Boxmining v2

Author: ronalthapa

  • Bullish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Bullish Chart Patterns Cheat Sheet: Crypto Technical Analysis

    Technical analysis made easy with bullish chart patterns packed into a cheat sheet, so that you can make better trades at Bitcoin or other cryptos!

    Is Technical Analysis Useful?

    Crypto, as a new asset class, is volatile in nature. Its price fluctuates because it is heavily influenced by supply and demand, and it reflects how the public feels about the asset. This is known as market sentiment — bullish when prices are rising, bearish when prices are falling.

    The market is constantly changing. In many cases, it does not matter how you feel about it, it only matters how the market is going to feel about it.

    Market sentiment is a critical indicator to predict price movements and make investment decisions. An easy way to gauge market sentiment is by looking at chart patterns. They tend to repeat themselves, and once you are able to recognize them, it becomes easier to strategize your entries and exits.

    However, it is important to note that they are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

    Bullish Chart Patterns

    These are some of the most common bullish chart patterns you will see in the market. This cheat sheet will help you identify real-time candlestick patterns whenever you’re on Binance, or other crypto exchanges, so that you can time your entries better.

    Ascending Triangle (Bullish)

    Ascending Triangle (Bullish)

    An ascending triangle is a bullish pattern which signifies the continuation of an uptrend, hence “ascending” triangle. It can be drawn onto the chart by (1) placing a horizontal line along the swing highs, which is the resistance, and then (2) drawing an ascending trend line along the swing lows, which is the support.

    Ascending triangles often have more than two identical peak highs which allow for the resistance line to be horizontal.

    The pattern completes itself when the trend breaks through the resistance, continuing the uptrend. This signifies that the asset has a high buying pressure, and buyers are most likely opting for a long position.

    Falling Wedges (Bullish)

    Falling Wedges (Bullish)

    A falling wedge occurs when the trend line is sandwiched between two downwardly sloping lines, getting narrower as the resistance line gets closer to the support line. In this case, the line of resistance is steeper than the support.

    It may seem like a downward trend but it isn’t. In fact, it is a reversal pattern. A falling wedge is usually indicative that an asset’s price will drop before it rises and breaks through the level of resistance, as shown in the second picture above.

    A falling wedge usually signals the end of the consolidation phase that facilitated a pull back lower. The consolidation phase happens when buyers regroup and attract new buying interest. It can be explained as the “calm before the storm.”

    Double Bottom (Bullish)

    Double Bottom (Bullish)

    A double bottom indicates a period of selling in which the price drops below the level of support. It will then rise to the level of resistance, before dropping again. It resembles a W shape, hence “double bottom.” Jokingly, the W stands for “win”!

    Finally, the trend will reverse and begin an uptrend as the market becomes more bullish. It may seem like a bearish trend, but it is in fact a bullish reversal pattern. This signifies the end of a downtrend and a shift towards an uptrend.

    It is important to note that most traders would jump the gun by entering a position before the pattern is activated. A double bottom is active only once the buyers break the neck line and secure a close above it. This is why it is important to wait for a close above the neck line before entering the market.

    Rounding Bottom (Bullish)

    Rounding Bottom (Bullish)

    A rounding bottom is both a bullish continuation and a reversal. During an uptrend, the price will drop slightly before rising once more. This would be a bullish continuation.

    Afterwards, the bullish reversal occurs when the price is in a downward trend and a rounding bottom forms before the trend reverses and continue upwards.

    Bull Flag and Pennant (Bullish)

    Bull Flag and Pennant (Bullish)

    A bull flag signals that the overall uptrend is likely to continue, followed by a consolidation. It resembles a flag fluttering upwards in the wind.

    Usually, there will be a significant increase during the early stages of the trend, before entering into a series of smaller upward or downward movements. This would be the pennant.

    Pennants can be either bullish or bearish, and they can represent a continuation or a reversal. The picture above is an example of a bullish continuation.

    While a pennant may seem similar to a wedge pattern, as mentioned in the previous section, wedges are much more narrower than pennants. Moreover, wedges differ from pennants because wedges are always ascending or descending, whereas pennants remain horizontal.

    Summary

    These are some of the most common bullish patterns you will see in the market. This cheat sheet will help you better time your entries when the market sentiment is bullish. However, it is important to note that crypto is volatile in general.

    These chart patterns are NOT a guarantee that the market will move in that predicted direction. It should only serve as a frame of reference for you to feel how the market moves.

  • Will Terra Luna Classic (LUNC) Make a Comeback? USTC Repeg?

    Will Terra Luna Classic (LUNC) Make a Comeback? USTC Repeg?

    Everyone loves a good comeback story. With Luna Classic now in the hands of the community, they are doing everything in their power to revive the ecosystem. Several crypto heavyweights such as Binance have also joined their cause. The question is, “will Luna Classic succeed long-term?” In this article, we will take a look at the recovery plan proposed by the Classic community and share some insights on the future direction of Luna Classic.

    History of Terra Luna

    The collapse of the Terra ecosystem in May 2022 was one of the most devastating black swan events in crypto history, wiping at least $60 billion off the market which triggered a dangerous domino effect across the industry such as the fall of Three Arrows Capital and Voyager Digital.

    Terraform Labs (TFL) developers shortly abandoned the Classic chain in support of Luna 2.0, the new Terra blockchain. This led to an overhaul of the community demographic, leaving only the validators and true believers of Luna Classic behind, not to mention millions of investors who are still holding onto LUNC or USTC with no exit opportunity.

    Luna Classic’s Chance at Redemption

    Despite its unfortunate history, there might be a glimmer of hope for Luna Classic. The technology and blockchain infrastructure are still there, and developers can still build on it. In fact, there are numerous DApps that have expressed an interest to return and build on Luna Classic. However, the ecosystem faces the opposite problem of most layer-one protocols. Instead of incentivizing user adoption with tokens, Luna Classic has hundreds of thousands of active users but no additional token incentives.

    This means that Luna Classic’s native tokens do not offer much utilities for developers to build off of, due to trillions of LUNC tokens in circulation and the USTC depeg. Therefore, in order to attract developers and builders to the Classic chain, the token situation must be addressed, and that is exactly what the community is doing right now.

    Luna Classic – Community-Driven Blockchain

    Community volunteers have self-organized into multiple groups to help build and restore the Luna Classic blockchain. Terra Rebels is one of the larger communities with seasoned developers and business professionals that is leading the recovery plan. None of the groups have any affiliation with TFL nor work under any central organization or established entities at this time. Essentially, the communities are filling the developer void impartially and in accordance with community proposals that pass the voting process. All codes are open to audits and feedbacks, and all community members have a say in vetting and implementing the code base.

    On August 26th 2022, after two months of disabled proof-of-stake validation in response to the collapse, governance was restored as citizens of Luna Classic could delegate, stake, and vote for the future of the ecosystem. As of now, proposals and the associated implementations are being passed by the Terra Classic Decentralized Autonomous Organization (DAO). When adopted, a new wave of delegators and validators from the community would stake on Luna Classic, built by community developers. This would be the beginning of a truly community-driven blockchain, but the path to that is still long and arduous.

    Recovery Plan of Luna Classic

    Deflationary Token Mechanism (Tax and Burn)

    On September 15th 2022, Terra Classic governance proposal 4661 passed with a 99.88% “yes” vote to enable a 1.2% tax and burn on all on-chain transactions. With more than 6 trillion LUNC in circulation, the main goal is to reduce the hyperinflated total supply until it reaches 10 billion LUNC. After that, the mechanism will be disabled via smart contract, and the total supply will not be changed. Based on the law of supply and demand, this creates scarcity which inherently increases the value of LUNC tokens. However, it takes more than just burning for LUNC to maintain a relatively stable price. There has to have a mechanism for LUNC to capture some of the value brought to the blockchain, otherwise it would be another exit race for all investors.

    The main concern for the tax and burn is that it would likely reduce on-chain activities, as core users and projects are affected. Terra Rebels addressed this in their white paper, stating that the community can structure the implementation to be flexible as time progresses. The tax rate can be changed via parameter proposal at any time and adjusted after every epoch. Nevertheless, the community has voiced with unity that they are willing to play their part.

    The bigger play here however is to reach out to major centralized exchanges (CEX) and implement the same tax and burn for all LUNC trades on their platform, since it only applies to on-chain transactions. As a result, several major CEXes such as Binance, KuCoin, Kraken, Huobi, MEXC Global, and more have joined the cause. Moreover, a petition has been filed on change.org to relist LUNC on Coinbase. It is important to note that the Terra ecosystem is still under strict government regulations as a result of the collapse. But if it succeeds, the help from the U.S. market would greatly accelerate the burning process.

    This goes to show the power of a unified and driven decentralized community, and perhaps the potential crypto heavyweights see in a Luna Classic comeback.

    USTC Repeg Proposal

    In October 2022, two factions of the Terra community proposed their own approach to repeg USTC. As both plans are new, there are no specific timings outlined. It is up to the community to debate these proposals and decide which approach is better.

    Proposal #1 – Algorithmic Fungible Token Debt Restructuring

    The first one jointly published by Alex Forshaw, Edward Kim and Maximilian Bryan presents the idea of minting 500 million LUNC to purchase Bitcoin as collateral for a new algorithmic fungible token (AFT) called USTN. The whole point of it is for current USTC holders to receive compensation meaningful relative to the current USD value of their holdings, making them as whole as possible under current legal constraints. It is akin to a debt-for-equity swap in traditional finance.

    However, this proposal was met with a lot of criticisms from the community, since minting more LUNC defeats the purpose of the tax and burn initiative. Although it would create a short-term growth cycle, it would most likely be unsustainable medium to long-term, due to the oversupply of LUNC.

    Shortly afterwards, Forshaw announced that the updated plan will not involve minting LUNC. Instead, USTN’s Bitcoin collateral will be managed by a tranche-based decentralized reserve system as outlined in section 5 of their original white paper. However, most of the community still do not like the idea of creating a new token. Why not just create mechanisms around USTC, bringing value to the ecosystem, instead of phasing it out? This is where the second proposal comes in.

    Proposal #2 – Quantitative Tightening to Incentivize New Businesses

    In response to Forshaw’s proposal, core developer Tobias Andersen (aka Zaradar) developed a different solution that focuses on improving USTC, instead of substituting it. Andersen believes that a USTC repeg could be accomplished by incentivizing new businesses to use Luna Classic’s existing blockchain infrastructure. The plan to achieve this however is a more “painful” journey as quoted by the author, but is more organic and sustainable in the long run.

    The plan adapts a form of quantitative tightening (QT), a traditional finance technique used by central banks to decrease liquidity in the economy. For Luna Classic, it would involve installing burn taxes and increasing interest rates on staking rewards. Rewards would be lowered and lock-up periods increased. The whole point is to significantly reduce the circulating supply of both USTC and LUNC, making the value networks sustainable long-term.

    As for incentivizing new businesses on the blockchain, the features include partitioned pools, where DApps can create their own commodity token which is captalized via LUNC and traded via USTC. Based on each pool, this brings another utility to USTC as a “value transfer”, with investors using the stablecoin to swap between pools. To help keep partitioned pools stable, a swap tax is applied when commodity tokens exit the partitioned pools into USTC. This process would be measured and regulated by the ABS keeper, which is a range of volatility guards and tax policies governed by the DAO.

    However, some things are unclear in the proposal. Andersen did not explain exactly how a successful implementation of these would help USTC regain its peg, and more importantly maintain the peg. He only explained a way to appreciate the price of USTC with increased network activity on the blockchain. Unless there is a way to successfully prevent another death spiral, we would see $10 billion worth of USTC debt tear down any bull run with an avalanche of speculative mercenary capital.

    Rebuilding the Project Ecosystem

    In order to restore DApp and project support on the Luna Classic, Terra Rebels will restore inter-block communication (IBC) between Osmosis and Terra, re-enabling and unlocking the transfer of token and data between chains. Currently, more than 150 million USTC is stuck in Osmosis alone. Opening up the channel will allow users to transfer funds from Osmosis’ LUNC and USTC liquidity pools for use in other DApps.

    Moreover, on June 24th 2022, Terra Rebels launched “Rogue-1” TestNet to test governance parameter proposals and ensure the tax burn code is working. It also has the necessary upgrades in Cosmos smart contracts and IBC to communicate with the rest of the Cosmos ecosystem. Based upon the Luna v2 core, other projects built on Luna v2 will not require additional development as it is compatible with both blockchains. The core implementation is expected to be completed in 2023.

    Verdict on Luna Classic Comeback

    For Luna Classic, there is a sense of justice that is unprecedented in the history of crypto. People around the world have literally lost their life savings because of the collapse. Similar to how volunteers help rebuild communities who were hit by natural disasters, we are seeing the crypto community and even crypto powerhouses step in to help revive a project with a failed reputation and fix a problem they did not create.

    There is a reason why LUNC is still performing relatively well, ranking top 35 in market cap at the time of writing. Whereas LUNA is barely in the top 100, since it is more associated with Do Kwon and the TFL. This goes to show that the Classic chain is entirely governed and driven by the community, which is the essence of decentralization in the first place.

    Despite the communities’ effort, there is no way to be sure that the comeback of Luna Classic is written in the stars. As of now, the proposed plans of the community solely focus on reducing the hyperinflated token supply and attracting new businesses to the blockchain. And even if Luna Classic does make a comeback, we cannot know for certain that their token price and network activity will remain stable long-term. But it is reasonable (or optimistic) to assume that the plans being debated and deployed now are just the first step to recovery.

  • Why Do Cross-Chain Bridges Keep Getting Hacked?

    Why Do Cross-Chain Bridges Keep Getting Hacked?

    Out of all blockchain attacks, cross-chain bridges are one of the most targetted ones. Just last week, Binance lost $570 million as a result of an exploit on Binance Smart Chain’s Token Hub Bridge. Even Binance, one of the world’s secure and reputable cryptocurrency platforms, fell victim to a cross-chain bridge hack. This brings us to an important question: why do cross-chain bridges keep getting hacked, and why do people still use them despite its security risk?

    Why Do People Use Cross-Chain Bridges?

    One of the biggest limitations of blockchains has been their inability to work together. Each blockchain has its own protocols or smart contracts that are not compatible with other blockchains on a programmable level. As a result, you cannot spend Bitcoin in the Ethereum network, for example. This is where cross-chain bridges come in to provide interoperability.

    A cross-chain bridge connects two blockchains, enabling users to transfer data and liquidity from one chain to the other. It also allows users to access new protocols on other chains, making it so that developers from different blockchain communities can collaborate together. Moreover, with Lego-like composability of decentralized finance (DeFi) applications, cross-chain bridges can potentially open up a whole new world of efficient and creative financial services and products for users.

    Without cross-chain bridges, the crypto industry would be bottlenecked by network congestions, since there is no bridge to off-load data and transaction executions.

    Why are Cross-Chain Bridges Vulnerable?

    When you bridge an asset to another blockchain, it is not exactly “sent.” Instead, through smart contract execution, the assets are first deposited, locked, or burned on one blockchain. Afterwards, they are then credited, unlocked, or minted on the other blockchain in the form of a wrapped token.

    However, this asset conversion is not guaranteed. This is because cross-chain bridges are independent entities that do not belong to any blockchain. This means that no blockchain can verify that any asset is bridged, since they cannot access off-chain information. The bridging process mainly relies on two parties to ensure successful transfer:

    • Third-party oracles who interpret off-chain data for on-chain use.
    • Validators or custodians (DAO or smart contract) who safekeep the original asset and release the wrapped asset.

    As you can see, there are several layers of trust, not just during the token swap but throughout the entire bridging process. Users must additionally continue to trust that they will be able to bridge the wrapped token back in the future on a 1:1 basis. Herein lies the vulnerability of cross-chain bridges: with multiple processes and third-party involvements, there is a brief window of time where hackers can target any one of these actions in isolation, not to mention possible bugs or flaws in the smart contract coding in which hackers can exploit.

    How are Cross-Chain Bridges Hacked?

    A successful cross-chain bridge hack typically ends up with tokens being minted on one blockchain without a corresponding deposit on the other. There are three types of exploits to achieve this:

    Fake Deposits

    During the bridging process, each deposit has to be validated before allowing a transfer to go through. If a hacker can create a fake deposit that validates as a real one, they can trick the system into minting free tokens without putting in any money.

    This mostly happens due to a flaw in the logic of the smart contract coding, where both tokens share the same proof of event. This would allow the attacker to call the function to deposit one token with fake data that can generate proof to withdraw the other token on the other blockchain.

    This is what happened to Binance when the attacker managed to forge proof messages of non-existent tokens that were then accepted by the BSC Token Hub bridge.

    Signature Verification Bypass

    A digital signature is a process to verify transactions, using the private key to sign the transaction and its corresponding public key to authorize the sender. However, if the smart contract uses an outdated function, it may not be able to verify the correctness of certain instructions. As a result, an attacker could create an input account with malicious data to spoof previously valid digital signatures. This would allow them to bypass the verification step and generate proof messages to mint free tokens.

    The Wormhole hack is an example of this attack, where the hacker bypassed the verification step by injecting a spoofed SYSVAR account, enabling them to freely mint 120,000 wETH (worth $326 million at the time).

    Validator Majority Attack

    Some cross-chain bridges have validators that vote whether or not to approve certain transfers. Similar to a 51% attack, if an attacker controls a majority of the validators, they can approve any transaction, allowing them to withdraw free money. An infamous case of this is the Ronin Network hack, where the attacker took control five of the nine validator nodes and stole $620 million.

  • Magic Square (SQR) Guide: First Ever Crypto App Store Backed by Binance

    Magic Square (SQR) Guide: First Ever Crypto App Store Backed by Binance

    Magic Square is one of the upcoming projects that is highly anticipated by the crypto community. Imagine Apple’s App Store or Google’s Play Store integrated with blockchain technology and driven by the community. This web3 solution offers a way to simplify crypto applications hence driving adoption, creating one integrated ecosystem for all crypto apps and activity.

    Magic Square’s innovation has gained the attention of many heavyweights in the crypto industry including Binance, KuCoin, and DAO Maker. All you need to know about Magic Square is in this article, made simple to understand and updated in real time.

    What is Magic Square (SQR)?

    Magic Square is more than a web3 app store hosting a multitude of decentralized apps (DApps) such as DeFi, NFTs, and GameFi. In fact, Magic Square has their own ecosystem which allows any user to earn crypto from using the app. We will explain this in detail later.

    But first it is important to understand why a project like Magic Square might just be the missing link in driving crypto adoption.

    Current Pain Points of Web3

    As of today, there are nearly 6,000 active DApps running across multiple different blockchains including Ethereum, Binance Smart Chain, Solana, Cardano, and more. This number does not even account for all the centralized crypto apps in the market such as Binance, Coinbase, and Kraken.

    However, with so many crypto apps scattered on the market, there is no established platform that can host them all in one place. As a result, navigating in the crypto space can be a chaotic and cumbersome experience for both users and blockchain developers alike.

    • For users, there is no all-in-one platform where they can easily discover, access, and manage vetted crypto apps.
    • For developers, there is no real multi-chain service that allows them to monetize their apps and market them to users.

    Magic Square’s Solution to Web3 Pain Points

    Magic Square has a built-in Decentralized Autonomous Organization (DAO) structure in which all users and developers have a say in the DApp quality control and listing process. This means that the app store is governed by the community, and they are incentivized to vet all DApps coming through the platform. Based on the principles of decentralization, this provides a secure environment for all users to engage with the listed DApps on Magic Square, as low quality projects and potential scams are filtered out, similar to how invalid Bitcoin transactions are rejected by the miners.

    Magic Square is also building their own multi-chain Software Development Kit (SDK) that will help creators develop, validate, deploy, market, and monetize their DApps.

    All in all, a decentralized crypto app store powered by the community as well as providing useful tools for blockchain developers could be the key to organize all DApp activities in one established platform. This would help bring order, ease, and trust to the crypto app space, which would help develop the infrastructure that powers the growth and success of the crypto industry. Now, let’s take a look at the key features of Magic Square and how their ecosystem functions as a whole.

    Key Features of Magic Square

    • Magic Store & Magic Spaces

    Magic Store is where users can browse and download DApps, similar to Apple’s App Store or Google’s Play Store. Within Magic Store, users have a personalized dashboard called Magic Spaces where they can access all of their DApps and track their app activity in one place. By clicking on the DApp, it will be opened inside the tabs within the user’s personal space. This is a convenient feature as users do not need to switch between websites or crypto apps on their device. Additionally, Magic Spaces is fully synchronized across all devices, including desktops, web browsers, and mobile devices.

    • MagicID (SSI & DIDs Technology)

    Users do not have to give up control of personal information to centralized databases like Apple or Google. Thanks to MagicID which is their Self-Soverign Identity (SSI) and Decentralized Identifiers (DIDs) technology, Magic Square ensures that the verifiable credentials a user has can only be shared with DApps or other users they deem trustworthy.

    SSI allows users to use their digital wallet and authenticate their own identity using the credentials they have been issued. This works in conjunction with DIDs, which creates unique, private, and secure peer-to-peer connections between two connection points. Users know who they are connecting with and vice versa, and no third party can interfere in any way. The platform only collects and aggregates on-chain data about users’ app activities, which they can provide relevant and up-to-date information for users, similar to YouTube’s algorithm. Magic Square does not hold any personal data of their users.

    • Magic SDK

    Magic Square is developing their own SDK that allows developers to enhance their development process in various ways. Its tools are built to optimize payment system with subscription model, wallet infrastructure, trading data aggregation, on-chain data, Automated Market Making (AMM) solutions, in-app token and NFT staking, community management, and more.

    Magic SDK supports common programming languages such as Java, Node JS, C++, which is easy to use for all levels of developers. In addition, the SDK is open-source, allowing every developer to add new tools that can be used by the community of developers. These tools would be vetted by certified auditors to ensure security. For more information on Magic Square’s SDK and their technical product description, their white paper is available.

    • Cross-Chain Bridges

    Magic Square will implement cross-chain bridges using deBridge technology, allowing users and developers to transfer data and liquidity across different blockchains and protocols. This can help developers integrate their DApp from different blockchains into Magic Square. Moreover, its cross-chain functionality allows for integrated DeFi solutions in Magic Square, which we will talk about next.

    • Integrated DeFi Services

    Magic Square’s business model is based on revenue sharing with all pre-integrated CeDeFi solutions that will also be available to the community. These solutions include token/NFT staking, custody services, AMM pools, payment, lending, swaps, and insurance. They will be fully integrated into all DApp pages, supporting their native currencies and protocol. That way, users do not need to leave the app to access related DeFi products and services.

    Moreover, any third party DeFi provider can apply to add their service in Magic Square. If they are approved by the community, their service will be added to the catalog of DeFi services in which DApp developers can use to add on their app page. For each transaction with a third party solution, Magic Square will charge payment based on transaction cost charged by the third party. This revenue will then be shared with the DApp developers, even free-to-own DApps can earn money this way.

    This is how Magic Square makes money and how they fund their community reward pools to distribute SQR tokens to users, which we will cover next.

    How to Earn on Magic Square?

    Magic Square Token (SQR) – Utilities

    The Magic Square (SQR) token is the primary unit that powers the ecosystem. Within the ecosystem, there are three types of members that play a vital role in running Magic Square: (1) users, (2) validators (3) creators. Each of them also has different ways to earn SQR tokens.

    Users

    Anyone who interacts with the DApp store is considered as a user. Magic Square’s core model “use-to-earn” distributes SQR tokens for all users for their in-app activities, which include downloads, comments, ratings, follows, shares, reviews, and using DApps. Individual DApps can even reward users for reviews with their own native app token, giving users the ability to earn double.

    The SQR token rewards are based on the personal ranking of the user which is called “Magic Karma.” All in-app activities are summarized and quantified on a daily basis in the Magic Karma score. The higher the user’s score, the more rewards they can earn. As cited in their lite paper, users can “earn SQR tokens without investing their money, just their time.”

    Users can also stake SQR tokens to unlock different levels of Packages which grant them additional perks. “Base Package” requires 150 staked SQR for unlimited DApp downloads. “Pro Package” requires 500 staked SQR for daily rewards and referral bonuses. Lastly, “Influencer Package” requires 1000 staked SQR and a high Karma score to unlock daily reward boosts and access to Magic Square events and exclusive contests etc.

    Validators

    To fill the role of Apple/Google engineers, Magic Square has validators to determine which DApps to feature in the store. There are three types of validators: (1) qualified validators, (2) nominees, (3) standard validators. Although all community members are eligible for these roles, there are certain conditions that must be met.

    To become a qualified validator, you must stake 5,000 SQR tokens, and pass a qualification test to demonstrate your level of knowledge and competency. Qualified validators can also transfer validating rights to nominees. However, nominees must also pass the qualification test, but do not need to stake SQR tokens. On the other hand, any user can register as a standard validator without passing the qualification test or stake SQR tokens.

    80% of the DApp creator’s validator fee is rewarded to qualified validators, which a portion of it is also shared with the nominees. The remaining 20% is rewarded to standard validators.

    Creators

    All DApp developers and their project team are considered as creators. For creators to have their DApp listed on the Magic Store, they would have to send 10,000 SQR via smart contract, where 35% is paid to validators, 15% is paid to Magic Square, and 50% is staked for the period the DApp is listed in the Magic Store.

    From the list of pre-integrated DeFi services, creators can choose to add them in their DApp page, allowing them to manage their liquidity through in-store interaction. With a higher rate of DeFi adoption by users, creators can efficiently engage with their target audience and increase market penetration.

    Furthermore, each newly listed DApp can apply for a grant of up to 200,000 SQR tokens to be used by the creators to build and improve their product. However, creators must first stake the number of SQR tokens to match the amount they are requesting, for 12 months. The grant would be decided through voting processes by the validators.

    Who is the Team behind Magic Square (SQR)?

    Magic Square is co-founded by Andrey Nayman (CEO) and Benjamin Vodovozov (CMO), both who are seasoned entrepreneurs and mathematicians who have decades of experience in quantitative analysis and performance marketing.

    The team consists of a first-class group of industry professionals, blockchain veterans, software developers, and crypto enthusiasts. Their goal is to gradually influence a widespread organic shift to the web3 space, and they aim to achieve that by developing infrastructures that power the growth of the crypto app ecosystem.

    What’s Happening with Magic Square (SQR)?

    In July, Magic Square concluded a $3 million seed round investments with an evaluation of $30 million, led by Binance Labs and Republic Capital. Mia Mai, Investment Director at Binance Labs, commented that they see potential in Magic Square, especially in their user-friendly designs and business model as a Web3 DApp store. They believe that the product suites of Magic Square can potentially be the driving force of Web3 ecosystem mass adoption and implementation.

    Other crypto industry heavyweights have also become strategic partners with Magic Square, including KuCoin Labs, GSR, DAO Maker, IQ Protocol, Gravity Ventures, Alpha Grep, and other angel investors.

    Several major web3 brands have integrated with Magic Sqare including Chainlink, KyberSwap, Banxa, and deBridge.

    Key Takeaway

    Magic Square is definitely bringing something new and innovative to the crypto space. Its product could essentially organize all DApp activities that are scattered throughout the market, making it easily accessible to crypto users and newcomers. Magic Square published their roadmap, stating that their token will be released in Q1 2023. We are now witnessing many crypto heavyweights such as Binance recognizing the potential of Magic Square and their ability to drive mass adoption through simplicity.

  • Blockchain Attacks Explained: Understanding Network Vulnerabilities

    Blockchain Attacks Explained: Understanding Network Vulnerabilities

    Based on principles of cryptography, decentralization and consensus, blockchain technology offers one of the strongest securities against traditional cyber attacks. However, it is not foolproof, even the strongest blockchains like Bitcoin and Ethereum have inherent vulnerabilities due to their infrastructure. In this article, we will look at the different types of attacks possible on a blockchain.

    51% Attack

    What is a 51% Attack?

    A 51% attack, also known as a majority attack, is when a single person or a coordinated group controls over 50% of the hashing power on proof-of-work blockchains OR more than half of the validating power (staked cryptocurrencies) on proof-of-stake blockchains.

    How does a 51% Attack work?

    Since transactions on a blockchain are validated via consensus, owning 51% of the blockchain’s hashing power or staked crypto gives the attacker majority rule, effectively allowing them to take control of the network. In such a scenario, the attacker has the final say in the validation process, even if the other 49% are against it. This potentially causes network disruption in a number of ways:

    • The attacker could reverse their own transactions, leading to a double-spending problem.
    • They could rewrite parts of the blockchain protocol, deliberately modifying the ordering of certain transactions.
    • They can even prevent some or all transactions from being confirmed, denying other miners or validators from earning rewards, which results in a monopoly.

    Limitations of a 51% Attack

    On the other hand, a 51% attack does have its limits in the amount of disruption it can cause. While the attacker could reverse their own transaction, they cannot reverse other users’ transactions on the network. Moreover, given the immutable nature of the blockchain, the attacker cannot alter the functionality of block rewards nor create coins out of thin air (unless there is a bug in the smart-contract coding).

    How likely will a 51% Attack happen?

    While possible, a 51% attack is unlikely as it is extremely expensive to execute. Owning more than half of the network’s computing power or staked crypto could potentially cost millions or billions of dollars depending on the user population of the blockchain. This is why the bigger the network, the stronger the protection. A majority attack is virtually impossible to occur in leading blockchains such as Bitcoin, Ethereum and Binance Smart Chain.

    But it is worth noting that the blockchain should be truly decentralized, on top of having a large userbase. This is because organizing a 51% attack would most likely be a coordinated effort. If several malicious actors collude and pool their resources together, then the network would be more centralized, which could potentially lead to a majority attack. This is more prevalent amongst smaller altcoin blockchains. Ethereum Classic (ETC), Bitcoin Gold (BTG), and Verge (XVG) were notable victims of the 51% attack.

    Sybil Attack

    What is a Sybil Attack?

    A Sybil attack is when an attacker uses a single node to create and operate multiple fake accounts in order to gain disproportionate influence over decisions made in the network. It is a smaller variation of a 51% attack. The main difference is that a Sybil attack largely focuses on manipulating the number of accounts or nodes rather than already owning them. It also targets smaller areas in the blockchain, whereas a 51% attack is capable of taking over the entire network. However, in some cases, a successful large-scale Sybil attack can transition to a 51% attack.

    The word “Sybil” derives from a case study about a woman named Sybil Dorsett, who was diagnosed with a Dissociative Identity Disorder, also known as Multiple Personality Disorder.

    How does a Sybil Attack work?

    A Sybil attack is quite difficult to detect and prevent, because most public blockchains do not have trusted nodes due to its decentralized nature. This means that the system perceives all nodes and accounts as real, even the fake ones. There are two scenarios of a Sybil attack:

    1. By creating numerous fake identities (or Sybil identities), the attacker will have enough capacity to out-vote the honest nodes on the network, allowing them to perform unauthorized actions in the system.
    2. The attacker can also control the flow of information in a network. If the attacker manages to obtain information about your IP address, they can create many fake nodes to surround you. They can then prevent you from receiving or transmitting blocks, effectively blocking you from using the network.

    How to prevent Sybil Attacks?

    Although a lot of time and research went into figuring out a way to detect and prevent Sybil attacks, there is still no guaranteed defense as of today. But there are some ways to help mitigate Sybil attacks:

    1. Identity validation techniques such as phone number, credit card or IP address verification can help reveal the true identity of hostile entities. This is a secure way to suss out fake accounts or bots for most types of peer-to-peer networks. However, this relies on a central authority to perform these identity validations which sacrifices anonymity for accountability. Moreover, this means that the validation authority could become a target for attack.
    2. Social trust graphs, on the other hand, can limit the extent of damage by a specific Sybil attacker, while maintaining anonymity. You can analyze connectivity data in social graphs like SybilGuard or SybilLimit to identify suspected Sybil clusters in distributed systems. But this technique is not perfect either, as small-scale Sybil attacks are more difficult to detect.

    Blockchain Denial of Service Attack (BDoS)

    Denial of Service Attack (DoS)

    Before we go into Blockchain Denial of Service attacks (BDoS), let’s take a look at its predecessors.

    Traditionally, a Denial of Service attack (DoS) or a Distributed Denial of Service attack (DDoS) when multiple computers are involved, is a malicious attempt to disrupt real users’ access to a website or network service by overloading its servers with a massive amount of traffic, causing the website or application to slow down its functionality or even crash entirely.

    But for blockchains, a DoS or DDoS attack is difficult to execute, especially if the network’s userbase is large and decentralized. This is because a decentralized network distributes computing power worldwide, eliminating single points of failure such as servers or apps. Even if several nodes are down, the blockchain is able to continue operating and validating transactions, unless…

    What is a Blockchain Denial of Service Attack (BDoS)?

    With the rise of blockchain technology, a new type of DoS attack emerged — a Blockchain Denial of Service attack (BDoS). These attacks focus on the protocol layer of a blockchain, usually PoW blockchains, with the biggest threat being transaction flooding.

    Since most blockchains have a fixed block size, there is a limit to how many transactions can fit into a block. Attackers can exploit this by spamming transactions to the blockchain, filling the blocks to prevent legitimate transactions from being added to the chain. The legitimate transactions remain in the public mempool waiting for the next block.

    When this happens, the throughput capacity of the network is drastically slowed down, and in some cases shut down. It happened to Solana in January 2022, where the network went offline for four hours as a result of a BDoS attack.

    How to prevent a Blockchain Denial of Service Attack (BDoS)?

    Penetration testing is a core security auditing process that helps identify potential vulnerabilities before the mainnet is deployed. By simulating in-dept attacks, penetration testing offers traffic analytics tools that can help blockchain developers spot some of the telltale signs of a DoS attack such as unusual traffic patterns from a single IP address or IP range.

    In our previous article, we have covered some of the top blockchain security auditing firms that offer the best penetration testing services.

  • Asia’s Largest Crypto Conference Begins Today! (TOKEN2049 Singapore)

    Asia’s Largest Crypto Conference Begins Today! (TOKEN2049 Singapore)

    All of the biggest names in the crypto industry are gathered in Singapore for the Asia Crypto Week and TOKEN2049 Event in Singapore today! Boxmining is here today to witness the biggest web3 event in history, where blockchain innovators, major investors, and the crypto community discuss and decide the future of crypto.

    What is Asia Crypto Week?

    Asia Crypto Week (source: https://www.asiacryptoweek.com/)

    Asia Crypto Week is Asia’s largest web3 event, involving a series of conferences, exhibitions, workshops, and meetups with some of the biggest names in the crypto industry. This week-long event offers the best networking opportunities for crypto investors and developers alike.

    The last Asia Crypto Week event took place in March 2019 in Hong Kong. This year features a week of various independently organized side events around TOKEN2049, running from 26 September to 2 October 2022 in Singapore. TOKEN2049 Singapore is the main event of this year’s Asia Crypto Week.

    What is TOKEN2049?

    TOKEN2049 is the premier crypto event in the world, organized annually in Singapore and London, where founders and executives of the leading web3 companies share their insight on the market as well as crypto regulation and the institutional landscape.

    Today marks the debut of TOKEN2049 Singapore, which will take place for two days (28 September to 29 September 2022) in the Marina Bay Sands. It brings together all of the largest web3 names, FinTech corporations, uniting entrepreneurs, investors, developers, industry insiders and global media. TOKEN2049 announced a record-breaking 7000+ attendees, 2,000+ global companies, 250+ exhibitors, and 200+ speakers for its Singapore debut, making it the industry’s most well-attended event in years.

    Global Web3 Brands attending TOKEN2049 (source: https://www.asia.token2049.com/)

    TOKEN2049 Singapore has an impressive all-star lineup of speakers including Galaxy Digital CEO Mike Novogratz, Pantera Capital CEO Dan Morehead, Axie Infinity co-founder and COO Aleksander Leonard Larsen, and even Hanson Robotics social humanoid robot Sophia A.I. With in-depth presentations and panel discussions, these key decision-makers and thought leaders will chart the latest milestones in digital assets and define what is next in the crypto space.

    TOKEN2049 Singapore will also be showcasing a grand NFT exhibition with immersive experience, titled the Op3n Whale NFT Exhibition. Developed by Op3n and Whale, two of the most popular NFT platforms, the NFT collection is reported to have a market value exceeding $100 million. This will be the first time such a collection owned by a single entity has ever been on display to the public.

    Op3n Whale NFT Exhibition Poster (Source: https://www.asia.token2049.com/)
  • What are Crypto Launchpads? Investing in Startups for Massive Profits

    What are Crypto Launchpads? Investing in Startups for Massive Profits

    In the crypto industry, discovering early-stage moonshot projects can be difficult. Investors who manage to enter early usually secure massive returns, and some of these projects end up becoming successful in the long run. However, there are many low-quality projects and scams looking to take advantage of early investors, resulting in pump-and-dump schemes. Therefore, the market needed a more secure mechanism to raise funds for crypto startups. This is where launchpads come in.

    What is ICO? – The Origin of Crypto Fundraising

    Before we take a look at what crypto launchpads are, it is important to learn about its predecessor — Initial Coin Offering (ICO) and why they are no longer practiced.

    What is ICO and Why does it Matter?

    Similar to all business ventures, crypto projects require capital to build their product and meet their objectives. They typically achieve this via crowdfunding, and the first fundraising model in the crypto industry is an ICO, where crypto projects would raise funds by selling a part of their total token supply to the community. This allowed investors to purchase tokens at the cheapest price possible before they are listed on a crypto exchange.

    In fact, Ethereum conducted one of the first ICOs in 2014. More than 60 million ETH were created and sold to the public, raising $18.3 million USD.

    ICO Bubble in 2017-2018

    In 2017, ICOs began to take off thanks to Ethereum’s open-ended smart contract protocol. Developers can easily create new applications and tokens (ERC-20 tokens). Moreover, smart contracts can be executed to calculate raised funds and distribute tokens once crowdsale is complete. As a result, the majority of ICOs took place via the Ethereum network.

    Numerous projects saw substantial gains of their token as high as 10,000x, making a lot of early investors very rich. By the end of 2017, an estimated $4.9 billion was raised through ICOs reported by the Wall Street Journal. However, ICOs quickly became a way for investors to gamble in hopes of making easy profit. As a result, project fundamentals became less important to would-be investors.

    This led to many security issues. For example, since cryptocurrencies were unregulated at the time, anyone can launch an ICO anonymously. Many malicious actors took advantage of the hype and created false projects and ICOs. They would rug pull investors’ funds, or even just run away with the money, abandoning the project before it ever got listed on an exchange. It became so severe that the U.S. Securities and Exchange Commission (SEC) intervened, imposing strict securities laws on ICOs which subsequently led to ICO bans worldwide such as South Korea and China.

    Crypto Launchpads – The Beginning of IEO and IDO

    Because of the ICO bubble, faith in the crypto industry was lost. This made it very difficult for legitimate blockchain projects to raise funds and build products with real value. Fortunately, not long after, crypto launchpads came to the rescue. Launchpads are essentially platforms that help crypto projects raise capital while giving access to early-stage token sales for their group of investors.

    There are two main types of crypto launchpads — Initial Exchange Offering (IEO) and Initial DEX Offering (IDO). The difference between the two is where the fundraising is being held. Let’s look at the first one, IEO.

    What is IEO?

    An IEO is a fundraising model where the project receives the backing of a crypto exchange like Binance or FTX. The fundraising event is administered by the exchange, in contrast to an ICO where the project team themselves conducts the fundraising on their website. With IEOs, users can buy tokens on the exchange’s launchpad directly from their exchange wallet.

    IEOs generally have high security as most crypto exchanges are regulated to an extent. They actively follow stringent protocols to prevent fraud including know-your-customer (KYC) and anti-money laundering (AML) verifications. The projects are carefully scrutinized, vetted, and selected by the exchange team for their IEO. Project teams must at least have a white paper and minimum viable product (MVP) ready for the exchange to review. Thus, would-be investors are assured that the startups under IEO listings are legitimate. After all, the exchange is staking its reputation behind the projects on its platform, offering a higher degree of trust behind the project.

    For crypto projects looking to raise funds, an IEO offers the promise of an immediate userbase that can see their product. In other words, IEOs help create exposure to the project. This also means that the project can reduce their outside marketing funnels for fundraising, enabling them to focus only on the development of their product.

    Top IEO Launchpads

    Some of the top IEO launchpads include Binance Launchpad, Huobi Prime, KuCoin Spotlight, Gate.io Startup, and many others. In fact, the first IEO in history was launched by Binance Launchpad in the first quarter of 2019. Moreover, these top IEO launchpads are more than a platform for offering tokens. They also provide full advisory service for projects, leveraging their insights and experience to help build better products.

    Disadvantages of IEO

    Though IEOs are generally secure, not all crypto exchanges are equal. Some may not be as strict in doing due diligence or implementing regulations. This means that there is still a risk of a pump-and-dump scam, as advanced scammers could pull a meticulous long con.

    Moreover, listing fees may be quite high, especially on reputable exchange platforms. Startups may also be asked to pay commission from token sales. They can be considered as centralized gatekeepers about the types of projects that proliferate, meaning that only somewhat established projects can earn a spot.

    What is IDO?

    On the other hand, IDOs are approved by the community of a decentralized exchange (DEX) instead of a crypto exchange. Given the decentralized nature of these exchanges, anyone can become an approver. The community can vote on projects that they are interested in. This alleviates the gatekeeping bottleneck that IEO exchanges have, giving smaller legitimate projects a chance to shine.

    Similar to ICOs, some DEX teams also provide advisory service to listed startups, offering them a tool for engaging their communities in an economy that enhances their products while allowing them to make smart business decisions regarding their assets. However, unlike centralized exchanges, most IDO launchpads have their own native tokens, which in some cases serve as an entry requirement for users to participate in crowdfunding.

    Top IDO Launchpads

    Some of the top IDO launchpads include Polkastarter, TrustSwap, Scaleswap, DAO Maker and more. We have a complete guide on choosing the best IDO launchpads: Private: Ultimate Guide to the Best Initial DEX Offering (IDO) Launchpads.

    Disadvantages of IDO

    Though IDOs are more transparent and accessible to everyone, there are also drawbacks. Since DEXes tend to be a lot smaller than centralized exchanges, new projects might receive substantially smaller traffic than IEOs. Moreover, because every one gets a say in the approval process, long-con projects can also sneak their way in with eye-catching proposals and marketing.

    Key Takeaway

    Investing in potential crypto startups can generate massive returns if successful. IEO and IDO launchpads are a great place for you to research upcoming innovations and learn more about what they offer. Though not completely risk-free, they offer far more security advantages than ICOs.

  • The End for Ethereum Miners after ETH 2.0?

    The End for Ethereum Miners after ETH 2.0?

    The newly launched Ethereum Merge has rendered mining obsolete. So what will happen to all Ethereum mining pools and its miners as well as the millions of dollars worth of hardware in the ecosystem?

    What is Ethereum Mining?

    Before Ethereum’s Merge on 15th September 2022, the blockchain used proof-of-work, the same consensus protocol as Bitcoin, to validate and record transactions. But unlike Bitcoin which solely uses application-specific integrated circuit (ASIC) miners, you could use graphics processing unit (GPU) of gaming computers to mine ETH. As a result, it was generally easier to mine ETH than Bitcoin since GPUs are more accessible and widely applicable than ASICs.

    There were two main ways to mine ETH – pool mining or solo mining:

    Pool Mining (working together)

    • Work with others to mine and share rewards
    • Get paid per share, on a hourly or daily basis
    • Less random / dependent on luck
    • Pools take some fees (0.5-8% depending on pool)

    Solo Mining

    • You mine the entire block reward (differs based on mining difficulty changes) – no pool fees
    • Random chance and probability – you can go days or months without rewards
    • Not viable if hashrate is low – single GPU might take years to mine a block

    Ethereum mining pools were the go-to options for most miners as solo mining took a very long time to earn rewards. However, this work drew criticism for its impact on the environment and its excessive electricity consumption. It is a highly energy-intensive process as miners around the world pool together large amounts of resources and power to mine ETH. But all of that has changed with the arrival of the Merge on 15th September 2022.

    How does the Merge affect Ethereum Mining?

    On 15th September 2022, Ethereum switched its consensus protocol to proof-of-stake as part of an update known as the “Merge” that links Beacon Chain and the Ethereum Mainnet. The Beacon Chain is what allows users to stake ETH, which has been operational since the end of 2020. Many people have staked their ETH to support the transition as well as earn rewards on their stake. Here’s the kicker, after the Merge begins, mining difficulty will soar due to the “difficulty bomb”. It is a kind of self-destruct mechanism meant to make proof-of-work calculations almost impossible, incentivizing the move to an environmentally-friendly proof-of-stake model.

    What will happen to Ethereum Mining Pools and Miners?

    There is a divide in the Ethereum mining community between the organizations that have helped coordinate the resources of individual miners (mining pools) and the individual miners themselves.

    Good for Ethereum Mining Pools

    For mining pools, the transition does not affect them at all. Since these organizations never did the actual work of generating computing power themselves, they are not affected by the sunk cost of the eventual obsolete mining rigs. Instead, these pooling companies have human capital and infrastructure necessary to organize the pooling of resources, source new clients, and overall manage and maintain the operation and its security.

    For this reason, leading Ethereum mining pools like Ethermine or f2pool can simply transition to staking pools. They do not rely on the actual mining itself. It is not a matter of product, only business model. These companies operate on a fee structure, charging individuals for participating in their pools, and it will be unaffected by the move from mining to staking. They only require business development, customer service, and communication with core developers, softwares, and client teams.

    Bad for Individual Ethereum Miners

    However, for the miners who make up these pools and other independent Ethereum miners, the transition could mean the end for them. People who have benefited from mining ETH, either by managing large mining farms or by contributing moderate amounts of GPU power to mining pools, may be left stranded. They have invested large amounts of money in expensive GPUs or specialized mining rigs that are useless in staking. Some will not even be able to recoup their initial investment as they hoped to profit from mining.

    Although validating via proof-of-stake only requires a home PC with stable internet connection, it would require a minimum contribution of 32 ETH, which is a sum far greater than most people’s savings. Essentially, in order to fully cover the hole of lost mining revenues via staking, individual miners would have to establish and operate their own staking pools, which would be a considerably more difficult task than maintaining their own mining rigs.

    Potential Solutions for Ethereum Miners

    There is really no good option for ETH miners. They can still salvage their GPUs by selling them in the market as gaming computers are still popular products, but it is safe to say that there is certainly no demand for ASICs in the market. They could use them to mine other cryptocurrencies that are compatible with their processors such as Ethereum Classic, Ravencoin or Ergo, but they are also much less in demand than Ethereum. The profit margins are substantially lower.

    However, there are certain staking pools that encourage bringing current miners into the fold. According to Bitfly, EtherMine’s parent company, their goal is to “onboard current miners from proof-of-work to proof-of-stake.” They also noted that most deposits to EtherMine’s new staking platform have come from existing miners. But whatever the case is, there is still no easy answer as to how Ethereum miners will ever again come close to generating the revenue produced by mining ETH.

    But the most popular option for ETH miners is to operate in a new proof-of-work hard fork of Ethereum known as ETHPoW or ETHW.

    What is Ethereum PoW Hard Fork (ETHW)?

    A hard fork is a major change to the blockchain’s protocol that results in the splitting of the blockchain, creating a seperate blockchain that inherits all of its history with the original, but is on its own towards a new direction.

    Hours after Ethereum’s successful merge on 15th September 2022, a group known as ETHW Core launched a proof-of-work hard fork of Ethereum known as ETHPoW or ETHW. The hard fork’s purpose is to preserve PoW and keep ETH mining alive beyond the Merge.

    The Problems with ETHW

    Although ETHW could be a safe haven for ETH miners, there is not a lot of optimism about its success. In fact, there are a lot of underlying issues that the core team has yet to address.

    ETHW Post-Launch Network Error

    ETHW is getting off to a bad start. Shortly after the ETHW mainnet debut, users began experiencing issues accessing the network. It became clear that the problem was that ETHW had chosen a chain ID already in use by a Bitcoin Cash testnet. If ETHW fails to change its network’s chain ID from the Ethereum mainnet, users could be susceptible to a replay attack — an exploit in which the attacker intercepts and then replicates a valid data transmission going through a network. Given the transparent nature of blockchains, this means that hackers can duplicate your transactions, allowing them to withdraw your funds.

    No Backing for Forked Stablecoins

    The two leading stablecoins USD Coin (USDC) and Tether (USDT) have officially confirmed to exclusively support Ethereum 2.0. This results in a smooth transition that is essential for the long-term growth of the decentralized finance (DeFi) ecosystem and its platforms.

    However, that leaves ETHW high and dry as lack of stablecoin support means insufficient liquidity. This is because 1:1 backing will only exist for the officially recognized blockchains, thus USDC and USDT balances cannot be duplicated onto a new blockchain. This is further amplified by the fact that ETHW announced they would temporarily freeze tokens in certain liquidity pools to “protect user funds.” This did not go well with many as this move is done without their consent and the community did not vote on such change.

    No Oracle Support

    Apart from facilitating transactions, decentralized applications (DApps) also interact with external data which requires off-chain computing. This is where blockchain oracle technology like Chainlink comes into play. They enhance smart contracts by connecting them with real-world data, events and transactions.

    On August 8, Chainlink has also officially confirmed to stay with Ethereum 2.0. This means that any DApps on ETHW can be negatively affected since oracle solutions are essential in retrieving and sharing data without jeopardizing the security of the blockchain.

    Lack of Support from Leading DApps and Projects

    On 16th August 2022, Aave, a leading decentralized lending protocol on Ethereum, proposed a governance vote to commit to using Ethereum 2.0, giving power to shut down any Aave deployments on any alternative Ethrereum forks. On their blog post, Aave advised developers and DApp teams on the Ethereum network to halt smart contract operations on forked Ethereum blockchains until they become stable.

    The lack of support from projects means that any tokens or NFTs on the forked Ethereum chain will less likely be accepted in marketplaces or DeFi applications. In turn this would affect investors who are looking to profit from trading these assets.

  • KuCoin vs Kraken Comparison Review: Which Exchange is Better?

    KuCoin vs Kraken Comparison Review: Which Exchange is Better?

    Choosing the right cryptocurrency exchange is crucial to optimizing your crypto investments and trading. In this article, we will be comparing two of the top crypto exchanges in the world: KuCoin and Kraken.

    What is KuCoin?

    Company Overview

    Since its launch in 2017, KuCoin has grown to be one of the largest exchanges by trade volume worldwide, with over $1 trillion accumulated trading volume. 11 million people from more than 200 countries are registered on the platform. Known as the “People’s Exchange”, KuCoin puts user experience first, providing users with multi-language and 24/7 customer service. As such, KuCoin has established local communities all around the world including Japan, Italy, Russia, and India, just to name a few.

    Trading Bot Feature

    While KuCoin provides advanced trading tools for experienced users, its platform also benefits beginners in the trading scene. In fact, KuCoin offers trading bots in which users can enter specific trading parameters and let the bot take over trading activities. As a result, traders of all levels do not have to go through the hassle of timing entries and exits. It is a passive approach to trading cryptocurrency and maximizing potential profit. The best part is that traders do not have to monitor the market constantly, knowing that their crypto trading portfolio is working for them.

    Top Altcoin Exchange

    KuCoin has one of the largest selection of altcoins available compared to other major exchanges. There are currently over 700 tokens with new ones being added regularly. Even crypto users from Binance or FTX will often keep KuCoin as a secondary exchange to acquire new altcoins that cannot be found anywhere else.

    The platform also offers fiat support for over 50 different currencies. As a result, users from remote locations have access to swapping tokens while avoiding high conversion rates.

    What is Kraken?

    Company Overview

    Founded in 2011, Kraken is one of the oldest and most reputable U.S. crypto exchanges. It is the global leader in Bitcoin trading in terms of the volume of transactions in euro and its liquidity. Trades also support Candian dollars, U.S. dollars, British pounds, Australian dollar, Swiss franc, and Japanese Yen. As a result, there are 9 million registered users across 190 countries, with $207 billion quarterly trading volume at the time of writing.

    In 2015, Kraken opened the first dark pool for Bitcoin, resulting in the trading platform becoming a primary place for institutional investors and high-volume whales to trade Bitcoin in discretion.

    Who Founded Kraken?

    Kraken was founded by Jesse Powell (CEO) who was a security consultant for Mt. Gox. Powell anticipated the fall of Mt. Gox and began developing Kraken as a potential replacement. According to Powell, he realized that “the exchange is the most critical part of the Bitcoin ecosystem” after learning the situation with Mt. Gox. When it indeed collapsed and failed security audits in 2014, it paved the way for newer and more robust exchanges like Kraken to gain market share.

    Key Features of Kraken

    Though Kraken only offers 185 coins which is fewer compared to other major exchanges, Kraken allows users to stake popular cryptos and earn attractive APY rewards as high as 23% in yearly rewards. To this day, over $10 billion worth of digital assets are staked on Kraken’s on-chain staking platform, rewarding more than $100 million to clients.

    Kraken was also one of the first exchanges to offer spot trading with margin, regulated derivatives and index services. Similar to Coinbase, Kraken also has two apps: Kraken and Kraken Pro. The latter is designed for traders on the go and provides an interface for advanced trading, charting, and order types that are not available on the standard app. Advanced traders can easily trade large volumes at stable prices with low spreads and high rate limits.

    Kraken is also active in providing in-dept crypto education. Similar to Binance Academy, Kraken has Kraken Learn that are full of articles, videos, and guides that users need to navigate the crypto world. Crypto is still a relatively niche market. As such, this is an important step to mass adoption as education is the key to onboard newcomers.

    KuCoin vs Kraken Overview

    In this section, we will take a closer look at what KuCoin and Kraken have to offer and compare them based on these features:

    Cryptocurrencies and Products

    KuCoin offers more cryptocurrencies than Kraken by a large margin. It prides itself in being the top major crypto exchange that is constantly up to date with the latest digital assets. KuCoin offers more than 700 supported coins, whereas Kraken only has over 185. However, Kraken focuses on providing large volume to its smaller number of cryptos, which is better for trading in general as users can easily trade large volumes at stable prices. If you opt for high risk, high reward investments, KuCoin is the pick. But if you prefer trading large-cap cryptos at a regular basis, Kraken is the better option.

    Kraken also offers higher returns on crypto staking and savings. Take Bitcoin for example, Kraken offers a 1% APR, whereas KuCoin only gives 0.12%. However, Kraken’s Bitcoin staking is done off-chain via their internal programs, which is available in eligible countries only. Nevertheless, though both numbers are small, the difference becomes more significant over time.

    Both KuCoin and Kraken offer a wide array of trading tools for advanced users. But KuCoin also provides a trading bot for users to earn passive profits without constantly monitoring the market. In terms of convenience, KuCoin is the winner here as traders of all levels can simply let the bot do the trading around the clock. After all, humans cannot compete with bots in terms of speed and calculation. According to their website, KuCoin has over 9 million bots created worldwide.

    Fees

    Kraken has a more complex fee structure than KuCoin. Fees are incurred across multiple purchase categories such as (1) Kraken Instant Buy, (2) Kraken Pro, (3) Stablecoins/Pegged Token/FX Pairs, (4) Margin, (5) Futures, and (6) NFTs. On the other hand, KuCoin only has differing fees for spot and futures.

    Both exchanges charge no fees for crypto deposits, though Kraken charges an address setup fee for certain assets. In terms of trading fees, KuCoin’s maker and taker fee is between 0.01-0.1%, whereas Kraken’s maker and taker fee is between 0.00% and 0.26%. KuCoin lowers trading fees based on the amount of KCS (KuCoin Shares) the user is holding, whereas Kraken gives discounts based on monthly trading volume.

    For most retail investors, KuCoin is the clear winner as the benefit of holding KCS is twofold: lowering trading fees and appreciation of KCS value over time. However, for whales who trade large volumes regularly, Kraken is the better option.

    Security

    Like Coinbase, Kraken is one of the few registered and licensed crypto exchange in the U.S. where it has one of the strictest crypto regulations in the world. The exchange ranks first with a perfect score on crypto exchange security review site CER, and it has never been hacked before.

    On the other hand, though KuCoin shares most of the security features as Kraken including KYC verification and multi-factor authentication, KuCoin has suffered a major breach in 2020. The hackers managed to obtain the keys to some of the biggest wallets on the exchange, stealing over $281 million worth of coins. Although $204 million were recovered within weeks of the attack, a lot of users in the crypto space had lost faith in KuCoin. However, since the incident, the exchange has been actively upgrading their security mechanisms and performing periodic reviews to protect users’ privacy and assets.

    Key Takeaways

    If you prefer spot trading and investing in high risk, high reward altcoins, KuCoin is the better choice.

    If you want to trade without going through the hassle of monitoring the market constantly, KuCoin is also better as they have a trading bot who can help you trade within specific parameters you set up.

    If you are an advanced trader or a whale, Kraken is far superior than KuCoin as they have an app (Kraken Pro) specifically designed for high-level trading and deep liquidity to support large volume trades with low fees.

    If you value security first, Kraken is the clear winner as they have never been hacked before, and is one of the few exchanges that operates under U.S. regulations.

  • What are “Money Legos” in DeFi? Composability Explained

    What are “Money Legos” in DeFi? Composability Explained

    What is Composability in DeFi?

    Decentralized finance (DeFi) has revolutionized financial services, creating new possibilities unlike anything that exists in traditional banking. DeFi protocols allow you to transfer value, exchange tokens, take out loans, provide liquidity, earn yields and so much more. As the market expands, it is likely that even more innovations will surface.

    This is because of how smart contracts work. The open-source and permissionless nature of blockchains allows anyone to code their own contracts or even integrate a component of another protocol in their own application. As a result, the applications built on a smart-contract network can run interchangeably.

    This is known as “composability” — the interoperability of DeFi protocols resulting in efficient and creative financial services and products for users. It is the core basis of DeFi and is what helped the ecosystem grow so quickly.

    What are “Money Legos” in DeFi?

    To understand how composability works in DeFi, we can view components of DeFi protocols as Lego blocks, giving rise to the term “money legos.” Each building block has its own functionality such as borrowing, lending or staking assets, just to name a few. Developers can stack multiple protocols together like Aave, Compound, Yearn, Curve or Synthetix to create a new DeFi protocol, just as you would a Lego set.

    For developers, money legos save a lot of time and complications around building a new decentralized application (DApp). They do not need to start from scratch as they can simply integrate existing money legos into their own. What money blocks provide are solutions to more complex processes which require more steps than usual.

    Moreover, developers can build smart contracts that can operate the legos in any order, be it one before or after the other, or in parallel. For example, by joining the money legos together and then specifying the order of events through a smart contract, users could

    1. Put up collateral for a loan on Aave
    2. Stake half of the loaned amount on Curve
    3. Trade half of the loaned amount on Uniswap
    4. Pull out both amounts simultaneously and take profit
    5. Pay off the loan on Aave

    This is just one type of scenario. As you can see, there are infinite possibilities with money legos. It is up to your creativity how much use you can make of the combination of their functions to optimize your crypto. Furucombo is a great platform to experiment different possibilities of DeFi money legos.

    Why “Money Legos” Matter?

    “DeFi” is a buzzword that gets thrown around a lot. People often associate DeFi with low fees and yield farming, but do not exactly know how the underlying infrastructure works. Therefore, it is important to learn about money legos as they are the building blocks for programmable money, hence its name. While developers can compare and choose specific DeFi protocols to cut down on fees when building new applications, investors can better optimize and manage their crypto by having a better understanding of money legos.

    As savvy investors, we know that key performance indicators (KPI) of a healthy market and ecosystem are trading volume and activities. As such, money legos are powerful tools that can expand the potential possibilities of the ecosystem. They add to the utility of each existing protocol, while improving the blockchain’s network effect.

    In other words, each time a new protocol is created in the DeFi space, a new money lego is born that can also be used to offer more new services within the sector. These new protocols will offer faster and more efficient services, giving investors more ways to generate profit. For each new money lego, hundreds or thousands of new combinations become possible.

    However, as of now, composability mostly favors protocols of the same blockchain. For example, DeFi protocols on Ethereum can only interact with other protocols on Ethereum. Same goes for Solana or Cardano. Perhaps in the future, true multi-chain interoperability will allow protocols on one blockchain interact with a protocol on another blockchain. This means that crypto will become more accessible, further increasing their adoption.

    Risks of “Money Legos” Composability

    Since DeFi protocols can seamlessly integrate with each other, this means that the entire ecosystem hinges on each of its money legos. If one of the core money legos is compromised, it could lead to a chain reaction, potentially affecting other integrated applications.

    This is possible because of the interoperability between the DeFi protocols. For example, you can carry out complex strategies like borrowing Synthetix (SNX) from Aave, depositing SNX into Synthetix to mint sUSD, then swap sUSD for DAI on Curve. Now if any one of these protocols is attacked, then all of their liquidity pools will be severely affected.

    Moreover, certain protocols also have wrapped crypto tokens (e.g. WBTC, renBTC, wETH) that are pegged to the value of another crypto. This means that you not only have to trust the protocol you deposit your funds to but all the others it may be reliant upon.

    Key Takeaway

    It is important to understand money legos as they are the building blocks of the DeFi ecosystem. Money legos help developers create new protocols, offering faster and more efficient financial services for DeFi end-users. It also helps investors get the best trades and the best yields when it comes to earning from DeFi protocols. That is the whole concept behind the idea of composability. Seamless interoperability among components helps to build the best and most creative solutions.