Boxmining v2

Author: ronalthapa

  • Moongate Features Innovative NFT Solutions in Taipei Blockchain Week

    Moongate Features Innovative NFT Solutions in Taipei Blockchain Week

    Taipei Blockchain Week

    Taipei Blockchain Week, the largest Web3 event in Taiwan, was held last week from December 12-17, 2022. Similar to TOKEN2049 Singapore, the event features a series of keynotes, panel discussions, workshops, and meetups with some of the leading developers and entrepreneurs in the Web3 industry. Speakers of the event included core team members from Avalanche, Solana, Filecoin, Moongate and many more, where they talked about the real-world applications of blockchain technology and the future landscape of crypto.

    Moongate, in particular, has introduced an end-to-end solution for brands and businesses to create customized NFTs for ticketing and memberships. In fact, Moongate is the official ticketing partner of Taipei Blockchain Week, having issued 4000 tickets for the event’s attendees. Despite the NFT industry getting a bad rap, Moongate helps bring meaningful and productive application of Web3 into the Web2 world with real utility NFTs that can greatly benefit everyday retail consumers. Let’s take a look at what they have to offer.

    What is Moongate?

    Moongate provides an end-to-end, no-code solution for brands and businesses looking to transform their user engagement experience via Web3. Its user application covers (1) membership and loyalty programs, (2) events and conferences, and (3) NFT projects. All customers will be able to own their membership as NFTs which unlock token-gated rewards and access.

    CEO of Moongate Jonathan Mui told Boxmining that they have helped brands, businesses, conferences, and sports leagues with NFT-empowered memberships and tickets. So far, Moongate has 30+ live programs, 50+ ecosystem partners, and 5000+ end customers. Notable partners include Polygon, SimpleHash (backed by Y Combinator), DTTD (backed by Animoca Brands), Limewire and many more.

    How Does Moongate’s App Work?

    Moongate’s User App is very easy to use, catering to both Web3 and Web2 users. You can create an account, which is also your crypto wallet, with your email, phone number or social media account. For experienced Web3 users, you can instead use your self-custodial wallet such as MetaMask to sign up.

    Private Key Security Features

    To onboard Web2 users more easily, there won’t be any traditional Web3 private key management such as seed phrases. Moongate understands that with traditional private keys, users can never get their NFTs back if they lose their key. This can be a problem for most Web2 users who are not used to Web3 interfaces.

    Instead, Moongate is collaborating with some of the top endpoint security solutions to implement a next-gen key management architecture. Its security infrastructure involves two independently-created mathematical secret shares, eliminating the single point of failure for traditional private keys. The wallet is still non-custodial as users have full control over their NFTs but it also allows them to restore their account safely if they delete the App or lose their phones.

    User App Interface

    In the App, users can enroll in membership programs via one-click join/redemption. Users can view and claim exclusive benefits tied to their NFT memberships. Tiered rewards can be earned, and benefits will increase overtime with increased spending/usage. Moreover, users can earn token rewards by completing promotions, and use tokens to claim extra rewards across partnered brands.

    Moongate App

    Mui said that it is important for Moongate to integrate blockchain technology with legacy systems so that it would require less steps and create less friction for Web2 users to get onboard while reaping the benefits of Web3. Since most retail customers are accustomed to Point of Sale (POS) systems, Mui said that adopting some of the Web2 approaches can help make their product scalable and viable.

    Merchant Setup for Moongate’s App

    Apart from retail customers, brands and businesses with no Web3 knowledge can also easily manage their Moongate account. NFT projects can keep track of the holders engagement for future rewards and airdrops, without requiring holders to reveal personal information.

    NFT Design and Minting

    Users can create, deploy, and mint their own NFTs without any coding knowledge. Moongate’s smart contract builder is a simple drag-and-drop deployment. It supports dynamic NFT integration and can be issued on multiple chains. Moongate’s mint site builder provides customized storefront design with personalized information. Users can checkout with fiat or crypto via Web2 social logins or crypto wallets.

    Moongate App

    Utility Management Dashboard

    No-code dashboards are available for merchants and projects to set the parameters of online or offline token-gated content, access, and discounts across different tiers of membership. There are also key applications on offline discounts, exclusive events, and online e-commerce stores. Additionally, off-chain data can be captured to support corresponding changes to dynamic NFTs.

    Moongate App

    NFT Ownership Verification

    Moongate has a one-scan solution to complete real-time, on-chain NFT ownership verification across multiple blockchains including Ethereum, Polygon, and Solana. Users will have their own ephemeral QR code for merchants to scan and verify as it supports whitelabel integration with other apps or third-party scanners. Moreover, it is also compatible with near-field communication (NFC) “phygital” gateways, which are essentially physical cards that hold the QR code verification.

    Moongate App

    NFT Usage Management and Analytics Portal

    Moongate provides data analytics for merchants and projects to monitor membership usage in real-time and post-attendance. It can integrate with traditional technology stack such as POS and CRM (Customer Relationship Management) marketing software. The portal also displays API for data integration with other sites, supporting tracking of spending credits.

    Moongate App

    Key Takeaway

    Moongate introduces a new paradigm in customer loyalty while maintaining positive business impact. It changes how businesses can build better branding and how customers approach purchasing goods and services.

    Since customers can truly own their NFT membership, they can also choose to sell the NFT along with all the rewards stored in it, as the NFT is a transferrable token. That way instead of “spending”, customers are actually investing because they are creating value for their NFT. This also helps businesses better connect with the next generation of customers, lowering their Customer Acquisition Cost (CAC). After all, that is what Web3 is all about — ownership by users.

  • Binance Steps Up Regulatory Efforts in the U.S.

    Binance Steps Up Regulatory Efforts in the U.S.

    Binance, the world’s largest cryptocurrency exchange by trading volume, has joined the Chamber of Digital Commerce, an American lobbying group, to help establish crypto regulation in the United States. The Chamber of Digital Commerce is a leading blockchain and crypto trade association with members such as Citi, Visa, MasterCard, Dapper Labs, Ripple, and Circle.

    This move comes as U.S. lawmakers are moving aggressively towards regulating the crypto space as result of FTX’s collapse in November as well as the Terra Luna collapse in May. Billions of dollars’ worth of crypto assets were stolen and lost, prompting politicians and regulators in the U.S. to take strict action.

    It is without a doubt that Binance also played a key part in the collapse of FTX. After Binance CEO Changpeng Zhao (CZ) learned of the unethical flywheel scheme that Alameda Research and FTX were taking part in, he announced on Twitter that he would liquidate all of Binance’s FTT holdings, FTX’s native token.

    Shortly afterwards, as investors got hold of the news, they quickly rushed to withdraw their assets, leading to a liquidity crunch in FTX. CZ then announced that Binance had signed a non-binding letter of intent to acquire FTX to help and protect customers, but pulled out the next day after realizing the massive hole in FTX’s balance sheets.

    Despite CZ’s efforts to protect the crypto industry, some believed that Binance is to blame. Former FTX spokesman Kevin O’Leary testified at the Senate Banking Committee hearing, saying that Binance “intentionally put FTX out of business”, even though FTX was already engaging in illegal activities. Regardless, lawmakers and regulators began diverting their attention to Binance.

    According to Reuters, U.S. authorities are currently considering filing criminal charges against top executives of Binance including CZ, relating to money laundering allegations in 2018. However, Binance defended against Reuters, saying that they are attacking Binance’s law enforcement team who have strictly complied with anti-money laundering policies.

    As of now, the U.S. Department of Justice is still divided over whether to prosecute Binance. It is unclear whether they will pursue this four-year long case. Given the circumstances, Binance’s decision to join the Chamber of Digital Commerce is an effort to help establish policies that benefit and protect users, and to provide education and advocacy on the use of digital assets and blockchain-based technologies.

    Binance’s Vice President of Public Affairs Joanne Kubba said that “working hand in glove with policymakers, regulatory bodies, and industry groups like the Chamber is imperative for Binance.”

  • Nigeria Plans to Phase Out Cash in Favor of CBDC – Good or Bad?

    Nigeria Plans to Phase Out Cash in Favor of CBDC – Good or Bad?

    Central Bank of Nigeria Limits Cash Withdrawals

    On December 6, 2021, the Central Bank of Nigeria (CBN) announced a cap on cash withdrawals, either over the counter or via ATMs, in an effort to encourage the adoption of digital currency and move towards a cashless society. The new policy affects more than 200 million people and will take effect from January 9, 2023. It includes a limit of ₦100,000 ($225) per week for individuals and ₦500,000 ($1,123) for businesses, as well as a daily ATM withdrawal cap of ₦20,000 ($45).

    The CBN launched the eNaira in October 2021, a Central Bank Digital Currency (CBDC) that uses blockchain technology and is accessible on all bank apps and Unstructured Supplementary Service Data (USSD). The eNaira is intended to help shrink the country’s large pool of the unbanked and boost the economy, as well as to help tax authorities track income and net worth more easily. However, the policy has seen backlashes and slow adoption due to its economy being largely powered by cash transactions.

    The new policy has been met with resistance from POS (point of sale) cash point operators, who fear it will compromise their business and affect their livelihood. Moreover, most business sectors in Nigeria are largely cash-driven and do not have digital payment alternatives.

    CBN Governor Godwin Emefiele said the policy is reversible and will be reviewed from time to time how they can best implement it. Despite their reassurance, several Nigerian businesses believe that the cashless policy will never work given the country’s financial circumstances. Rise, a digital investment platform based in Nigeria, stated in a subscribers-only blog that the many charges attached to the country’s cashless policy are burdensome, and that the informal economy is not primed for cashless transactions.

    Quick Summary

    • Nigeria’s Central Bank announced a cap on cash withdrawals, with individuals limited to ₦100,000 ($225) per week and businesses limited to ₦500,000 ($1,123).
    • The eNaira, Nigeria’s central bank digital currency, was launched in October 2021 and uses blockchain technology.
    • The policy will take effect from January 9, 2023, and will encourage the use of alternative channels such as internet banking, mobile banking apps, USSD, cards/POS, and eNaira.
    • The policy has been met with some resistance due to its impact on the informal economy and the additional charges attached to the cashless policy.
    • The policy is intended to promote financial inclusion and increase tax revenue, but trust in government institutions is necessary for its success.
    What is the cashless policy announced by the Central Bank of Nigeria?

    The new policy announced by the Central Bank of Nigeria is a cap on cash withdrawals, with individuals limited to ₦100,000 ($225) per week and businesses limited to ₦500,000 ($1,123). ATM withdrawals will be capped at ₦20,000 ($45) per day.

    What is the eNaira?

    The eNaira is Nigeria’s central bank digital currency, launched in October 2021. It uses blockchain technology and is accessible on all bank apps and USSD.

    When will Nigeria’s cashless policy take effect?

    The new policy will take effect from January 9, 2023.

    What is the purpose of Nigeria’s cashless policy?

    The policy is intended to promote financial inclusion and help tax authorities track income and net worth more easily, but trust in government institutions is necessary for its success.

    What are the potential impacts of the new policy?

    The new policy has been met with some resistance due to the fact that most business sectors in Nigeria are largely cash-driven and do not have digital payment alternatives.

     

  • MetaMask Integrates PayPal Payment in the U.S. for Easier ETH Purchases

    MetaMask Integrates PayPal Payment in the U.S. for Easier ETH Purchases

    MetaMask Enables U.S. Users to Purchase ETH via PayPal

    MetaMask developer ConsenSys has announced the integration of a PayPal payment option to its software wallet. Users will be able to buy and transfer Ethereum (ETH) by logging into the mobile MetaMask app, tapping on the “Buy” button, and selecting “PayPal.” This will redirect users to PayPal, where they can complete their transaction OR send ETH from their PayPal account to their MetaMask wallet.

    This feature will be rolled out to all U.S. users first in the coming weeks, as they are one of MetaMask’s largest markets in terms of users. For MetaMask’s desktop browser extension, MetaMask Product Manager Lorenzo Santos told Decrypt via email that it will be available in the next quarter.

    As of now, it is unclear whether the feature will be deployed in other countries or if other cryptos will also be available for purchase. Since ConsenSys is run by Ethereum co-founder Joe Lubin and MetaMask is an EVM-only wallet, it makes sense that ETH purchases are focused first.

    Unlocking the Web3 Ecosystem with MetaMask and PayPal

    As one of the top crypto wallet providers, MetaMask is often a starting point for users interacting with DeFi applications, GameFi, and metaverse platforms. And because PayPal is one of the largest online payment systems with 432 million active accounts worldwide, adding PayPal to MetaMask could broaden the customer base, making it easier for newcomers to enter the Web3 ecosystem.

    Santos stated in the press release, “this integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through MetaMask, but also to easily explore the Web3 ecosystem.” 

    Traditional Payment Companies Expanding to Web3

    Over the past year, more and more traditional payment companies have been integrating crypto into their services. In fact, PayPal first began offering customers the ability to buy, sell, and hold crypto on its platform in 2020, and allowed customers to checkout with Bitcoin, Litecoin, Ethereum, and Bitcoin Cash in 2021. In June 2022, PayPal also enables customers to transfer crypto from PayPal to other wallets or exchanges. And now with the new integration into MetaMask, we can expect PayPal to release more new features gradually.

    Other traditional payment companies have also followed suit. Cash App, the number one finance app in the App Store, has also added support for transactions via the Bitcoin Lightning Network, the layer-2 protocol for Bitcoin’s blockchain. Stripe, an Irish-American financial services company, has also launched its own tool to help Web3 companies, allowing their customers to buy crypto with fiat.

    Other global financial services have also hinted at the possibility of dabbling into crypto. In October, Western Union filed trademark applications for managing wallets, exchanging digital assets and commodities derivatives, issuing tokens of value, and brokerage and insurance service, according to trademark attorney Mike Kondoudis.

  • Are Crypto Trading Bots Safe to Use?

    Are Crypto Trading Bots Safe to Use?

    While crypto trading bots can be profitable for users, like with any form of automated trading, there are always risks involved. Therefore, it is important to consider whether or not using a trading bot is the right decision for you. In this article, we will explain how crypto trading bots work, the advantages they offer, and the risks involved.

    What are Crypto Trading Bots?

    Crypto trading bots are software programs that use algorithms to analyze market data and automate trading tasks. Users can enter specific parameters for the bots to buy and sell crypto, depending on the users’ trading strategies and goals. Spot trading is the most common way to use trading bots. More experienced traders can also use bots in leveraged trading, arbitrage trading, options, and futures.

    It is important to remember that trading bots are NOT money-making machines. They only execute trading orders automatically based on the commands you give them. It is essentially an extension of your trading skills. Before operating one, you should have some understanding of technical analysis (identifying bullish or bearish trends) and risk management.

    How do Crypto Trading Bots Work?

    Crypto trading bots typically access a user’s crypto exchange account by using the exchange’s application programming interface (API). An API is a set of protocols and tools that allow one piece of software to interact with another. The user will first need to create an API key for the exchange. This key will grant the trading bot access to the user’s account and allow it to execute trades on the user’s behalf.

    It is important to note that users must specify which specific permissions the API key should have before connecting the bot to the exchange account. Users should ONLY allow bots to execute trades, and disable other personal options such as withdrawing funds and viewing account information.

    There are many reputable platforms that provide trading bot services such as 3Commas, Pionex, Cryptohopper, TradeSanta, and KuCoin Trading Bot. However, this does not mean they are risk-free. Users should carefully do their research and select the one they trust to hand over their API keys. We will cover more about the entailed risks below.

    Advantages of Using Crypto Trading Bots

    Crypto trading bots are generally considered to be more effective than manual trading for several reasons.

    Execute orders faster and more accurately

    Based on predefined rules and algorithms, trading bots can track market data for hundreds of trading pairs on several markets simultaneously and execute large trades in a matter of a few milliseconds. On the other hand, a human trader would have to spend a lot more time analyzing market conditions one by one and make decisions based on their own judgment.

    Operate 24/7 without human emotion

    Additionally, trading bots only follow logic, removing the emotional and psychological biases that are the bane of human traders. Trading bots can also operate 24/7 and trade on multiple crypto exchanges, taking advantage of market opportunities that may be difficult for a human trader to spot. Therefore, trading bots help automate and streamline the trading process, which saves a lot of time and reduces human error.

    Efficient in building wealth over time

    The efficiency of trading bots allows them to execute hundreds of trades within an hour if there is enough trading volume and volatility for the asset being traded by the bot. This is also achieved by setting the take-profit percentage low for the bot to consistently enter and exit trades. This is essentially dollar-cost averaging (DCA) on a much smaller time frame — profits are compounded over time, leading to continuous growth of the crypto portfolio.

    Risks of Using Crypto Trading Bots

    Though crypto trading bots are useful tools, the risk they pose is twofold: security and market conditions.

    API Key Leak/Hack

    One major risk is the potential for the API key to be hacked or otherwise compromised, potentially allowing an attacker to gain access to the user’s account and steal their funds or sensitive information. Additionally, if the API key is not properly secured, it may be possible for unauthorized users to access the user’s account and make trades without the user’s knowledge or consent.

    Following the collapse of FTX, there have been numerous reports of unauthorized trades initiated via API keys, suggesting a database leak in trading bot platforms such as 3Commas. Though shortly after the attack, 3Commas provided evidence that the attacks were not a result of a leak from their database. They believed that victims’ API keys were phished or compromised from an outside source.

    Extremely Volatile Market Movements

    Sudden market movements can have a significant impact on the performance of crypto trading bots. Because these bots are designed to buy and sell cryptocurrencies based on pre-programmed rules, they cannot adapt quickly to sudden changes in the market. This could lead to bots triggering unfavorable buy orders, in which their take-profit order will never close as the market continually declines. Bots are only profitable if there is enough volatility for them to get in and out quickly and regularly.

    For human traders, this is when they perform better than bots. They can take breaks and step away from the market when necessary. For these reasons, it is important for users to monitor the market and be prepared to adjust their trading strategies as needed in response to sudden changes.

    Key Takeaway

    While crypto trading bots can help traders take advantage of market opportunities, their risks are arguably greater than their benefits, especially given the shortcomings of many centralized platforms today. By sharing your API keys, you are practically giving a third party access to your crypto exchange accounts. Should they get hacked or become fraudulent, you run the risk of losing all your funds.

    However, that is not to say that crypto trading bots are bad, especially in the longer scheme of things. After all, 90% of the stock market’s total turnover are done by algorithmic trading (trading bots), according to JPMorgan research. But with repeated cases of centralized failure in the crypto industry, it is best to approach these platforms with caution for now.

  • Is Binance SAFE? Funds Fully Audited by Mazars

    Is Binance SAFE? Funds Fully Audited by Mazars

    Binance is tackling to issue of proving where user funds are by using the third-party auditor Mazars, a leading Hong Kong-based auditing firm, to prove independently that user funds held by the exchange are safe and “untouched”. This is particularly important as users are demanding to know that funds are safe (or “SAFU”) and that they can trust the exchange to keep holding their funds. Auditing centralized exchanges help to ensure that they are compliant with applicable laws and regulations, as well as industry best practices. This helps to protect users from fraud, manipulation, and other malicious activities.

    Binance BTC Reserves are Fully Backed

    Mazars, an international audit, tax, and advisory firm, has confirmed that Binance has more than enough Bitcoin (BTC) to cover all customer deposits. The report verified a 101% collateralization ratio on 575,742 BTC in net customer deposits as first published on their proof-of-reserves system on November 25. All assets included customers’ spot, options, margin, futures, funding, loan and earn accounts for BTC and wrapped BTC circulating on the Bitcoin, Ethereum, BNB Chain, and BSC blockchains.

    Learn more about Binance- Binance Exchange Review (2023) Best Crypto Exchange?

    To ensure customers’ assets are not being lent out or stolen without permission, Binance implemented a Merkle Tree proof-of-reserves system that allows customers to independently verify the safety of their assets.

    Binance Merkle Tree Proof-of-Reserves (Source: Binance)

    Binance Securely Controls Custodial Wallets

    Mazars has also asked Binance to perform transactions at specific times to prove that the wallets were actually under Binance’s control. This clarifies the situation in late November when Binance moved 127,351 BTC to an unknown wallet. According to the report, Mazars used Etherscan and BSCscan to check that the wallets indeed belong to Binance.

    Moreover, Mazars reviewed the scripts that Binance uses to extract the total net deposits, making sure there was no duplicated or rigged user IDs. This confirms that Binance’s Merkle tree is built with open source script developed by Silver Sixpence.

    What This Means for Investors

    Binance is the world’s largest crypto exchange by trading volume, and is arguably the most used platform for all crypto users. After the collapse of FTX, Binance CEO Changpeng Zhao (CZ) was jokingly hailed as the “savior” of crypto, doing everything he can to repair the industry. However, Binance itself is no exception to scrutiny as a result of FTX’s collapse. People need to know what centralized exchanges are doing with their money.

    Binance’s audit has cleared up a lot of doubt, restoring confidence in the exchange. However, there are still two issues raised by the crypto community:

    A Step in the right direction

    Overall, auditing centralized exchanges are essential for protecting users and ensuring that exchanges are operating in a safe and secure manner. By conducting regular audits, exchanges can help to ensure that their customers are protected and that they are getting the best possible service. Binance has also provided on-chain proof of funds using “Merkle” Proofs in November of 2022. This means that Binance has taken efforts to prove that both Fiat and Crypto deposits in their custody are safe.

    FAQ

    Is Mazars a reliable auditing firm?

    While most of the community praises Binance’s initiative, several Crypto Twitter users expressed concerns that Mazars is not one of the “Big Four” accounting firms: Deloitte, Ernst & Young (EY), PricewaterhouseCoopers (PwC), and KPMG. For the longest time, audits made by any one of the Big Four is the gold standard, and any other firms are deemed not “credible” enough.
    This is reasonable enough seeing as FTX was in fact audited by smaller accounting firms. But that might not be the case for Mazars. Founded in 1945, Mazars is one of Europe’s largest audit and accounting firms with global presence. In fact, Mazars was a longtime accountacy firm for former president Donald Trump. But after finding out Trump’s business filings were not adding up, Mazars cut ties with his business. Given their track record, it is safe to say that Mazars is reliable as they conduct due diligence on any business.

    Binance audit only accounts for BTC reserves

    The audit only focuses on BTC assets for now. As of now, Binance does not have a proof-of-reserves system for other cryptocurrencies. But at the end of the day, this is a big step towards a more transparent ecosystem. Let’s hope there will be more developments in the coming weeks.

    References

    Recently some users are reporting USD withdraw issues, CoinMagazine

  • Ledger Stax: Next-Gen Crypto Wallet Designed by iPhone Co-Creator Tony Fadell

    Ledger Stax: Next-Gen Crypto Wallet Designed by iPhone Co-Creator Tony Fadell

    Ledger and Tony Fadell Unveil Stax Wallet

    Ledger, one of the top hardware wallet providers, has announced the launch of its new Ledger Stax wallet in partnership with Tony Fadell, co-creator of the iPod and iPhone. This is a significant initiative as Fadell being one of the world’s foremost tech engineer is stepping in to bring clarity and confidence to owning digital assets following the collapse of FTX.

    Pre-order your Ledger Stax Wallet here!

    buy now

    Key Features of Ledger Stax Wallet

    Fadell realized that existing hardware wallets are difficult to use for mass consumers. Therefore, he drew inspiration from his iPod design to bring a more user-friendly experience for wallet users.

    Ledger Stax resembles a small smartphone and has a monochromatic E ink display which covers the front and curves around the spine. That way users can easily view complete transaction details as well as their NFT collections even when the wallet is off. This works in conjunction with integrated magnets, allowing multiple Stax devices to stack, hence its name. This is particularly useful for Ledger owners who have different portfolios since they can look at the labels displayed on the spine, like books on a shelf.

    Stackable Ledger Stax wallets with displayable screen on the spine (Source: Ledger)

    Users can store more than 500 cryptocurrencies or NFTs on Ledger Stax. Developers are also planning to allow users to explore Web3 applications through the Ledger Live app. Users can connect the Ledger Live app on (1) laptops via secure USB-C or (2) smartphones via bluetooth. This new user interface will enable clear and intuitive interaction for all mainstream users.

    Ledger Stax also has good energy efficiency and supports wireless Qi charging. Its battery can last as long as few months with a single charge.

    How to Get Ledger Stax Wallet?

    Ledger Stax is now available for preorder at $279 and will begin shipping by the end of March 2023. It will also be available from select retailers such as Best Buy in the U.S. Those who purchase the wallet will also receive an Infinity Pass, which provides users with a free utility NFT.

    Additionally, a Ledger Stax NFT Bundle is available to mint on [Ledger] Market for 0.22 ETH to redeem a free Ledger Stax device. It also unlocks access to exclusive NFT artwork from Ledger’s network of hand-picked artists. However, Genesis Pass holders and PREMINT Collabs have special mint-priority, and there are only 10,000 bundles available.

    Key Takeaway

    “Not your keys, not your crypto” — there is a great risk of losing all your crypto if you park it on a centralized exchange. Hardware wallets are great self-custodial solutions because only you have control over your funds. But the problem is it can be quite daunting to operate one, especially for beginners.

    Ledger Stax will revolutionize this by bringing the familiar user experience of smartphones into hardware wallets. This is a big step towards a decentralized financial future as more people are opting for self-custodial solutions. If you are interested in other hardware wallets, feel free to check these out:

    Pre-order your Ledger Stax for only $279 and get it by end of March 2023!

    buy now
    What is the Ledger Stax wallet?

    The Ledger Stax wallet is a new hardware wallet developed in partnership with Tony Fadell, co-creator of the iPod and iPhone. It has a unique and innovative design in the style of high-end Samsung cell phones, and lets users view their NFT collections even when the wallet is off.

    When will the Ledger Stax be available for sale?

    Ledger Stax is now available for reorder at $279 and will begin shipping by the end of March 2023.

    What features does the Ledger Stax offer?

    The Ledger Stax wallet is an easy-to-carry device about the size of a credit card, which allows users to store more than 500 cryptocurrencies or NFT collections. It also features an E-Ink touchscreen for viewing NFT collections, and a battery that can last for weeks or even months with a single charge.

    Are there any incentives for purchasing the Ledger Stax?

    Yes, those who purchase the wallet will be eligible for various prizes, such as a “Magnet Shell” protective case and an NFT from the “The Art On Ledger Stax Collection.”

  • Silvergate Capital’s Exposure to FTX Collapse: What Investors Need to Know

    Silvergate Capital’s Exposure to FTX Collapse: What Investors Need to Know

    Silvergate Capital, one of the leading banks for Fintech businesses and cryptocurrency, is facing a number of risks as a result of their exposure to FTX’s collapse. As a publicly traded financial service company listed on the New York Stock Exchange (NYSE), Wall Street banks including Morgan Stanley are strongly advising investors to sell Silvergate stocks due to its affiliation with FTX. Because Silvergate positions itself as the main pipeline facilitating the flow of fiat funds and fiat onramps between large crypto exchanges, its impact on the crypto market is comparable to Genesis Trading if they went under.

    Silvergate Capital Exposure to FTX is $1.1 billion

    Following the collapse of FTX, Silvergate Capital disclosed details of their relationship with FTX and Alameda Research. Although Silvergate does not appear to be a creditor to FTX, they had a sizeable deposit relationship with the exchange, which accounted for nearly 10% of its $11.9 billion in deposits from digital asset customers.

    Silvergate claimed its exposure is “minimal” but $1.1 billion is still a lot of money. As a result, investors have begun to fear the crypto bank is developing the same symptoms as other troubled institutions who have fallen to the contagion. Short sellers have already taken their short position on Silvergate, with the stock now down 53% over the past month.

    Silvergate Capital CEO Addresses Market Concerns

    In response to speculations of market uncertainty, Silvergate Capital CEO Alan Lane asserted that the company followed all relevant regulatory procedures when receiving wires directed to Alameda Research, implementing risk management policies to ensure the security of customer funds. He also noted that the bank has a strong balance sheet and ample liquidity, with cash and securities in excess of its digital asset related deposit liabilities.

    If we are taking Lane’s word for it, FTX’s collapse will have little effect on Silvergate. However, the broader market downturn could cause the bank’s foundation to crack if other large depositors continue struggling. Moreover, though Lane claimed they conducted “extensive due diligence” on the FTX group, the community is pointing out its contradiction as they would have prevented it in the first place if they had really done due diligence.

    Morgan Stanley Downgrades Silvergate Shares

    In a Monday letter to investors, Morgan Stanley lowered its rating on Silvergate’s shares from equal weight to underweight, recommending investors to reduce their exposure to Silvergate stocks. This came across when Silvergate’s digital deposits are down 60% in Q4, citing its need to fund outflows with securities sales and costly wholesale borrowing. With clients withdrawing their deposits, the company is facing even more pressure on its net interest margins (NIM) and net interest income (NII).

    Despite Silvergate facing uncertainty in the near-term, the bank has been around since 1988 with a long history of robust financial performances and regulatory experience. Their tier 1 leverage ratio, which measures a bank’s ability to withstand financial stress, was 10.7% in Q3, making them among the top 15% of American banks by this critical metric.

    Its long-established regulatory compliance and healthy leverage ratio are set up to weather any financial storm. However, since the crypto industry is still largely unregulated and highly volatile, as well as the downfall of several financial heavyweights, only time will tell if Silvergate will survive this crisis.

  • Will DEXs Take Over Centralized Exchanges after FTX Collapse?

    Will DEXs Take Over Centralized Exchanges after FTX Collapse?

    “Not your keys, not your crypto” — this decade-old mantra has taken full effect after the FTX collapse. Crypto users have lost faith in centralized exchanges (CEXs) and are migrating to decentralized exchanges (DEXs) instead. Though a non-custodial option seem to be an ideal solution, it would likely take a long time until price discovery shifts from centralized to decentralized platforms. Let’s take a closer look.

    Impact of FTX Collapse on Centralized Exchanges

    Almost every centralized platform in the crypto industry had done business with FTX, and some companies bore the brunt of the collapse such as BlockFi, Genesis Trading, and KuCoin. Crypto users around the globe found they could no longer withdraw assets from several crypto exchanges as the contagion spreads.

    FTX’s collapse is a symptom of a problem inherent to centralized exchanges, also known as custodial exchanges. Customers’ tokens parked on the platform are exposed to the risk the exchange could go bust. Because crypto has no government depositary schemes to cover losses, customers of insolvent exchanges must wait for bankruptcy courts to regain what remains of their funds — if there is any left after other investors claim their share.

    Given the circumstances, all crypto exchanges including Binance have been implementing proof-of-reserves to verify they have enough assets to cover all customers’ funds. Though it is a good transparency initiative, investors still fear for the safety of their funds. As a result, many CEX customers rushed to withdraw their funds, opting for non-custodial solutions. This is where DEXs come in.

    Rise of Decentralized Exchanges after FTX Collapse

    Soon after FTX’s downfall, decentralized exchanges saw a vertical spike in trading volume. According to DeFi Llama, the monthly DEX volume showed an increase of 80% from $57.6 billion in October to $103.8 in November. At the time of writing, Uniswap had the largest trading volume with 60%, followed by Curve (9.6%), PancakeSwap (9%), DODO Exchange (8%), and Balancer (3%).

    Monthly DEX Trading Volume (Source: DeFi Llama)

    Moreover, Uniswap also surpassed Coinbase in daily ETH trading volume on November 14 ($1.1 billion vs $600 million). This is significant as CEXs have always been dominant in trading large market cap coins given their deep liquidity. It strongly indicates traders are moving away from CEXs.

    This is compounded by the fact that Bitcoin (BTC) has been exiting CEX wallets at a record pace. According to on-chain data analytics Glassnode, BTC withdrawals from CEX to self-custody wallets is unfolding at a historic rate of 106k BTC monthly. This accounts for $3.7 billion worth of Bitcoins over the past week. Simultaneously, hardware wallet providers such as Ledger and Trezor reported its highest sales day. Check out some of these wallets:

    Advantages of Decentralized Exchanges

    Decentralized exchanges, also known as non-custodial exchanges, are decentralized finance (DeFi) protocols that allow users to trade directly with other users via smart contracts, without handing over management of their funds to an intermediary or custodian.

    They are non-custodial, which means users have full and exclusive control of their wallet’s private keys. This is the opposite of putting your assets on CEXs as they hold onto the wallets and keys on your behalf. This feature makes it impossible for centralized players to siphon user funds, and is why people are doing their trading on DEXs instead.

    Transactions on DEXs are facilitated through the use of smart contracts, and liquidity pools are funded by other users. As such, there is significantly reduced counterparty risk — you do not need to trust other users, only the code. There are three types of DEXs that uses different protocols: automated market makers (AMM), order book DEXs, and DEX aggregators. But they are all programmed to determine the best price for an asset, all while offering a better rate for users compared to CEXs.

    Moreover, anyone can earn passive income if they provide liquidity to the protocol. On the other hand, CEXs are managed by a centralized organization such as a bank or a small handful of professional trading firms or market makers. In this case, since liquidity is concentrated in these actors, CEX maker and taker fees are much higher than DEX swap fees. Additionally, they can also choose to withdraw their assets during periods of volatility, restricting trades when users need it most.

    Challenges Facing Decentralized Exchanges

    Despite the many critical advantages DEXs offer, it has several downsides that hinders widespread adoption:

    Relies Heavily on Centralized Exchanges

    Most DEXs are dependent on price oracles (i.e. Chainlink) that source data from CEXs. As such, an attacker can manipulate the price of an asset on a particular DEX, leading to inaccurate price data being fed to all protocols which rely on that DEX as a price oracle.

    A flash loan attack is a common method to trick price oracles. In such events, attackers essentially create false arbitrage opportunities by instantaneously borrowing, swapping, depositing large numbers of tokens, tricking price oracles that the target token’s price is being moved on a single exchange.

    This creates a disparity which can then be arbitraged, allowing the sale or purchase of assets at above or below market price. Polygon’s Quickswap was a victim of this attack in October 2022.

    DEX Transactions are Slower than CEX

    Trading on DEXs are often much slower because all trades take place on the blockchain. It takes time for blocks to be validated and transactions to go through. On the other hand, CEX trades are almost instantaneous because they take place on proprietary matching engines instead of the blockchain. These engines are complex software that synchronizes and combines data from thousands of trading pairs at the same time.

    Liquidity Issues and Impermanent Loss

    DEXs cannot yet compete with large CEXs in size as they cannot offer as much liquidity. When they do not have enough liquidity, large orders can incur slippages in which the buyer pays above-market prices on their order. As such, a lack of liquidity can deter institutional participation as large orders are likely to suffer from slippage.

    On another note, liquidity providers are exposed to a risk of impermanent loss when depositing two assets for a specific trading pair. In most cases, liquidity providers end up withdrawing more of the token that lost value and less of the one that gained value because the ratio of tokens held in the pool changes as trades occur.

    Smart Contract Vulnerabilities

    Although there is significantly reduced counterparty risk when using DEXs, there is still the issue of smart contract vulnerabilities that can be exploited by hackers. Smart contract codes are publicly available and anyone can review their code. Therefore, exploitable bugs can still slip past audits and other code reviews.

    This is a problem inherent to all DeFi protocols. Over the past two years, we have seen numerous hacks on cross-chain bridges, hot wallets, staking platforms, and even entire blockchain infrastructures.

    See also: 10 Best Smart Contract Security Auditing Firms in 2022

    Future Landscape of Crypto Exchanges

    In the wake of FTX’s collapse, users’ confidence in centralized exchanges are waning and the crypto community expects a shift toward decentralized platforms. However, according to JPMorgan and several other financial analysts, centralized exchanges will continue to control the majority of global digital-asset trading volumes. Although DEX trading volume has surged over the past month, it is a possibility that it reflects the automatic liquidations following the FTX collapse, and does not indicate the start of a long-term trend.

    DEX users are still confined to a relatively small base of niche traders and investors, and their interfaces can be difficult to navigate. At this stage, CEXs still provide a better user experience, fiat gateways, and deeper liquidity. To date, Uniswap has a total of 4.5 million users cumulatively, whereas Coinbase has a total verified user base of 108 million.

    With that being said, DeFi is still in its infancy. Development in liquidity protocols, safekeeping mechanisms, and user interfaces is needed to fully realize the potential of non-custodial trading services. As long as DEXs can compete with CEXs in terms of liquidity and speed, we may start to see widespread adoption or even a full-on switch to DEXs. After all, decentralized infrastructures are key to preventing centralized collapses, something we, as the community, has had enough of for the past year.

  • Proof-of-Reserves Explained: Essential for Crypto Exchanges

    Proof-of-Reserves Explained: Essential for Crypto Exchanges

    In light of the FTX collapse, cryptocurrency exchanges are implementing proof-of-reserves (PoR) as a form of on-chain accounting that shows their entire holdings and customers’ assets. As centralized entities, this is a big step towards a more transparent crypto ecosystem, but some argue it might not be enough to regain investor trust. In this article, we will explain how PoR works and why it matters.

    What is Proof-of-Reserves (PoR)?

    Proof-of-reserves (PoR) is a cryptographic method to verify that an exchange has enough assets to cover all customers’ deposits. In doing so, the exchange ensures customers they have sufficient liquidity on hand to process all withdrawals, should a bank run occur.

    This came to light after FTX secretly used $10 billion of customer funds to prop up its sister company Alameda Research, which ultimately led to a liquidity crunch amidst mass withdrawals.

    This has left the crypto community wondering what other crypto exchanges might be doing with customer assets. As a result, Binance CEO Chengpeng Zhao (CZ) urged all crypto exchanges to do PoR, albeit Kraken was one of the first exchanges to prove their reserves in February 2022.

    How Does Proof-of-Reserves Work?

    Proof-of-reserves essentially involves taking a snapshot of all balances held on the exchange which are aggregated into a Merkle tree — a data structure designed to encapsulate and encrypt data. These Merkle trees, also known as hash trees, function as a map of the exchanges’ assets and liabilities (customers’ tokens).

    From there, a Merkle root is obtained, which is a cryptographic fingerprint that uniquely identifies the combination of these balances at the time when the snapshot was taken. Afterwards, digital signatures produced by the exchange are collected, which prove ownership over the on-chain addresses with publicly verifiable balances. To put it simply, the exchange discloses these addresses and provides proof that they have access to the associated private key.

    Because Merkle trees are part of blockchain technology, anyone can compare and verify if these balances exceed or match the customers’ balances represented in the Merkle tree. In the case of crypto exchanges, this process is either self-attested by the exchange or carried out by an independent third-party audit. As of now, most crypto exchanges have been working with Nansen, a blockchain analytics platform, for their PoR audit.

    Downsides of Proof-of-Reserves

    Although proof-of-reserves is certainly a step in the right direction, there are still several improvements that could be made to enhance transparency and trust.

    Proof-of-Reserves are Pointless without Proof of Liabilities

    A proof-of-reserve audit without disclosure of total liabilities, not just customers’ tokens, does not paint a full picture of an exchange’s solvency. This would include anything the exchange owes such as debts and taxes. Kraken CEO Jesse Powell expressed that Binance’s PoR is pointless without liabilities. This is also in reference to other platforms publishing their PoR without mentioning any liabilities. He also added that accounts with negative balances must also be included in the sum of total liabilities.

    However, the problem is that these liabilities are NOT on-chain, which means an independent auditor has to step in. At that point, crypto exchanges will have to provide the same proof as all public and regulated companies provide — audited financial statements. (Clonazepam) Coinbase is one of the few exchanges to do this. Since they are a public company subject to U.S. regulations, they have already been proving their reserves using balance sheets audited by the SEC.

    Therefore, the most reliable way to prove an exchange’s assets are more than its liabilities is via third-party auditors. In fact, CZ responded to Powell’s comments that Binance would involve third-party auditors to audit their PoR results.

    Proof-of-Reserves Audits Can be Falsified

    Although the cryptographic proof do not lie, it can be manipulated and framed to look healthy. There is the issue of crypto exchanges moving their funds right after the snapshot for the audit was taken. Recently, Crypto.com mistakenly transferred 280,000 ETH to a Gate.io address after it released its proof-of-reserves audit. Many speculated that exchanges were borrowing assets to show a healthy balance sheet, only to return them after the snapshot.

    Moreover, a PoR audit is only as good as its verifier. There is also the issue of exchanges colluding with third-party audits to produce false results. Unless the exchange is audited by a reputable source such as the Big Four accounting firms, we will just have to take their word for it.

    Proof-of-Reserves Do Not Prevent Customer Fund Misappropriation

    Even then, audits and attestations may not suffice. At its core, crypto exchanges are not the same as banks — crypto is not insured by government depositary schemes. Even if all the steps are done correctly, customers can still lose their crypto if mishandled.

    Merkle tree-based PoR would not prevent the misappropriation of customer funds completely. It only tracks the money, providing information. It does not provide customers with greater control over their funds. If the exchange is caught in the act, you would not be able to get your crypto back as it is likely to be tied up in litigation.

    Not your keys, not your crypto. We strongly suggest keeping your crypto on hardware wallets such as Ledger Nano X, Ledger Nano S Plus, Ledger Nano S, Trezor One or Trezor Model T.

    Why Proof-of-Reserves is Crucial

    At the end of the day, proof-of-reserves is the first step towards a more transparent crypto ecosystem. In effect, it functions as a verification tool to filter out fraudulent crypto exchanges, albeit not completely.

    By leveraging blockchain technology, PoR brings crypto exchanges closer to the treasuries of DeFi protocols, allowing anyone to trace funds on-chain at any time. However, there is much to improve in this aspect. But with on-demand, real-time tracking of exchange reserves, the industry is working towards a decentralized and trustless system, where customers do not need to trust the institution, only the math.