Autor Cointelegraph By Inigo Vaca

Music NFTs a powerful tool to transform an audience into a community

Music NFTs a powerful tool to transform an audience into a community

Uverejnil používateľ | okt 2, 2022 |

As one of the oldest entertainment industries in existence, the music business has experienced many technological advances that enhanced widespread adoption. The digitalization of music meant that artists could reach any audience across the world, and digital distribution gifted people with unlimited access to music. With these advances in distribution came some drawbacks in music monetization. The way musicians make money in a digital format has reduced margins from media or video revenue. Artists have been pushed back to generating revenue from offline endeavors like concerts and selling merchandise as the online landscape has been filled with intermediaries that take a piece of the pie.“Web3 and existing platforms help us build a new chapter of the music industry.” Takayuki Suzuki, CEO at MetaTokyo — Web3 entertainment Studio — told Cointelegraph, “It was hard to find good music for me, checking many record stores in Tokyo and sometimes overseas. Now it’s very accessible via streaming.”A new paradigm of Web3 tools is giving creators the means to develop an existing audience and transform it into a community. Fan relations have become crucial and they have never been tighter with artists in Web3. Marcus Feistl, chief operations officer of Limewire, a Music NFT marketplace that was originally a free software peer-to-peer file sharing music-based platform, told Cointelegraph: “The music and creator industry is certainly on the verge of a step change, moving from a Web2 model focused on content consumption to a Web3 model focused on content ownership. Artists are just beginning to find their way to best utilize Web3 to interact with their audience.”Among the many use cases for nonfungible tokens (NFTs), the most prevailing has been the ability to form communities around token holders. The rise of decentralized autonomous organizations experimented with coordinating these communities in a digitally native way. All these unlock potential opportunities for independent artists willing to innovate in the next iteration of the music space.Disrupting the music industry once againThe music industry has always been willing to try new things. As Mattias Tengblad, CEO and co-founder of Corite — a blockchain-based crowdfunding music platform — told Cointelegraph, “When music videos came out in the 80s, it was entirely new and people weren’t sure what to make of it. Adoption of these things often starts slowly but eventually becomes mainstream.”Web3 platforms are in their early stages. The majority of users are crypto savvy and have a basic technical understanding of how to interact on-chain. As the space develops, Web3 music platforms can become a key piece in the way labels and artists do business and market themselves. The opportunities presented by this technology facilitate connections between like-minded individuals breaking any previous barriers to forming a community. “It was hard to maintain great relationships in the industry,” reflected Suzuki, “I’ve been constantly meeting and re-connecting with forward-thinking people.”These innovations aren’t exclusive to incumbents of the music industry and young talent native to Web3 can open the gates for new expression and monetization. It is encouraging the relationship between artists, middlemen and fans to transition into a community.Related: Web3 is creating a new genre of NFT-driven musicMusic innovation empowers those artists testing new technologies with the opportunity to become the next established artists of the upcoming generation. This can potentially diminish the importance of record labels to an artist’s success. Many record companies are getting involved by moving some of their activity on-chain and releasing NFT collections.“There will always be a need for record labels, but I think the ones that fail to adapt to the changing landscape are at risk of being left behind,” Tengblad said, adding:“Once you have a loyal group of supporters, I think the technology opens the door for you to monetize your work directly, while also sharing in the benefits of your success with your supporters.”Successful Music NFT drops show how Web3 can disrupt the fundraising model by allowing artists to go directly to fans for funding. Those artists that make an effort to engage with their community and build a direct relationship with their fanbase will benefit the most from Web3.From audience to communityAn audience is generally understood as a one-way relationship, while a community suggests a two-way communication between the artist and its fans. For a community to be productive, those involved should enrich the creative process by actively listening to each other’s needs and proposing solutions for the betterment of the community as a whole. As artists shift to a more community-driven approach, blockchain and NFTs allow artists to raise funds from their fans with no middlemen and offer unique benefits and opportunities back to the people who contribute to them. Prevailing platforms are still a crucial tool for community building and music distribution to complement a Web3 strategy.“Affordable digital recording has led to an explosion of musicians on YouTube who reach out to their community for collaborations, instant feedback, live streams, etc,” commented Tengblad, “Social media and chat programs like Twitter, Instagram, TikTok, Telegram, and Discord give people who are interested in what you are doing a chance to engage with more of your content, connect with you and with each other.”If an artist posts a new video on Youtube, their community can contribute to the artist’s work by providing instant feedback and proposing new ideas that can help the artist grow and develop further. Activities performed by the community tend to enjoy a bigger impact and immediately affect the growth of an artist. With the backing of a strong community, artists possess a solid foundation to build a career.Recent: NFTs will bring crypto to billions of users, explains VC investor The engagement process between the artist and their community has to become as simple as possible. Suzuki explained: “Web3 will give more power to artists and creators so there would be a need for education. Intermediaries could be supporters or contributors in a community not intercepting information or money.”This starts with clear communication and by making NFTs more accessible to everyone. Bringing NFTs and the model of content ownership closer to fans is what will ultimately drive artist communities, as it creates a much stronger and more exclusive connection between fans and creators.“For creators, this means an easy-to-use self-onboarding process where they can create their first NFT project in just a few clicks,” concluded Fesitl, “For fans this means that you can either use a fully custodial service without the need of owning a wallet or directly connecting an external wallet, providing the full Web3 experience.”Artists who are most prepared to succeed in today’s industry are the ones who are willing to use every tool available to build an interactive and engaged community around their work.

Čítaj viac
Collapse of Terra blockchain ecosystem forces talent migration

Collapse of Terra blockchain ecosystem forces talent migration

Uverejnil používateľ | sep 13, 2022 |

At the height of the 2022 bull market, the Terra ecosystem was booming with talent and innovation. The native token of the Terra blockchain had made its way to the top-10 cryptocurrencies by total market capitalization. Protocols were building the next iteration of a super cycle that seemed like it would never end. Terraform Labs created Terra amid the crypto market crash of 2018 and built it all through the bear market. The Terra ecosystem’s main appeal and claim for glory came from their offer of the best yields in decentralized finance (DeFi), with up to 20% yield on its stablecoin through the Anchor protocol.As of March 2022, Terra had a total of 73 projects built in the ecosystem. The ambition of the team was to onboard at least 87 more projects by the end of the year. Terra was becoming a serious competitor to BNB Chain, Solana, Cardano, Avalanche and other layer-1 blockchain infrastructure in their quest to gain market share from the current leader, Ethereum. Being a blockchain built on the Cosmos network meant Terra could scale and interoperate with other blockchains through the Interblockchain Communication Protocol (IBC). The hype from the bull market was attracting liquidity and Terra was benefiting from users’ appetite for new opportunities in the market. Terra reached over 90% of the total value locked (TVL) of all the Cosmos blockchains with more than $21 billion worth of assets in May 2022.That same month of May will be remembered as Terra’s collapse. The Terra token was supposed to maintain the peg of Terra’s algorithmic stablecoin — until it didn’t. Billions of dollars were wiped out from the market in just a couple of days and the flourishing ecosystem Terra had built was left for dead. Related: What happened? Terra debacle exposes flaws plaguing the crypto industryThe community was fast to act. Although there was no attempt to revive the Terra token and its failed pegging mechanism to the stablecoin, a new network was created in an attempt to compensate those affected by the crash, not in full but more as a symbolic gesture of how resilient a community can be in Web3. There are now three different trading tokens to take into account in the market: Terra (LUNA) the new networks’ token, Luna Classic (LUNC), which is how the token was rebranded after the new network was created, and TerraUSD Classic (USTC) the failed algorithmic stablecoin previously known as UST. Currently, LUNC has a market capitalization of $2.8 billion, while LUNA has just over $303 million. The new Terra blockchain has a lower market capitalization than the failed USTC with $415 million. Where did talent go after Terra collapsed?Suddenly and with no time to prepare, those projects that had chosen to build on Terra faced a tough decision that to this date hasn’t happened before, at this scale or severity. An attempt was made through Terra 2.0 to compensate projects by providing much-needed liquidity to those affected. The grants were distributed on June 17, with half of the tokens available on that date, and the rest remained locked for a period of three to six months of linear vesting.For the projects that stayed, the Terra 2.0 Emergency Builder Allocation program will unlock a new round of tokens for 35 projects. On Sept. 17, Neptune finance will receive the biggest amount of LUNA of almost $185,000 in value.Linear vesting dates for Terra 2.0 Emergency Builder Allocation program. Source: CoinhallThe last group of 15 projects for this program will receive the tokens on Dec. 17, Astroport will unlock the most with $1.25 million worth of LUNA and Leap Wallet receiving the smallest amount of this group with $235,000 worth of LUNA at current market price. As Terra was built from within the Cosmos network, this was a natural migration choice for some of the protocols. The IBC architecture enabled projects to stay within this ecosystem and easily relocate to a new blockchain.Not every project found the idea of remaining within Cosmos appealing as other blockchains started using developer grants to lure talent and new projects to their network. With the Ethereum Merge right around the corner, Ethereum Virtual Machine (EVM) compatible blockchains have been outperforming the rest. Polygon, an Ethereum sidechain, managed to onboard more than 48 projects from the Terra ecosystem through Polygon’s multimillion-dollar Terra Developer Fund. An effective strategy in attracting the talent that was unexpectedly available when Terra collapsed in May.UPDATE: Terra projects have begun migration. Over 48 projects and counting… including @OnePlanet_NFT, an exclusive @0xPolygon marketplace, and @DerbyStars_HQ!It was so awesome to help and welcome all these wonderful developers to our thriving ecosystem! Welcome! $MATIC https://t.co/5ypu1QdMBA pic.twitter.com/JcskdWGnZJ— Ryan Wyatt (@Fwiz) July 8, 2022BNB Chain, the EVM-compatible blockchain created by Binance, is also committed to providing investment and support to projects that are considered migrating from the Terra ecosystem from the BNB Chain Fund, which has $1 billion in investment and grants to distribute among those projects deploying within the BNB Chain ecosystem.Other networks like VeChain and Kadena unsuccessfully tried to take advantage of the talent migration. Building a new chapter for projects that survivedMany great projects and talented people within the ecosystem were pushing for progress and had good intentions in what they were building on Terra. From the ashes of the debacle, these talented individuals will keep on building and creating tools for the betterment of the space as a whole.There are six projects currently developing the new Terra ecosystem with just over $23 million TVL at the time of writing.Terra 2 TVL Rankings. Source: DefiLlamaChauncey St. John, founder of the Angel Protocol, told Cointelegraph, “We lost a huge chunk of our treasury but live to fight another day and will be relaunching in the next couple of weeks,” adding:“Angel Protocol has learned the importance of diversification and leaned into the fact that we can do more good as a multi-chain entity. As such, we’re launching both IBC and EVM compatible hubs.”Lido, the leading liquid staking derivatives protocol, known for its market dominance of Ethereum liquid staking, also offered its services for those LUNA token holders that wanted to stake with them and remain liquid. After the collapse of Terra, the protocol decided to wind down its operations around LUNA and put in motion a shutdown process for this liquid staking token. There is no known interest from Lido to support Terra 2.0 liquid staking tokens for the time being.

Čítaj viac
Lido’s market dominance and Ethereum decentralization post-Merge

Lido’s market dominance and Ethereum decentralization post-Merge

Uverejnil používateľ | aug 4, 2022 |

After a successful third testnet merge, Sept. 19 was recently proposed as the tentative target date for the Ethereum Merge. Ethereum is set to fully transition from proof-of-work (PoW), the original consensus mechanism used by the Bitcoin network, to the more energy-efficient proof-of-stake (PoS) used by younger networks like Solana and Cardano.“The Merge won’t solve Ethereum’s scaling concerns on its own. It is just the beginning of a road map to achieve future scaling upgrades,” Jacob Blish, head of business development at Lido, shared with Cointelegraph. The staked Ether (ETH) on the Beacon Chain, the PoS network that mirrors Ethereum’s transactions, is expected to remain locked up for at least six months after the Merge is completed. After the Merge, staked ETH liquid tokens will start benefiting from transaction fees and maximal extractable value, meaning yields will go up. There has been a lot of hype around the Merge. It is the single biggest event in crypto for a very long time, Rocket Pool founder Darren Langley told Cointelegraph, adding, “The lockup period is testing liquid staking protocols now but this is mainly due to macro conditions and the ongoing Centralized Finance (CeFi) drama. Once it blows over, liquid staking will explode.”Currently, ETH staking yields are earning close to a 4% annual percentage rate (APR), with just over 10% of the ETH supply being staked, according to StakingRewards.Lido’s liquid staking serviceThe launch of the Beacon Chain created a need in the ecosystem for a decentralized liquid staking solution that would compete against centralized exchanges (CEX) and could be used within decentralized finance (DeFi) for lending, borrowing and more. The staking service offered by Lido has gained popularity as the first protocol to implement a liquid staking derivative on Ethereum through the minting of the stETH token. Contrary to popular belief, stETH is not meant to be pegged to ETH. As Blish shared:“Staked ETH issued by Lido is backed 1 to 1 ETH but the exchange rate isn’t pegged. It can fluctuate and trade at a premium or a discount as the secondary market forces dictate the price. This doesn’t affect the underlying backing of stETH.”Lido’s first mover advantage to launch a liquid staking product has helped the protocol move ahead with more DeFi integrations for stETH as well as other multichain-staked products for Solana, Polygon, Polkadot and Kusama. The team recently announced that stETH will expand to layer-2 solutions to further their DeFi integrations.Various staking protocol balances as of May 2022. Source: TwitterThe protocol attracted liquidity to the Curve pool with incentives in the form of additional rewards of the Lido token (LDO) and a referral program to further its growth strategy and consolidate itself as a temporary winner within the liquid staking space. When compared to other protocols in the DeFi ecosystem as a whole, Lido stands out as the only product that has been able to compete and even surpass its centralized counterparts, like the Binance ETH (BETH) token, in terms of total value locked.Alternatives to liquid staking derivativesNew products tend to start out having strong market leaders, but soon competition develops and innovation ensures fresh entries that have the potential to take up market share. The network effect achieved by Lido in a short period has made it challenging for its competitors to catch up and seize a substantial share of the market. Recent: Borrowing to buy Bitcoin: Is it ever worth the risk?Other liquid staking projects have small differences in fees, product decentralization and the token characteristics they offer, but the value proposition remains the same: to empower users to maximize their capital efficiency and compound their yield while securing the network.“The Ethereum ecosystem is built on trustless decentralization. That much voting power in the hands of one organization is certainly counter to that ethos,” Jordan Tonani, head of institutions at Index Cooperative, told Cointelegraph, adding, “Having a healthy competition between multiple liquid staking protocols is a better outcome, and shortly after the Merge, a new crop of liquid staking protocols will be propped up to promote decentralization.” Rocket Pool represents over 1.5% of all Ethereum staked, with 1,300 individual node operators across 84 geographic locations. Because of this, it could impact Lido’s market dominance and grow its relevance in the liquid staking space with new scaling solutions. Stakehound, Stkr and Stakewise are some of the other projects trying to make a dent in Lido’s market share but still lag behind in terms of liquidity depth and utility as collateral in DeFi.It is worth highlighting that Rocket Pool’s permissionless approach seems to appear more decentralized at first sight, contrary to Lido’s permissioned one, which was a trade off in order to ensure the reliability of node operators at the early stages of the protocol. The Lido team has been working on permissionless onboarding based on performance reputation to shift from their current model. Monopoly or oligopoly, it has to be decentralizedConsidering the data, Lido currently has a monopoly on the immature liquid staking derivative market.Lido, as a decentralized autonomous organization (DAO), opened the debate on its governance forum around stETH being limited to a fixed percentage of the whole ETH staked. Blish explained:“We are aligned with Ethereum’s decentralization ethos at the core. Governing the protocol through a DAO ensures Lido will not pursue any actions that can enter into conflict with our community and values.”Also, a dual token governance proposal was recently passed that allows holders of stETH to veto governance proposals by LDO token holders that can harm stakers on the Ethereum network. Similar to the liquid staking dilemma proposed above, Bitcoin (BTC) mining appears to show centralizing forces. The space has matured into a market where the three biggest mining pools have over 50% of the network’s hash rate. And, the top six mining pools account for more than 80% in the last three months, according to data from BTC.com. Recent: Beyond the headlines: The real adoption of Bitcoin salariesIt is hard to predict the changes we will experience after the Merge and what implications it might have on liquid staking products. Even though liquid staking derivatives trend toward centralization, an optimistic middle-term evolution might come from other alternative products gaining ground and dividing the market into an oligopoly.“Realistically, there will be many players in the ecosystem, but maintaining a strong level of decentralization is critical to Ethereum’s success — particularly its credible neutrality,” said Langley, “The key to decentralization is lowering barriers-to-entry, including lowering the collateral requirement and the technical challenges.” Some volatility is expected in the following month as the hype around the Merge continues to build around liquid staking products. Demand for these products has never been stronger. Further developments will prove if the space will be run by one, a few, or many liquid staking derivative products.

Čítaj viac
Anonymous culture in crypto may be losing its relevance

Anonymous culture in crypto may be losing its relevance

Uverejnil používateľ | jún 1, 2022 |

Crypto has inherited many values that were popularized in the early days of the internet. Many participants in the crypto space have been anonymous since the beginning of Bitcoin (BTC), since using this digital money offers a certain degree of anonymity so long as nobody knows the public address of the user. The true identity of its creator, Satoshi Nakamoto, remains unknown to this day.The most recent wave of innovation spearheaded by decentralized finance (DeFi) and nonfungible token (NFT) projects have anonymous teams that maintain their general right to remain unknown. The founder of DeFi analytics dashboard DefiLlama, anonymous person 0xngmi, released a bug bounty on his identity. Rather than giving out this quest to find vulnerabilities in the DefiLlama code, he offered 1 Ether (ETH) to whoever could reveal his identity with a detailed explanation of how they found out. No one has managed to reveal his identity at the time of writing. 0xngmi has also been educating people that would like to become anonymous with a guide on “How to stay anon,” which is a collaborative document that allows contributors to add and edit to improve it. Navigating through Crypto Twitter, there are plenty of pseudonymous “celebrities” that, based solely on the reputations they have built, have a digital persona with a substantial amount of followers. Another account that remains anonymous on Twitter, The DeFi Edge, tweeted the reasons why he has decided for the account to remain anonymous. The founder of the eponymous DeFi analysis site has no intention to reveal their identity for the time being, but has dropped some minor details:Why I’ve chosen to remain anonymous for now, and why I might semi-doxxed myself later: pic.twitter.com/OGZLmU9Nte— The DeFi Edge ️ (@thedefiedge) March 11, 2022As the industry rebrands to Web3 and a wide array of talent is being lured into the ecosystem, a greater number of participants in the space have decided to take a different approach. They are in the position to later reveal different characteristics of their physical persona to become pseudonymous or reveal their true identity altogether. After the recent Terra collapse, the BBC reported that a man presented himself at Do Kwon’s home in Seoul only to find his wife answering the door. The 30-year-old founder of Terra has been active on Crypto Twitter, using his real identity to promote his protocol and communicate with the community in these times of crisis. Having his identity open to the public might have helped him convey trust to investors and the community, but it also exposed him to threats in real life. Situations like these are some of the reasons why many entrepreneurs in the space remain anonymous.Related: How Terra’s collapse will impact future stablecoin regulationsIn a constant struggle between the open flow of information and retaining the privacy of the individual, protecting anonymity and avoiding getting doxxed has become an important issue of the new cultural and technological revolution taking place in online society.One of the biggest controversial identity reveals was when journalist Kate Notopoulos authored an article titled “We found the real names of Bored Ape Yacht Club’s pseudonymous founders,” in which she uncovered the identities through publicly available records associated with Yuga Labs.Protestors in Guy Fawkes masks. In the internet age the mask has become a symbol associated with anonymity and privacy.Revealing an identity ≠ doxxingUsually referenced as a hostile action via the internet, doxxing is meant to insinuate the ability to find a person and reveal private information about an individual or organization. Although the term was coined by extreme groups as a way to threaten and intimidate marginalized persons online, the word doxxing currently blends into the meaning of revealing an identity without exclusive extremist connotations. Recently, 0xngmi gathered some findings that linked Charlotte Fang as the person behind the anonymous account Miya. The founder of the NFT art project Milady Maker allegedly used this pseudonymous online profile to spread hate speech toward minorities through social media.After being recognized as the person behind the pseudonymous account allegedly linked to an online cult, Charlotte had to step down from the project as Milady Maker’s floor price plummeted. Anonymous teams handling fortunesDecentralized autonomous organizations (DAOs) have opened the door for many participants to be able to contribute to the governance of a project while remaining anonymous. Either for safety reasons or to avoid regulation, the majority of these projects have anonymous founders and contributors. This has been the norm in recent years. Grug, a pseudonymous account on Twitter, told Cointelegraph his reasons for remaining anonymous as CapitalGrug and the value of being judged solely on performance and ideas: “I think the main reason that I chose to be anonymous is so that I can participate in and help maintain the same type of irreverent culture that I found so cool about crypto from the start.”Plenty of good actors in the space have remained anonymous, bringing value to projects and communities by not having other defining characteristics influence people’s perceptions of that persona.Being anonymous can also be the path for people that need a fresh start, but this can also have the effect of allowing malicious actors to infiltrate the space.Back in January, the true identity of 0xSifu, founder of Defi protocol Wonderland, was unveiled as Michael Patryn, the co-founder of now-defunct crypto exchange QuadrigaCX.The co-founder of the scandal-ridden exchange had previously been sentenced to 18 months in a United States federal prison for identity theft related to credit card fraud. Patryn is not even his real name; following the prison term and previous to founding QuadrigaCX, he reportedly changed his name from Omar Dhanani.Recent: Crypto’s youngest investors hold firm against headwinds — and headlinesThe Wonderland protocol collapsed with this news and the debate of whether anonymous teams should be allowed to handle large sums of money took the center stage. Even Danielle Sesta, co-founder of Wonderland, said that he expects anonymous teams to lose relevance in favor of teams that have their full identity revealed. Redefining anonymous identity Although with the transition toward transparency in crypto in recent years, anonymous culture is still very strong. One doesn’t have to remain completely anonymous in the space, as Grug shared: “Our fund is all anon for instance, although we have all doxxed to one another. When I go to events and people whip out their phone to follow me on Twitter they are usually anonymous.”Identity, whether it’s public or anonymous, is a very delicate subject that we all struggle with. Finding the balance between fully anonymous and a public identity will be the key to a more rich and diverse crypto community.Up to this point, anonymous culture in crypto has proved to bring some positive value, as it minimizes biases and allows individuals to fully express themselves. Bad actors can take advantage of this to pursue a fresh start, which can be dangerous if they keep acting maliciously. But, if they become healthy contributors to an ecosystem and provide value to the community, it could prove people deserve a second chance.

Čítaj viac
The many layers of crypto staking in the DeFi ecosystem

The many layers of crypto staking in the DeFi ecosystem

Uverejnil používateľ | apr 20, 2022 |

Staking has been used fluently to describe several actions within the world of crypto, from locking your tokens on a decentralized finance (DeFi) application or centralized exchange (CEX) to using tokens to run a validator node infrastructure on a proof-of-stake (PoS) network.PoS is one of the most popular mechanisms that allows blockchains to validate transactions and it has become a credible consensus mechanism alternative to the original proof-of-work (PoW) used by Bitcoin.Miners require a lot of computational power to carry out the energy-intensive PoW, while PoS requires staking coins as collateral to validate blocks and verify transactions, which is significantly more energy-efficient and presents less centralization risk. These are some of the reasons why companies like Mozilla changed their donation policies to only accept PoS crypto donations in line with its “climate commitments.” The Ethereum protocol is expected to undergo a transition to a PoS consensus mechanism before the end of the year. On the roadmap to scale the network, the merge feels right around the corner. Ethereum miners will have to mine a different cryptocurrency or pivot to staking if they wish to continue securing the network. Dogecoin also has plans to perform this transition in the future. Staking rewards are incentives provided to blockchain participants for validating new blocks. There are several ways in which one can participate in staking within the crypto ecosystem:Run your own validator nodeProof-of-stake allows for anyone with a computer to run a node and validate transactions by participating in the consensus of the selected blockchain. Validators are assigned at random to verify a block.Validators have to build their own staking infrastructure to run a node. Depending on the network, being a validator can demand high entry costs as a set amount of tokens needs to be staked before going live.As long as the validator node is live, the tokens being staked are both locked up and earning a yield. Running your own node can be complicated and technical for beginners and if done incorrectly, can incur financial losses of the tokens at stake. Delegate to a validatorTokens of PoS networks can be assigned to a third party so they can run their own node and validate transactions. This is a less complicated method than running your own node but involves delegators joining a staking pool and trusting the selected validator with their tokens. Projects like Stake.fish offer “Staking as a Service” to ensure the legitimacy of these validators. The founder of Stake.fish’s validating services also co-founded f2pool, one of the largest Bitcoin and Ethereum mining pools. Similarly to running a mining pool, a staking pool requires a robust team of engineers. The main difference comes down to the target audience. While mining pools are focused on miners, staking pools cater to anyone who holds PoS tokens. Dasom Song, head of marketing for Stake.fish, told Cointelegraph: “Managing and building our own infrastructure is our way of contributing to the crypto ecosystem.We talk with projects, research ecosystems as well as listen to our community to make a decision on new chains to support.” Both running your own node and delegating to a validator are some of the safest ways to earn an active return on your tokens but come at the cost of making your assets illiquid for a set period.Related: Ethereum 2.0 staking: A beginner’s guide on how to stake ETHLiquid stakingIn recent years, several projects have sprouted that offer token holders an alternative to staking pools and solve the illiquidity of staking while still contributing to validating the network. Lido (LDO), the highest-ranked protocol by total value locked (TVL), supports several blockchains with their yield-bearing tokens like Ether (ETH), Cosmos (ATOM), Solana (SOL), Polkadot (DOT), Cardano (ADA) and more. It is a non-custodial protocol but it is not permissionless as the Lido DAO selects validators through governance voting. Stake.fish is one of those trusted validators voted by the Lido community to support the protocol. Other projects like Rocketpool (RPL) have decided to focus on just supporting liquid staking for ETH at the moment. Rocketpool is a permissionless protocol so anyone can become a node operator.Although similar in principle, LDO tokens are different from RPL tokens. Those tokens staked with Lido are pegged to the original token. Meaning that 1 ETH is equivalent to 1 Lido stETH (STETH). This method is similar to yield farming in DeFi and incurs a gas cost to harvest with every transaction.Rocketpool’s tokens will remain as a fixed amount of Rocket Pool ETH (RETH) but the value of these tokens increases over time as the decentralized network of nodes earns rewards, making it more cost-effective as it does not requires the harvesting of tokens.Liquid staking was created with DeFi applications as the prime users of these tokens. Staked tokens have value and can be used as collateral for many decentralized applications to earn a yield on top of the staking rewards. The first and main use in DeFi at the moment is providing exit liquidity to those liquid staking protocols via liquidity pools. Curve Finance liquidity pool of ETH + STETH tokens allows for STETH to be swapped for ETH until the merge is complete. RETH also has a liquidity pool in Curve Finance. There is even a liquidity pool that facilitates swaps between STETH and RETH with more than $100 million in assets locked on Convex Finance. Locking tokens in a DeFi protocolProtocols in DeFi can incentivize participants to lock their tokens in exchange for rewards in the form of yield. This can be done for lending and borrowing protocols like Aave (AAVE), to provide liquidity on a decentralized exchange (DEX) like Uniswap (UNI) or SushiSwap (SUSHI), and to support governance-related operations of decentralized autonomous organizations (DAOs). Governance has seen the most innovation with regard to staking as the vested escrow (VE) model was used by many DeFi applications to align community interests and incentivize long-term awareness of the protocol. Curve Finance has received major attention with the use of this mechanism as Curve’s native token (CRV) is deposited into the voting escrow contract for a period of one week to four years; the longer the contract, the bigger the voting power the VE token will hold.Two things make the DeFi world go round:• Liquidity• IncentivesProtocols want liquidity, and we want incentives. We say we’re in it for the tech, but we’re also greedy. Protocols understand this. They fight for our liquidity, incentivizing us with creative rewards.— Ross Booth (@rossboothr) March 9, 2022Colloquially denominated “Curve wars” in DeFi, protocols like Convex Finance have built a structure around this mechanism to influence Curve Finance token reward allocation and position themselves as the top liquidity providers for CRV governance tokens, making it the sixth biggest DeFi application with $12.26 billion TVL, per DeFi Llama’s data at the time of writing.Related: Crypto staking: How to pick the best staking coins for passive incomeStaking through a CEXCentralized exchanges provide several of the staking options mentioned above in a traditional custodial and permissioned manner. The exchange will stake the tokens on the users’ behalf and ask for a commission in exchange for the staking services.Binance, the biggest crypto exchange, allows users to stake their tokens for a locked period or in a liquid way, depending on their preference and yield appetite. For those users who stake ETH, the platform provides exit liquidity in the form of a Binance ETH (BETH) token until after the merge takes place. Binance recently launched a new TerraUSD (UST) staking program for more than 30 million users. Kraken, another leading exchange, provides staking services but doesn’t offer an exit liquidity option. Those users that stake ETH will have to wait until after the merge to obtain a liquid asset. It also recently announced the acquisition of the non-custodial staking platform, Staked for an undisclosed amount, which was described as “one of the largest crypto industry acquisitions to date.”Locked tokens that earn a yieldStaking comes from PoS but has taken a meaning of its own in DeFi and crypto as a whole. As of the time of writing, any token that is locked either to support a network via a validator or used in a decentralized application is considered to be staked. The above-mentioned examples showcase the different ways to stake tokens and they all come with different implications and characteristics. Staking tokens provides a strong foundation for earning yields while contributing to a network’s overall ecosystem.

Čítaj viac
  • 1
  • 2

Získaj BONUS 8 € v Bitcoinoch

nakup bitcoin z karty

Registrácia Binance

Burza Binance

Aktuálne kurzy