All posts in "Fundamentals"

Orion Protocol – Gateway to Everything Crypto

Orion Protocol is the first decentralized platform that will allow users to trade across both decentralized and centralized crypto exchanges and swap pools (including an NFT marketplace) within one decentralized platform.
Orion is providing a non-custodial gateway that bridges the gap between centralized and decentralized worlds, allowing users to access the entire digital asset market from one terminal.


ORN Token Details

Orion Token has some of the best token utilities you will find in the crypto space. Orion now has now 18+ revenue streams that will give ORN holders huge benefits (these are likely to continue growing over time as they expand across the crypto space as well).

The ORN Token itself is currently an ERC-20 token, but the team have stated they are also open to migrating over to a native token if they need it.

“At this time we do not plan to migrate, but we’re always considering ways to improve and evolve the platform… If reasons arise and we need to migrate, it can be done successfully without affecting Orion’s functionality and platform.”

blog.orionprotocol.io/faq-orn-token

Revenue Streams:
As shown in the image, all these revenue streams will drastically add to the validity and use case of the project long-term continuing to benefit ORN holders, through continuous revenue generation.

A few major Revenue Streams I would like to touch on quickly are Orion’s Liquidity Boost Plugin and the Orion DEX Kit.

Orion’s Liquidity Boost Plugin will give any exchange instant access to the liquidity and volume of all exchanges through the platform. Any exchanges that may be struggling with daily volume can choose to quickly plug into the liquidity of Orion’s platform benefiting both parties, but also ORN stakers/brokers.

Partner exchanges using Orion’s liquidity means more transactions with trading fees that then raises the total Daily Volume.

If you would like a visualization of the process, check out this infographic.

Orion’s DEX Kit will allow crypto projects to build decentralized exchanges, employing their own chain. Trades completed through the DEX Kit will result in general trading fees which build Daily Volume and Staking rewards.

Licensing fees charged for utilising the Orion DEX Kit will be paid in ORN directly bought through the platform, removing them from the supply. This is an amazing feature for any DEX as building a user base and growing liquidity can take time and be expensive, so this can put them ahead of competitors.


Holding ORN:

The ORN token is supply-capped at 100,000,000. But, the token supply is diminishing, this is for a few reasons:

  • Brokers will hold large amounts of the tokens and will be given rewards in ORN.
  • Stakers will lock their tokens away for great APY rewards paid in ORN.
  • All licensing fees will be paid in the token from Orion’s DeFi solutions.
  • The refund system (DYCO token sale) will reduce supply, as every ORN token refunded will be destroyed.

Orion has made an ecosystem where they incentivize the community to hold their ORN tokens, they have made it clear they want to continue to add more functionality and benefits improving the value for holders even further.

Discounted trading fees on the platform:
Save up to 20% on standard trading fees by paying with ORN.

Staking rewards:
ORN holders can earn more tokens by staking and receiving a % APY in return. There is now a staking calculator which can give you estimates on potential staking rewards: https://calc.orionprotocol.io/
I’ve also seen that there may be some future rewards for stakers/holders including NFTs or NFTVs (vouchers) through Boson Protocol.

“Brokers and Non-Broker Stakers can earn extra transaction fees by staking ORN – with chances increasing along with the size of their stake”

Priority access:
Holding ORN will unlock the ability to take part in new features, including first access to Orion Margin Trading and Orion Lending (likely coming in Q3).  

Advanced Features:
Unlocking of more premium services on the platform. Currently including advanced trading orders like controlling Take Profit and Stop Loss parameters.

dApp Marketplace Access:
Future dApps in the marketplace will be available for holders, including apps for trading bots, payment gateways, and investments. These services will be available through ORN as payment.


How does the platform work, what are the benefits?

Aggregation:

Orion is an all-in-one platform where traders can access the liquidity of centralized and decentralized exchanges (DEX’s & CEX’s), and also swapping pools.

This will save time in ‘exchange-hopping’, and will ensure the best prices across all exchanges on what can be looked at as a crypto-wide order book:
Providing arbitrage opportunities across all exchanges, and also allowing you ‘whales’ out there to transact in large quantities without the associated risks of doing so on a single exchange.

Being a decentralized platform means that there is no KYC involved for users on Orion as it is a non-custodial platform. Orion uses a decentralized brokerage system (they do not hold any funds). Whereas brokers will hold funds and are KYC’d (the foundation for the entire platform).

Stakers and Brokers:

The decentralized brokerage uses a Delegated Proof of Broker (DPoB) model that is the underlying support for the Orion ecosystem, built up of Stakers and Brokers allowing the protocol to function using the ORN token.

Non-Broker Stakers will stake ORN to ‘vote’ for a broker based on their offerings in reward shares. This incentivises Brokers to make their rates appealing to collect more ORN which in turn will increase their chance of being chosen (as a competitive ranking system).

Stakers and Brokers are rewarded via transaction fees on the protocol. Staking rewards are generated through volume on the terminal, and from all the other DeFi products in the platform, so as transaction volume increases on the platform the rewards will as well.


What else can we see on the platform moving forward?

Orion’s Main Net Terminal is live 31st of March 2021. So you can go check out their platform for yourself and get a feel for what it’s like!

Connect your wallet up and start trading across their current major exchanges like Binance, KuCoin, Bitmax and many more.

Main Net Staking is in its final testing and will be live in Q2, where you can stake ORN and get Rewards. In the meantime check out their Staking Calculator I mentioned earlier to gauge your potential rewards.

Additional features to be added to the terminal later this year include lending, margin trading, leveraged ETFs, derivatives, contract trading, NFTs, and staking of any digital asset type”.

https://blog.orionprotocol.io/2021

Most of these features will be coming in Q2 this year, the margin and lending later in Q3, with the official launch of the Liquidity boost plugin in Q4.

Orion will be launching the first NFT Aggregator that will include every major marketplace all available into the Orion terminal. If you want to stay up to date for when this is open make sure to sign up for their updates!


Partnerships

For Orion, building many Partnerships is vital for the Ecosystem and they have been growing rapidly over the past few months. To give you an idea, here are some of them: Binance Smart Chain, Elrond, Avalanche, Coti, KuCoin, Boson Protocol, Polkastarter and YFDai. These are only a few on a long list, and I expect Orion to continue growing this list over the coming months and for years to come.

If you would like to learn more about how their Partner Ecosystem works I would highly recommend checking out Orion’s Partners page, and if you still need more information have a read through this: Partners Explained.


To sum it all up

Orion Protocol is essentially a powerful all-in-one non-custodial decentralized platform that incentivizes users to hold ORN tokens due to the many Revenue Streams, benefitting holders in the long term.

It bridges the gap between DEX’s and CEX’s, users can take advantage of crypto-wide liquidity across all areas even including Swap Pools and NFT Marketplaces, while still allowing users to secure their own wallets.


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The Radix Saga: Part 1

By Shawn Dexter / December 1, 2020

The Promise Of Possibility

A Necessary Perfection

Over the past year, the DeFi ecosystem has taken the crypto world by storm. With repackaged branding and bandage-fixes, most projects have only now hopped onto the DeFi bandwagon. Hidden with this charade, however, exists a team that has spent nearly a decade engineering an elegant future-ready platform to put all-others to shame...

Back in 2013, visionary Dan Hughes foresaw the inefficiencies that would eventually come to plague the DeFi space. Of course, “DeFi” wasn’t even a well-known term back then. But Dan was thinking far ahead of his peers. Inspired by Satoshi Nakamoto himself, Dan envisioned a truly globally-scalable platform that would revolutionize the world as we know it. 

Led by this coding genius, the Radix team has discarded iteration after iteration of consensus-models. Each of these iterations were cutting-edge innovations. But to Radix — none of them were good enough.  They were stubborn in their pursuit of a truly world-breaking innovation.  Some would say their approach to innovation was “perfectionist”, but Radix would argue that their approach was “necessary.” After all, Radix is embarking on a herculean mission that demands nothing less than perfection itself.

A Trillion Dollar Ambition

Scalability is often touted as the next big step for the DeFi Ecosystem. But that begs the question — what does scaling even entail? How “much” do we need to scale? And scale for “whom” exactly?  The Radix team have been obsessing over these questions over the past decade, and they have found the crypto-space severely wanting.

The global financial services industry (lending, borrowing, payments etc) is estimated to be worth $25 Trillion dollars. Crypto DeFi is only a tiny fraction in comparison and still wasn’t able to meet the throughput requirements. The rebuttal to this is often “Ethereum 2.0 will solve the scalability and throughput problem”. And perhaps it may — but not without a host of other problems that lead to bottlenecks on the road to global adoption.

Dan Hughes was able to foresee these crippling hurdles all the way back in 2013. Even four years later, while everyone was touting “scalability” as the new buzz word, Dan and his team were working tirelessly away at problems that hadn’t even been discovered yet. Radix sought to engineer a solution that would be battle-ready for the demands of the trillion dollar industry that not only needed scalability — but security and ease-of-use as well.

A Four-Pronged Attack

Although extremely ambitious, Radix’s mission statement could be summed up in a single simple sentence: 
A decentralized protocol to serve as the backbone of global finance.

A simple sentence indeed — but an almost impossible task. In fact, achieving this would entail battling one of the hardest problems in Computer Science. The Blockchain Trilemma states that a system cannot have all three: Security, Scalability & Decentralization without compromising on at least one of them.

Radix, however, didn’t just want their platform to fulfil all three of these criteria — but they insisted on the fourth: “Ease Of Use”.  Again, while this may sound simple on paper, it would require the genius of Dan Hughes and his team to see it fulfilled. 

Even the team at Ethereum struggle to provide ease-of-use to their community. While Ethereum 2.0 may eventually deliver on its promise of scalability, it will do so by adding increased complexity to an already unsavoury development experience. This makes future development efforts prone-to-error, laborious, and expensive — all of which are likely to hinder adoption.

In fact, this is a problem that plagues every major project in the DeFi space. As soon as a team attempts to tackle one problem, they inevitably sacrifice a value offering on another problem. For example, the solution provided by Ethereum 2.0 brings to doubt its core-value proposition in the DeFi Space. For while Ethereum’s solution may provide scalability, it also hampers the seamless “cross-chain composability” that made DeFi effective in the first place.

Radix realized that the only way to escape this “trap of compromise” was to approach the problem differently. Instead of trying to solve “one problem at a time”, they opted for a four-pronged attack. Tackling all four problems holistically would allow Radix to craft an innovation where each one of the solutions “complimented” each other, instead of “compromising” on each other:

  • Scalability with Composability
  • Security
  • Decentralization
  • Ease of Use

But achieving this feat would be no small matter. In fact, it would be a gargantuan task — the likes of which would raise the eyebrows of the smartest minds in the space. Dan Hughes, however, would settle for nothing less.

A Composable Solution

After years of sweat and blood, the persistence finally paid off. Radix’s stubborn determination bore fruit to what could potentially be a world-changing innovation: Cerberus — the heart of the Radix protocol.  

Cerberus, aptly named after a mythological multi-headed guardian, was Radix’s statement indicating that they have finally arrived for the grand stage. It promises to encapsulate every feature the team envisioned in their dream protocol — a protocol that would serve as the backbone of the global financial system.  

“We spent years building, so you don’t have to”
Dan Hughes

By incorporating a unique shard-first  approach, Radix was able to elegantly solve each of the aforementioned problems. Not only does Cerberus provide a novel answer to the Blockchain Trilemma, but it does so while still maintaining ease-of use &  composability — a core feature to ensure the success of the DeFi ecosystem.

Put simply, Cerberus’ pre-sharded architecture allows Radix to leverage the benefits of sharding while still maintaining seamless communication between the shards. This means that apps living on different shards can interact with each other easily (aka cross-shard interoperability) This is far more crucial and ground-breaking than it may seem.  In future articles, we will provide simple explainers to all of these concepts and how Radix tackles them.

Like pieces of a jigsaw puzzle finally coming together, Cerberus is a picturesque piece of engineering where every component compliments the other.  But will Radix achieve its eventual goal of global adoption? There’s definitely still a long road ahead. And at Mango; we’re excited to explore the technology further.

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What is DeFi? & Difference Between DeFi vs CeFi

The DeFi Narrative

Removing third parties is the core principle of cryptocurrency—with the community rallying behind slogans like "not your keys, not your coins" , and "don't trust, verify!" But as the ecosystem sprung up around cryptocurrency, this original ethos has weakened. Most buying and selling takes place through secondary software on third party exchanges or wallet services, and most cryptocurrency is stored with third party custodians.

This discrepancy between placing trust in code, and placing trust in third parties, has opened an ideological chasm at the heart of the cryptocurrency space. Now with the explosion of Decentralized Finance (DeFi) protocols and Centralized Finance (CeFi) platforms that facilitate borrowing, lending and trading of cryptocurrency, the two ideologies are directly pitted against each other.

These two branches of blockchain-based finance share the same goal of liberation from the limitations of legacy banking, but each has a unique set of pros and cons.

What Is DeFi?  - Decentralized Finance

DeFi protocols  are typically open source, with all financial processes facilitated by a system of smart contracts hosted on a blockchain. 

Instead of a bank clerk shuffling funds around, or a centralized database, the smart contracts moving money are secured by decentralized consensus, typically on Ethereum, EOS, or Tron.

With all operations taking place on the public blockchain, full transparency is possible. Transactions can be verified with Blockchain Explorers, and smart contracts verified by specialist auditors.

With no gatekeepers to the system, those who wish to remain anonymous are able to, and do not need to surrender valuable passports or ID documents through KYC processes that can put sensitive information at risk. This permissionless freedom, along with an open source development culture, has transformed the strictly regimented world of traditional finance. With DeFi, innovators are free from regulations and can use smart contracts like "lego pieces" to create new forms of financial plumbing.

How Does DeFi Work? 

Interoperability is central to DeFi, and each project, of which there are over 200 listed on DeFi Prime, can be linked with others through smart contracts to create something new. This makes collaboration simple, and incentivizes the sharing of resources because each project benefits from the additional liquidity that each new success brings into the space—a stark contrast to the increasingly fragmented liquidity of the centralized exchange landscape. 

The success of this approach has made DeFi responsible for a long list of innovations supercharging the functions of traditional finance. These include new types of assets like wrapped BTC, new governance experiments like Compound's COMP, and complex forms of lending like flash loans

On the flipside, this complexity makes Defi a daunting prospect for newcomers. But while the learning curve might be long, at the end there are lucrative opportunities with new esoteric money making schemes like liquidity mining (aka yield farming), and interest rates that blow anything traditional banking can offer out the water.

The opportunities provided by these new protocols have incentivized the fast flow of new money into DeFi, which has doubled to more than $2 billion in just two months.

Difference Between DeFi vs CeFi

The downside of DeFi is that it is still very experimental, and while there might not be a custodial risk, there is the possibility of smart contract hacks with faulty code creating vulnerabilities.

This risk is what CeFi platforms aim to eliminate. Instead of removing trust by replacing third parties with code, CeFi adds more third parties in the form of auditors and certifications to replicate the functions of traditional finance with familiar reassurances like insurance and regulation.

CeFi platforms—including Nexo and BlockFi—typically benefit from a friendlier UX, and the same familiar sign-up processes as any centralized exchange, but have the same drawbacks of traditional finance like KYC processes that can put information at risk, and custodial services that represent an attractive target for hackers.

As regulated entities, CeFi platforms also tend to offer more possibilities for holding fiat in custodial wallets, and converting fiat to cryptocurrency and vice versa via a fiat gateway. These fiat gateways have helped CeFi services like Crypto.com attract hordes of new users, and make CeFi platforms an easy entry point into the ecosystem, even if funds are later moved to more decentralized regions. 

This scenario, which involves points of centralization with fiat gateways in an otherwise decentralized ecosystem, is what DeFi pioneers like Maker's Rune Christensen envisage as the next stage of evolution of DeFi and CeFi.

As Christensen told CoinTelegraph, “it is still the very early days” for DeFi, and eventually it is likely to merge with Centralized Finance: "What's currently known as CIFi will become the front end and sort of the access points to the various DeFI protocols (...) You will have a custodian that you trust and then that custodian interacts with the DeFi protocols for you.”

Guest Post

Kieran Smith

Content Strategist

Kieran Smith provides content strategy and copywriting services for cryptocurrency companies at Bitcopy.

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What is ERD Elrond Network? – Fundamentals & TA

What is (ERD) Elrond?

The Elrond Token (ERD) is used to secure and support the Elrond Network. It is a proof-of-stake (POS) blockchain platform for highly scalable, fast and secure distributed apps (dApps).

With its Adaptive State Sharding, it’s able to achieve a near instant transaction speed (testnet exceeded 10,000 transactions per second) and drastically improve scalability. Using a unique POS system called “Secure Proof of Stake”, it rewards people for:

  • Staking ERD (up to 36% in rewards per annum)
  • Running a node
  • Processing transactions
  • Producing blocks
  • Reaching consensus

23 Days to Elrond Mainnet

As of writing this post, the launch of the Elrond Mainnet is 23 days away. During this launch, ERD will shift from an ERC-20 token to Elrond's native token, and their platform will become fully operational. This could explain the recent pump in price.

  • Staking rewards are currently 25% per annum for validators and delegators, but this will increase to 36% per annum after the mainnet launch.
  • Elrond’s market-cap is at $96.4 million right now. It will be interesting to see how the mainnet release will affect it. 

ERD Price Analysis - Big Parabolic Moves Ahead?

On the daily ERD/BTC chart below, we have closed a large, confident candle over 71 satoshis (sats) which has been resistance for the past three weeks. ERD may test this in the coming days as this 70-71 sat level should now serve as a support area since new buyers will be looking to get into position at these prices. If price closes a daily candle underneath, the next level of support is at approximately 60 sats. If ERD closes below that, price may go all the way down to 33 sats. The ERD token has taken out all the highs, except for 191 sats, and with the upcoming mainnet launch, this chart is looking very bullish. New highs above 200 satoshi could send Elrond into a parabolic drive.

ERD Elrond-July-2020

On the 4 hour chart below, we can see a breakout of an ascending triangle. It has not yet met its measured move and seems to be consolidating around 80-75 sats. We may see that test of 71 sats before more upside but if we start closing candles underneath the triangle, that would not be a good sign. We are currently in no man’s land as there is no resistance further up ahead. Fibonacci retracements can be used in this case to get rough upside targets, as well as candlestick and trend analysis. 

ERD Elrond-July-2020

ERD Elrond - Bottom Line

With the upcoming Elrond Mainnet Launch, price has been trending to the upside, and as we get closer to the date, we may see large parabolic moves. It will be interesting to see price action after the mainnet launch. The fundamental and technical aspects of this coin is definitely worth keeping a close eye on.

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Constantinople & Reentrancy Attack Explained

By Shawn Dexter / January 22, 2019

In this post Shawn Dexter explains why the Ethereum Constantinople Hard Fork was delayed. He states the reason for the delay and any actions you many need to take in response to the delay. Shawn also explains security vulnerability called a Reentrancy Attack and how it was also used in the DAO Attack of 2016.

Constantinople Hard Fork Delay

Unfortunately, the long-awaited Ethereum Constantinople Network Upgrade has been delayed. An auditing team discovered that the upgrade to Constantinople would introduce a security vulnerability.  Before we go over the security vulnerability, let’s quickly answer a couple of questions I’ve been getting.

What do You Need To do?

This depends on whether you’re simply an investor/trader or if you’re a miner or node operator.

  1. Do you need to do anything with your Ether?
    No – if you’re simply an investor, just sit tight. You do not have to do anything with your Trezor, Ledger, MyEthereumWallet (MEW).  So, watch out for scammers who may try to confuse you.

2.Do I need to upgrade my node?
    Yes – if you’re a miner or node operator you will have to upgrade to a new version of Geth or        Parity before approx. 4am Jan 17th GMT.

What was the Security Vulnerability in Constantinople?

Quick Answer: The security vulnerability arises from the update that introduces Cheaper Cost Of Storage [EIP1283] that we discussed in our Constantinople Simple Explanation post.

The cheaper gas costs allowed for an exploit in the Smart Contracts. This particular exploit is called a “Reentrancy Attack”.

What is being done about it?

It's already in the process of being fixed. The developers hoped that they could fix it before the network upgrade, but these things need time for proper analysis. They decided to err on the side of caution and postpone the hard fork until they fully investigate the extent of the vulnerability. 

What is a Reentrancy Attack?

I’ll give you guys a simplified explanation. A Smart Contract may communicate with an external Smart Contract by “calling it”. If the  external Smart Contract is malicious, it may be able to  take advantage of this and take over control flow of the first Smart Contract’s code.

This allows the attacker to make unexpected changes to the first Smart Contract’s code. For example, it may repeatedly withdraw Ether from the Smart Contract by “re-entering” at a particular spot in the code. (Essentially, it makes multiple invocations of the withdrawBalance() function)

ethereum reentrancy attack constantinople 2019

A Reentrancy Attack allows an attacker to take over control flow of the Smart Contract in concern.

Note: It’s important to note that this security vulnerability does not exist in the current Ethereum chain.  All Smart Contracts on the current chain are Reentrancy-Safe!

The introduction of cheaper gas costs allows for the reentrancy attacks to be viable. Since Ethereum has not made any software upgrades yet, the main Ethereum chain is not at risk in any manner. In fact, even if the upgrade to Constantinople occured, only a small number of Smart Contracts would have been vulnerable.

So – Is this a bad thing?

Yes, and no.  Yes – if you were making your investing/trading decisions solely based on this event. In a previous article we warned about how unpredictable price movement can be closer to events.

But overall this is a great thing for Ethereum – and for long term investors. Catching this security vulnerability right before the network upgrade is a gift. If Constantinople went live before  and if the security vulnerability was discovered by malicious attackers, then things could got far worse!

Let’s not forget the disaster of the 2016 DAO Attack – which was actually caused by attackers exploiting code that was vulnerable to a Reentrancy Attack!

Lest We Forget: The DAO Attack of 2016

Many of you may not be aware of the DAO Attack of 2016. Attackers used a combination of two types of Reentrancy Attacks: Single Function & Cross Function.

The attackers were able to siphon 3.6 Million Ether from the DAO Smart Contract to their own accounts. Fortunately, the Ethereum community decided to Hard Fork and restored all the funds to the original Smart Contract. However, this led to a lot of controversy and led to the infamous Ethereum and Ethereum Classic network split.

Up to today, Ethereum bears the stain of the DAO controversy – albeit fading with time. It would be a disaster if it were to happen all over again.

Overall – This Is A Good Thing

The fact that this vulnerability was detected by a third party team – ChainSecurity – speaks to the network strength that Ethereum has built over the years. Ethereum has a global development strength that made itself a powerhouse. Multiple teams across the world are working on finding improvements, flaws & vulnerabilities. These are flaws that could sink other projects if gone undetected. The Ethereum community, on the other hand, is showing its strength.

Sure, prices may take a hit for the short-term. But like I said, it could have been far worse. In the long run, this delay will be forgotten. A security breach (and possible contentious hardfork that would follow) would never be forgotten.

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Ethereum Update 2019: Constantinople Hard Fork

Introduction

In a previous post we discussed the Ethereum Roadmap for the coming year. One of the key milestones on the roadmap update was the Constantinople hard fork. Constantinople was initially scheduled for 2018. However, due to inevitable software development delays, Constantinople was pushed to early 2019. That being said, the wait has definitely been worth it.

Ethereum Roadmap 2019

Ethereum Roadmap: Byzantium, Constantinople, Serenity

Constantinople has been much awaited by the community primarily because of the Block Reward reduction. The Block Reward reduction effectively reduces the inflation rate of Ethereum. I explain how in a simply post here: Ethereum Inflation Rate & Difficulty Bomb  However, aside from the Block Reward reduction, there are few other exciting improvement updates in Constantinople which is scheduled for Jan 16th 2019.

In this post I will explain these updates simply and briefly! 🙂

Ethereum Constantinople: What Is It?

So what exactly is Constantinople? Is it a Hard fork? If so, will you be getting two coins? (like all the other hard fork fiascos?)  Yes, Constantinople is a Hard fork - but you won’t be getting two coins. Unlike the other fiascos, this isn’t a “contentious” fork. To understand this, let’s go over a couple of terms quickly & simply:

What is a “Hard Fork”?

A “fork” is simply when the blockchain undergoes a software update. The fork may require all participants (primarily nodes & miners) to update their software to be part of the same network. This is because the software update is not compatible with the older version. This is called a “hard fork”

What is a “Contentious Fork”?

A contentious fork is when participants do not agree with software updates. In this case, they may choose to either stay with the old software or implement their own updates. Essentially, they choose to go their own way because they don’t agree with the direction of the core team (yay, democracy!)  This causes a “fork” in the original chain, and two new chains will begin to exist independent of each other.

Constantinople: Not A Contentious Fork

Fortunately, Constantinople is not a contentious fork. Everyone (for the most part) is on the same page with the proposed software updates on the Ethereum Blockchain. So what are the updates? In the next section I will provide a simple overview of the Ethereum Constantinople 2019 Hard fork!

Constantinople:  A Quick Overview

The Ethereum Constantinople 2019 hard fork marks an important milestone in Ethereum’s transition from Proof of Work to Proof Of Stake (Casper).

As mentioned in the previous section, the Constantinople hard fork is simply a software update. The software update will have improvements that have been accepted by the community. These improvements were proposed ahead of time and are simply called “Ethereum Improvement Proposals” (EIP).  There are five of these Ethereum Improvement Proposals that will be included in the Constantinople Update for Jan 16th 2019.

Ethereum Constantinople Update 2019

Ethereum Constantinople: EIP1234, EIP145, EIP1052, EIP1014, EIP1283

Performance Improvements:

  1. Block Reward Reduction ← A BIG ONE!

  2. Cheaper Smart Contract Execution

  3. Increased Efficiency on Verification of External Smart Contracts

  4. State Channels!

  5. Storage Cost Improvements

[EIP 1234] Block Reward Reduction: “The Thirdening”

This is the big one that everyone was waiting for all of 2018. The update falls under the EIP1234 proposal and will have two major changes:

  1. Block Reward Reduction
  2. Delaying The Difficulty Bomb

I explain both of these in more detail (with simple analogies) in this post, but I’ll go over them quickly here as well.

Ethereum-inflation-rate

Block Reward Reduction:
Constantinople will officially mark the reduction of the rewards issued to miners from 3 ether to 2 ether. This effectively reduces miner rewards by ⅓  and is often referred to as “The Thirdening“. This reduction in Block Rewards will significantly reduce the inflation rate of Ethereum.

Ethereum Inflation Rate Definition (Quick'n'Dirty)
 The speed at which each Ether loses it's purchasing power/value.

Difficulty Bomb:  Miners are issued rewards each time they successfully add a new block onto the chain. The Difficulty Bomb is a tool within the EVM that the developers can use to adjust how difficult it is for the miners to do this.  If the bomb “detonates”, it will get exponentially harder everyday for miners to find blocks. This was put in place to incentivise miners to transition from the Proof Of Work Chain to the Proof Of Stake Chain.

So why delay? Well, two reasons:

  1. Ethereum is not moving to Casper just yet - so there’s no reason to incentivise the miners to stop mining here just yet.

  2. The inflation rate has already been reduced by decreasing the issuance rate.

[EIP145] Cheaper Smart Contract Execution: 

Constantinople will include the EIP145 proposal which will introduce “Shifting operators” to the Ethereum Virtual Machine. Put simply, this will allow Smart Contracts to initiate certain instructions for only 3 GAS compared to the 35 GAS it would have costed without the Shifting Operators.

This is a drastic reduction in the cost of these operations and contributes to Ethereum’s efficiency improvements.

[EIP1052] Increased Efficiency on Verification of External Smart Contracts

This is another key efficiency improvement in the 2019 Constantinople update. Smart Contracts often need to perform verification checks on other Smart Contracts. Currently this is done by copying the bytecode of the external Smart Contract and then performing the needed verification. However, this can unnecessarily expensive when dealing with large Smart Contracts.  EIP 1052 tackles this problem by introducing a new function that will allow the Smart Contract to pull a hash of the bytecode instead.  This will make verifications far more efficient.

[EIP1014] State Channels!

The Ethereum Constantinople 2019 Update will also include a keystone update for State Channels in Ethereum. EIP 1014 will allow interactions be made with addresses on the main chain that don’t exist yet .  This may sound confusing but is a key milestone for the implementation of State Channels. The goal of State Channels is to have as little load on the main chain as possible while still remaining secure. Unnecessary calculations and processes will take place off chain – thereby increasing the efficiency of the main Ethereum chain.

[EIP1283] Cheaper Cost Of Storage

Constantinople will also include an update that will reduce the storage costs in Ethereum. EIP 1283  proposes a change to how gas is charged for EVM storage operations. The primary initiative of this proposal is to reduce excessive gas costs where unwarranted. And to enable new use-cases for contract storage.

With this, transactions that are making multiple updates to the same storage slot will cost significantly less!

Ethereum Constantinople Update 2019: Conclusion

Ethereum’s soon approaching Constantinople hard fork, while significant, is still only a piece of the larger puzzle that is Serenity – Ethereum’s transition to Proof of Stake. 

Ethereum Casper Release Date Updated 2018 - Infographic & Illustration

Updated Ethereum Casper Release Dates (2018 Estimates]

While Constantinople brings about a reduction in miner block rewards (EIP 1234), it must be noted that the hard fork is not a Contentious Fork.  All 5 EIPs within Constantinople gained majority approval across the Ethereum community as a whole, thus will not result in two coins after the hard fork on January 16, 2019.

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Radix Coin – Relatively Stable, Infinitely Scalable

In this post Shawn breaks down the Radix Coin (RDX) as a stable and scalable cryptocurrency. He discusses Radixs' novel economic approach to solving the pain point of crypto price stability for consumers and businesses.

Radix Coin – An Intensively Scalable & Stable CryptoCurrency

Radix DLT is beginning to garner increasing attention in the crypto-space. Radix rose from an obscure and exotic "coin" in 2017 to one of the most discussed technologies in 2018. Every week, I receive several questions on Radix’s Scalability & Sharding or on their Tempo Consensus Method.  But one of the more common questions goes something like this:

"Hey, what are your thoughts on the Radix Coin ? "

It recently dawned upon me that while I’ve discussed Radix’s infrastructure, I haven’t really delved into the “Radix Coin”.  While Radix does indeed sport a crypto coin, it is so much more than that. Radix DLT is a fully fledged distributed ledger technology platform. The platform will feature decentralised applications, mass scalability, and of course, the Radix Coin as well – 'RDX'.

In this post, however, we focus our discussion on the Radix Coin (RDX) and its purpose in revolutionizing the digital economy. If you’re interested in the Radix  DLT Infrastructure – mainly its Consensus and Sharding approach, then you can read the following introductory & simple explanations:

The following sections will discuss how the Radix Coin will serve and benefit from the Radix DLT infrastructure.

Radix (RDX) As A Stable Coin

The Radix Coin will be the token used on the Radix DLT platform to fuel various operations. However, the coin and the platform have special features that make the dynamic rather interesting. The Radix coin will be a relatively stable coin. Notice the word "relatively" – this is key. Several people mistaken the Radix Coin to be a stable coin. This can lead to confusion – especially for interested investors. 

Radix DLT designed the RDX token so as to have low-volatility. In that vein, the Radix Coin will initially be pegged against the US Dollar where 1 Radix Coin will be equivalent to $1 USD. However, after a certain period, the price of the Radix coin will float free.  Low-volatility and relative stability will be maintained by increasing the supply of the coins. 

“Wait, what the… what do you mean by ‘increasing’ supply of the coins? “

Don’t worry – we’re not talking about ‘Supply inflation’ here. Radix DLT will be using an algorithmic model that will monitor demand and accordingly increase as well as decrease the total supply of the Radix Coin at regular periods. The low volatility of the Radix Coin will help facilitate mass adoption. And the flexible supply should satisfy investor needs as well.

In the following sections, we will discuss how investors and merchants both benefit from this flexible supply system.

Radix Coin for Investors - Should Investors Worry?

Upon first hearing “stable coin”, cryptocurrency investors are immediately skeptical. After all, why invest in something if it’s going to be stable in value? This is an understandable concern since we’re conditioned to the volatility of cryptocurrencies. The Radix Coin, however, functions sort of like a Bond with a variable interest rate.  The value of each Radix Coin may not rise and fall substantially. But the investor will receive more RDX at regular intervals which should increase his total amount of RDX.

For example, let’s say John has  2000 RDX. At the time, each RDX is valued at around $1.10.

  • No. of RDX: 2000   
  • Value of each RDX:  $1.10
  • Total Value: $2200

In the coming months/years, the demand for the Radix Coin skyrockets! Now, each of John’s RDX will not increase drastically in value. Instead, the total number of RDX he has will increase.  His total Radix Coins will increase to 6000 RDX and each RDX will be worth $1.15 (Remember – the Radix Coin will be relatively stable.)

  • No. of RDX: 6000  
  • Value of each RDX:  $1.15
  • Total Value: $6900

Note: This is just an example – as details on the calculations have yet to be released.

On the flip side – if the demand for the Radix Coin reduces, the platform has mechanisms in place that will perform a token-burn process to reduce the total supply of the Radix Coin. Again, details on how this process is yet to be revealed. We will all have to wait for the economic white paper that should be released closer to their mainnet launch.

However, we can rest assured that investors don’t have to worry about their investments being “stale”.

Radix Coin for Mass Adoption

Relative Price Stability

One of the biggest reasons the Radix Coin features relative stability is to facilitate mass adoption. Without stability, mass adoption across the world will be near impossible.

As things stand, the general public find it troublesome to hold cryptocurrencies for anything other than a speculative investment. You may hear increasingly more reports of merchants accepting cryptocurrencies as a form of payment. However, most of these merchants are immediately converting their cryptocurrency back into regular FIAT.  Why? Well, simply because merchants need to be able to rely on their revenue holding value in the months that follow. Cryptocurrencies are far too volatile to offer the level of reliability that merchants need in order to run an efficient and sustaining business.

Similarly, regular consumers will only hold a fraction of their purchasing power in cryptocurrencies for similar reasons. With the current state of the market, it’s a serious gamble to rely solely on your holdings of cryptocurrencies to pay your rent or mortgage. The Radix coin will safeguard against violent price swings using an elastic-supply. This will allow merchants and consumers to hold their Radix Coins with reduced risk.

Decentralized Transaction Scalability

Scalability has been one of the biggest limitations of current blockchain solutions. Most DLT consensus models have to make the tradeoff between throughput and decentralization. Radix, however, achieves high throughput, security and decentralization using a unique approach to Sharding along with their Consensus Method – Tempo .   The Radix DLT platform ensures that every single device can be part of the network and use the Radix Coin to transact with high speed across the globe.

Radix Coin - Conclusion

With "Stable Coins", like the Radix Coin, being the latest talk of the town, its no surprise that investors and enthusiasts alike are blazing with questions on how to seize opportunity on this relatively new crypto class.

The concept of price stability around the radix coin will be primarily based on elastic supply. Depending on the demand of RDX, there will either be a coin issuance to each RDX holder, or a coin burn. While much of the economic structure behind the Radix coin is yet to be unveiled, their scaling solution - Radix Sharding & Tempo Consensus – has been fully implemented and tested. 

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Ethereum Casper V2: Beacon Chain & Sharding Explained Simply

In this post Shawn breaks down the Ethereum Casper V2 update. He discusses ethereum's transition to Proof of Stake, and how beacon chain fits into ethereum sharding.

Casper V2: Beacon Chain , PoS , Sharding

There’s been a great deal of confusion in regard to Ethereum’s new approach to Casper. Part of the confusion stems from the
updated timeline for Ethereum’s PoS (proof of stake). And the other part of the confusion stems from this new “Beacon Chain” thingy.  Yes, I said ‘thingy’.

So, in this post I’m going to try to break things down in an easy manner for you guys. What exactly is the Beacon chain? And what role does it play in Proof Of Stake and Sharding

As usual, I’ll keep it simple – and avoid the unnecessary details.

Ethereum: The Initial Roadmap

Before we go any further, allow me to break down the structure of Ethereum’s Casper V2.  There will be three chains that we are concerned with:

  1. The Ethereum PoW Chain
  2. The Beacon Chain
  3. The Sharding Chain(s).

All three of which will be linked together in Casper V2.

Ethereum Casper: 3 Types of Chains

Ethereum PoW Chain

This is the chain that Ethereum is currently using. It’s using the traditional Proof Of Work (PoW) consensus method. In Ethereum’s Proof Of Work chain, miners currently validate blocks by running the PoW Cryptographic Puzzle.

However, Ethereum will be using Proof Of Stake in Casper. Miners will have to transition to the Proof of Stake chain if they want to keep validating blocks for the Ethereum Network.  To do so, they will have to deposit 32 Ether into the Beacon Chain. Once they do that, they will become Validators on the Beacon Chain.

Important:  Miners are not the only ones who can become validators. Anyone can deposit 32 Ether from the Ethereum PoW Chain to the Beacon chain to become a validator

Ethereum Casper: PoW to PoS

The Beacon Chain

Alright, so the Beacon Chain is where all the confusion stems from. But it’s actually quite simple. The Beacon Chain serves two primary roles

  1. The main Proof Of Stake chain

  2. The base layer of the Sharding solution

  3. To Simplify: The Beacon Chain will link to the Shard Chains and “signal” which blocks from the Shards should be added onto the main chain. The main chain will be validated & finalized using Proof Of Stake. The main chain also resides on the Beacon Chain. The Beacon Chain will also play a crucial role with the Shard Chains. It links up to the Shard Chains to listen for blocks that will be included onto the beacon chain (the PoS chain).

The Sharding Chain(s)

Yes, there are going to be multiple Shard Chains. Remember, Sharding is an attempt to avoid having “every single node validate every single transaction”. This will allow for more scalability.  In order to do so, instead of having one single chain, we will have multiple shard chains. I explain Sharding in more detail in this article:
Ethereum Sharding Explained Using An Analogy.

Essentially, you can think of the Shard Chain as a group/block of multiple chains. All the transactions will take place on these Shard Chains – and will be split between each shard.  The account data will also be stored on these shard chains.

Above, I mentioned the Beacon Chain links up to a Shard. Well, there’s also a link from the Shards to the Beacon chain. This link needs to be attested/signed-off by a sub-group of Validators that will be pseudo-randomly picked.

Ethereum Casper: PoW to PoS

Ethereum Casper: Validators vs Miners

Casper will be using Proof Of Stake which does not require “mining” to validate blocks. If a miner wants to continue validating blocks on Casper, he will have to deposit 32 Ether into the Beacon Chain like everybody else.

Once 32 Ether is deposited, the person will go into the “Queued Validator” pool and eventually get added to the “Active Validator” pool. Active Validators will be responsible for producing blocks, sign off on blocks and sign off on links (to shards).

Why “Beacon Chain”?

You may be wondering why the Ethereum team chose the term “Beacon Chain?”.  The Beacon Chain was originally only part of the Sharding spec. It’s role was (and still is)  to link up to Shard Chains and signal which blocks should be added to the main chain. 

The Validators utilize the crosslinks between the two chains to “listen” for new blocks on the shard chains. They then sign off on the block and the crosslink if it is to be included on the main chain.

Beacon essentially means “Lighthouse/signal” – and that’s precisely what the role that the Beacon Chain serves.

Disclaimer: I’m sort of taking an educated-guess at this one. To be honest, a lot of the terminology in Sharding & Casper PoS is sorta...confusing (e.g: proposer, collator, validator, committee...come on Vitalik!)

Conclusion

As you can see, the Beacon Chain in the new Casper implementation isn't all that complicated. All you need to know is that it will serve as the foundation for the Proof Of Stake and facilitate the communication via the Shard Chains (via cross-links).  You can become a Validator on the Beacon Chain if you deposit 32 Ether from the current PoW Chain. Once you do that, you can take part in the Proof Of Stake consensus process as well. ValidationFinality  will take place on the Beacon Chain. Transactions & Account Data will be on the Shard Chain.

Simple, eh? Tbh, maybe all you need to read is the conclusion of this post. Damn. Oh well.

Follow up Reads:
1. Casper Roadmap Update Explained
2. ​Ethereum Sharding - A Simple Analogy
3. Finality: Understanding Settlement & Finality

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Blockchain Clearing And Settlement: Securities & Trades

By Shawn Dexter / August 8, 2018

Shawn uses a simple example to explain the concept of blockchain clearing and settlement. He also explains what is blockchain settlement – and why businesses would opt for a blockchain for clearing and settlement of trades & securities.

Why We Need A Blockchain For Clearing And Settlement

Clearing Daily Transactions

The current process for clearing and settlement is wasteful – and blockchain tech is poised to change that. The results will be a net gain for everyone -- not just for businesses, but for consumers as well.

We tend to take our daily transactions for granted. It’s as simple as swiping your credit card or depositing a cheque, right? Wrong. It only seems that way. In truth, every transaction you make is simply a promise. Once the promise is made, a clearing house steps in to facilitate and  settle the promise .

The clearing house consists of a plethora of middlemen. They ensure that the finality & settlement of the promise made. And in return for their good-deed, they charge you hidden fees. Ding!

Clearing Trades And Securities

Businesses have to endure these unnecessary fees as well – but on a grander scale. They trade securities that have various risks managed by the clearinghouse. This leads to higher fees. Businesses are then forced to pass these costs down to their consumers.  Ding!

We essentially get Double-Dinged!  But wait – it doesn’t end there. Since we’re getting double-dinged, we have less money to buy stuff. And because we have less money to buy stuff, businesses lose profit. Businesses now have to either increase prices or close shop. As you can see, it’s just one never-ending loop of economic waste!

However, eliminating the middlemen like settlement Clearing houses has been all but a fantasy… until the advent of blockchain technology.

Blockchain Clearing And Settlement: Efficient & Fast!

Our current models of eCommerce are facing a hasty demise. Enterprises have been swift to leverage blockchain clearing and settlement solutions. The efficiency and cost savings that the technology delivers has been far too enticing to ignore.

A blockchain allows a network of businesses to use a shared ledger upon which they can conduct their transactions. This shared ledger provides all parties with security, speed and transparency – while removing middlemen and reducing friction.

Traditional methods of clearing and settlement rely on middlemen to facilitate trust & security. But the friction is so severe that it can take weeks to settle a single transaction.

However, blockchain and distributed ledger technology provide trust & security
without  a middle man. This reduces friction and costs for all parties. Furthermore, transaction settlement is conducted within seconds! The resulting cost savings are massive – which are then passed down to consumers.

blockchain-clearing-and-settlement

Blockchain Trade Settlement: The Adoption Has Begun

Across the globe, big name firms and established players have been experimenting with blockchain and distributed ledger technology. The list extends from one end of the world to the other

USA based Broadridge Financial Solutions will be using blockchain trade settlement in the repo market.  Broadridge believes that blockchain technology can

  1. Reduce counterparty risk

  2. Eliminate wasteful manual intervention

  3. Streamline current processes for confirmation

  4. Increase audibility, and transparency

London based SETL already utilizes a blockchain platform for settlement of payments. They empower participants to deploy their own blockchain within minutes.

In 2016, India based uTrade was the first Indian company to  employ a blockchain technology for trade settlement. Their “uClear” blockchain platform allows for real time clearing and settlement of securities.  Fast forward to 2018, and we have the Security and Exchange Board of India (SEBI) have begun exploring blockchain technology for trading the stock market.

The Australian Securities Exchanges (ASX) isn’t interested in falling behind either.  ASX will be launching their blockchain based financial services by 2021. The goal is to allow stockbrokers & fund managers to use the blockchain for real-time settlement and tracking.

Challenges in Blockchain Clearing And Settlement

Established processes and policies have firm roots in modern day operations. Uprooting these policies and redistributing resources will be the biggest challenge firms will face. Change is not easy – and will face strong resistance and certain junctions. Furthermore, the technology itself requires to be battle-tested some more. The complexity combined with the shift in mindset may cause onboarding issues.

Conclusion: Advantages Too Good To Ignore

Even with the political and regulatory resistance, the adoption of the technology has been moving forward. As understanding increases, decision makers will be coaxed into action by the following advantages:

  1. Drastically reduced transaction costs

  2. Near instant settlement and clearing

  3. Easier Risk management

  4. Increased Transparency

Blockchain technology is paving the way for a financial revolution that eliminate a lot of economic waste.

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Settlement Finality in Blockchains: PoW vs PoS

By Shawn Dexter / August 6, 2018

In this post Shawn explains the concept of Settlement Finality in blockchains. He then goes over finality in proof of work and finality in proof of stake, resptively.

Settlement Finality

Settlement & Finality – often heard and often misunderstood. Newer blockchains boast about their speed to "finality". But does that really mean? What is Settlement Finality? 

Put simply – all transactions (daily transactions, security trades etc) have to be "settled" to be considered "final".  Hence, the term Settlement Finality.

In our daily transactions, settlement banks handle the 'finalisation' of our transactions. They are the middle-man. And we pay them for the privilege. However, a blockchain manages it's own settlement finality. It does not require a middle man. This is one of the reasons why blockchain technology is so revolutionary. 

Middle-men are used in the traditional systems to ensure that transactions have finality.  A blockchain, on the other hand, uses a consensus method like Proof of Work or Proof of Stake to reach finality.

But before we go any further, let's quickly describe what finality really means.

Settlement & Finality: What Is Finality?

Finality: Finality simply refers to the idea that the occurrence of event is “final” and “permanent”. You cannot undo this event – it has occurred, and will remain ‘occurred’

An Example: A simplified example of Finality would be your age. Once you turn 18, you’re an adult – and you will remain an adult forever. You can be certain in the ‘finality’ of that. No one can go back and change that event. (Unless time travel is possible, and they murder you before you’re 18)

However, achieving finality with financial transactions is actually easier said than done. We tend to equate "extremely difficult" to "impossible". 

To understand, let's explore settlement finality in blockchains and banks a bit more.

Settlement Finality: Blockchain vs Banks

In the finance, people & businesses want to be certain that their transactions are "settled & final". This  Settlement Finality is traditionally handled by settlement banks

Businesses – small or large – face issues with finality of payments quite often. A consumer can attempt to reverse his payment made via VISA or PayPal. In these scenarios, settlement finality conflicts are handled by the middleman.

However,  middleman-solutions are always going to be a point-of-weakness for finality. What if people in key positions are bribed?  What if  centralised servers are hacked? In a centralised solutions, there's always a chance that finality is reverted. Each intermediary will pose a risk point.

Comparatively, a blockchain uses no intermediary. It achieves finality via it's consensus method. Notable consensus methods are Proof Of Work and Proof of Stake. Both of which eliminate several weaknesses of centralised systems. However, neither of them achieve true finality. Finality will always be probabilistic (i.e there's a chance – however small – that a transaction can be reversed) 

First, let's go over finality in proof of stake and proof of work.

Settlement Finality: Proof of Work & Proof Of Stake

Finality in PoW and PoS are achieved in different ways. In Proof Of Work, the hash puzzle plays a key role in determining when a settlement is reasonably 'final'.  Proof of Stake uses a raffle system and economic incentives to arrive at finality (you could call it economic finality)

Finality in PoW

Finality in PoW is achieved as more and more blocks are created. It gets increasingly difficult to reverse a payment in the older blocks.

Blocks in Proof Of Work age well – the more hashpower used on future blocks, the more resilient the older blocks are to attacks. Why? Cause if someone wants to reverse a payment, he has start a new chain beginning at the old block. He has to then try to outpace the current chain. He will have to ensure that his chain is the longest chain.  The only way he can do this is by consuming A LOT of electricity.   This is why we wait for “Confirmations”. Each confirmation represents a block. Anything over 6 blocks gives us reasonable finality.

Finality in PoS

Casper’s Proof Of Stake uses a sorta raffle-system to facilitate finality (and other security elements too.)  People who want to validate blocks deposit their Ether into a pool. This pre-registering all the possible validators. Validators are then asked to declare finality at certain intervals. Essentially saying:  “I agree that every transaction/event up until this point is legit”. 

If at least, ⅔ of the validators make a claim – you have reasonable finality.

Notice how I said “reasonable finality” for both – Proof Of Work and Proof Of Stake. This is because finality is always going to be probabilistic!  To understand this, we have to dive a little deeper – but I’ll try to simplify.

Blockchain Settlement Finality is Probabilistic

I say "reasonable finality" because finality in proof of work and proof of stake are still not truly "final". Technically, a settled payment can still be reversed. It may be improbable – but not impossible. Let's go over some of the ways:

  • A 51% attack can lead to a reverse payment in Proof of Work  regardless of block age. While this is difficult, it’s not impossible – it’s improbable.  
  • In Proof Of Stake, we have the Nothing At Stake attackwhich again is improbable, but not impossible. (I explained Nothing At Stake just yesterday actually) Even with punitive penalties implemented - slashing - we have the improbable chance that a bunch of validators are willing to burn their own capital to hurt the network.
  • Finally, even our current centralized solutions don’t have  finality because they can always
    be hacked, burned down, gun-to-the-head
    etc etc. Perfect finality is probably impossible. There are too many external factors outside of the system that can remove finality.

Final Thoughts

No system is perfect – yet. A bank can be hacked. Proof of Work is subject to a 51% Attack. Proof Of Stake is subject a 1% Attack.  However, blockchains and distributed ledger technologies have come a long way in increasing the likeliness of finality.

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