The Cardano Vasil Upgrade

According to the Cardano project team, their much anticipated Vasil Upgrade hard fork will proceed on September 22, 2022. The upgrade will bring more scalability and also lower transaction costs on the Cardano blockchain. A smart contract platform, like its competitor Ethereum, Cardano represents a third generation blockchain design.

There have been previous delays to the upgrade due to flaws discovered while testing during the summer of 2022. The Cardano project developers have been criticized for moving too slow in meeting targets, but this was to make sure that the software is stable and secure. What many don’t realize is that this is part of the team’s strategy to deliver a product that is tested for quality, making it less prone to failure. Let us not forget that many cryptocurrency projects have ended in failure due to poor development, not to mention tokenomics.

Cardano’s founder Charles Hoskinson mentioned in a YouTube video (from Altcoin Daily):

“We built Cardano to be the financial operating system of the world …. we understood a roadmap to get there … we’ve maintained actually that level of security and quality that people have come to know …”
Charles Hoskinson

In essence, what Hoskinson is saying is that in order to have a working cryptocurrency token, it has to meet rigorous testing and quality assurance. Despite news of errors in the protocol, it was during testing that they occurred. Errors were discovered on the test network, so that means it can be corrected before deploying to production. Development takes plenty of time in order to guarantee an ecosystem that is reliable and safe to use. The team is now ready to deploy the upgrade to the main network, and this should improve the network significantly.

Cardano is at the Goguen phase (smart contracts) of the roadmap to the Basho phase (scaling). This is the release of the Cardano smart contract platform that uses Plutus, a functional programming language that uses Haskell. This also includes the release of Marlowe which is a high level programming language for financial applications that can also be used for building smart contracts. Plutus is more advanced for high-end developers, while Marlowe can be used by users with no previous background in software development.

What will be interesting is what happens in the Cardano ecosystem after the upgrade. For Cardano’s native token ADA, this could mean a big price boost provided there are no complications during and after the upgrade. Traders and investors are keeping an eye on the price of ADA, as the news has been received positively so far (ADA spot market price was at $0.49 as of writing). This has kept ADA among the top 10 in the cryptocurrency market so far (based on CMC 9/4/22).

Cardano sets itself apart from other tokens. It is not a ‘meme’ nor is it considered a purely speculative asset like many coins that have no utility (i.e. ‘shitcoins;). Instead it has its own unique philosophy that is in line with the fundamentals of cryptocurrency, but based on the foundations of sound engineering. It is building a community with its own ecosystem, much like Ethereum. If Cardano can deliver on the many features it hopes to provide users, we can expect it to remain one of the top (if not the top) cryptocurrency in the market.

Disclosure: This is not financial advice. This is for educational purposes only. Do your own research always to verify information.

The Upcoming Ethereum Merge

Ethereum developers have announced that they are deploying the Ethereum Merge on its blockchain on September 19, 2022 (based on transcript from a conference call). The news has been received positively by the market, which led to a rally in ETH market price. This has been a long awaited event, which will consolidate the beacon chain with the main network to transition Ethereum’s blockchain from PoW (Proof-of-Work) to PoS (Proof-of-Stake).

There have been doubts about the merge since it was first delayed in the summer of 2022. Ethereum has a known history of delaying projects, with market panic when the developers cannot deliver on time. The expectations are sometimes too high for even what the developers can accomplish. When the deliverables do arrive, it usually turns sentiment back to bullish as was the case with EIP1559.

Before the merge can become a success, there are still some hurdles to clear. Tests are underway on testnets (e.g. Ropsten) to make sure that the protocols work properly. There are still major tests that will be conducted on the Sepolia and Goerli test networks. Once these chains have been transitioned successfully without much issues to PoS, then the next step is the Ethereum mainnet. This aims to improve the network to scale the number of transactions and lower fees for users.

Although a date has been set for the merge, it is not final. If there are problems during testing that are serious enough to address, then this could lead to further delays. The hope from ETH HODLers and investors alike is for a successful merge to occur in order to increase Ethereum’s value.

Disclaimer: The information provided is for reference and educational purposes only, and is not financial advice. Always DYOR to verify information.

We Were Warned About Terra LUNA

Prior to the great Terra LUNA meltdown of May 2022, there were warning signs to investors. This came from some notable crypto experts. The main problem was not about the team or developers. They actually have a solid project team with great ideas. It was more about the design of the stablecoin that worried critics. Terra developed an algorithmic stablecoin called UST (Terra USD) that has no actual commodity or asset backing its value. Instead it relies on minting tokens that peg its value to the US Dollar (USD).

In order to meet its peg to the USD, users must purchase Terra’s main coin called LUNA. UST is minted by burning LUNA, and users can hold UST in a DeFi protocol called Anchor to earn yields on interest up to ~20% (has fallen to 18% as of writing). It is a high earning interest rate that attracted investors to flock to UST. This includes many crypto influencers who also urged their followers to put their UST on the Anchor protocol and earn money.

The second problem with this system, is the sustainability of the Anchor protocol in being able to pay users the interest on their deposited UST. It turns out there were liquidity problems that exposed the protocol before. It was back in May 2021, during the cryptocurrency market crash that UST fell to as low as $0.96. That means a deposit of $1,000 would go down to $960 (a loss of $40) not including any yield on interest. This happened once again in May 2022, and this time the price of UST has gone well below the May 2021 mark. As of posting the value of UST was $0.1101 (Coinmarketcap). If you had deposited $1,000, the value will go down to $110.10 or about 90% of your money’s value was lost.

In order to return the peg back to $1, UST needs to be burned to mint more LUNA. During the meltdown that was what happened, but it hyper-inflated the supply of LUNA in the open market pumping into the trillions. This led to a drastic fall in LUNA prices as a “bank run” started with users dumping their UST. The Luna Foundation Guard (LFG) then stepped in by selling reserves in Bitcoin (and other assets supposedly) to try to mitigate the free fall of UST. It just was not enough because more users were selling off their UST than holding. On the Anchor protocol, the UST locked value fell from $14 Billion to under $5 Billion (and still falling as of writing).

Investment and crypto analyst Lyn Alden was one of the experts who warned about Terra’s UST. In a report from Daily HODL:

“Unlike a crypto-collateralized stablecoin, there is no specific threshold where UST breaks. However, if LUNA gets small relative to UST, the probability of an algorithmic bank run increases… Many of them would liquidate their BTC for cash since their positioning at the time was meant to be a stablecoin.”

The fall of UST did affect Bitcoin prices, as the LFG had to sell off its reserves in BTC. The worst case scenario seems to have played out because it dragged several assets to the downside (UST, LUNA, ANC and Bitcoin). The LFG reserves would not be enough to cover restoring the peg to USD unfortunately.

She also cites some worries about the Anchor protocol:

“Then there’s the unsustainable Anchor yield timebomb. The time bomb is not about how well-managed the yield decline will be. It’s about what happens to UST demand structurally, when the primary demand driver (artificially high Anchor yields) no longer exists.”

In other words, Anchor did not appear to have the money to cover the interest payments. The payments would be coming from money borrowed using the protocol. However, there were more lenders than borrowers, so there was no balance. The yields were so high it could not be sustainable to pay in the long run.

Another warning about Terra LUNA came from Kevin Zhou of Galois Capital. He was one of the critics to sound the alarm and warned the public. Zhou told Coindesk:

“Even if it happened in slow motion, even if it was something like a bank walk, it was more about this thing not being solvent.”

Solvency was indeed an issue. To quote Zhou, “mechanism was flawed, and it didn’t play out as expected.”

There is also a crypto YouTube channel Coinsider that reported about the risk with Terra LUNA and UST. You can check the video which was made back in March 18, 2022 prior to the meltdown. The analysis was spot on and very informative. It may have also helped some people make the right decision of not investing in LUNA/UST or using the Anchor protocol.

What happened to Terra was catastrophic, and probably the worst if not one of the worst collapses in crypto history. Many people have lost money in the Anchor protocol with their UST deposits, while holders of LUNA now have a worthless (under $1) coin that once was valued at over $100 per coin. Regulators are aware of this problem and they could now begin to apply regulations that require money earning protocols to register or comply with financial rules for consumer protection.

The lesson from all this is to be careful when depositing your money into a DeFi protocol. Anchor was not the first protocol to fail like this. Iron Finance had their own meltdown that should have been another warning sign about high interest protocols. It was even endorsed by public personalities, making it more attractive to users which makes it even more problematic. The problem exposed in these systems is that during extreme market volatility, the algorithmic stablecoins were not able to keep the peg to USD. There was nothing the protocol can do when you have a bank run.

Sometimes when it sounds too good to be true (e.g. high interest on deposits), it probably is. It can be risky when big money is involved. Research the project thoroughly and listen to both sides to get a better understanding of the risks involved, and not just the benefits.

Disclaimer: This is opinion and not financial advice. The information provided is for reference and educational purposes only. Always DYOR to verify information.

Cross-Chain Swaps Using The Symbiosis Protocol

One of the main problems in DeFi (Decentralized Finance) is the seamless swapping of tokens. If a user wants to exchange one token for another, they can only do so if the wallet or exchange supports it with a token pairing. The issue here is that not all tokens are swappable with each other. You will need to find a token pair first, to make an intermediate exchange before you can swap for the token you need.

This is because there are many types of blockchains used by tokens and they are not all compatible with each other. The most liquid tokens are the easiest to pair because they have the most liquidity. When you want to swap from a lesser known token for another token, if it does not have a supported pair to swap, you will need to swap it first with a more liquid token.

Swapping tokens can be frustrating with so many processes involved
(Photo Credit:Andrea Piacquadio)

For example, let’s say you have a token called X and you want to swap it for Z. You realize that you cannot swap them directly with each other. Token Z does not have a pairing with X, so you will have to swap it with another token first. You then decide to swap with token Y, which is paired with both X and Z. You will need to exchange X for Y, and then you can swap Y for Z. That is the best way to convert tokens, but it can also be more time consuming and cost more in terms of transaction fees.

It would be so much easier if things can take place on the backend. If a user can just send their order to swap X for Z, without having to perform any other intermediate step, it would save time and money. It would also be more convenient when it comes to user experience.

Symbiosis provides a solution to swapping tokens across different blockchains. It is a liquidity protocol that integrates the features of a multi-chain AMM (Automated Market Maker) and DEX (Decentralized Exchange). It is like a decentralized version of a digital exchange (e.g. Binance, Coinbase) that functions as an AMM (e.g. Uniswap).

With Symbiosis, users can swap any token across different blockchains with no additional software required. This provides interoperability between token swaps. As an AMM, it automates the order book system for unlimited token pairs with the best exchange rates offered. As a DEX, swapping of tokens is direct without requiring a trusted third-party like a payment processor or intermediary.

**Swapping allows the exchange of one token for another.**

The process of swapping tokens from Symbiosis is called a cross-chain swap. This allows tokens to be traded across dissimilar blockchains without requiring the authorization from another exchange to process the transaction. Think of it as an open system that facilitates the flow of transactions. The tokens can also be on blockchains that are either EVM (Ethereum Virtual Machine) or non-EVM compatible. In order to get the best prices for swaps, Symbiosis routes transactions to other AMM DEXes like Uniswap or PancakeSwap. This allows for better price discovery by exploring the best options. Users also don’t have to pay different gas fees across blockchains since the protocol abstracts it into a single transaction fee.

An important benefit of Symbiosis is that it also addresses some issues that can occur during swaps. These are slippage and impermanent loss. A slippage occurs when there is a divergence in the price of the token from the time it was ordered and the fulfillment of an order. This can lead to what is called an impermanent loss. If the price recovers, then the loss is only temporary. However, if the price of a token does not recover right away and it is used for another transaction the loss becomes permanent. To address this, Symbiosis uses liquidity pools that includes stablecoins to offset market volatility with little to no slippage.

Swaps are just one of the many features of Symbiosis, which users will find very useful. It provides a much simpler solution for moving liquidity across multiple chains without experiencing fragmentation due to the many interfaces and processes involved. Current systems make swapping more difficult to the average user. What Symbiosis offers is a one-stop-shop solution for swapping different types of cryptocurrencies with less difficulty.

Disclosure: This article was written for #SymbiosisDeFined. This is not in any way financial advice, but for educational purposes only. DYOR always to verify the information.

First Published At Publish0x (3/23/22)

Things To Know About Getting Paid In Bitcoin

Would you be willing to accept your salary in the form of Bitcoin (BTC)?

Some people are willing to accept their salary in the form of cryptocurrency like Bitcoin. These are not just ordinary people, but includes athletes, celebrities, social influencers and even politicians. It is becoming a popular way for some brands to gain exposure by building up the hype around Bitcoin and other cryptocurrency by using public figures as ambassadors.

In the sports world, you have athletes like Aaron Rogers, Odell Beckham Jr., Russell Okung and Sean Culkin who have agreed to accept some part of their salary in the form of Bitcoin. These athletes did not have to do that, but the incentives are great. Either they had done their own research or someone may have advised them on the value of Bitcoin.

Some politicians have also agreed to get paid in Bitcoin. One example is Miami mayor Francis Suarez, who agreed to get a paycheck in Bitcoin. This falls in line with the mayor’s own plans of transforming Miami into a cryptocurrency hub. Another example is the mayor of New York, Eric Adams, agreeing to have his first salary paid in Bitcoin. These moves could be politically motivated to promote their respective cities as being open to the crypto space. Nonetheless, it sends a positive signal.

There are countries that are also allowing Bitcoin as payment for salaries. At the top of this list is El Salvador, which is officially the first country to accept Bitcoin as a form of legal tender. Prior to El Salvador, New Zealand had been the first country to allow salaries in Bitcoin, back in 2019. Elsewhere in Latin America, there are proposals in Brazil to accept Bitcoin as an option for salary payments.

Since the world has become more global in terms of business, Bitcoin is also providing a way for companies to pay for workers who are based overseas. There are now crypto payroll services that process such transactions. What is important here is that these services meet legal requirements, in order to be able to allow companies to pay their workers in Bitcoin. It is much easier with integration to Layer 2 payment rails like the Lightning Network (LN). The LN works with apps to allow Bitcoin payments to be made quickly and cheaply, so it is just like sending any electronic payment. This can be made using a smartphone app, which can help adoption since many users around the world own a smartphone.

Getting paid in Bitcoin is not yet common, but gaining popularity. What is important for anyone who accepts their salary in Bitcoin is to understand that this is a volatile asset. Prices are subject to swings, where the value can fall by 40%, but it can then suddenly recover much higher. This also does not excuse anyone from not paying taxes. Treating it more as an investment asset rather than as just another form of currency is the whole idea of Bitcoin. It may not be ideal if you need fast liquidity like cash, but more so for storing value in the long run.

Another important thing to know about getting paid in Bitcoin are tax laws in respective jurisdictions. In the US, this is a taxable event. An accountant or lawyer who has an understanding of virtual currency laws as it relates to cryptocurrency can help. The taxes are to be paid in fiat, unless the jurisdiction accepts BTC for tax payments. There are states like Arizona which will allow it, so if a payment is received in BTC, the taxes can also be paid in BTC that is commensurate to the fiat amount of that payment. For the most part, taxes are paid in fiat based on the conversion from the Bitcoin payment.

It is easy to just convert Bitcoin to fiat currency after every paycheck. However, it has future price appreciation in valuation for holders which is just like stocks. You also get the benefits of a non-confiscatable store of value that grows over time. If you custody your own Bitcoin in your own digital wallet, it cannot be frozen or taken by anyone. As more people realize that there is more to Bitcoin than currency, perhaps they will be more open to considering it for their next paycheck.

(Photo Credit by David McBee)

Disclaimer: This is not financial advice. The information provided is for reference and educational purposes only. DYOR always to verify any information.

Ethereum Reaches A New Milestone As It Prepares For ETH 2.0

There have been plenty of great developments in the Ethereum blockchain. This has been good for its native currency ETH (Ether) and has restored confidence in holders toward the end of the first quarter of 2022. This has led to a rally in ETH price to above the $3K level, starting in March 22. Some analysts take this as an ominous sign that ETH has turned bullish once again, but what is really the motivation behind it?

Toward the end of 2021, Ethereum developers released the Kintsugi Merge test network. This is a more realistic approach to testing how the Ethereum network will be like post-merge (i.e. when the Beacon Chain merges with the mainnet). This allows developers to test the features of the network in an environment that supports PoS (Proof-of-Stake). This is where smart contracts can be tested without any additional costs to developers.

Ethereum developers have also released the Kiln public test network in March of 2022. This is the final test network before the transition to PoS. This is where developers can test their applications and tools before deploying on the mainnet. Node operators and stakers can also test on Kiln, to evaluate the performance on a simulated blockchain.

Toward the end of March 2022, the number of ETH 2.0 validators has reached 300,000+ with over $28 Billion TVL (Total Value Locked). That is based on the valuation of ETH (~$2900-$3,000 circa March 1, 2022). The total amount of ETH locked (requires 32 per validator) has reached 9.6 Million ETH. At the price of ETH in March 28, 2022 at $3,300.62 (10:46 PM EST), the total value locked would be $31.6 Billion. The value of ETH increases with the market, and any surge also brings up the TVL for the validators.

Ethereum is receiving not just retail support, but institutional as well. Macro guru Raoul Pal has become more bullish on his outlook of Ethereum. He believes it is on track to outperform Bitcoin based on its performance. Pal is looking at long term metrics that show that the market Ethereum is capturing covers a much larger base than Bitcoin. This includes the derivatives and money markets, where billions of dollars are sitting. Should even a small percentage of the money flow into the DeFi space, where ETH is a major currency, it can create network effects that can further drive ETH value higher.

Other reports are coming that banks are positive on Ethereum. It seems banks like JP Morgan had at one time been very critical of cryptocurrency. The sentiment has changed, and they now invest in projects that involve cryptocurrency like Ethereum. Perhaps the recent developments in how Ethereum will become more energy efficient and how it is a platform that facilitates a decentralized financial system opens opportunity for capital investments.

The transition to a new consensus mechanism can greatly impact Ethereum network performance. A faster and more energy efficient system gives it a positive outlook compared to Bitcoin and other energy intensive cryptocurrency that use PoW (Proof-of-Work). The more important matter that investors are keeping an eye on is how the move to ETH 2.0 will improve the network’s overall performance. This attempts to solve the problems of scaling, which Ethereum competitors (e.g. Solana, Harmony, Avalanche) have already been addressing. A more stable network with the capability to process more transactions will be huge for Ethereum, and can establish it as a dominant platform for years to come.

All I Want Is Bitcoin For Christmas!

What better idea to give for Christmas than Bitcoin! The premier digital asset is a gift to behold. There will only be 21 million BTC in existence, so having at least one or a fraction of BTC will be very valuable. Here are ways on how you can gift your friends, family and loved ones with the number one cryptocurrency in an easy and secure way.

Bitcoin ATM Voucher

Give a voucher to redeem BTC from a Bitcoin ATM (BTM). Go to the BTM to purchase Bitcoin. A printed receipt will be given that contains the wallet address of the Bitcoin(s) purchased. The BTC can be redeemed at any time. Best to give with a Christmas or holiday greeting card. This is the best way to give Bitcoin to first time holders.

Hardware Wallets

Purchase a hardware wallet (e.g. Trezor, Ledger) for storing a Bitcoin address private key. This in itself is enough for the gift, but you can also add some BTC to the wallet address. Ideal gift for more advanced users who may already have a hot wallet (i.e. online wallet) on an exchange. Hardware wallets allow users to have full custody of their Bitcoin(s).

Direct P2P (Peer-to-Peer)

Gift Bitcoin the way it was intended to be used, peer-to-peer. Just get the recipient’s wallet address and send the Bitcoin from your wallet. This is now simpler thanks to smartphone apps (e.g. CashApp, Coinbase) which have features for sending cryptocurrency like Bitcoin to other users. You can also use Lightning Network apps (e.g. Strike), which makes it faster to send BItcoins.These apps are easy to use, but do be wary of transaction fees. It could be a little more expensive during the holidays when the network is busier than usual.

Crypto-Gifting

Some crypto companies like Coinbase offer a crypto-gifting service. You must have an account on their platform to do this. This will allow you to choose the cryptocurrency of your choice (choose Bitcoin!) and send it as a gift. Provide the recipient’s e-mail address and instructions will be sent on how to claim their Bitcoin present.

Bitcoin Is A Gift That Keeps On Giving

The overall value of Bitcoin is everlasting. It can be worth more than it is currently priced in the future due to demand and supply. It is even more scarce than gold. It is also something that cannot be easily confiscated or restricted, because of its decentralized nature. Bitcoin’s properties make it a good asset to own for storing value.

The takeaway here is to give Bitcoin(s) responsibly. Recipients should be educated on cryptocurrency in general, not just Bitcoin. Spend some time with them to help them learn. With that understanding, you can make sure they will be responsible enough to never reveal a private key and that once it is lost the Bitcoin might never be recovered. It is about safety and security first in order to enjoy Bitcoin this holiday season.

Disclaimer: This is not financial advice. The information provided is for reference and educational purposes only. DYOR always to verify any information.

Spider-Man NFTs … From AMC

AMC Entertainment, the company that operates the AMC Theaters chain, has entered the NFT (Non-Fungible Token) market. In a collaboration with Sony Pictures, they will be giving away 86,000 NFTs for the December 16 release of the movie “Spider-Man: No Way Home.” This giveaway is open to members of AMC Stubs Premiere, AMC Stubs A-List and AMC Investor Connect with advance purchase of tickets.

According to AMC CEO Adam Aron (via Twitter):

“This idea came from YOU! Partnering with @SonyPictures for #AMCFirstEverNFT. More than 100 unique Spider-Man NFTs, given FREE to the first 86,000 online buyers of U.S. AMC December 16 tickets for Spider-Man No Way Home. Only for Stubs Premiere, A-List & Investor Connect members.”

— Adam Aron (@CEOAdam) November 28, 2021

This is not the first time AMC has ventured into cryptocurrency. They are already accepting payments in cryptocurrency like Bitcoin (BTC) for movie tickets. NFTs are like the next step in their journey to the blockchain and metaverse. Spider-Man is a popular Marvel Comics superhero, so an NFT would be a valuable digital collectible. This has future value for trading in the NFT marketplace among collectors. The NFT will be minted on the WAX blockchain.

This is probably part of AMCs strategy to catch up to the trends among millennials and Gen Zers. Crypto is popular among the younger generation and this is a better way to promote your brand. AMC needs to rebound after the pandemic lockdowns, so this is also a way to entice moviegoers to return to theaters with some added benefits to go along with the soda and pop-corn.

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.