these bookkeeping nodes to draw up a plan, and then other bookkeeping nodes will vote basing on the Byzantine fault tolerance algorithm.That is, majority principle. If more than 66% of the nodes agree to the spokesperson’ plan, a consensus is reached; otherwise, the spokesperson is re-elected and the voting process is repeated.
-Representative application: Neo, etc.
Proof of authority. That is, certified by some accredited accounts, these accredited accounts are called "validators". The software that the verifier runs that supports the verifier to place transactions in blocks.
-Representative applications: VeChain, etc.
Directed acyclic graph. Each newly added unit in the DAG is not only added to the long chain block, but added to all the previous blocks, verifying each new unit and confirming its parent unit and the parent unit of the parent unit, and gradually confirming until the genesis unit. As the hash of its parent unit is included in its own unit, the blockchains of all transactions are connected to each other to form a graph-like structure with time.
In the DAG network, each node can be a trader and a validator, because the transaction processing in DAG is done by the transaction node itself. Taking IOTA as an example, IOTA’s Tangle led
ger does not need to pay transaction fees while ensuring high-speed transaction processing. However, it does not mean that the transaction is free, because in this ledger, the initiation of each transaction needs to verify the other two random transactions first, and connect the transaction initiated by itself to these two transactions, so the responsibility that miners on the blockchain bear is distributed to all traders. The DAG method of processing transactions can be called asynchronous processing mode.
Figure 10 The difference between the traditional blockchain structure and the DAG structure
-Representative applications: IOTA, etc.
Proof of elapsed time. That is, it is usually used in a permissioned blockchain network. It can determine the mining rights of the block holders in the network. The permissioned blockchain network requires any prospective participants to verify their identity before joining. According to the principles of the fair lottery system, each node is equally likely to become the winner.
Each participating node in the network must wait for a randomly selected period, and the first node to complete the set waiting time will get a new block. Each node in the blockchain network will generate a random waiting time and sleep for a set time. The node that wakes up first, that is, the node with the shortest waiting time, wakes up and submits a new block to the blockchain, and then broadcasts the necessary information to the entire peer-to-peer network. The same process will be repeated to find the next block.
Proof of stake velocity. Proposed by Reddcoin, drawing on the concept of "money circulation speed" in economics, it mainly allocates bookkeeping rights based on the coin age of nodes participating in the competition.
PoSV also allocates accounting rights according to the coin age of the nodes participating in the competition, but modifies the coin age calculation formula to a function of exponential decay of growth rate. Taking Reddcoin as an example, Reddcoin sets the half-life of the coin age growth rate to 1 month. Assuming that the unit token can accumulate 1CoinDay coin age on the first day, only 0.5CoinDay coin age can be accumulated on the 31st day, and only 0.25CoinDay coin age can be accumulated on the 61st day, and so on. In this way, the nodes are encouraged to use the token to conduct a transaction after holding the token for a period of time, thereby restarting the calculation of the coin age and increasing the circulation speed of the token in the network.
-Representative applications: Reddcoin, etc.
Table 2 Comparison of the advantages and disadvantages of current mainstream consensus mechanisms
Source: network resources
Chapter 4 Summary of the Selection and Status Quo of Consensus Mechanism
4.1 How to choose a consensus mechanism that suits you
Step 1: Determine whether the final result is important
For some applications, the end result is very important. If you are building a new payment system that can support very small amounts, it is acceptable for the transaction result to change. Similarly, if you are creating a new distributed social network, 100% guarantee that the status is updated immediately is not particularly necessary. On the contrary, if you are creating a new distributed protocol, the final result is critical to the user experience. For example, Bitcoin has a final confirmation time of about 1 hour, Ethereum has a final confirmation time of about 6 minutes, and Tendermint Core only has a final confirmation time of 1 second.
Step 2: Determine how fast the application process needs to be
If you are building a game, is it reasonable to wait 15 seconds before each action? Due to the low block processing time of Ethereum, games built on it will cause poor user experience due to Ethereum's throughput. However, the application for the transfer of housing property rights can be run on Ethereum. Use the Cosmos SDK to build an application that allows developers to freely use Tendermint Core. It has a short block processing time and high throughput, and is capable of processing 10,000 transactions per second. You can reduce the required communication overhead and speed up the application by setting the maximum number of validators for the application.
Step 3: Determine the application's demand for decentralization
Some applications such as games may not require very high censorship resistance as a by-product of decentralization. In theory, does it really matter that the validator can create a cartel in the game and reverse the transaction result for profit? If it is not important, a blockchain such as EOS may be more suitable for your needs because of the fast transaction speed and free fees. However, some applications such as autonomous banks are more powerful and decentralized. Although Ethereum is considered to be decentralized, some supporters claim that Ethereum's mining pool is an important part of centralized platform, although there are actually only 11 validators (mining pools). One of the major benefits of building your own blockchain instead of building on a smart contract platform is that you can customize the way the application completes verification. However, it is difficult to build your own blockchain, so the Cosmos SDK is very useful, you can easily build your own blockchain and customize the degree of decentralization you need.
Step 4: Determine whether the system can be terminated
If you are building a new application similar to a distributed ride-sharing service, then ensuring 24/7 service must be the first priority, even if there are occasional errors in accounting similar to transactions. One of the properties of Tendermint Core is that if there is a disagreement between network validators, the network will suspend operations instead of proceeding erroneous transactions. Applications such as decentralized exchanges require correctness at all costs-if there is a problem, it is far better to suspend trading on the decentralized exchange than there may be trading problems.
Summary: Choose a suitable consensus algorithm after weighing the advantages and disadvantages
All in all, there is no single best consensus algorithm. Each consensus algorithm has its own value and advantages. You need to have your own judgments and choices. However, by understanding the relevant processes of the consensus mechanism, including proposals and agreements, and establishing a framework to consider the types of consensus algorithms that your application may require, you should be able to make wiser decisions.
4.2 Future development of consensus mechanism
The consensus algorithm is one of the core elements of the blockchain. Although there are more than 30 consensus mechanisms listed in the article, there are still many niche consensus mechanisms that may not be discussed. As the blockchain technology is gradually known and accepted by the public, more and more newer and better consensus algorithms may appear in the future, which may be brand-new consensus algorithms, and more should be improvement and optimization version based on the current consensus algorithm.
After 2016 and 2017 years’ fast development, the current consensus algorithm does not have a recognized evaluation standard, but is generally more biased towards fairness and decentralization, as well as some technical related issues, such as energy consumption and scalability , Fault tolerance and security, etc. However, blockchain technology must be combined with requirements and application scenarios, and the consensus mechanism algorithm and incentive mechanism are inseparable. How to customize a suitable consensus mechanism according to the characteristics of your own project and optimize the current consensus mechanism will become the future direction of consensus mechanism development
As the first DPOW financial blockchain operating system, CelesOS adopts consensus mechanism 3.0 to break through the "impossible triangle", which can provide high TPS while also allowing for decentralization. Committed to creating a financial blockchain operating system that embraces supervision, providing services for financial institutions and the development of applications on the supervision chain, and formulating a role and consensus ecological supervision layer agreement for supervision.
The CelesOS team is dedicated to building a bridge between blockchain and regulatory agencies/financial industry. We believe that only blockchain technology that cooperates with regulators will have a real future. We believe in and contribute to achieving this goal.
P2Pool is a software for bitcoin mining available to the Mac users. With this software, you will be in a position to get a unique experience of the mining process. With this, the payments are instant, and you do not need the help of a pool operator and thus contribute to ensuring that the system remains decentralized. Der Mining-Prozess beinhaltet den Einsatz dedizierter Hardware (z.B. ASICs, FPGAs), die Verarbeitungsleistung nutzen, sowie Software-Anwendungen zur Verwaltung dieser Anlagen. Wenn Sie sich für Kryptowährung Mining entschieden haben, finden Sie hier einige der besten Bitcoin Mining-Software, mit der Sie anfangen können. Lesen Sie also weiter ... The Bitcoin.com mining pool has the lowest share reject rate (0.15%) we've ever seen. Other pools have over 0.30% rejected shares. Furthermore, the Bitcoin.com pool has a super responsive and reliable support team. Durch Bitcoins Mining können Sie Einheiten der virtuellen Bitcoin-Währung erhalten. Mit entsprechendem finanziellen Aufwand kann so jeder Computer-Besitzer nebenbei Geld verdienen. Wie das geht und was Sie dabei beachten sollten, erklären wir Ihnen in unserem Ratgeber. Windows Operating System : Bitcoin Mining Software. Bitcoin Miner. This miner is available on both Windows 8.1 and Windows 10. The software interface is user-friendly, it supports pool mining, there's a mode for power saving and very fast in share submission. The most powerful feature on this Bitcoin mining software is the profit reports. Hence ...
[index]          
Bitcoin Mining with your PC - http://bit.ly/2xxaahI Get paid for the computing power of your PC. Generates cryptocurrency and pays you bitcoins or real-world... Another entry in the Crypto Mining Pool Server Vlog. Featuring re-purposed Dell Poweredge R720xd Google Search Appliances. Starwind: https://www.starwindsoftware.com My Rig Parts: Asrock H110 Pro ... I'm going to talking about top free best bitcoin mining website, and I'm gonna tell you every steps to get bitcoin mining! In this video I'm showing how to m... MineBTC Leading Bitcoin Mining Pool - Legit OR Scam 0.0063 Btc Live Withdrawal Payment Proof 2020 Hi Everyone Today i Tell You About New Free Bitcoin Earni... What is a mining pool and why is it best to mine Bitcoin and other cryptocurrencies on mining pools? Here is our review and explanation of mining pools, how ...