IGOs – Crypto, Metaverse, DeFi and Gaming

Launchpads to crypto gaming platforms are gaining traction. The method they use for funding is called an IGO (Initital Game Offering) that are like the ICOs (Initital Coin Offerings) in crypto and an IPO (Initial Public Offering) in traditional finance. IGOs are based on cryptocurrency like NFTs (Non-Fungible Tokens), which are issued to represent unique digital assets. NFTs can represent content like art and collectibles, which encompasses the gaming industry. NFTs issued in gaming can be in-game rewards, loot boxes, prizes and game characters. These have unique traits that determines their value. NFTs also establish ownership of a digital asset via a blockchain.

IGOs help to fund new gaming projects using launchpads like Enjinstarter. One of the big reasons IGOs are becoming popular is the rise of the metaverse. This is not the same ‘metaverse’ that Big Tech companies like Facebook (i.e. Meta) are building. Though they intersect in some aspects like with shared virtual worlds (e.g. VR, AR), the crypto metaverse is decentralized and open. Big Tech’s metaverse are like silos with their own ecosystems, but they may connect to the crypto metaverse with regards to NFTs. Other than that, there are still differences with respect to their purpose.

The use of NFTs in the metaverse is a big factor in crypto gaming projects. Developers are not just building fancy virtual world games. They are adding value to it using cryptocurrency in the form of NFTs and gaming tokens. The NFTs are the unique items users collect from playing games. Their value is based on their uniqueness, and this adds value. This can be a unique armor or weapon that gives a gamer advantages or they can be special powers. In traditional gaming these objects are also available but not tokenized like NFTs. When it is in the form of an NFT, it can be traded or sold by the gamer.

Tokens are also another feature of crypto games. Using a Play-To-Earn model (e.g. Axie Infinity), players earn the tokens from playing the game. For example, if the player wins a round, they can earn tokens as a reward for their victory. These tokens can then be put to work in DeFi protocols to earn money. This brings another aspect that is not found in traditional games, so these are enticing users to try something new.

IGOs are for investors who want to jump into a project from the start. It is an opportunity to get into what might become the next big thing in gaming. These have the potential for huge ROI (Return On Investments), depending on the amount invested. There are risks involved since the project might fail, so potential investors should do their research before participating in an IGO. A good project is one that has a great idea, but also make sure that it has a credible team and reasonable tokenomics.

It is also important to check if the project follows regulatory compliance, otherwise there could be problems in the future. This is true if the launchpad is not fully decentralized, since regulators can come after the platform’s owners.

IGOs may only be relevant until new techniques for funding replace them. For example, ICOs were eventually replaced by STOs (Security Token Offerings) and IDOs (Initial DEX Offerings) due to regulatory concerns. Those who get in early are usually the ones who benefit the most from these projects. An IGO is a great opportunity worth exploring for investors interested in earning from the next generation of gaming.

Disclaimer: This is not financial advice. The information provided is for reference or educational purposes only. Please do your own research always to verify facts.

(Photo Banner Credit: JÉSHOOTS)

The Anchor Protocol For The Terra Network Blockchain

This article provides information about the Terra network and the Anchor Protocol. This will allow access to the Terra blockchain ecosystem, which provides users with access to DeFi (Decentralized Finance) applications.

Terra Blockchain

Anchor is a savings protocol offering low-volatile high yields on Terra stablecoin (UST) deposits. While banks are offering less than 0% interest on savings, Anchor offers between 19 – 20% APY. The Anchor protocol makes use of the Terra blockchain ecosystem to earn users higher yields on their deposits.

The protocol is decentralized. There are no required sign-ups other than access to a wallet. There are no minimum deposits, account freezes and users can immediately withdraw funds at any time.

Anchor also lets users borrow against their digital assets as the collateral. The borrower is issued Terra stablecoins based on an LTV (Loan-to-Value) ratio. The higher the LTV for borrowing against collateral, the higher the risk of liquidation if the borrower is not able to maintain the ratio. The good thing about it is that this provides liquid assets to users without losing their original assets. As long as they pay back what was issued, they can recover their collateral.

Users can also stake ANC tokens to earn more tokens. This can also be provided to liquidity pools for the ANC/UST token pairing. The protocol’s simplest earning product is a UST savings deposit, which can earn up to 20% APY.

Participants

The participants are the users of the Anchor protocol. There are 4 main types.

Lenders – Deposits Terra stablecoin UST for lending to earn % APR. In return they receive a token bond issued as aTerra. This is used to redeem the deposit along with accrued interest.
Borrowers – Deposits collateralized digital assets in the form of bonded assets or bAssets (e.g. bETH or bLUNA) in order to borrow money based on an LTV ratio. The borrowed money is against the borrower’s collateral and is in UST stablecoins.
Liquidators – Purchases liquidated collateral from bidding. When a lender is about to default or has reached the threshold LTV, the liquidation process allows for bids to liquidators.
Liquidity Providers – Provides liquidity to a pool for token pairing of UST/ANC. In return, liquidity providers earn from transaction fees made from the liquidity pool.

Tokens

There are 5 types of tokens involved in the Anchor protocol.

UST (USD Terra) – The Terra stablecoin that is pegged to the USD (US Dollar) in price.

– 1 UST = 1 USD

aTerra (Anchor Terra) – Represent the deposited UST stablecoins.

– Redeemable for initial deposit D and accrued interest i

aTerra = D + i

– To receive aTerra, a user must deposit their digital asset as bAssets.

The aTerra is then issued based on the LTV ratio.

bAssets (Bonded Assets) – The locked collateral

– Locks the value of assets from collateral

Bonded Luna (bLuna) – Token backed by Luna
– CW20 compliant for fungible tokens (ERC20 based)

– exchangeRate = lunaBonded / bLunaSupply

Bonded ETH (bETH) – Token backed by ETH
– CW20 and ERC20 standard

– ETHexchangeRate = stETHbalance / bETHSupply

Anchor (ANC) – Governance Token

– Allows token holders to participate in digital governance for policy making decisions and development of the protocol.

ANC-UST LP – Liquidity Pool (LP) token issued for users who provide ANC/UST token pair.

How to Earn From Anchor

There are 4 DeFi products that allow users to earn from Anchor.

Deposit UST to earn up to 20% APY (subject to change)
- Users deposit their UST to earn % interest APY.
- Users receive a bond of their deposit as aTerra.
- The longer the user keeps their deposit in savings, the more interest they can earn.
- Withdrawals can be made at any time.
Stake ANC and earn ANC
- Users stake their ANC governance tokens.
- There is a % APY of staking rewards given to ANC stakers.
- Rewards from staking are claimed when users unstake their ANC.
Provide liquidity for ANC/UST token pair, earn ANC
- Users provide equivalent amounts of ANC and UST for liquidity.
- Their pool contribution is issued as ANC-UST LP token.
- Users earn from transaction fees from the pool.
- The ANC-UST LP token is used to redeem the user’s earnings, when liquidity is removed by burning the LP tokens.
- Users receive the amount of the ANC and UST they provided along with the earnings, depending on the number of LP tokens burned.
Collateralize bLUNA or bETH to borrow UST and earn ANC
- Users provide digital assets (ETH or LUNA) as bonded assets for collateral.
- Users can borrow against their collateralized assets using an LTV ratio.
- Users can borrow until the loan’s LTV ratio reaches the MAX LTV, calculated based on collateral types, their prices, and deposit amount.
- Users can use the money they borrow to earn ANC.

Liquidation Contracts

The higher the LTV, the higher the risk of liquidation.
Manages collateral liquidations of loans at risk of under collateralization.
Used by liquidators to purchase liquidated collateral.

Synopsis

Anchor allows users to earn by allowing deposits of their UST for % APY.

They can also borrow for collateralized lending using bETH and bLUNA tokens.

Staking allows users to stake ANC tokens for yields and claim rewards.

Contribute to liquidity, allowing users to provide ANC-UST token pairs to a liquidity pool and earn from transaction fees.

Disclaimer: This is not financial advice. The information provided is for educational and reference purposes only. Do your own research always to verify facts.

The Ethereum Altair Upgrade – Merging PoS With The Beacon Chain

The Ethereum Altair upgrade was completed on October 28, 2021. This is part of the transition to ETH 2.0, as PoS (Proof-of-Stake) consensus mechanism merges with the Beacon Chain.

The upgrade implements the following:

light-client support to the core consensus.
Setup of beacon state incentive accounting.
Fixes validator incentives issue.
Penalties for offline or inactive validator nodes per EIP 2982.

Over 95% of the network participated at the time of the upgrade’s first epoch. This is the first upgrade to the Beacon Chain since going online in December 2020 and could also be the last before the merge with PoS on the Ethereum mainnet.

According to IntoTheBlock researcher Lucas Outumuro:

“Through the Altair upgrade, Ethereum sets the base for this vision, enabling the upcoming merge of the proof-of-work chain and the Beacon Chain. Finally, these are expected to benefit Ether holders and stakers by making it deflationary while offering higher returns to validators.”

The recent London Hard Fork had introduced a base fee as part of EIP 1559 with a coin burning mechanism that adds a deflationary feature to Ethereum. During the first 48 hours of that upgrade, $30 million in ETH were burned from the network’s circulation. As of 10/30/21, 681,030 ETH have been burned that is valued at $3,013,073,269. This puts pressure on supply as it decreases and drives the price of ETH higher due to market demand.

With ETH 2.0 set for deployment in 2022, Altair is part of the preparation. Altair is a hard fork, which means that the 250,000+ validator nodes who didn’t upgrade are now considered offline. Their ETH will then slowly diminish at about 10% per year. This was included in Altair as a sort of way to push for moving towards the upgrade. This not only benefits the validators, but the network as a whole as it comes to an agreement to pave the way for Ethereum’s next phase.

Bitcoin And Twitter Integration May Not Bring Decentralized Social Media

There have been reports of Twitter integrating Bitcoin (BTC) tipping from their app. This would allow users to receive BTC from their followers or from anyone who appreciates their content. This would require some payment integration with the Bitcoin blockchain, allowing Twitter accounts to receive BTC tips. While there is no final word on that ever becoming a feature (as of posting), it is generating excitement among crypto-fanatics on social media.

Tipping on Twitter is possible using a third party payment channel. It is called the Tip Jar service, and you can receive money that goes through a payment processor like PayPal. It would also be possible to receive crypto like BTC, but once again this is assuming Twitter will actually integrate crypto. Jack Dorsey (Twitter CEO) did mention before that he has plans for Bitcoin and Twitter, but whether this is part of the plan remains to be seen.

Due to this news, can we also assume (or expect) that Bitcoin will help make Twitter a more decentralized social media platform? After all, Bitcoin is based on the ideology of decentralization and censorship resistance. Those are things that Twitter is actually not known for. They are highly centralized with a team of systems administrators and moderators who check content and have even banned a former head of state and public figures who have violated their terms of service. Twitter has also been accused of bias when it comes to content, but there has been no undeniable proof that has been determined by the court of law.

Decentralization means there is no one controlling the platform. That is in contrast to Twitter. The Bitcoin network is considered decentralized because no single entity controls it. It consists of independent nodes that verify payments, hold copies of the blockchain database or mine blocks for rewards. If one of the nodes goes down, the entire network can still operate. If Twitter were to shut down, it affects the entire network operations. With decentralization you also have platform neutrality because no one is going to restrict any user’s action, even if they have consequences (this is another topic for debate).

In a decentralized platform, there are no admins or moderators who check the content. Not even AI algorithms that make sure users are following the company policy. There is no need for that, so a truly decentralized platform is not regulated. It can still deal with bad actors, but that requires community to come to a consensus. Decentralized networks are based on this mechanism to keep users honest and properly behave. With Twitter, it is decided by a few people at the top of the organization. You can make the argument that Twitter can do what it wants because it is their platform. That is fine, but it is the perfect example of a centralized organization.

Some would say making the software open source paves the way to decentralization. The Twitter app is open source just like Bitcoin. They are both open source, yet one is centralized and the other is not. Therefore it is not about being open source. It is really more about organizational structure and policy. Twitter can become decentralized if it has not main office or central authority for leadership. Bitcoin does not even have a recognizable executive team like Twitter. Its founder is an anonymous user and it has no directors or employees. Those who work in Bitcoin development are for the most part volunteers.

So even with Bitcoin integration it is not likely Twitter will become decentralized. Just because a company uses crypto does not mean they follow the principles behind it. Even digital exchanges like Coinbase and Binance have a high degree of centralization, despite embracing the cryptospace. They have an executive board, they can shut down accounts, ban users and manipulate data. As long as the organization exists as a single entity with board members consisting of a few people not voted through consensus, it will not be decentralized.

(Photo Banner Credit: JESSICA TICOZZELLI)

VISA Gets Into NFT With CryptoPunks

VISA has announced the purchase of a CryptoPunk NFT (Non-Fungible Token) worth approximately $165,000 (~50 ETH this August 18, 2021). Perhaps the most unlikely thing you would expect VISA (the financial credit company) to invest in. VISA is apparently bullish on NFTs, or could this just be another signal to show they are “in the know” or “part of the gang”? CryptoPunk NFTs are original digital artwork made by Larva Labs. These are unique collectible characters that have verified ownership on the Ethereum blockchain. They are not physical objects at all, but purely digital. They look just like icons or emojis, not at all like the works of art you would see in a gallery.

This shows that VISA is getting in on the DeFi (Decentralized Finance) market with NFTs. According to their recent tweet:

“Over the last 60 years, Visa has built a collection of historic commerce artefacts—from early paper credit cards to the zip-zap machine. Today, as we enter a new era of NFT-commerce, Visa welcomes CryptoPunk #7610 to our collection”

NFTs like CryptoPunks, despite looking like mediocre art, hold plenty of value. A typical CryptoPunk can bid over $20,000 while the more in demand will bid in the millions of dollars. That shows that there is a big market for these collectibles and the buyers have plenty of money to spend. This is not your basic retail market where items cost a few dollars. This is a big money market, and it has attracted VISA’s attention.

What makes CryptoPunks desirable as a collectible is their uniqueness. A CryptoPunk character (i.e. Punks) is algorithmically generated by computer, not manually created by a human artist. There are also different types like Apes, Zombies and Aliens. Each CryptoPunk character has their own set of attributes and their metadata are recorded on the Ethereum blockchain. That also includes the proof of ownership to the holder of the NFT.

It seems like VISA will hold this NFT for the collection purposes. It will hold the CryptoPunk for historical records, perhaps to document a time when NFTs first emerged. This will surely be valuable in the future, whether NFT continue to become successful or not. Just owning a piece of history is valuable in itself, so VISA is going to look back on this as having a memento to that timeline. Overall the NFT market continues to grow. According to Forbes, the NFT market grew 1,785% In 2021. It is now the fastest growing sector in DeFi that is also gaining pop culture adoption and VISA is jumping on board.

Moving forward, it looks like VISA is also on the horizon ready to enter new partnerships and projects related to NFTs. As a payment processor, VISA can help bridge the traditional finance market with the DeFi space. That opens a world of opportunities for buyers, sellers and developers.

London Hard Fork Brings The Burn To Ethereum

The Ethereum network has activated the London Hard Fork successfully (12:34 UTC, Block# 12,965,000, 8/5/2021). In the first two days, $30 Million of ETH (Ether) were burned. That amount of ETH burned, removes approximately 3,000+ ETH from circulation. This is part of the EIP 1559 specification in which a certain portion of the transaction fee is burned per transaction. The hard fork also makes transaction fees on the Ethereum blockchain more predictable. This creates lower gas fees that can bring the costs of transactions down since there is now a base fee.

The introduction of a base fee addresses the volatility in transactions. This is regarding the cost of gas prices during times of network congestion. When the network is at its busiest, the cost of gas can suddenly increase which is why recent transaction costs on the Ethereum network has been high. With a base fee, this can prevent gas prices from suddenly shooting up to levels where it makes more sense to send large transactions than lower ones.

Since Ethereum uses an inflationary currency model, the burning introduces a deflationary system for the first time. This puts a check on the amount of ETH in circulation, which can affect prices to the upside. This has become controversial since it affects miner rewards, but the Ethereum network is moving away from mining (Proof-of-Work) consensus. A protocol difficulty bomb is part of the design for Ethereum 2.0 (ETH2.0) that will make mining more difficult, encouraging validators to move towards staking (Proof-of-Stake) consensus. The London Hard Fork will delay this at the moment to allow time for transition.

In a nutshell the London Hard Fork has enabled the following features:

Establish a base fee for transactions
Provide more transparency and predictability to transaction fees
Make ETH a more deflationary asset with a burning mechanism

Here are other EIPs activated during the London Hard Fork:

EIP 3554 delays the “difficulty bomb”.

EIP 3529 reduces gas refunds. Gas tokens (e.g. Chi) will become obsolete.

EIP 3198 allows users to return the base fee opcode.

EIP 3541 enables future upgrades to the Ethereum Virtual Machine (EVM)

Overall this introduces steps that will bring Ethereum closer to a minerless future. This gives time for miners to transition to staking, but once the difficulty bomb is activated it begins the “Ice Age” for mining. The new structure for transaction fees is also a positive development in light of the skyrocketing costs to run a transaction on the Ethereum blockchain. It doesn’t exactly lower gas prices, but makes it more manageable with a base fee. At least users will not have to deal with sudden increases when all they want to do is transfer ETH to another wallet or swap tokens. ETH will also be headed towards a more deflationary asset as well, with the burning of portions of its transaction fees. All of this creates positive market signals that drives further utility on the Ethereum blockchain.

(Photo Credit by Chris Schippers)

Come On Amazon, Get Into Crypto Already

In Big Tech, Apple was usually the one who was late to the party. When it comes to crypto, that does not seem to be the case. Apple has made moves to hire an “alternatives payment” manager that we can assume involves cryptocurrency. It became obvious when one of the key qualifications mentioned was experience with cryptocurrency. Google has been involved with blockchain technology related matters like their partnership with Theta Labs network. Other Big Tech companies like Twitter, Facebook and Microsoft have dabbled with blockchain and cryptocurrency on occasion but there is one company that we have not heard much about recently being involved in crypto … Amazon.

Amazon has actually patented a blockchain-based product authenticator back in 2020. It is not using cryptocurrency (as of writing) and has not really been in the news much. Amazon even removed crypto from their payment methods from the Twitch.TV platform . There is however news that Amazon is moving towards cryptocurrency payments. Just like Apple, Amazon is looking for a digital currency and blockchain expert. They might be considering crypto payments for their online retail business.

It is a big deal if Amazon embraces crypto. Not just for payments, but if the company invests in digital assets like Tesla. Amazon has a large retail empire which they could open to retail for cryptocurrency. This will most likely require payment processors like Visa, who have started to process cryptocurrency for payments in 2021. Amazon may permit payment processors to handle cryptocurrency to fiat conversions, meaning the final payment will still be in fiat.

Developers would find it an opportunity to create gateways for payment processors from crypto to fiat. Regulations must be followed as part of jurisdiction laws, so how it will be implemented is the challenge. The less you have to deal with regulators, the better it will be to just allow others to deal with it. Then again why would Amazon need a third party, when they are more than capable of implementing a system with their vast resources available.

According to an Amazon spokesperson:

“We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon. We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.”

It sounds like the type of news that can move the market to the upside. It is also what speculators want to hear because it can generate more interest in Bitcoin and other cryptocurrency. That usually leads to FOMO buying sprees that help drive prices of digital assets higher. While the news cycle from the media had been full of FUD the past few weeks since “Elon FUD” back in May, it has since become more positive. Whether or not Amazon does finally consider cryptocurrency payments or develop their own token, they have confirmed their interest. For many analysts that is a sign that cryptocurrency is not about to go away any time soon.

(Cover Photo Credit by Anna Shvets)

Apple Pay and Coinbase Bring Crypto Payments To Retail

As of June 2021, users who have Apple Pay can now pay for items with cryptocurrency by way of the Coinbase debit card. The card also supports Google Pay with the option to pay with cryptocurrency like Bitcoin and Ethereum. In a press release statement (From the Coinbase blog):

“You can now use your Coinbase Card with Apple Pay and Google Pay to make it even easier to spend crypto at home and on the go.”

It is Coinbase that has integrated cryptocurrency payment options, and is not directly from Apple Pay. This means that users will need a Coinbase card first, which can then be added as a payment option on Apple Pay.

Coinbase provides a debit card from which users can attach their cryptocurrency wallet to use funds. One of the perks it offers is a cash-back spending feature (up to 4% according to Coinbase). This rewards heavy users back to their iPhone.

Before a user can pay with cryptocurrency, it is clear that it is not a direct exchange of value. It must first be converted to fiat at the point-of-sale. The merchant must also support payments in cryptocurrency, so this means that users cannot just use their card to make any payment in cryptocurrency. Merchants who accept the card can offer designated cryptocurrency payment methods (e.g. ETH, XLM, BTC).

Cryptocurrency debit cards are providing users not just a new payment method, but a way to actually use digital assets as a medium for exchange. They can be used to pay for goods and services where it is accepted, and that allows more utility for cryptocurrency. There are other types of cards offered by Crypto.com and BitPay, with their own reward system for users.

With crypto payments going toward mainstream adoption, the question is whether the volatility will have any negative effect. An example of this is sudden change in price of a cryptocurrency in the middle of a transaction. How will payment processors handle the variations, which can suddenly increase or decrease without warning? The idea is making the payment at the point-of-sale, but users may delay in paying from the time of quote. In the real world, prices are fixed with fiat currency and users pay for an item as listed. Prices don’t suddenly change after a few minutes. With crypto, prices can suddenly change while a user is waiting to make a payment. This is certainly something that will be tested.

Certain crypto, like Bitcoin, may be considered too valuable to spend. However, that would probably be the digital asset merchants would like to accept for cryptocurrency payments. Users will have to consider whether they want to spend fractions of their BTC for a pair of sneakers or just HODL it. There are other crypto options of course, which is why this can still work out for both users and merchants. Another thing to take note of are the transaction fees. Users would probably want to use a blockchain where transaction fees are cheapest to spend their crypto.

Stablecoins may provide a better solution to go around the volatility. This might be a good option since it is pegged to more stable assets. Users can set their Coinbase card to use a stablecoin like USDC as their payment option method. All users will need to do is convert a certain amount of their base crypto like Bitcoin to a stablecoin. From there they can fund their debit card with less worries about volatility.

Both Apple Pay and Google Pay come from large tech platforms that serve millions of users. Integration with cryptocurrency payments is further simplified through the use of smartphones. Apple Pay users have iOS (iPhone) while Google Pay users have Android (Samsung, OnePlus, Huawei, etc.). This finally takes the world of retail digital payments to the blockchain.

Meme Coins – Opportunity Or Stupidity?

I am convinced that the rise of Meme Coins in the cryptospace is nothing innovative like DeFi (Decentralized Finance), but more a distraction. If the pumps going into these coins were instead going to legitimate projects, perhaps the market would be better off. Perhaps I am wrong, but when you think about it, why do coins like Dogecoin (DOGE) have a market cap of $40+ Billion (as of June 15, 2021)? I feel the same way about hard forks that could have injected more liquidity into the original coin, but instead are diverting funds away to an offshoot. There is plenty of hype behind it, and it can be fueled by public figures who have influence (e.g. Elon Musk for Dogecoin).

After the Dogecoin hype, the Meme coin mania continues with Shiba Inu (SHIB), Safemoon (SAFEMOON), Cumrocket (CUMMIES) and more dog themed coins. At first glance many would think there is no particular utility for these coins. SHIB actually wants to help protect the Shiba Inu dog breed, so it has a specific cause. Other than that it seems like a pump and dump scheme. CUMMIES offers a crypto for adult themed entertainment. SAFEMOON claims to be a DeFi token despite its classification by some exchanges like Coinmarketcap as a Meme Coin.

Critics say that these coins lack fundamentals when it comes to money supply. If you look at Dogecoin, it has no supply limit which means that it is highly inflated. Others implement a sort of burn mechanism to deflate the supply, but the total circulating supply is already very high (in the billions). It doesn’t seem to make much sense that the circulating supply is so high, but you can buy them cheaply because they are barely 1 cent in value. Buying at such low prices appears to be a bargain but with no limit to money supply, prices just don’t really increase unless there is some scarcity or deflation.

Meme Coins do not really have any ground breaking purpose other than transfer value on a blockchain. The coins target specific use cases like causes and communities for the purpose of the coin. That already gives it a use case, but it is not like other projects that have a more serious purpose. Instead, developers of Meme Coins are doing it more for fun. They were meant to be a joke for good humor. It surely does not seem like a wise long term investment or even for storing value. It can all be lost when a big bag holder dumps the market. Then you have to wait for more people to come in with their money, but there are no guarantees that will happen.

For starters, most of these coins were copied from existing projects. Since many of the top crypto are based on open source code, it is easy to copy them and create a new crypto. Dogecoin was copied from both Bitcoin and Litecoin. Another path for Meme Coin developers is the issuance of a token using a standard like ERC-20 on the Ethereum blockchain (e.g. SHIB) or a BEP-20 token issued on Binance Smart Chain (BSC). The reason they are called a meme is because they don’t offer any specific purpose other than “going to the moon”, which is the term for making money in the cryptospace. Some Meme Coin developers offer their rationale behind their coin, but many of these talking points do not have solid proof or evidence behind the theory.

The main concern is that when these coins pump, they can as easily dump. That would leave the newcomers as the bag holders until new money pumps. It is a sort of Ponzi scheme since liquidity is determined not by utility, but from hype. Those who came late give their money to those who came early during a dump, leaving newcomers rekt (i.e. losers). The system will not be sustainable unless you have new people who put money in the coins. So far, it seems to be working and there is a reason why.

First there is a community driven market that is keeping these coins alive. Without the network effect, there would be no further liquidity in these markets. There are evangelists and shillers of each coin who propagate the benefits of putting money. These groups are all over the Internet on social media sites like Instagram, messaging apps like Telegram and video streamers on YouTube. The power of the network is exponential, and this is what has led to market caps that are in the billions. There is a belief system around most crypto, including Bitcoin, and this also helps to drive Meme Coins. A lot of the enthusiasm with DOGE was led in part by tweets from Elon Musk. Entrepreneur Mark Cuban also added to the hype by accepting DOGE as payment for his Dallas Maverick’s sports merchandise.

Second motivation is the money. Obviously, there is plenty of money to be made just by looking at the market cap of the top Meme Coins. It gives many the belief that there is a chance to become rich, and that has already happened to some people. There are reports that a Goldman Sachs executive quit their job after striking it rich with Dogecoin. There are people who will get rich, but others will lose a lot of money. Those who are mortgaging their homes or selling their cars just to get into Meme Coins should be aware of the risks from price volatility in the cryptospace. There are no guarantees with Meme Coins. It is like gambling when you place your life savings in a coin with the hopes that it will increase in future value. Always put no more than what you are willing to lose, as the saying goes.

Meme coins add a new dimension to the cryptospace. I call it distraction because of the amount of capital it has taken away from the rest of the market. There is approximately $48+ Billion (based on Coinmarketcap data in June 2021) total value in Meme Coins. Some would say that money would have been better off going into Bitcoin or Ethereum. It can be an opportunity for the wise when used as a way to earn quick money from a small amount invested. You can have a million of some of these Meme Coins for less than $20 initial investment. It does become stupidity when you decide to invest all your money into one Meme Coin. There are other coins where that money could have been yielding higher profits and earning from DeFi protocols.

In seems you cannot stop people who are motivated by community and money. Greed backed by a strong support system will keep the belief in Meme Coins alive. Some jurisdictions are taking a harsh stance on Meme Coins. Regulators may determine the momentum moving forward. The SEC in the US has the power to restrict trading in Meme Coins if they deem it to be more harm than good for investors. What could be good news is if some of these Meme Coins actually do succeed not just from new users, but in accomplishing a purpose. Dogecoin is seeing some form of development in the works. In any case, be very careful with Meme Coins. Anything is possible, but it can go either way. Do plenty of research and understand the risks involved. There is just no way of knowing what will happen.

Disclaimer: This is not financial or investment advice. The information is an opinion piece for reference purposes only. Always do your own research.

The Alonzo Hard Fork – The Road To Cardano Smart Contracts

The launch of the Alonzo hard fork signals the next stage in the Cardano roadmap. This provides the path to the Goguen phase, which introduces smart contracts to the network. This will take place in multiple phases represented by colors. The current phase is called Alonzo Blue, to be followed by Alonzo White and Alonzo Purple. What is coming are the feature for developing applications. Alonzo is the upgrade that will allow developers to build DApps (Decentralized Applications) that run on a secure and mathematically verifiable network.

According to the Cardano testnet site:

“The ‘Alonzo’ hard fork will bring exciting and highly-anticipated new capabilities to Cardano through the integration of Plutus scripts onto the blockchain. These will allow for the implementation of smart contracts in Cardano, enabling the deployment of a wide range of new DeFi applications for the first time.”

Cardano (ADA) has been criticized for its slow development pace. This has anxious investors waiting for the release of products built on top of the Cardano blockchain. The Cardano team are doing this with purpose to be able to release a peer reviewed system that is stable, secure and quality tested. That can only be possible by following the roadmap set by the developers. It begins with the foundation to build a core network that was introduced in the Byron phase. Next came the decentralization of the core network, which was the purpose of the Shelley phase. Now comes the ability for developers to build on top of the Cardano blockchain, like how developers use the Ethereum blockchain for smart contracts and DApps.

The smart contracts used in Cardano are written using the Plutus programming language. It is based on the functional programming language Haskell, which is used for reliable and mission critical application development (e.g. aerospace and defense software). The aim here is to provide a more stable code for smart contracts, which are critical in nature. That means a more sound way to execute DApps on the network, that minimizes logic errors and capable of scalability.

The Alonzo Blue phase will bring the testnet live by the end of May 2021. It will be open to a select group of partners and developers to test the codebase. The Alonzo White phase comes around July 2021 and will bring in more participants for testing. Alonzo Purple will then open up the testnet to the public. This is in preparation for opening the system up to other users to test the performance of Cardano smart contracts. With these developments, the smart contract platforms will get more competitive in the cryptocurrency markets. Ethereum and Binance Smart Chain (BSC) are going to see a new platform to compete with.

Unlike most projects, Cardano has a reputation for being slow. Founder Charles Hoskinson wants to take the slow tortoise approach to development, rather than giving too many updates right away. The team’s objective is to release quality controlled and tested software that is reliable and secure. They want to make sure they avoid many bugs and flaws that could compromise the system. Perhaps we can now see the fruits of their labor.