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  • Will Tether Stablecoin (USDT) Depeg Again? Reserve FUD Continues

    Will Tether Stablecoin (USDT) Depeg Again? Reserve FUD Continues

    USDT has reclaimed its peg after UST collapse. But will this happen again amidst FUD rumors surrounding Tether?

    What is USDT?

    Tether (USDT) is the world’s largest stablecoin by market cap with more than $65 billion in circulation at the time of writing. Stablecoins have long been the anchor of cryptocurrency trading because they are pegged to the U.S. Dollar, allowing investors to “cash out” of risky investments instead of swapping to another crypto coin that would fluctuate in value.

    For more information on stablecoins, check out “The Pros and Cons of Stablecoins: Why You Need To Know How They Work.”

    What Happened to USDT?

    However, stablecoins are not exactly 100% “stable”. This is shown by the sudden vaporization of $18 billion in the collapse of Terra’s algorithmic stable terraUSD (UST), which caused a dangerous domino effect across the market.

    This catastrophic event spurred panic selling in other stablecoins, and Tether Ltd., the company behind USDT, honored billions of dollars’ worth of redemptions following UST’s bank run. As a result, USDT’s peg broke and fell to as low as 95 cents. It is a huge red flag if a stablecoin drops below 99 cents, especially for stablecoin heavyweights such as USDT itself.

    Fortunately, USDT has passed the market’s stress test. They were able to withstand redemptions in extremely volatile conditions, eventually reclaiming the peg. However, Tether is still facing criticisms for the lack of transparency about the nature of assets backing the stablecoin.

    Tether fights back: calls short-selling hedge funds “flat out wrong”

    Many hedge funds saw the collapse of Terra as a reason to short USDT. According to a Wall Street Journal podcast, the reason for this is twofold. Firstly is the fact that institutional investors are withdrawing from risky investments (such as crypto) since the Federal Reserve is aggressively raising interest rates. Secondly, they are worried about the quality of the assets backing Tether.

    In Tether’s blog post on 28th July 2022, Tether hit back at these hedge funds, saying that, “…the underlying thesis of this trade is incredibly misinformed and flat-out wrong. It is further supported by a blind belief in what borders on outright conspiracy theories about Tether.”

    Tether also added in a blog post on 27th July 2022 that its portfolio does not contain any Chinese commercial paper. Furthermore, as of the date of the post, its total commercial paper exposure has been reduced to around 3.7 billion (from 30 billion a year ago). Tether also states that it has plans to further reduce its total commercial paper exposure to 0 by October/early November 2022.

    What is Exactly Backing USDT Value?

    Tether has claimed that all USDT tokens are backed 100% by the company’s reserves. According to their latest reserves attestation report audited by MHA Cayman, an independent accounting firm, the company’s total assets exceed its total liabilities, suggesting that USDT is fully backed. Its holdings include U.S. Treasury bills, money market funds, cash, and commercial paper.

    Great, this finally puts an end to what is in their reserves and we can all sleep peacefully without worrying about a USDT collapse, right? Not quite. In fact, there are namely two big issues surrounding Tether’s backing.

    • Nearly Half of USDT’s Reserves Were in Commercial Paper

    According to the report, Tether has more than $20 billion worth of commercial paper in their total assets. Commercial paper is a short-term unsecured debt issued by companies. This poses a problem to backing stablecoins because they are generally seen as less secure and illiquid, unlike cash and U.S. Treasury bills.

    There have also been rumors that most Tether’s commercial paper holdings are backed by debt-ridden property developers in China, albeit Tether denies the rumors. As mentioned previously, Tether has denied rumours that its portfolio contains Chinese commercial paper.

    On the positive side, Tether has taken an initiative in reducing its commercial paper holdings to zero in favor for U.S. Treasuries to back USDT reserves. Tether currently has around 3.7 billion in commercial paper exposure (as of July 2022) but plans to eliminate this completely by October/early November 2022.

    Does this mean that Tether is taking on a leadership role in support of greater transparency for the stablecoin industry? Or is this just a facade, given that Tether continues to avoid a comprehensive audit? This brings us to the next issue. Ambien

    • Tether Has Yet to Undergo an Impartial and Comprehensive Audit

    Though Tether was open about the state of their reserves, the problem lies with the firm that audited it. MHA Cayman is a small-time independent accounting firm based in Cayman Islands. So it is understandable that critics believe that it is more of a validation of information based on management claims than an audit.

    John Reed Stark, an SEC attorney leading cyber-related projects for 15 years, tweeted that the best way for Tether to end the allegations against them would be to “engage a big-four accounting firm to conduct an audit which finds a rock-solid balance sheet. He also added, that, “without a proper audit, everything else Tether’s CFO says is just noise.”

    The big-four refers to the four largest professional services networks in the world, consisting of the global accounting networks Deloitte, Ernst & Young, KPMG, and PwC. They have recently been getting involved in the blockchain industry, working with many crypto companies for regulation purposes.

    A big-four audit carries a lot of weight with the SEC, and many larger companies want to be a part of it because it would make their enterprise more attractive and trustworthy to investors.

    What Would Happen if USDT Collapses?

    If USDT were to collapse, it would deliver catastrophic results in the industry, sparing nothing. It would mean the end of Ethereum DeFi which is a predominantly USDT-based market. This would trigger a chain reaction across all smart-contract networks.

    Bitcoin will also be severely impacted as more than half of bitcoin is traded for USDT since 2019, according to data cited by JPMorgan analysts. As a result, history would repeat itself, triggering another bank run, destabilizing exchanges and causing a panic drop in Bitcoin’s price.

    But we should not forget that USDT was able to maintain its stability through multiple black swan events and extremely volatile conditions, and has managed to stick to its values and honor all redemption requests during the UST collapse in May.

    After all, USDT has long been the king of stablecoins and is critical for maintaining any confidence in the industry. All the big players in crypto will simply not let a collapse happen.

  • How to Fix Stuck Transactions on Ethereum

    How to Fix Stuck Transactions on Ethereum

    Ethereum is one of the world’s most versatile blockchains, with functionality that supports innumerable decentralized applications and blockchain assets. Although conceived in 2013 by Vitalik Buterin, Ethereum did not launch until 2015, it has since been at the forefront of blockchain utility, especially with the recent popularity of non-fungible tokens (NFTs).

    An NFT is an asset on a blockchain that is completely verifiably unique and therefore irreplaceable. Today, many people use NFTs to digitize real-world assets and expose these assets to a global audience. NFTs are very popular in art and photography, as they allow creators to access a wide pool of potential fans and buyers. Currently, most NFTs are on the Ethereum blockchain.

    Ethereum is also the most popular network for decentralized applications (DApps). These apps are powered by smart contracts that drive several functions on the blockchain using specified agreements and conditions. Since the NFT and DApp markets exploded, the Ethereum network has become very busy, and sometimes leaves some transactions stuck for long periods.

    Check out our video on how to fix stuck transactions on Ethereum:

    FIX stuck transactions on Ethereum

    Why Do Some Transactions Get Stuck?

    A delay in processing simply means that no miner has picked up the transaction yet. All Ethereum transactions require a gas fee (gwei), a processing fee set to incentivize miners to pick up and process the transaction. This fee is never static, as it depends on the network congestion at transaction time. Sometimes, gas fees may be very high if there are a lot of people transacting simultaneously.

    Ethereum wallets usually recommend a gas fee based on current network specifics but would let the user increase or reduce it as preferred. If a transaction is delayed for too long, it’s likely that the gas fees for other transactions on the network are considerably higher, and miners are ignoring the lower prices.

    What is a Nonce?

    Used in cryptography as an acronym for “Number Only Used Once,” a nonce is a number that functions as an identifier for a transaction. This number is sequential and follows an order such that transactions with lower nonces get processed before others. Since one Ethereum wallet can initiate any number of transactions, nonces represent a (sometimes chronological) sequence that transaction processing follows.

    How to Fix a Stuck Transaction

    There are three main ways to fix a stuck transaction: cancelling the transaction, increasing the gas fee, or introducing a new transaction with a custom nonce. Before fixing a stuck transaction, it is important to verify the transaction in a block explorer like Etherscan to confirm that it is pending. An ETH wallet may provide users with a cancel or reset button that helps to delete the transaction. After cancelling, it might be necessary to close the wallet application or browser and then reopen it.

    If it is a hardware wallet, turning off and disconnecting the device is also required. Although this is a simple and quick way to solve stuck transactions, users should note that this method may not always work. It is also possible to fix a transaction by increasing the set gas fee. If a user initiates a transaction with a low gas fee but later increases it to match the market’s current price, miners will pick up and process the transaction.

    Another way is to use a new transaction to clear the old one by setting a custom nonce. For instance, a wallet might have three pending transactions, each with nonces 3, 4, and 5, respectively. The network would process nonce 3 first before the others. However, if the gas fee for that transaction is low and miners aren’t picking it, all three transactions could remain stuck.

    The solution here is to initiate a new 0 ETH transaction with a high gas price and send the transaction to the user’s own address. To clear out the transaction, the user must ensure that the nonce specified in the new transaction is the same as the old one. Although this will cost some gas, it immediately clears out the clog and resolves all the other transactions.

    How to Prevent a Stuck Transaction

    The simplest way to prevent a stuck transaction is to ensure the gas fee you are setting agrees with current market prices. If the gas fee is high enough, miners pick it up almost immediately and process the transaction without delay. Users can confirm current gas prices from the wallet or from other online sources. If you are looking to save on gas fees, there are gas tracking websites and applications that will help you optimize this process.

    Conclusion

    Fixing a stuck Ethereum transaction is easy and usually takes a few minutes. When the transaction is still “pending” on the block explorer, these methods can help solve any problems concerning transaction delay. However, users should note that it is mostly impossible to fix any transactions where the status has moved from “pending” to “completed.”

  • EtherDrops Review and Tutorial

    EtherDrops Review and Tutorial

    EtherDrops is a Telegram based bot designed to track major crypto markets and NFTs. Many crypto enthusiasts would use data tracking sites such as CoinMarketCap and CoinGecko, and these tools are excellent as ‘wikipedias’ for all the altcoins out there. However, for those with more advanced needs, there are much better resources available that can make your life easier.

    If you’ve been in crypto for several years, you’ll probably have a Telegram account. Most of the crypto projects in existence have official Telegram channels to keep their communities informed and up to date on developments, so the chances are you also use the messaging platform.

    This is just as well, because one thing that makes Telegram very useful is its ability to add bots that serve different purposes to the end-user. This is where EtherDrops comes in, so you can be part of the various crypto communities and track your tokens all on the Telegram app.

    What is EtherDrops?

    Originally created in 2018 as a tool to monitor Ethereum wallets, EtherDrops was mainly used to track the transactions of Ether ‘whales’ as well as one’s own wallets on the first smart-contract blockchain. 

    Four years later, EtherDrops has evolved into something much bigger than wallet monitoring. It is now integrated with Ethereum, Polygon, Fantom, Avalanche and BNB Smart Chain, providing a convenient place to track all your crypto activities within one Telegram bot.

    Users are equipped with simple-to-use tools to follow coin prices, as well as track and receive real-time notifications on wallet transactions, DEX and CEX swaps, NFTs, liquidity pools, Binance funding, gas prices, and more.

    By shaping settings according to your own personalized needs using a unique combination of advanced tools and instruments, EtherDrops becomes a simple yet essential bot that notifies you about anything you want, or alerts you to certain conditions. Thousands of investors, traders, and holders use it to navigate their crypto journeys.

    The bot already has more than 400,000 users on board and keeps growing steadily. With the product sending over 5,000,000 notifications daily, it’s no surprise that each day they welcome hundreds of new users onboard.

    EtherDrops Features

    Major features of EtherDrops include:

    • Price tracking; 
    • Wallet tracking;
    • Liquidity pools;
    • OpenSea integration;
    • Gas price notifications;
    • Integration with Telegram groups and channels; and 
    • Token distribution alerts. 

    Price Tracking

    Tracking the prices of various cryptocurrencies is a basic need for long-term investors or traders. Add coins by name, ticker or contract address. Apply your personalized settings to receive instant notifications about price changes and swaps.

    • Price Change Notifications – Set % Price Change to generate an alert.
    • Swap Alerts – Set $ Value to track Swaps on Uniswap, Sushiswap, Balancer and other supported DEXs.

    Wallet Tracking

    Add a wallet by its address to monitor incoming and outgoing transactions, airdrops, NFT transactions, and created contracts.

    • Transaction Notifications – Choose between different event types and set $ alerts to be notified about transactions.
    • Wallet Balance – Check Balances of assets and NFTs.

    Liquidity Pools

    Add a liquidity pool by its contract address and receive % pool changes should it increase or decrease within the specified range.

    • LP Changes – Set the % change value to stay on top of your added pool.

    OpenSea Integration

    Track the floor price and metrics of NFTs and arts on the Ethereum network. To follow your collection, add it by the name or address and set a % price change or generate a $ price target.

    Gas Price Notifications

    At times ETH gas prices can be really high and leave you with an eye-watering bill in fees to pay if you make a transaction. Set gas price notifications and save yourself a fortune!

    • Set Gas Alerts – Set Gwei amount to generate an alert. As soon as it hits the target or lower, you’ll be immediately notified.

    Check out our Advanced Tips and Tricks to Save on Ethereum Gas Fees:

    Integration with Groups & Channels

    If you are an admin or a community manager of a project using Telegram, or you run a trading group, your channel could benefit from integration with the EtherDrops bot.

    • All Bot Features in your Groups and Channels – The same alerts and notifications you set in your individual account can be applied to groups and channels.

    Token Distribution Alerts

    Token distributions often create market price pressure and increase capitalization. Be the first to obtain such info and assess market conditions to make a play in your favor (if you use Margin or Futures trading). 

    • Token Distribution – Receive distribution alerts from seed, private and other events for tokens that you’ve added to monitoring.

    Tutorial: How to use EtherDrops

    1. How to install EtherDrops bot

    To install EtherDrops, simply follow this link to open the bot in Telegram. It will automatically link the bot to your account. Here is an official list of the available EtherDrops install links. If you experience any delays with bot updates, you can switch to any other official link.

    2. How to add a wallet

    In the Main Menu, select “+Add wallet”. Tick ✅ which networks you wish to add to monitoring for your wallet and press ✔ Done (for example ETH and Polygon). Then type in your wallet address and name it. You’ll now be immediately notified whenever there are any transactions happening within the wallet, including NFT activity, in/out transactions, airdrops, etc.

    3. How to edit wallets

    In the Main Menu, select “Edit Wallets”. Choose the wallet you wish to edit. The menu with available options will open up. You can Delete, Rename, make it your Favourite (if ON, notifications with this wallet will be illuminated for better visibility), follow only IN, OUT or ALL transactions, check Balances, add/remove Networks for this wallet, set Alert Transactions filter (you’ll only be notified about transactions that are bigger than the specified threshold).

    4. How to add a liquidity pool

    In the Main Menu, select “+Add pool”. Choose the network. Next, enter the address of the liquidity pool. Enter the % liquidity change to create a notification. When the liquidity of a pool changes within your specified range, you’ll be instantly notified.

    5. How to edit liquidity pools

    In the Main Menu, proceed to “Edit pools”. Choose the liquidity pool to add additional settings. You can Delete, Rename, turn your Notifications ON or OFF for this specific pool, or change the % notification alert.

    6. How to add a new coin

    In the Main Menu, select “+Add coin”. Next, enter the contract address, symbol, or name of the coin. Choose the coin from the list and select network (ETH, BSC, ERC-20, Polygon, or CEX). Finally, enter the % price change and $ value for swaps (in case the coin is traded on a DEX) to create a notification. Now you are following this coin. Whenever there is a swap or price change within the range you specified, you’ll receive an instant notification.

    7. How to edit coins

    In the Main Menu, proceed to “Edit coins”. Choose the coin. You can Delete, turn your Notifications ON or OFF for this specific coin, change Price Denomination (in USD, BNB, ETH, BTC), change the price % notification alert, create a price alert (if a coin is x USD, you’ll receive a notification), or change swap alerts.

    8. How to add an NFT

    In the Main Menu, select “+Add NFT”. Enter the contract address or name of the NFT. Select the right one and type in the % price change alert to receive notifications.

    9. How to edit NFTs

    In the Main Menu, select “Edit NFT”. Choose the NFT. You can Delete, change % alert or price, set a new price alert, or turn notifications ON/OFF.

    10. How to set gas price alerts

    In the Main Menu, select “Set gas alert”. Type in the desired fast gas price to create an alert.

    Conclusion

    EtherDrops is a simple yet comprehensive one-stop tool for all your crypto tracking needs and continues to add new networks, coins, and exchanges as the market expands so you’ll never be short of what you need. It just takes one click and a few easy-to-follow steps within Telegram to get set up, and that short initial setup time proves to be well worth it.

    For a comprehensive tutorial on the more advanced features of EtherDrops such as quick shortcuts, special commands, managing profiles, how to set up the bot for groups and channels, and subscription options, read to the end of this quide. If TL;DR you can also watch a video tutorial here.

    Follow DropsTab / EtherDrops for more information:

    Website | Telegram | Twitter | Medium

  • 10 Best Smart Contract Security Auditing Firms in 2022

    10 Best Smart Contract Security Auditing Firms in 2022

    We have compiled an updated list of the top performing blockchain security and smart contract auditing companies in 2022, giving you comprehensive data and history of these firms for you to make the best informed decision possible.

    Why Do Smart Contract Auditors Matter?

    A lot has happened since 2020 when we last ranked the best smart contract auditors at the time. As the crypto space is evolving, so are hackers and scammers around the world. Web3 attacks are becoming increasingly frequent, and each day malicious players have found creative ways to exploit smart contract vulnerabilities for quick profit.

    One of the largest crypto hacks in history happened earlier this year when Wormhole, Solana’s cross-chain bridge, was hacked on February 2nd. The attack exploited a signature verification vulnerability in the network that allowed the hacker to freely mint 120,000 wETH, worth $325 million at the time. As a result, security audits are extremely important. According to an article by Hacken, though Solana may be blamed for providing the instrument with security flaws to its projects, Wormhole might have “prevented the incident by auditing the instruments it used.”

    Quality smart contract assurance helps identify potential issues, and ensure that the protocol is ready at all times to address any threat that could put its users’ funds at risk. However, there are no guarantees that a protocol will be 100% secure after an audit, but a good smart contract auditor can still perform thorough reviews to potentially prevent major vulnerabilities after launch. To keep up with the increasing demand in blockchain security, certain auditing firms have also branched out to offer other cybersecurity services such as penetration testing, running bug bounty programs, vulnerability assessments, and threat modelling.

    What Makes a Good Smart Contract Auditor?

    We have compiled our list of the top smart contract auditors this year based on a set of criteria. One of the first steps in finding a reliable smart contract auditor is to check the portfolios of projects they have audited. Doing so allows you to see the size and popularity of the projects they have audited, and more importantly if any of the projects they have worked on have been compromised. Larger projects tend to attract more attention from hackers, and if they have not been exploited for a long period of time, then it is a good sign that their security is up to date thanks to their auditor(s).

    The next factor to consider is the auditor’s expertise in certain blockchains. As of now, most auditors offer only Ethereum contract audits. Only some are specialized in auditing projects on altchains such as BNB, Solana or Polygon. This is because EVM-compatible chains have different architectures, and certain altchains use a completely different programming language, e.g. Rust for Solana. Different firms have different areas of expertise in auditing protocols built on different blockchains, so it is best to assess their level of competency before engaging them for an audit. For example, if you are looking for a Polygon-based contract audit, check the firm’s past audits for Polygon-based projects.

    Finally, it goes without saying but the quality of audit reports is an important consideration to look for in a reliable auditor. Different auditing firms have their own methodology and approach. In many instances, the scope of an audit varies according to the scale and complexity of the project as well as the auditor’s agreement with their clients. It is important to note that a good report should include a comprehensive description of all the problems that were found during the test and inspection, and the findings of the audit have been addressed by the project.

    Hacken

    Website: https://hacken.io/

    Projects Audited: 700+

    Major Clients: FTX, Avalanche, VeChain, Huobi, Kyber, Air Asia

    Chains Supported: Ethereum, EVM Chains, BNB Chain, Solana, Polygon, Avalanche, NEAR, Fantom

    Hacken is a leading cybersecurity consulting company focused on blockchain security. Since its inception in 2017, Hacken has been educating and growing the ethical white hat hacker community to continually nurture and build the blockchain security ecosystem. Who better to identify and address cybersecurity threats than a hacker? (https://www.kambioeyewear.com/)

    Hacken provides a wide range of security services including blockchain security consulting, web/mobile penetration testing, vulnerability assessments, coordination of bug bounty programs and more. The company also encompasses security products such as HackenAI Security Platform, hVPN, and hPass etc. Beyond just blockchain security ecosystem, Hacken has also partnered with non-blockchain giants like Air Asia.

    Over the years, Hacken has built a commendable reputation as a security risk assessment for companies requiring a digital environment to create or enable services for their consumers, which is why Hacken is certified as Web 3.0 security standard by two of the world’s largest cryptocurrency data aggregator Coingecko and Coinmarketcap.

    Quantstamp

    Website: https://quantstamp.com/

    Projects Audited: 200+

    Major Clients: Ethereum 2.0, Solana, BNB Chain, Cardano, Maker, Curve, OpenSea

    Chains Supported: All chains

    Quantstamp is a security validation protocol for smart contracts and is one of the most recognized auditing companies in the blockchain sector. Their security team consists of PhDs and security professionals with experience in top IT companies such as Google, Facebook, Apple, and Ethereum Foundation.

    Quantstamp specializes in auditing services of all programming languages designed for use in blockchain applications. Since its launch in 2017, Quantstamp has audited over 200 projects and helped secure over $200 billion in value. Its services include auditing layer-1 blockchains, smart contract-powered NFT and DeFi protocols, and developing financial frameworks for layer-1 blockchain ecosystems.

    Trail of Bits

    Website: https://www.trailofbits.com/

    Projects Audited: 500+

    Major Clients: 0x Protocol, Compound, MakerDAO, Acala, Balancer, yearn.finance

    Chains Supported: Ethereum, Polkadot, Polygon, Tezos, Arbitrum

    Trail of Bits is a cybersecurity industry giant with a long list of big-name clients such as Microsoft, Adobe, Reddit, Zoom, Airbnb, and Reddit etc. Founded in 2012, before smart contracts were even invented, the company prides itself as a network of developers with the capabilities of identifying and fixing loopholes in software, devices, and code. They have long developed tools that help developers find and fix critical vulnerabilities. Manticore is one of their signature tools, a multi-contract and multi-transaction emulator. Other tools include Cryptic, Slither and Echidna which are also blockchain-focused solutions.

    ConsenSys Diligence

    Website: https://consensys.net/

    Projects Audited: 100+

    Major Clients: 0x Exchange, Aave, Balancer, Uniswap

    Chains Supported: Ethereum

    Consenys is a US-based blockchain technology solutions company and is one of the biggest and prominent blockchain incubators in the industry. Unlike other security firms mentioned on this list, ConsenSys dedicates its resources and technological expertise solely to the development of Ethereum blockchain applications and software, especially financial infrastructures.

    Its signature product, MythX, is one of the most powerful automated scanners for Ethereum smart contracts, providing a solid API which developers can use to access security analytics tools. Over the years, ConsenSys has successfully protected over 100 Ethereum-based projects and uncovered over 200 issues. Apart from security auditing, the company also provides two other services known as Fuzzing, a bug-finding tool for first specifications, and Scribble, a runtime verification tool that translates high-level specifications into Solidity code.

    CertiK

    Website: https://www.certik.com/

    Projects Audited: 1800+

    Major Clients: BNB Chain, Polygon, The Sandbox

    Chains Supported: All chains

    CertiK is a blockchain security company specialized in formal verification and AI technology in collaboration with some of the world’s best cybersecurity experts to create end-to-end audit services. The company has developed “CertiK Chain”, a public blockchain focused on mathematically validating the safety of smart contracts through formal and manual verification. Other services of CertiK include Skynet, Skytrace and Penetration Testing.

    CertiK is an official partner company of Binance, and is also backed by numerous big-name firms such as Golden Sachs, Coinbase, Lightspeed, Matrix Partners, and DHVC.

    LeastAuthority

    Website: https://leastauthority.com/

    Projects Audited: 80+

    Major Clients: Ethereum Foundation, Chia Network, O(1) Labs, Protocol Labs, cLabs, Tezos Foundation

    Chains Supported: Ethereum, Chia Network, Tezos

    LeastAuthority is a cybersecurity consulting firm with its main focus on privacy. Using privacy-enhancing technologies, it classifies itself as an enabler of private and disruptive storage solutions. The platform offers two major products which are essentially storage architectures. The first, Privatestorage (formerly S4), is a centralized system that provides storage infrastructure to end-users and offers them the autonomy over the collection, processing and distribution of their private data. The second product, Tahoe LAFS, enables a decentralized, distributed and fault-tolerant storage facility.

    Apart from security audits, other services also include penetration testing, network and traffic analysis, and mechanism and incentive design. The company’s consultants work with developers throughout their development cycles to ensure that their projects are not susceptible to security threats.

    ChainSecurity

    Website: https://chainsecurity.com/

    Projects Audited: 85+

    Major Clients: yearn.finance, Maker, Compound, Curve, Rarible, Kyber Network

    Chains Supported: Ethereum

    ChainSecurity is a blockchain security firm led by security experts from the renowned university ETH Zurich. Similar to ConsenSys, the company specializes in Ethereum contract auditing. They have developed an automated audit platform that allows projects to thoroughly analyze smart contract designs, test their viability, and monitor metrics detailing their performances after launch. The company has worked with more than 85 Ethereum-based projects and helped secure more than $17 billion worth of assets.

    OpenZeppelin

    Website: https://openzeppelin.com/

    Projects Audited: 150+

    Major Clients: Ethereum Foundation, Coinbase, Compound, Aave, The Graph

    Chains Supported: Ethereum

    OpenZeppelin is a cybersecurity technology and services company known for its development of Solidity libraries known as “OpenZeppelin Contracts.” These libraries are used in most Solidity projects as a tested and standard template for contracts deployable on DApps. Developers can easily integrate these solutions into their applications through OpenZeppelin’s native SDK.

    OpenZeppelin was the first cybersecurity company to reinvent blockchain security by introducing elements of gamification to identify security vulnerabilities in smart contracts. “Ethernaut” is a web3/Solidity war game which challenges gamers to find and exploit loopholes in smart contracts to progress to the next level. The company also provides free services such as “Defender”, which helps clients automate their smart contract administration, offering a more secure and private transaction infrastructure.

    SlowMist

    Website: https://www.slowmist.com/en/

    Projects Audited: 1000+

    Major Clients: Binance, OKX, Huobi, Pancakeswap, Crypto.com

    Chains Supported: Ethereum, EVM Chains, EOS, Fabric, Solana, VeChain, ONT

    SlowMist is China’s leading blockchain security company founded in 2018. The team at SlowMust has over 10 years of experience in network security, specializing in smart contract audits, blockchain security, wallet security testing, and more. The company constantly tracks and publishes data about security situation on crypto exchanges through their Blockchain Threat Intelligence (BTI) service. Their most notable product MistTrack is a system that tracks the movement of stolen funds. Since its launch, it has helped recover nearly $1 billion in stolen funds.

    The company also offers security-related products such as anti-money laundering software, DarkHandBook (crypto safeguarding handbook), SlowMist Hacked (crypto hack archives), and FireWall.X (firewall for EOS smart contracts).

    Runtime Verification

    Website: https://runtimeverification.com/

    Projects Audited: 100+

    Major Clients: Algorand, Polkadot, Tezos Foundation, Ethereum Community Fund, NASA

    Chains Supported: All Chains

    Runtime Verification is a research and development company focused on verification-based techniques to perform security audits on virtual machines and smart contracts on public blockchains. The platform is a dynamic software analysis approach that analyzes programs as they execute, observing the results of the execution and using those results to find bugs. This solution designs standard models for high-value applications and uses them as templates to develop security-sensitive products.

    Runtime Verification has developed two main smart contract security products. The first, K Semantic Framework, offers smart contract correctness proofs to validate the viability of Ethereum and Cardano’s smart contracts. The second, Firefly, is a test coverage analysis tool for Ethereum smart contracts. The company has also worked with Ethereum Foundation on building a formal framework for Ethereum 2.0 testing.

  • Ethereum Merge is Coming, Is This the End of Ethereum Killers?

    Ethereum Merge is Coming, Is This the End of Ethereum Killers?

    The Ethereum network is said to be the fastest and most scalable blockchain after the Merge in September, effectively cementing its position as the front-runner of smart-contract networks. What will this mean for other popular competing layer-1 blockchains known as “Ethereum Killers?” If you are holding any of these coins, you might want to consider its future prospects.

    The Ethereum Merge in September

    Ethereum founder Vitalik Buterin addressed at the Ethereum Community Conference in Paris that the Ethereum network will hit the 55% roadmap completion level after its much-anticipated “Merge” in September. The Merge will mark the beginning of Ethereum’s proof-of-stake upgrade, potentially enabling the network to process 100,000 transactions per second (tps), according to Buterin, which is significantly higher than even centralized financial services like Visa and Mastercard.

    For the longest time, the biggest problem that has been plaguing Ethereum is scalability. In its current state, Ethereum can only process 12 to 25 tps with an average confirmation time of around six minutes. As a result, the network gets congested, leading to extremely high gas fees. To address that problem, the Merge involves many protocol changes that would allow users to enjoy fast transactions and low gas fees. Buterin has even given each of these planned upgrades rhyming names which he calls the “merge”, “surge”, “verge” and “purge.“

    • Merge
      • Refers to combining the Ethereum mainnet with the proof-of-stake beacon chain, also known as EIP-3675.
    • Surge
      • Refers to the addition of Ethereum sharding, a scaling solution which will further enable cheap layer-2 blockchains and lower the cost of rollups or bundled transactions, making it easier for users to operate nodes that secure the Ethereum network. This reduces congestion on the main chain by distributing traffic to 64 shard chains.
    • Verge
      • Refers to the implementaion of “Verkle trees” (a kind of mathematical proof) and “stateless clients”, aimed at making the network more decentralized. These features will allow users to become network validators without having to store large amounts of data on their nodes.
    • Purge
      • Refers to the removal of historical data in a bid to streamline the network, also known as EIP-4444, a proposal focused on storing said historical data in execution clients such as The Graph, BitTorrent and block explorers, since relying to store everything on existing nodes can hamper scalability.

    What are “Ethereum Killer” Blockchains?

    “Ethereum Killers” refer to Ethereum’s competing layer-1 blockchains, namely Solana, Avalanche, Polkadot, Algorand, and Cardano. They inherited the killer name because they offer similar features to Ethereum but at significantly lower costs and faster speed.

    Ethereum Killer coins have been a very popular asset to investors looking for an alternative network to Ethereum. Smart-contract platforms have been dominating the market cap in the crypto space. According to Coingecko, it is the second highest crypto category by market cap, just behind the Ethereum ecosystem.

    What will happen to “Ethereum Killers” after Merge in September?

    If Buterin is able to deliver what he promised, then Ethereum will most certainly be the front-runner of smart-contract networks. People will look to Ethereum to being the primary platform for DApp development, DeFi activities, NFT minting and marketplace and more.

    Although Ethereum Killer coins have been pumping recently due to bullish sentiment surrounding Ethereum and its long-awaited Merge, communities are speculating whether this is just hype as competing blockchains of Ethereum will no longer have competitive advantage in terms of speed and scalability. Even until now, none of them have been able to dethrone Ethereum from its number two spot by market cap. The upcoming merge will only propel Ethereum upward, but that is if Buterin delivers what he promised. He stated that they will soon test the merge on Ropsten (Ethereum’s testnet).

    The largest future problem for Ethereum will most likely remain to be scalability. Although the new system will be faster, it is unlikely to solve the issue of high gas fees immediately since network demand is likely to rise as efficiency increases. But that is not to say that gas fees will forever be expensive on the Ethereum blockchain. But until Ethereum is able to achieve high scalability, Ethereum Killer blockchains remain to be viable alternatives for fast transactions and low gas fees. We will just have to wait and see in September.

  • DYOR: How to ‘Do Your Own Research’ Before Investing in Crypto Projects

    DYOR: How to ‘Do Your Own Research’ Before Investing in Crypto Projects

    There are tens of thousands of cryptocurrencies out there, with over 1,000 new tokens launched between January and July of 2022. Over time, people in the crypto community have realized that there are many bogus projects in the blockchain space whose sole aim is to entice unsuspecting people and defraud them. This makes it compulsory for everyone to research blockchain projects before making financial commitments.

    What Does DYOR Mean?

    DYOR (Do Your Own Research) is a well-known acronym in the crypto and blockchain space. DYOR means that people are encouraged to conduct due diligence and gather all the necessary information on projects before depositing any funds, especially for new projects. Adequate research protects new and existing crypto enthusiasts from scams and projects with no real value. By “doing your own research,” members of the crypto community can find viable blockchain projects and avoid fraudulent or deceptive ones.

    Why is DYOR Important?

    DYOR is important to avoid losses, especially from scams or fraudulent actors. The evolution of decentralized finance (DeFi) and blockchain tech has made it easy for creators to sell the promise of a revolutionary product and attract cash from the general public. Since anyone with enough technical knowledge can create an asset on a blockchain, people no longer require intermediaries such as banks and brokerages before investing in the opportunities available within the crypto market. However, without governmental checks and regulations on these intermediaries, it also means that there is a high risk that the average investor will fall for a scam or fund a project with nefarious intentions. 

    Furthermore, since there are no centralized authorities in the DeFi space, people have no place or authority to report their grievances should the project turn out to be a scam. Fraudulent development teams know this, and exploit it by making promises they cannot deliver. In addition, transactions recorded on a blockchain are immutable. This design is a significant reason DYOR is important, since funds lost to scams or harmful projects are usually irretrievable.

    How to Do Your Own Research (DYOR) in Crypto Projects

    Here are some tips on how to DYOR before investing in crypto projects:

    • Find the project team and its Unique Selling Proposition (USP);
    • Evaluate the project roadmap;
    • Check the project’s social media reputation and presence;
    • Research the project’s source of funds
    • Read the project’s whitepaper
    • Find Third-Party Audit Reports

    Find the Project Team and its Unique Selling Proposition (USP)

    People looking to invest or deposit funds must first find information about the project’s motives, purpose, and development team. The data could include the project’s past performance and detailed use cases of featured products. If a project team is anonymous, it should set off red flags in your head, as you should be wondering why they aren’t willing to put their name behind a project if it is reputable. Also, what is the project trying to achieve? Consider if it is actually something that there is likely a market for, and whether other competitors have attempted the same idea in the past and their results? 

    Evaluate the Project Roadmap

    Reading and understanding a project’s roadmap, which provides a strategic overview of objectives, milestones, deliverables, and resources, is an effective way to DYOR. You should also evaluate if the roadmap is feasible – this relates to the above research on the team and their background. A fake or deceptive crypto project may publish a roadmap that promises all kinds of products or features in a short time. These projects sometimes do this to excite new backers into believing the project is viable in the long run and things are moving along quickly. However, the roadmap may be too good to be true. If a project makes promises like partnerships, new products, plans to raise a large sum of money, and full government approval all within a short time, buyers should be wary.

    Check the Project’s Social Media Reputation and Presence

    Reputable blockchain projects usually have a verifiable social media presence and reputation. Checking the project’s reputation on major social media platforms such as Facebook, Telegram, Reddit, and Twitter gives insight into people’s thoughts about the project. See how other users are interacting with the community. Also, see if there are any questions or grievances concerning the project, and whether the team is immediately on hand to address them. 

    Research the Project’s Source of Funds

    Before making financial commitments to a project, it is important to determine whether a single individual or an established firm backs the project with capital and other resources. Prospective investors should also research previous projects backed by these sponsors to see if they were successful. Additionally, these sponsors should have a good reputation in the crypto community. This information can be located in the project’s whitepaper. 

    Read the Project’s Whitepaper

    All crypto projects should have at least a whitepaper that documents information and technical aspects of the project. Whitepapers contain critical information about a project’s development process, potential opportunities, and utility.

    Find Third-Party Audit Reports

    Many auditors, such as Certik, Hacken and Quantstamp review the code of blockchain projects before launch to ensure their security. These audits involve double-checking the code and testing it for vulnerabilities, which results in the funds within the application being much safer than a non-audited smart contract. Looking up the audit report of projects before investing is a sure way to build confidence in a project. However, people should be aware that a positive report does not mean that the project is completely safe, as there are instances where malicious code was added after the report was released. 

    Learn more about these companies and what they do: Top 10 blockchain security and smart contract aduit companies.

    Common Tools Used in Researching Crypto Projects 

    People researching crypto and blockchain projects should use multiple tools, common tools include CoinGecko, CoinMarketCap, Investopedia and social media. 

    CoinGecko

    CoinGecko is a popular market research source for blockchain projects. The platform provides detailed information on market caps, prices, and daily trading volumes of various crypto assets. In addition to being a credible source of crypto information, CoinGecko also provides crypto-focused podcasts, industry commentary, and daily newsletters. When going into individual asset pages, you can also find the token’s website and social channels, allowing you to continue your due diligence.

    CoinMarketCap

    CoinMarketCap is the leading platform for cryptocurrency market information and research. The platform provides market information on nearly all the crypto assets available. CoinMarketCap also ranks crypto assets and projects in real-time, using features like market capitalization or 24-hour trading volume to sort projects in order. Like with CoinGecko, make sure to check the individual asset pages for more information on a specific cryptocurrency.

    Investopedia

    Investopedia is a leading online resource in the finance space. It is a repository that explains related terms and contains news and general financial information. Investopedia explains many complex blockchain concepts in layman’s terms, making it an ideal platform for newcomers in the finance and crypto space.

    Social Media

    It is almost essential to sample public opinion about a project before spending money. Social media platforms like Facebook, Twitter, Telegram and Reddit contain raw and undiluted information from members of the crypto community who may have in-depth details about the project. 

    Although the information posted on social media may be unverified, these platforms can still be an excellent way to get much-needed information about projects. Posts may be from people who have lost money, made money, or those who noticed specifics that they considered to be red flags. However with everything on social media, always confirm that the statements being made are legitimate before you take them as truth.

    Conclusion

    DYOR is crucial for investors in the cryptocurrency and blockchain space. The absence of easy-to-understand information and lack of regulation somewhat makes scams more likely in the crypto space than in traditional financial markets, so never overlook the importance of research and verification. Doing the proper research before getting monetarily involved in any project is a concept that has more relevance in the blockchain sector than in many other industries because it is a disruptive and highly volatile sector.

  • What is Bifrost Finance ($BNC)?

    What is Bifrost Finance ($BNC)?

    Bifrost Finance ($BNC) is a Polkadot-based parachain designed to enhance cross-chain liquidity and provide users with staking service. Bifrost pays vTokens (Staking Derivatives Voucher Tokens) to users who help with liquidity by depositing PoS tokens on the platform. Users can convert a Proof-of-Stake (PoS) token into a vToken (such as ETH to vETH) for cross-chain functionality. 

    Many blockchain networks in the crypto space offer various DeFi services supported by unique native tokens. Although the global DeFi and blockchain sectors are growing, most operate individually and have little to no interoperability with each other. This lack of cohesion between chains created a void that only cross-chain projects could fill.

    Cross-chain infrastructure solutions are slowly gaining popularity. However, these projects still face problems with liquidity across networks and cross-chain reward mechanisms for staked assets. Bifrost Finance aims to address these blockchain limitations, allowing the easy flow of assets and user incentives between blockchain networks. 

    Ecosystem, Technology, and Utility

    The Bifrost project lets users earn incentives for staking assets and providing cross-chain liquidity. The project functions as an intermediary protocol between decentralized applications, and supports these applications via PoS services and liquidity staking.

    Usually, staking crypto assets require users to lock their tokens in smart contracts for a specified period. Staked tokens are generally not accessible until the lock duration expires. However, Bifrost uses its native vTokens to solve this problem through liquid staking. Liquid staking on the Bifrost platform lets users stake crypto assets and receive vTokens in exchange instead of waiting for the specified staking period to expire. Stakers can then use the vTokens to access and fund Bifrost-compatible networks like Kusama and Polkadot. Bifrost Finance uses Polkadot’s GRANDPA consensus algorithm for staking and other functions.

    Components of the Bifrost Finance Network 

    The Bifrost Finance network includes the following components:

    • Cross-chain users, including vToken holders, and BNC miners
    • Voters, who are BNC holders, capable of voting for the governance and management of the Bifrost platform. Voters receive rewards for their service.
    • Node validators who vote on valid transactions. Validators also receive a percentage of the total platform’s rewards.
    • Stake proxy nodes nominated to support PoS chains of other networks associated with Bifrost. These nodes connect with various mining pools, liquidity pools, DApps, and wallets, making it easier for the staking node to interact with other DeFi services and protocols.
    • A vToken DEX that provides liquidity for vToken. Users can also stake or unstake their tokens on this exchange.
    • Community Developers who build applications like wallets and DApps, developing new features on the Bifrost platform.

    Is the Bifrost Finance Network Safe?

    The Bifrost network is a Polkadot parachain project. The network provides security by leveraging Polkadot’s existing infrastructure instead of providing its own. Polkadot also helps provide secure communication between networks with the help of its relay chain, without any additional trust mechanisms through a concept known as “shared security.”

    Bifrost Native Coin ($BNC) Utility

    The BNC token is essential for the governance and operation of the Bifrost network. Some of its main use cases include:

    Trading Fees

    Users performing Bifrost network transactions, including transfers and staking, must pay transaction fees. Bifrost has a flexible fee model that supports multiple asset payment fees such as BNC, DOT, vDOT, KSM, and vKSM. The platform converts these fees into BNC before storing them in the treasury to promote network growth and maintenance.

    Collateral

    Participating nodes have to stake BNC to guarantee good conduct on the Bifrost network. Based on node performance, required collateral may increase or reduce.

    Administration

    To build and establish community governance, BNC holders can recommend and vote on network enhancements, with each vote corresponding to the amount of BNC tokens held.

    Bifrost ($BNC) Unique Features?

    • Bifrost provides PoS networks with much-need liquidity by letting users convert assets to vTokens with the option to receive passive income from staked tokens.
    • vTokens can help optimize transaction speed and improve transaction efficiency across various protocols and platforms, including decentralized applications (DApps), decentralized exchanges, and centralized exchanges.
    • Bifrost Finance guarantees genuine democratic governance by ensuring all processes on its parachain are transparent.

    Conclusion

    Cross-chain liquidity allows users to use and enjoy various blockchain protocols and maximize the many opportunities in the DeFi space. By providing quick and cost-effective cross-chain liquidity, Bifrost Finance has made a significant leap in DeFi advancement.

    Official Channels

    Website — https://bifrost.finance/ 
    Twitter — https://twitter.com/bifrost_finance  
    Telegram — https://t.me/bifrost_finance 
    Medium — https://medium.com/bifrost-finance 
    Github — https://github.com/bifrost-finance

  • 7 Ways to Profit During a Crypto Bear Market

    7 Ways to Profit During a Crypto Bear Market

    All financial markets experience different cycles and market conditions. Since crypto asset prices also go through prolonged periods of bullish and bearish movements, the crypto market is no exception. The most dreaded market phase for crypto traders and investors is a declining or bearish phase, especially one that sustains itself for a long time.

    General sentiments regarding the crypto and other financial markets are bleak during these periods, making many investors and crypto enthusiasts understandably worried. However, many traders still find ways to make money during unfavourable market conditions. To earn when the market is down, it is important to understand the concept of a bear market.

    Check out our video comparing the crypto bear market in 2018 vs 2022, and how you can still profit during this period of downward price trends:

    What Is a Crypto Bear Market?

    A bear or bearish market is a prolonged period characterized by falling prices of at least 20% across major crypto assets. Individual crypto assets may also be in a bear market if they experience a decline of 20% or more over an extended period. A bear market may occur due to widespread pessimism and negative market sentiment, as well as other internal or external factors. Additionally, a weak or slowing economy, pandemics, wars, and geopolitical crises are also characteristics that may cause a bear market. 

    7 Ways to Make Money and Profit in a Crypto Bear Market

    Even when the market is in an overall downtrend, the blockchain and DeFi sector offers various ways for crypto traders and investors to still emerge profitable and victorious. Here are a few lucrative options that crypto investors and traders can utilize to make money and remain afloat in a bearish market phase.

    Yield Farming

    Yield Farming is a cryptocurrency investment method that allows investors to earn interest and rewards on their crypto assets. With yield farming, investors lend their crypto assets to DeFi platforms that hold these assets in a liquidity pool for a specified period. These pools provide liquidity to decentralized finance platforms that use the funds and ensure that the depositors earn some interest over time.

    For those who are new, check out our video on the top yield farming mistakes all newbies make: 

    Crypto Staking

    Staking is the process of earning rewards by locking up funds on a blockchain. Although similar to yield farming, this process does not use tokens for loans. Instead, Proof-of-Stake (PoS) blockchains use staking to validate transactions on their networks.

    Learn more in our article: Proof of Stake explained. 

    Users who stake more tokens get higher priority to validate transactions and earn more funds. Earnings from asset staking vary between platforms and depend on the governance community in each case. Before getting involved in yield farming or staking, always do your own research and make sure the returns are sustainable, as many times, there are ludicrous and unsustainable offerings that result in users losing all of their funds. 

    Crypto Savings and Crypto Lending

    Savings and lending are good ways to make passive income from crypto during a bear market. These methods involve storing assets on a platform to earn simple interest on the deposits. Traders should remember that potential earnings mainly depend on the amount stored. Again, do your own research before allocating any capital to these types of platforms.

    Forks and Airdrops

    Altcoin forks and airdrops are also effective ways to make money in a bear market. A fork happens when users vote to diverge a blockchain and form another due to a material disagreement. This process leads to an airdrop where holders of the old token get the new tokens to participate in the forked blockchain. Depending on the value of the forked token, users can earn quite a bit by simply holding newly acquired tokens. (Modafinil)  

    Margin Trading

    One of the most common ways to make money in a down-trending market is margin trading. This method is simply the process of trading crypto assets with funds from brokers. Margin trading allows users to trade with more money than they have in their accounts, thereby increasing potential profit. Although margin trading is an effective way to earn in a bear market, this method is only recommended to experienced crypto traders, as you can lose the entirety of your initial capital if the market moves in the opposite direction of your call.

    Analyze Smaller DeFi Projects

    A new DeFi project may have a low valuation after launch, but show huge promise in the long run. Crypto enthusiasts who take the time to analyze and research these projects can likely find and profit from the right ones. Even in a bear market, crypto investors who get in early enough tend to make gains from the increase in the asset prices of these crypto projects.

    Dollar-Cost Averaging 

    One of the most effective ways to thrive in a bear market is to buy the dip. With dollar-cost averaging, investors buy assets at consistent intervals and properly observe market conditions before reinvesting. Since the cryptocurrency market’s volatility is unpredictable, it is nearly impossible to predict the lowest point before a reversal. Hence, dollar-cost averaging helps investors maximize profits by allowing them to buy at low points before the market becomes bullish. You lower your risk by lowering your potential downside and upside, but also allocating capital in a way where you will not only hit peaks and troughs.

    Next Steps

    Any crypto market condition has potential for profitability if you know how to play it right. The above strategies can help even novice crypto traders earn when the market is bearish. However, traders should note that their preferred strategy should depend on their risk tolerance and portfolio size. Traders should also learn to study the market to ensure that the chosen method will be effective at a particular time.

  • Will the Launch of Ethereum 2.0 Crash Crypto Prices?

    Will the Launch of Ethereum 2.0 Crash Crypto Prices?

    Ethereum 2.0 is coming soon and the question everyone wants to know is “will it cause crypto prices to crash?” This is particularly as markets around the globe are not looking great, and that includes the crypto industry. Everything has been bleeding heavily for months without a sign of stopping, as central banks keep hiking rates, global supply chains struggle, and spending and investment dry up. Stagflation is a very real possibility, and there is no telling how long it will take for us to cool down the overheated markets that have been going only up since the last recession more than ten years ago. 

    The aforementioned notwithstanding, active development in the blockchain space continues to march forward. Although investments might drop significantly, many builders keep on building no matter the state of the markets. As Ethereum is steadily approaching the long-awaited transition from proof-of-work (PoW) to proof-of-stake (PoS), dubbed The Merge, it might be interesting to think about potential impacts of The Merge on the crypto market prices, especially in the context of a potential extended bear market.

    Learn more: 

    Ethereum 2.0 is coming- Here’s what you NEED to know

    Proof of Stake (PoS) explained

    Ethereum ($ETH) Merge: What is it and everything you need to know

    Plus check out our video!

    About Ethereum 2.0

    In short, The Merge will result in Eth2.0’s Beacon chain (the coordination mechanism of the new network) merging with the current Ethereum mainnet, signifying the move to a fully PoS chain. To secure the network, enormous amounts of ETH will be staked in addition to the ETH already staked in the Beacon chain, making all of this locked ETH illiquid. Combined with the EIP-1559 upgrade, which now burns 70-80% of the fees, The Merge is expected to cause the equivalent of 3 bitcoin halvenings, dropping Ethereum’s inflation rate to 0.43% and locking up a lot of ETH, potentially reducing sell pressure by up to 90%. In addition, the PoS mechanism will reduce Ethereum’s energy consumption by up to 99.95%.

    So all is looking great for Ethereum and projects building on top of it, right? Possibly. However, there is still a decent chance that, given the current market conditions, ETH’s price pump might be short-lived, and would continue to drop, bringing down a lot of other projects with it.

    The Potential Impacts of The Merge

    There are two possible scenarios to look at when discussing the downside impact of The Merge on crypto prices:

    1. The external effect would be caused by Ethereum sucking out liquidity from other PoS alt-L1s and the projects built on top of them (especially if they’re EVM-compatible), as one of the more critical selling points compared to Ethereum is environmental sustainability.
    2. Beacon chain staked ETH unlocks, extended bear market, and poor treasury management of Ethereum-backed projects could see more capitulation events as HODLers and projects sell off their ETH to stay afloat as new investments dry up and stagflation looms.

    1. Ethereum Sucks Liquidity From Other PoS alt-L1’s

    By offering lower gas fees, fast transactions, and relatively high throughput at the expense of decentralization and economic sustainability, many PoS chains have attracted developers, investors, and NFT ecosystems to their networks away from Ethereum. Ethereum’s high demand (=high fees), poor L1 scalability, and the concerning PoW mechanism have severely limited its growth. (https://rpdrlatino.com) Understandably, regular people simply do not want to pay exorbitant fees when minting and trading NFTs, and developing inaccessible dApps on a network that is supposedly destroying trees and warming up the planet.

    The environmental argument will be completely invalid after the merge. Coupled with the enormous innovations in Ethereum’s L2 ecosystem, which have already reduced transaction fees to sub-$1 with no signs of stopping, Ethereum is set to once again become the most sought-after smart contract development platform. As post-Merge buy pressure of ETH increases and scalability improves, alt-L1’s could struggle to offer any significant unique selling points, making new projects opt to build on top of the most secure, established and decentralized smart contract chain out there.

    As more and more people flock to Ethereum, established projects might also decide to migrate to the platform with the most demand and upside potential, effectively sucking out liquidity from other chains, and leaving them dry with evaporated treasuries, limited runway, and reduced demand. The strategy of subsidizing transaction fees during a bull market when funds are plentiful will likely not work when no new investments are coming in during a bear market, and an exodus of users is reducing demand and network revenues.

    Of course, there is plenty of room for growth in this space, and projects existing on other chains might not find it too beneficial to move to Ethereum even though short-term liquidity issues might prove challenging.

    2. Beacon Chain ETH Unlocks in Extended Bear Market Cause Mass Capitulation

    The Merge will unlock a lot of ETH, resulting in a potential aggressive selling spree that might have trickle-down effects on a lot of other coins, especially those that have tight correlation with their ETH pair, are ERC-20 tokens, or have been sitting on ETH treasuries to fund their development. A lot more downside risk due to a selloff is also a very real possibility for ETH and other coins simply due to bad timing (i.e. bear market – with recession slowly creeping into our daily lives due to central banks raising interest rates, supply chain issues, energy crises etc.), the unlocked ETH might serve as a critical lifeline for those who had confidently staked their ETH during the bull market.

    During the bear market, investments will be scarce, and projects that during the bull market had made the decision to not convert their treasury ETH to stablecoins are now seeing their wallets drop in value significantly, forcing them to capitulate by selling at low prices to cover their expenses.

    However, it is important to note that the ETH unlocked from the ETH staked on the Beacon chain will not be immediately available right after The Merge. Rather, this feature – EIP-4895: “Beacon chain push withdrawals as operations”, will be enabled during the Shanghai upgrade. It will probably be deployed much later after The Merge, with estimates ranging from a month to 6 months. This means that any amount of potential sell-off of unlocked ETH would come with a significant delay post-Merge, at which point it’s impossible to predict where the market might be in 6-12 months and how it will behave, with contradicting bullish and bearish narratives clashing against one another in an attempt to drive price in either direction.

    This option does seem a bit far-fetched, however, and no one knows how much more pain we will have to suffer before the momentum shifts towards the upside, so it’s best to be prepared for both the upside and downside, and not fall prey to only bullish narratives.

    Conclusion

    As outlined in the two main points, post-Merge many alt-L1 coins could face a risk of crashing even further due to risks associated with reduced liquidity in a bear market (for non-Ethereum coins), liquidity that might flow towards the Ethereum ecosystem due to its established security, track record, and newly acquired environmental sustainability.

    On the other hand, ETH and other ERC-20 tokens living on Ethereum also run a risk of crashing, if the post-Merge ETH unlock from the Beacon chain results in a mass sell-off of ETH, which could crash other coins and project treasuries.

    As this will be the first time the crypto industry experiences a recession or a stagflation, there is a lot of uncertainty about how low the market could go and, most importantly, how long it could stay so low. This is uncharted territory, so making comparisons with past cycles might not be particularly useful. Nations and companies will keep tightening their belts, and spending will significantly decrease across the board, leaving risk-on markets such as crypto vulnerable to a continued mass exodus to safer investments.

  • Crypto BEAR MARKET NOW (2022) VS 2018: Similarities & Differences

    Crypto BEAR MARKET NOW (2022) VS 2018: Similarities & Differences

    The crypto market, together with stock markets and the global economy in general, have been experiencing a significant drawdown for the past 6 months, leading to a confluence of factors ranging from high inflation, rate hikes, supply chain issues, energy crisis, to geopolitical instability. This combination packs a powerful punch for any risk-on markets, such as stocks and crypto, forcing retail and institutional investors to exit their capital from markets during these uncertain times.

    With Bitcoin currently at $20k, down 70% from its $69k ATH, and the total altcoin marketcap being down 72% from its ATH, it is hard to deny that we’ve entered a bear market. But one question remains – is this anything like the bear market of 2018 and will it last equally as long as the previous one? Let’s dissect the situation and understand if this time is truly different, or if this is just a small bump in the road before an accelerated bull market.

    Check out our video comparing the crypto bear market now (2022) and in 2018- and more importantly, how to STILL make money during this downturn:

    2018 Bear Market

    2017 saw the first true mass influx of retail interest into the crypto space. Bitcoin saw a rapid increase in price, everyone’s friend and grandma were kickstarting their own ICOs to attract funds, and regular companies added the blockchain keyword to their names to increase their share prices. 2017 was the wild west, as there was even less regulation than currently, and the space was rife with opportunists spawning scam projects to extract money from ignorant first-time crypto investors.

    But, as with any bubble, it eventually pops. The crypto space was heavily overheated, with investors throwing money at everything that moved, doing minimal to no due diligence, just to get on the crypto hype train. Come 2018, things were starting to cool down and people were beginning to feel the pain. In less than 6 months after the peak ICO craze, over 90% of all the projects were already dead, with many more to go down with them in the rest of the 18-month long bear market.

    At the peak of the market, a lot of FUD (fear, uncertainty and doubt) was beginning to circulate. Fear of regulation due to the prevalence of scams, and with China/Korea considering banning cryptocurrencies, things were not looking great for the crypto space. Right around the peak of the market, the Chicago Mercantile Exchange (CME) launched their Bitcoin futures product, which allowed institutional investors to get their hands dirty with Bitcoin. And, naturally, they did just that. With all of the FUD circulating and the market waiting to release a lot of pressure, institutions began shorting the market, creating an enormous sell pressure that brought BTC down to $7k, which kept grinding down to $3k till mid-2019.

    2022 Bear Market

    After Covid-19 hit, the market experienced a tiny two-month recession. As everyone was locked inside, demand dropped and supply shrunk as well. But once central banks began printing more money to help businesses and people via stimulus checks, many found themselves with a lot of extra cash and no way to spend it, so they turned to investing. After the March crash, the rest of 2020 saw the crypto market boom, calling it the “DeFi summer”, with BTC increasing in price by 400% by the end of the year. After that, it just kept on going. 2021 was the year of the NFTs and Metaverse, i.e. GameFi, with numerous projects sprouting up to capture some of the value amid all the hype.

    After reaching its peak in November 2021, the crypto market has kept on steadily grinding down. Those who had called the peak in November aptly understood that the markets were overheated, inflation was starting to get out of hand, and the only way for governments to keep that under control was to begin quantitative tightening through rate hikes. Unfortunately, many were still in denial about the onset of the bear market way into April, which has resulted in a lot of people holding bags that might or might not recover.

    Now the path forward seems clear. The US Federal Reserve’s hawkish monetary policy is causing markets a lot of necessary and unavoidable pain. Because the money printing since Covid-19 has been at such an unprecedented level, the Fed is finding it hard to slow down the inflation without causing a lot of damage. The result currently is a looming recession at the same time as inflation is still running rampant and driving up the prices of everything, all the while people’s incomes are stagnating and their expenses increasing.

    When is the Next Bull Cycle?

    At the moment, there are no clear signs of central banks reeling in their hawkish monetary policies. It might possibly take at least several months if not until the end of the year for the dust to settle, the bottom to come in, and for us to be ready for the next bull cycle once the Fed eases monetary restrictions. Continued geopolitical turbulence aside, the next bull cycle will certainly come, but it’s difficult to say what will be the narratives driving the rapid market expansion this time.

    The two most touted bull market catalysts are the long-awaited Bitcoin spot ETF and the Ethereum Merge, which will cause the Ethereum network to transition from its wasteful Proof-of-Work mechanism to Proof-of-Stake. However, as is common in life and in markets, the most obvious things tend not to be the ones to catalyze huge changes. Markets are irrational, and a confluence of new narratives that will be born only in 6 months might very well end up triggering the next bull run.

    How to Still Make Money During the Crypto Bear Market?

    With great pain come great opportunities, and this bear market is no exception. This is the time for learning, accumulating, and paying attention to the market. In our latest video about the current bear market, we outline a few strategies that you can use as an investor to maximize upside potential come next bull run:

    1) Dollar cost averaging (DCA) into your investments – instead of trying to catch the generational bottom and investing your whole capital in one go, better invest 20% of your capital at a time during a longer time period, so that way you are more likely to get a great average entry price and reap the profits in the future.

    2) Doing lots of research – fundamental analysis of projects is the best way to ensure you invest in projects that have a real potential, and this is the time to be doing just that. Many projects will die during this bear market, so it’s important to source trustworthy information and be critical of everything in order to position yourself properly during the next stage of growth.

    3) Diversify your portfolio – as we’ve seen in the past months, there’s no such thing as too big to fail in the crypto space. Instead of going all-in on one project, spreading risk across several projects will ensure your capital is better protected from a few bad investments.

     4) Shorting the market – this should not be practiced by anyone who doesn’t have experience trading, as without proper risk management things can get pretty ugly very fast. During a downtrend, a way to make money is by shorting an asset, which essentially means you’re betting on an asset to go down in value.

    Of course, none of this is financial advice, and we implore our readers to do their own research and never invest more than they are willing to lose. It’s a highly volatile market and not for the faint of heart.