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Cryptocurrency

Why DeFi Is Still in the Making

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As decentralized finance (DeFi) continues to grow in popularity, more and more people are recognizing its potential. In fact, a 2021 survey found that 97% of 60,000 respondents considered digital assets to be a “safe and viable” way to earn income. From lending protocols to exchanges to liquidity providers, it’s certain that DeFi will continue to make a major impact on the financial industry for years to come. 

Despite the nearly limitless possibilities of DeFi, it’s important to remember that it is still in its infancy. The space is relatively new and, because of this, it is rapidly changing. New developments and projects start every day, and they continue to push the capabilities of DeFi and blockchain further.

DeFi still has a big learning curve

Although innovation continues to flourish, no one DeFi project is quite the same as the next. Some projects step into the decentralized world well-prepared and organized while others fail within a year of their launch. In other words, accomplishing longevity is unlikely for most and accomplished by only a few. 

On the bright side, as more projects fail, leaders in the space are provided with opportunities to learn from past mistakes and subsequently help others learn from them. It helps them identify where the gaps are, and which areas could use some “spring cleaning.” 

While countless projects have faced setbacks from security risks, there are other risks that are worth taking into account. Let’s talk about notable risks that past projects have faced and how their failures can help shorten the DeFi learning curve. 

The Security Risk: Ring Financial’s hack (2021)

Ring Financial was an innovative, ambitious project on the Binance Smart Chain that was formed to create returns by aggregating DeFi protocols. The project saw some growth in November 2021 before it was hacked a month later. The hacker was able to exploit Ring’s code, which led to them losing investor trust and confidence. 

Ultimately, the project failed. Ring’s team was not prepared to handle the widespread turmoil that was caused by the hack. 

Lesson to be learned: Teams should be prepared for the worst (no matter how unlikely it may seem), and project leaders need to ensure they are doing everything they can to keep their confidential information safe. Security is incredibly important for any blockchain project, which is why audits and safety standards have become an integral part of Web3.

The Pump & Dump Risk: Yummy Token

Promoted by YouTube influencer Jake Paul, Yummy Token ended up being a typical pump-and-dump scheme. In these schemes, people promote low-value assets in hopes that investors will buy them to subsequently increase their value. Once the price climbs to a certain height, the assets are sold. Then, the scheme coordinators take their profits and jump camp before the coin value officially falls. 

According to Coffeezilla, Jake Paul was said to have participated in several of these schemes, and he ended up being one of the main influencers promoting Yummy Token. He went from claiming “we’re not selling” [the token] to pocketing Yummy coin sales for over $300k (all in one month’s time).

Lesson to be learned: Do research before making an investment. If a project’s founders are anonymous, this can be a major red flag. In addition, if something seems too good to be true, it probably is. Don’t make swift investments simply because your favorite influencer swears by them. 

The Tokenomics Risk: Olympus 

Olympus is the first reserve protocol with their APY above 1000%. At one point in 2021, the Olympus reserve currency, OHM, was at 8000% APY and later dropped to just over 1000%. Subsequently, the high annual percentage rate has made it quite difficult for Olympus to maintain its TVL and token prices.  According to Yahoo Finance, many people view the high APY to be “unsustainable to the point of being fraudulent.” 

Lesson to be learned: Projects that seem to overpromise typically underdeliver at some point. Even the ones with the best of intentions can still fall short.

The Team Risk: Wonderland

The cross-chain reserve currency protocol, Wonderland, faced a major setback after one of the project’s key members, ‘Sifu’, was found to have a lengthy criminal record. This involved a number of scams and a history of deportation, according to Yahoo Finance. The revelation also included that he was the co-founder of QuadrigaCX, a failed Canadian exchange. Co-founder, Gerald Cotten, ended up making away with $169 million in the scam. 

Shortly after the truth about Sifu was uncovered, Wonderland’s TIME tokens saw a 32% decrease. 

Lesson to be learned: Internal risks can be just as substantial as external ones. It’s up to DeFi projects to have better protocols for their internal structure, including who they’re partnering with/onboarding. 

The Legal Risk: Terra Mirror Protocol 

More recently, U.S. regulators have launched an investigation into TerraForm Labs for allegations of selling unregistered securities. The sales were said to have taken place through Terra’s Mirror Protocol. It’s worth noting that this was a completely separate endeavor from the collapse of the Terra Luna coin earlier this year. 

This is not the first time Terra has faced legal difficulties. CoinTelegraph has reported the project was tied to charges of tax evasion and market manipulation in South Korea as well. 

Lesson to be learned: It’s paramount that protocols take government rules and regulations into account to avoid major issues.

Many people still know very little about DeFi

Yes, most of the world has heard about decentralized finance at this point, but the overwhelming majority of people still know very little about it. Even some DeFi project leaders only have a basic understanding of it, which is perhaps one reason why projects fail and get abandoned so often.

A 2020 survey found that 40% of crypto users say they know little to nothing about DeFi. The same study found that only 9% of women knew anything about it at all. 

The technical nature of DeFi is one of the most often-cited reasons people steer clear of it. And, it’s no surprise that it’s primarily utilized by the age group (20-39 year olds) that’s most comfortable with technology. 

To help bridge the gap, it’s imperative that there be a way to hold the attention of the older generation. The first step is to start talking. From DeFi leaders to crypto users, as it gains more prevalence in day-to-day conversations, the veil will part and DeFi will become more mainstream.

The future of DeFi 

Right now, educated and talented individuals are the ones making most of the advancements within the decentralized space. The next step is driving innovation, which stems from creative input and feedback from DeFi users. 

It’s up to leaders in the DeFi space, along with support from the community, to help it thrive. Every problem within the arena is not going to be solved overnight, however. It’s going to take a lot of time, trial-and-error, and dedication to continually advance DeFi.  

Rome wasn’t built in a day, and neither was DeFi.

Imran Javed Awan brings 9 years of experience in helping grassroots, mid-sized organizations and large institutions strengthen their management and resource-generating capacities and effectively plan for the future. He is also a mentor and professional advisor to artists working in all disciplines.

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Cryptocurrency

5 Tips for Trading Altcoins on the Bitcoin Exchange Marketplaces

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This is a list of five tips that can help you trade cryptocurrency on the Bitcoin Exchange Marketplaces.

  1. Use Limit Orders to Protect Your Bitcoin
  2. Be Patient and Wait for the Right Time to Sell/Buy Altcoins
  3. Do Research Before Trading Altcoins
  4. Always Keep an Eye on the Market
  5. Be Careful When You Trade with Other People

What is a Cryptocurrency Exchange?

Cryptocurrency is a digital currency that is decentralized and that is not controlled by any central authority. Cryptocurrency exchanges are the platforms where people can buy, sell, and trade cryptocurrencies like Bitcoin. There are two types: centralized and decentralized exchanges. A centralized exchange is an online platform that matches buyers and sellers in order to facilitate transactions in cryptocurrencies. A decentralized exchange uses blockchain technology to operate without a central server or administrator.

Tips for Buying & Applying for Crypto Exchanges

Crypto exchanges are a new type of market that has been gaining popularity in the past few years. In this article, we will discuss some tips for buying and applying for crypto exchanges.

Buying:

  • Look at the exchange’s volume and trade volume in USD (like MANA to USD). If the exchange has a low volume, it is likely that it would be volatile and difficult to trade with. It is also important to look at how many coins are listed on the exchange before you decide to buy.
  • Look at their trading fees, as well as any bonuses or discounts they offer.

Applying:

  • Check out their whitepaper or website to view their team members and advisors.
  • Read through their terms of service agreement before you sign up so you know what they require from you (ex: KYC/AML requirements).

Why Do We Trade on Bitcoin Exchanges?

Bitcoin is a digital currency that is not controlled by any central authority. It was created in 2008 as an alternative to the traditional banking system and it has since been adopted by many people around the world. The basic idea behind Bitcoin is to provide a decentralized peer-to-peer payment network that does not require intermediaries such as banks or credit card companies. Bitcoin transactions are recorded in a public ledger called the blockchain, which can be viewed by anyone.

Many people have speculated on why there has been such an increase in the popularity of Bitcoin News, with some claiming that it is because of its anonymity and lack of government control over the monetary system. Others point out that this currency can be used as a hedge against inflation or political turmoil. So why do we trade on Bitcoin News exchanges? Well, there are many reasons for this, including: The opportunity to gain profits from fluctuations in price The ability to buy bitcoin anonymously The chance for quick returns when trading other cryptocurrencies.

Crypto exchanges vs. fiat currency exchanges

The US dollar is the most widely used currency in the world, but it has been losing popularity in recent years. Cryptocurrencies have started gaining a lot of traction as a new form of digital money that is becoming more accepted. Crypto exchanges are platforms that allow people to trade cryptocurrencies for traditional currencies like the US dollar, for example FLUX to USD. Fiat currency exchanges are platforms that allow people to trade traditional currencies for cryptocurrencies.

Fiat currency exchanges have been around since the early 80s and they have become popular because they offer liquidity and stability. They also help protect consumers from fluctuations in cryptocurrency price fluctuations by offering fiat currencies with low volatility rates. Crypto exchanges on the other hand offer a decentralized market where you can trade cryptocurrencies without third-party intervention and they don’t charge any fees when you use them to buy or sell cryptos.

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Cryptocurrency

StrongBlock, Olympus, WonderLand, Ring & DegenBox : the Rise and Fall of “Degens” DeFi

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The crypto world is as deep and perilous as the ocean. The complex and open nature of
cryptocurrency naturally suggests that a potential investor proceeds with caution before
jumping in. There will always be those who are willing to throw caution to the wind, though.
In the crypto space, a “degen” is one of those. Degen is largely meant as a derogatory term
for people who recklessly invest in a cryptocurrency, hoping it will go from a penny stock to a
blue chip. Human nature being what it is, some degens embrace the name, wearing it as a
badge of honor.

These self-proclaimed degens have even created a culture and trading strategy around their
“degenerate” behavior. They buy a memecoin or NFT at rock-bottom prices and then hype it
up, hoping to raise the floor price of the asset. In a decentralized marketplace, a strategy like
that can get some traction.

The idea of a decentralized future has inspired the creation of numerous DeFi projects.
Many of these began as innovative solutions with the potential to change finance as a whole,
but, for one reason or another, almost all of them failed.

While there have been some very questionable projects and outright rug pulls, most entrants
have been legitimate attempts to solve a problem in the DeFi space. However, between the
newness of decentralized finance, the bear market that started last December, and the
constant hack attempts, moving forward has been a slow, painful process.
Here are five innovative DeFi projects that had the potential to achieve great things, but
didn’t live up to expectations.

Four Promising Yield DeFi Projects That Failed
StrongBlock
StrongBlock was once viewed as one of the most innovative DeFi protocols. It introduced
Nodes as a Service (NaaS), a blockchain scaling solution that made creating and launching
nodes very easy. Anyone could create a node on a supported blockchain and receive
rewards (in Strong coins) for running and maintaining it.

StrongBlock NaaS became one of the hottest DeFi projects on the internet. As a result, the
Strong coin’s value rose from less than $20 to almost $1,800 in a year.

However, a year-end drop in the price of crypto assets marked the beginning of the end for
the Strong coin. Its price dropped by half within a few months and never recovered. There
were also technical issues that prevented users from accessing several blockchains.
The value of the Strong coin kept dropping, leading to increasingly lower rewards. Coupled
with the growing technical issues, this caused many investors to lose confidence in the
project. Eventually, it was no longer viable to create nodes with StrongBlock.

Olympus DAO
Liquidity is a challenge in many DeFi projects. Traditionally, it is provided by aptly named
liquidity providers. And, while this often ensures there will be enough funds to keep a project
going, there’s always the risk that the liquidity providers will pull out and move to a more
enticing project.

In early 2021, Olympus DAO came up with a solution to this problem. This solution –
nicknamed DeFi 2.0 – involved the project owning a vast majority of the assets in the liquidity
pool. So, if liquidity providers left for greener-looking pastures, their departure wouldn’t harm
the protocol.

Furthermore, the project’s OHM token would be backed by a treasury of assets (just like the
dollar was once backed by gold). This, in theory, meant that the token would be less volatile
than traditional cryptocurrencies.

However, after some success, the project suffered a market sell-off that significantly dropped
its price in March 2022. It has since split into two versions, Olympus V1 and Olympus V2. It
isn’t totally dead, but the project’s reputation has taken a dip it will likely never recover from.

Wonderland
Wonderland emerged as a fork of Olympus. Like Olympus, the project owns much of the
liquidity and uses a token ($TIME) backed by a treasury of assets. It also offered an insane
APY early on. This made it the hottest DeFi project in town – enough for the $TIME token to
achieve a valuation of more than $10,000.

However, Wonderland’s problems started when crypto assets plummeted in December 2021.
$TIME was hit hard, losing over half its value in the space of a month. Then, a string of poor
moves by the team made things worse.

For instance, they failed to deliver on airdrops. They also bailed out some team members’
bad investment decisions and tried to cause liquidations. The final nail came when the CFO
was revealed to be a convicted felon.
Today, Wonderland’s $TIME token sits at around $20 – a symbol of how far the mighty can
fall in the world of crypto.

Ring Financial
Ring Financial was inspired by StrongBlock’s NaaS. But, unlike StrongBlock, the goal was to
create returns by aggregating DeFi protocols. These funds would then be used to develop a
technology that automatically aggregates other innovative DeFi protocols through a DAO.
The project planned to realize its vision over several years, but found success very early on.
People believed in it, drawing investors and pushing the Ring token from less than $1 to
$220 in a matter of days.

Unfortunately, on the 4th of December 2021, a hacker exploited the project’s smart contract
and stole funds. This caused Ring’s market cap to drop by 75%. Furthermore, the team
behind Ring didn’t successfully communicate to the investors what had happened. So while
Ring survived the immediate aftermath of the hack, it didn’t do well in the coming weeks.
Investors panicked and lost confidence in the project. They tried to sell, but nobody wanted
to buy. This drove the price of the Ring token down. Today, the token is a forgotten asset,
sitting around 38 cents.

Two Steps Forward, One Step Back
It’s tough out there. The world of decentralized finance is not for the faint of heart. There
have been several great, well-intentioned projects to come along. However, there are a
million and one people out there who are taking shots at these projects, and this crypto
winter we’re in hasn’t helped.

DeFi is still in the experimental stage. Experts agree that most DeFi projects are destined for
failure. The few projects that succeed go on to inspire new ones, while the ones that fail
serve as a lesson to everyone in the industry. This is the process that will propel DeFi into
the future

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Blockchain

Among The Top 3 Cryptocurrencies In The 1st Quarter Of 2022

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Amid the turmoil that impacted the crypto-asset market at the beginning of the year, there were digital currencies that followed the opposite path, showing high appreciation during the period. This is what a survey carried out by Felipe Medeiros, analyst, and partner at Quantzed Criptos, a technology and financial education company for investors shows.

Based on data from CoinCodex, the analyst highlighted which were the three cryptocurrencies that rose in appreciation in the first quarter of 2022. To know them, check below.

Which cryptocurrencies appreciated the most in the first quarter of 2022?

1 – GMT, from STEPN: + 791.93%

The cryptocurrency that appreciated the most in the period was Green Metaverse Token (GMT), a governance asset of the STEPN application, a platform that encourages physical exercise through rewards within the game ecosystem.

It works like this: that interested access the technology and, in a way, “equipped” with an NFT sneaker, walk or run to earn the cryptocurrencies (exercise monitoring is controlled by STEPN via GPS).

Then, after performing physical activities, users’ earnings are stored in the app’s wallet, which has a built-in exchange function.

For Medeiros, the justification for the increase would be that “in recent months, we have had a very strong trend towards the ‘win-to-play’ model… [that’s why] the currency that appreciated the most in the first quarter was the GMT”.

However, the analyst also comments that despite this hype bringing a strong rise to the asset at the moment, he does not have a good outlook on the cryptocurrency in the medium and long term.

In trading on April 14, the asset had a market cap of $342.3 million, according to Coinbase data. The cryptocurrency began trading in May 2021.

2 – KNC, by Kyber: + 149.56%

Kyber Network Crystal (KNC) is a utility and governance token and an integral part of the Kyber Network, which is a decentralized exchange liquidity platform that is based on the Ethereum blockchain.

The ecosystem allows for simple conversions between different types of digital assets, so users can trade cryptocurrencies using only decentralized apps and their wallets.

KNC token holders bet and vote to receive protocol trading fees on the network. And as more trades are executed and new protocols added, more rewards are generated.

In trading on April 14, the asset had a market value of US$ 828.5 million, according to Investing data. The cryptocurrency began trading in November 2017.

3 – WAVES, from the Waves platform: + 95.16%

Waves is an all-in-one blockchain platform that supports multiple use cases, mainly for the development of decentralized applications (DApps) and smart contracts.

The network has its own virtual asset, which has the same name. The token serves to reward all infrastructure participants, to pay platform fees and for users to carry out other projects.

In trading on April 14, the asset had a market value of US$ 2.4 billion, according to Investing data. The cryptocurrency began trading in July 2017.

Is it worth looking for more alternative cryptocurrencies? 

As is well known, investments in digital assets are part of the variable income category, so in this market that is so volatile, making these applications is quite risky, even more so when investing in more alternative cryptocurrencies.

For Medeiros, “if you know how to make a good assessment of the assets you are buying, it is worth betting a small part of your portfolio on this… but you have to understand that you are taking a very big risk”.

Francisco D’Orto Neto, professor at the FIPECAFI faculty in the subjects of the Economics course, explains that before investing in a cryptocurrency, it is important to make a complete and thorough analysis of it. For the teacher, it is essential to assess the following:

  • Is the cryptocurrency project innovative? What are his advantages? Are there already other digital currencies proposing the same thing? If so, do they seem to be more promising?
  • What is the future planning of the project (roadmap)? It is important to analyze the next programmed steps and, if possible, identify if the currency has the potential to grow. And it’s worth a warning: if you can’t find a crypto roadmap, it’s a sign of distrust.
  • Does the currency have its source code available to the public, allowing anyone to access it?
  • Another fact to look at before investing: it is important to identify cryptos that have liquidity and market value.

Best Cryptocurrencies to Invest Now in 2022

For Medeiros, the best investment now is in Ethereum, “because the cryptocurrency will undergo an update in the coming months, which is the biggest in history”.

Currently, the development of Ethereum is through the proof-of-work (PoW) protocol, that is, when a decentralized network of computers competes to validate transactions.

With the update, which is called The Merge (the merger, in the Portuguese translation), the network should start to work through the proof-of-stake (PoS) protocol. This means that users will be responsible for validating transactions when staking the cryptocurrency.

This change is expected to have a positive impact on the asset price because, ideally, it should bring more security to the investor, reduce energy costs and facilitate blockchain scaling.

“I see Ethereum, including, in the next few months getting very close to the Bitcoin market cap … I think this is a trend that will happen”, comments the analyst.

In addition, among other promising cryptocurrencies, “a second good prospect that we can assess for this year still plays to earn games . We will have a very large inflow of capital into them”, concludes Medeiros.

What are the main cryptocurrencies on the market?

Among the thousands of cryptocurrencies listed on the market, few of them stand out among the majority. Clearly, at the moment, the crypto asset that has the most relevance is the pioneer Bitcoin (BTC), which has more than BRL 3 trillion in market capitalization. Then comes Ethereum (ETH) skyrocketing in relation to the others, with a trading volume of more than BRL 1 trillion.

However, in this first quarter, the performance was not good for crypto assets: Bitcoin lost 9.66%, and Ethereum 16.11%.

Rubens Neistein, business country manager at CoinPayments and partner at Blockmaster Brasil, believes that both cryptocurrencies “in the short term will still suffer volatility due to the global scenario”, which is still suffering from the consequences of the war in Ukraine.

Which Cryptocurrencies to Avoid in 2022? 

For Medeiros, “mostly, the investor needs to avoid coins that survive on hype, which do not have a purpose”. He cites Dogecoin, Shiba Inu, and other meme-pegged cryptos.

“Another asset class people need to avoid is games that promise high returns,” he adds.

How is the cryptocurrency market? 

As the most recent survey by North American exchange Gemini points out, nearly half of all cryptocurrency owners in the United States, Latin America, and the Asia-Pacific region bought the assets for the first time in 2021 alone.

But not only that. According to the survey carried out by asset manager Hashdex, Brazil recorded a 1,266% growth in the number of investors allocated to crypto-asset funds and ETFs in 2021 compared to the previous year. The number of investors in this type of application rose from 30,000 in 2020 to more than 410,000 last year.

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