The concept of decentralized identity revolves around taking back control of your data, which is critical for your identity and privacy. The following post offers you a complete guide on self-sovereign identity or SSI and decentralized identity. You can explore the critical reflection on existing issues with centralized identity management. At the same time, you can also identify the potential use cases for SSI to learn about its significance. 

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Existing State of Identity

Before you try to learn about Self Sovereign identity use cases, you must develop a clear impression of the challenges in the identity ecosystems. Digital transformation has been quite rampant in the recent decade, albeit without any definitive solutions for transferring personal identity to the virtual worlds. 

Over the course of time, many issues pertaining to privacy, user experience, data protection, security, and interoperability with respect to digital identity have been addressed on different occasions. On the other hand, it is also important to note the lack of a digital ecosystem featuring sustainable business models alongside suitable incentives for the participating users. 

The initiatives for secure and federated digital identities started developing in Europe almost 20 years ago. For example, the European Commission sponsored initiatives such as “Large Scale Pilots” Stork [Ta15] and the Stork 2.0 projects. These projects served an important role in the foundation of eIDAS regulation. 

Germany introduced an electronic identity card or nPA to promote the creation of secure digital identities. However, decentralized identity management is still a coveted dream despite the introduction of nPA and eIDAS. Most of the daily use of digital identity revolves around single sign-on systems or username-password applications. 

The notable issues for identity ecosystem emerge in the form of the need for creating balanced and sustainable trust relationships among identity providers. Subsequently, the dependent users and parties have also created an important challenge for decentralization. Furthermore, it is also important to find out how many applications are prepared to welcome the applications of decentralized identity. 

Definition of Decentralized Identity

The understanding of decentralized identity blockchain is one of the significant elements in an introduction to SSI and decentralized identity. Decentralized identity is a unique term described by Microsoft as the path to digital privacy by enabling individuals to take complete control over their privacy. Users could make decisions on the methods and type of data for sharing.

Decentralized identity is also useful in enabling people to monetize their personal information. The applications of decentralized identity can help in reducing the risks of abuse alongside bigger data breaches through violation of people’s privacy. For example, a decentralized identity can help in storing all your academic qualifications digitally and using them for a job interview.

The discussion on decentralized identity management would also emphasize on accuracy of considering it as a centralized, decentralized identity. How is centralization relevant in this case? The individual with the digital identity could act as the central authority over decisions about sharing particular personal information.   

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What is Self-Sovereign Identity?

Self Sovereign Identity & Decentralized Identity are closely related terms, and SSI is frequently used in the case of blockchain-based identity management. Over the course of time, a few key traits of self-sovereign identity have evolved with unique value advantages. The traits show that a self-sovereign identity management system could help users gain complete control over ownership and management of identity without depending on third parties. 

As of now, self sovereign identity blockchain systems are not any different from decentralized identities. Self-sovereign identity on a specific blockchain network implies a permanent identity that is accessible completely only by the person or entity owning the identity. However, some portions of the SSI can be showcased to any organization, agency, or individual when the time arises. Self-sovereign identities come with the advantage of encryption and decentralization, thereby reducing the concerns of identity theft.   

Difference between SSI and Decentralized Identity

The discussion on SSI and decentralized identity in blockchain systems also point to the possible differences between them. Although there are no specific differences between both terms, they are distinguished on the basis of underlying concepts. Self-Sovereign Identity basically suggests an identity concept that can allow people and businesses to store and control data on their devices.

Users can showcase the data to another individual who wants to verify them without intervention of a centralized database. On the other hand, decentralized identities are a slightly different concept as DID is always under the complete control of the user. With a decentralized identity, you don’t have any certificate authority, central registry, or identity provider. Therefore, you don’t have to showcase your data to anyone to verify data validity. 

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Working of Decentralized Identity

Storing your digital identity in a decentralized form is not the only explanation for how decentralized identity works. The difference between SSI and decentralized identity shows that both the terms imply the same functionalities. You have to understand the technical concepts underlying Self Sovereign Identity & Decentralized Identity before you can identify SSI use cases. The two important technical concepts, Decentralized Identifiers or DIDs and Verifiable Credentials or VCs, are critical requirements for majority of blockchain-based identity approaches. Here is an overview of the two important components in the working of self-sovereign identity. 

• Decentralized Identifiers (DIDs)

Decentralized identifiers or DIDs are basically identifiers you can use for exchanging or authentication of credentials. The ownership of a private key related to the public key embedded in the DID is crucial for proving ownership of the DID. However, the W3C points out that DID is basically the Uniform Resource Identifier or URI. 

Some of the other aspects of the decentralized identity blockchain specification refer to the DID scheme and the DID method. The DID scheme is actually the formal syntax for a DID, while the DID method helps in defining the approach for implementation of a particular scheme. You can find information on methods for creating, updating, and deactivating DIDs in the DID method. 

Another important element in the working of decentralized identifiers refers to the DID resolver, which returns the DID document for a concerned decentralized identifier. The DID document features the relevant data providing description for the DID subject, including public keys alongside other attributes and metadata. 

As of now, the Decentralized Identity Foundation, supported by Microsoft, is working on a universal resolver. The universal resolver can provide the ideal answer to interoperability among different decentralized identity management solutions.

• Verifiable Credentials

The next significant element in self sovereign identity points at the Verifiable Credentials or VCs. Verifiable Credentials provides a format for credentials, which works as a crucial element across different blockchain-based identity architectures. You can also think of a verified credential as an immutable statement regarding the subject signed cryptographically by the issuer. 

Other than the tamper-proof statement, the VC also includes metadata pertaining to cryptographic schemes, issuer, validity period, and other factors. In addition, future applications of Self Sovereign identity blockchain would also call for resolution of challenges, such as including a revocation mechanism. 

The revocation mechanism can help in balancing the privacy elements while achieving better revocation. You can also discover different perspectives on concrete implementation of verifiable credentials. However, the fundamental concept of VCs shows that it is a cryptographically signed credential under the control and ownership of the user. 

One of the common approaches for managing private keys and credentials points at a wallet application. You also use the application for interacting with other entities and on different devices. The wallets serve as a stable and highly available endpoint for other services and can help in recovering credentials when a wallet is not available on a device. In addition, the concerns of decentralized identity on blockchain networks have also brought forward the use of hardware wallets and paper wallets. These wallets can provide the ideal options for backup and recovery of private keys. 

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Use Cases of Self Sovereign Identity 

The outline of an introductory guide to decentralized identity would be incomplete without reflecting on the self sovereign identity use cases and their valuable benefits. Decentralized identity is the future of identity management as it provides better architecture and improved control for the end-user alongside lesser chances for monopoly. Self-sovereign identity or SSI can grab the market’s attention in the future by a focus on the following use cases. 

• Control to End-User

The foremost value advantage with self sovereign identity & decentralized identity refers to the control over your own data. With the advantage of portability, users can remove their data from the siloes of service providers. In addition, SSI takes away the need to depend on third-party intermediaries for using identity data. 

The proposed self-sovereign identity solutions could introduce higher privacy, which would be crucial for decentralized identity management applications. Furthermore, the decentralization and customer-centric nature of SSI would help in reducing the risks pertaining to massive aggregated sets of identity data. The aggregate sets of identity data safeguard against risks of misuse or manipulation and hacks. 

On top of it, integration of innovative cryptographic schemes such as zero-knowledge proofs helps in improving safeguards for identity data. You can use verifiable credentials in your digital identity with the flexibility for selective disclosure. As a result, you can disclose only relevant identity data to service providers, thereby enabling better control over your own privacy. 

• Usability 

The customer-centric approach is an essential highlight among self sovereign identity use cases, especially in terms of usability. Privacy is one of the key highlights of self sovereign identity and not the complete value proposition associated with the concept. Therefore, SSI solutions must focus on the usability aspects, such as removing the username-password issue. 

Single sign-on or logins through existing identity data for accessing new services can help in improving the usability of SSI solutions. On top of it, service providers must also find the self sovereign identity solutions helpful for reducing friction during the process of onboarding customers. Furthermore, access to verified identity data could help in addressing compliance requirements alongside reducing fraud. 

Most important of all, service providers wouldn’t have to depend on third-party identity providers or manage the identity information of users. Therefore, service providers can also make the most of usability benefits in self-sovereign identity solutions to avoid risks and costs of infrastructure and security. 

• Accessibility to Digital Identity

The most crucial use case of self sovereign identity blockchain applications would point to improved accessibility to decentralized identity. Decentralized identity can open up the digital identity infrastructure to more than a billion people worldwide. For example, decentralized identity can serve a radically transformative role by offering valid identity information to people who could not access basic societal or financial services. 

Some of the notable initiatives focused on digital identities include the Identification for Development Initiative by the World Bank and the ID2020 Alliance. In addition, many proofs of concept projects have showcased the capability of blockchain-based management in enabling better access to digital identity. For example, the World Food Programme or WFP has employed a blockchain-based identity system in refugee camps with positive results. 

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Final Words

The final overview regarding Self Sovereign Identity & Decentralized Identity suggests that they are the future of identity management. Decentralization makes everything better, especially in terms of control over your own identity and the associated data. In addition, the concept of decentralized identity also resolves the problems due to the silos or service providers and unwanted risks emerging from the same. 

You can use your identity throughout the broad assortment of digital services available today with better security and a seamless experience across all services. In addition, the concept of self sovereign identity would take some more time before it develops into a benchmark for digital identity. Learn more about decentralized identity and self sovereign identity solutions right now.

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The radical growth in popularity of blockchain technology has made it possible that your child may ask you about Bitcoin. If ever the situation arises, you must know the right approach to explain blockchain to your children. The following post helps you figure out some interesting ways to explain the concept of blockchain to children.

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Why Should You Learn How to Explain Blockchain to a Child?

The first thing that must be revolving around your mind right now must have focused on why a child would need blockchain explained to them. You cannot burden a child with the technical jargon and complex terms associated with the domain of blockchain technology. However, you cannot undermine how blockchain will develop as the technology of the future. Therefore, you would basically prepare a child for the future by explaining blockchain technology to them in simple terms. 

Another significant reason for learning how to explain blockchain technology to children is that everyone is not an expert in blockchain. The growing adoption of blockchain technology in diverse use cases across multiple industries has fuelled the interest of senior objectives in the applications of blockchain technology. 

On the other hand, blockchain professionals can convey the actual value of blockchain technology to executives and business leaders only in simple terms. The importance of blockchain simple explanation in such cases is more than you could imagine. For example, senior executives, leaders, and decision-makers could understand blockchain-based projects easily, thereby removing the setbacks for project approval. 

Definition of Blockchain Technology

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The foremost highlight in the ways to explain blockchain technology to a child would focus on the definition of blockchain. In addition, the answers for “How do you explain blockchain to a child?” would also focus on maintaining simplicity. The simplest definition of blockchain suggests that it is a decentralized public ledger that helps in recording all transactions throughout multiple computers. 

One of the biggest highlights of blockchain technology is that the network does not have any central point. How? All the information on the blockchain has been stored across different computers simultaneously, thereby creating difficulties for compromising a single computer or stealing data. However, the definition might be a bit confusing for children as they might wonder about the reasons for recording transactions across multiple computers. What is the special thing about not having a central point in blockchain?

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Background of Blockchain

The simple definition of blockchain might still feature some complicated annotations for children. You would obviously encounter multiple responses to “What is blockchain in one sentence?” for explaining the term to children. Now, it is important to explain how blockchain came into existence. Let us assume the example of Yap Island, a small island in the Caroline Islands group in the western Pacific Ocean. 

Around 3000 years ago, somewhere around 1000 BCE, the inhabitants of the island used human-sized currency, known as Rae Stones. The Rae Stones weigh almost 8000 pounds and reach a height of almost 12 ft. It would have been a lot difficult to move such humongous units of currency upon exchanging them for goods. 

How did everyone manage to run an economy without the facility for trading money physically? Everyone kept a memory of the trade, and transactions had to be announced to the rest of the tribe. All the other members of the tribe maintained a mental ledger of the transaction, thereby showcasing decentralization. You may assume the simple example as an assumption for blockchain explained in detail. However, you would look for alternatives in which you would solve the problem of difficulties in physical trade today. How will the system look like? 

The Trouble with Centralization

If you want to solve the problem of managing an economy without physical trade, then you would need banks. Banks or other centralized financial institutions would keep records about the ownership of Rae Stones in the Yap Island example. The banker would monitor all the transactions and offer verification regarding credibility of certain transactions. 

You must also try to explain blockchain technology based on the essential requirements of the centralized authority. The central authority or the banker must provide security for the ledger to avoid any unwarranted modifications. In addition, the banker must be readily available at all times to ensure transactions between users. On top of it, the banker must have credibility and professionalism to avoid accidental mistakes. 

On the contrary, blockchain simple explanation for kids suggests how blockchain removes the centralized authority. You don’t have to worry about the credibility of the banker in the case of blockchain technology. With blockchain, it doesn’t matter whether one user in the network is not trustworthy or a particular user compromises the network. Transactions will happen on the blockchain and will be recorded even if one specific person is not available in the network. How?

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Working of Blockchain

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The simple answer for “What is blockchain in one sentence?” points to the example of Yap Island once again. You can find a lot of similarities between the working of blockchain technology and the old transactions on Yap Island. Just like announcing a transaction to the tribe, every transaction on blockchain must be sent across the whole network. The “nodes” or computers in the network must document the transaction details on their copy of the distributed ledger. 

You can think of the ledger as an account of all transactions on the blockchain. The computers on the network would compare the ledgers and determine the authenticity of transactions. Therefore, a transaction on a blockchain network is valid only if the majority verifies the truth of the transaction. On top of it, the incorrect ledgers would be updated with the correct data from majority of the nodes.

• Transaction on Blockchain

Suppose John wants to send 1 Bitcoin to Jessie from his crypto wallet, which contains 10 Bitcoin now. The first step starts when John initiates the transaction by sending it to the network. All the servers on the network record the transaction, with possibility of some nodes registering the wrong information. 

In the next step, all the nodes would compare their data and identify whether their copy of the transaction matches with the majority. If anyone has a wrong copy of the transaction data, they can receive a copy of right data from the majority. Finally, all the servers agree on the transaction details, thereby ensuring addition of the transaction to blocks. 

• Decentralization on Blockchain

The simple explanation for recording transactions on blockchain networks shows an interesting example of how decentralization works. On the other hand, the example shows the basic approach for a blockchain transaction. However, you would need an interactive example to explain blockchain to a child by showcasing the importance of decentralization. 

Think of a scenario where a 7-year-old kid Michael wants a video game for Christmas and writes a letter to Santa asking the same. However, Michael does not know how to send the letter to Santa and asks his father to deliver the letter. Now, Michael’s father reads the letter before mailing it to Santa. Michael’s father doesn’t like him wasting his time on video games. 

So, he changes the content of Michael’s letter and writes the names of a few books for his school. When Michael receives his Christmas gift, he is heartbroken that Santa did not give him a video game. You can notice that the intermediary or middleman, i.e., Michael’s father, disrupted the intended outcome of the transaction by Michael.

Let us assume that Michael uses a North Pole blockchain network that has Santa, his elves, kids from all over the world, and their parents as participants. Michael can send his letter asking for a video game on the blockchain network, and everyone on the network can see his request. When Michael’s father notices the request and tries to modify it, the rest of the network disagrees with his proposal. Therefore, the final transaction recorded on the blockchain is that of Michael’s letter for a video game. The blockchain ensures that Michael can get his transaction completed the way he wants to. Think of the same model applied to financial transactions and other use cases. 

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Blockchain and Money

If your child asks you about blockchain, then you are most likely to come across the need to explain cryptocurrencies. The concerns of “How do you explain blockchain to a child?” would also reflect on how blockchain and money and related to each other. Children would grow to find blockchain as one of the integral elements behind cryptocurrencies, one of the modern investment tools. 

As a matter of fact, it is important to highlight the example of Bitcoin as the first use case of blockchain technology. You can showcase how Bitcoin uses blockchain technology to establish a peer-to-peer electronic cash system. As described in the basic designs of blockchain explained clearly, all the nodes or miners on the Bitcoin blockchain network document the transfers of Bitcoin. However, blockchain is not all about cryptocurrencies. 

Other Uses of Blockchain

The next notable highlight you need to explain blockchain technology to children is an outline of its other use cases. You have to teach children that blockchain technology serves as a distributed ledger that can help in recording almost any type of information. A blockchain network could record weather data, stock prices, details of votes, and healthcare information comprehensively in detail. Blockchain can also help in documenting supply chain information, thereby enabling better efficiency in tracing products. As you can notice, blockchain has many plausible applications beyond the domain of cryptocurrencies. 

Significance of Blockchain

The final and most essential aspect of an introduction to blockchain technology for children would focus on its practical necessity. Children must learn about the practical advantages of blockchain technology when applied in real-world use cases. The outline of blockchain explained for children must focus on the way blockchain ensures accurate and timely transactions. It is important to remove the bottlenecks in supply chains alongside ensuring product quality. 

Blockchain technology helps in documenting the data regarding product status throughout multiple phases of the supply chain. Imagine the range of benefits you can have by tracking how fresh the vegetables on the supermarket shelves are. The removal of bottlenecks from supply chain in terms of approval and necessary checks makes the process faster. Therefore, you can have better chances of delivery of essential goods and services without any limitations. 

Most important of all, blockchain can also serve an important role in the future by supporting the verification of information authenticity. The credibility of information is one of the critical problems in the present times. On the other hand, proper use of blockchain technology can help in verifying which information is true or false. In addition, you will also come across many other innovative uses of blockchain for the world in the future. 

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Bottom Line

The future of blockchain is shaping up with some of the most promising use cases noted in popular sectors such as financial services and supply chain management. In the present times, you can explain blockchain to a child by using interactive examples and stories which resonate with them. You don’t have to burden children with the technical jargon and the pressure of expectations to learn blockchain technology. 

However, you must also focus on teaching the crucial aspects, such as removal of centralization and the scope of blockchain beyond cryptocurrencies. The continuous growth in the demand to learn about blockchain technology has translated into the need to explain blockchain technology to children. Find some more interesting stories to help your children learn blockchain.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post How to Explain Blockchain Technology to Your Children appeared first on 101 Blockchains.

At the same time, innovation in the DeFi space has been evolving in the form of new solutions like Curve DAO and its native token. The DAO is an essential component of the Curve.fi ecosystem, which offers a blockchain-based decentralized exchange based on the principle of an automated market maker. The Curve token is the focal aspect of the distinctive UI of Curve Finance, which helps in capturing the true potential of the DeFi market. 

Automated Market Makers or AMMs have introduced a significant effect on the overall crypto landscape with the development of liquidity platforms. Curve helps in swapping stablecoins with lower transaction costs and concerns of slippage. Why is Curve an important point of discussion in the DeFi world right now? The following discussion provides a detailed account of Curve DAO explained with references to how it works. In addition, you can also figure out the special highlights of the DAO token of Curve DeFi protocol.

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Definition of Curve DAO Token

The first thing you need to know right now is the answer to “What is a Curve DAO token?” which can help you understand its significance. Also known as CRV, the native utility token of the Curve DeFi protocol is an important tool for exchanging stablecoins alongside other ERC-20 tokens. The primary goals of Curve DeFi protocol focus on connecting users interested in exchanging stablecoins and ERC-20 tokens through exchange protocols. Interestingly, the Curve DeFi platform is non-custodial, thereby entrusting users as the custodians of their own tokens. 

The design of Curve Finance ensures low transaction fees and slippage through identification of the ideal routes for exchange requests of users. Curve leverages liquidity pools for facilitating the exchanges. Liquidity pools have the support of liquidity tokens and can encourage liquidity providers to deposit tokens in the pools. 

The liquidity can help in maintaining the desired level of prices for transaction costs. At the same time, liquidity providers receive the necessary rewards for depositing their assets in the liquidity pools. Curve CRV is the utility token of the protocol and can help in incentivizing liquidity providers. The token holders can also use it for participating in network governance. 

Working of Curve DAO Token

The next critical highlight in any discussion on Curve DAO CRV would refer to its working. CRV serves as the fuel for the Curve DeFi protocol, which itself serves as an automated market maker and decentralized exchange. AMMs serve a unique variant of trading that allows permissionless and automated exchange of assets. Rather than depending on order books, AMMs can help such protocols conduct trades automatically through different liquidity pools. 

The liquidity providers would receive favorable incentives for creating liquidity pools and depositing tokens in the pools. Every pool features a specific token pair supported in the concerned liquidity pool only. The liquidity pools also feature similar assets for reducing impermanent loss alongside ensuring better possibilities for returns. 

Liquidity pools and Automated Market Makers serve as major answers for how Curve DAO works for the future of DeFi. Most important of all, the protocol helps users find out about different exchange markets to discover the most favorable fee rates. As a result, Curve.fi can ensure that traders can improve their returns by reducing slippage. The frequency of trade on the Curve network by users serves good sign for the overall network. Liquidity providers could receive rewards from a portion of the trading fee paid by users. 

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Founders of Curve DAO Token

The introduction to Curve DAO token must also focus on its founders to figure out the objectives behind designing such platforms. Michael Egorov, a Russian scientist, and cryptocurrency expert, is the founder of the Curve DeFi protocol. He launched the CRV token in 2020, and it has become one of the popular asset pools for exchanging Bitcoin and stablecoins as well as ERC-20 tokens. You can also think of CRV as a blockchain protocol focused on offering a platform for swapping assets. The decentralized trading environment also serves another crucial advantage for users as they can enable flexible trading in different crypto assets. 

The experience of Michael Egorov in the blockchain and cryptocurrency domain is also evident in his role as co-founder of NuCypher. It is a fintech company with a specific focus on encryption and privacy-centric infrastructure and protocols. 

What is Special about Curve DAO?

The discussions on Curve DAO explained in detail would generally draw attention to the specific reasons which make them special. Interestingly, the project has achieved considerably promising improvements in terms of utility. Curve DeFi protocol witnessed substantial growth in 2020 with the assurance of low transaction fees and low slippage. The detailed understanding of how Curve DAO works shows that it is successful on the grounds of technical capacity. 

It is attractive not because it uses liquidity pools but for the AMM operating model. Users could easily figure out the best options for exchanges alongside facilitating exchange of stablecoins and tokens between traders and exchange protocols. The technology and technical capacity can help in exchanging stablecoins and tokens at the ideal rates. In other words, Curve has evolved as the perfect example of the closest thing to decentralized finance. 

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Special Highlights of Curve DAO Token

The introduction to Curve DeFi protocol is incomplete without reflecting on the special highlights of its native token. The Curve DAO CRV token is the utility token for the DeFi protocol. It is basically an ERC-20 token operating on the Curve DEX. CRV basically serves as the governance token on the exchange. In addition, the token is also used for offering rewards to liquidity providers. 

CRV token holders can play a vital role in defining the future direction of the Curve Finance DeFi protocol. Ownership of CRV tokens entitles the holders to voting power regarding the decisions for the Curve DEX protocol. Users locking their CRV tokens could exercise influence on operations of the DEX. For example, they can modify the fee structures or ensure voting for bringing in new yield pools. 

The CRV token holders can also define the existing burning schedules for the token. Therefore, the Curve CRV token is more significant than serving as the utility token of Curve DeFi protocol. You should also note that voting power on the Curve DEX also depends on the length of time for which a user had a CRV token in their ownership. The increasing holding period could help in increasing the voting power, thereby defining CRV as a digital asset. 

Tokenomics of Curve DAO Token

The immediate thing on your mind regarding the Curve DeFi protocol would point to a review of CRV coinmarketcap statistics. You must be eager to know more about the details of how Curve DeFi protocol works right now. CRV does not feature any ICO, and the only metric for its measure is through stake drop. Stake drop or Apy mining are the two methods for mining CRV tokens. A user pre-mined more than 80,000 CRV tokens through a code found on Github of the Curve DAO token. Following a comprehensive review of the code, CRV DAO offered acceptance for the token launch. 

As of now, the total supply of CRV amounts to almost 3 billion tokens. Almost 5% of the tokens would help in issuing addresses to offer liquidity for the decentralized exchange. In addition, the DAO reserves of the project receive around 5% of the tokens. On top of it, the next 3% of the supply has been reserved for employees in Curve decentralized exchange. Subsequently, 30% of the supply of tokens has been reserved for employees in the Curve DeFi protocol. 

Furthermore, you must note that 62% of the remaining tokens are reserved for the CRV future alongside the existing liquidity providers. The Curve DAO CRV would follow an annual reduction of 2.25% in their distribution schedule by ensuring the daily distribution of almost 766,000 CRV tokens. Surprisingly, the process of issuing the remaining CRV tokens at the existing rate might extend for the future 300 years. 

You can find the CRV coin market cap estimate by multiplying the number of coins in circulation with the existing CRV price. The market cap is an essential highlight for ranking the crypto token against its peers alongside determining its suitable market share. 

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Value Drivers for Curve DAO Token

The answers to “What is a Curve DAO token?” also create doubts regarding the long-term potential of the project. The AMM technology and features such as an engaging interface strengthen the popularity of Curve.fi protocol among users. Who would want to avoid the benefit of low slippage and transaction fees in exchanging cryptocurrencies and tokens? 

The utility of Curve token and its role in governance of the DeFi protocol would drive its real-world value. In addition, other crucial factors, including upgrades, upgrades, and increasing adoption, could influence the value of CRV in the future. The growing adoption of DeFi solutions can play a vital role in dramatic changes in the CRV price within a short period. 

Price Analysis for CRV Token

The detailed overview of Curve DAO explained, especially in terms of its value, would point to price analysis for the token. Curve DeFi protocol is obviously a unique decentralized exchange with DAO governance, which sets it apart from other decentralized exchanges. It has evolved as one of the ideal protocols for serving the needs of stablecoin exchanges. 

After the airdrop in 2020, along with a vesting period amounting to 4 years, CRV must stake the complex and time-locked payoffs. How? The total fee accrued by the Curve DeFi protocol resulted in such promising payoffs. In addition, a closer assessment of the Curve CRV protocol can serve a clear impression of the growth in interest. The statistics for the token, such as trading volume and on-chain transactions alongside total value locked or TVL for the protocol, can help in learning more about the price statistics.         

In the initial days following its launch, the trading value of CRV token on Uniswap was almost $1275. During this time, CRV tokens offer a low ratio in the Uniswap pools when compared with other digital assets. On top of it, adding more cryptocurrencies to the asset pool ensured a plummeting drop in the price of CRV. 

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Additional Rewards for Liquidity Providers

The liquidity pools of Curve DeFi protocol serve as the most important highlights. As a popular DEX aggregator, Curve Finance ensures that crypto users can find the ideal exchanges for their needs. At the same time, the protocol also compensates liquidity providers for staking their assets in liquidity pools on the platform. The liquidity pools feature Ethereum-based smart contracts, and majority of the liquidity pools on Curve protocol are supplied to other liquidity protocols like Compound. Liquidity providers can receive additional interest other than the trading fees offered to Curve.fi network. 

The technical design of liquidity pools shows that they are basically smart contracts containing tokens. If you want to create a liquidity pool with two similar tokens, you must maintain a 1:1 ratio in the value of the two tokens. For example, if you have DAI and USDC in a token pair, then the USDC balance would decrease when someone exchanges DAI for USDC in the pool. In such cases, the difference in amount would reduce the value of USDC by a marginal difference in comparison to DAI. As a result, the mechanism would encourage crypto users to exchange USDC in return for DAI, thereby ensuring that the values become even. 

Security of Curve DAO Token Network

The most important aspect in an introduction to Curve DAO explained comprehensively would focus on its security. The DAO governance is an important part of ensuring the security of the DeFi protocol’s network. Most important of all, regular audits of smart contracts used for creating the liquidity pools can help in securing the network and tokens. 

The Curve DAO token operates on the Ethereum network, thereby ensuring a visible transition towards Proof of Stake consensus in the future. Proof of Stake serves the benefits of better cost-effectiveness and energy efficiency in comparison to Proof of Work protocol. In addition, CRV tokens could also be staked alongside locked for voting in order to help holders engage in network governance.

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Bottom Line

The rise of DeFi solutions has been one of the most revolutionary highlights in the crypto space. Curve DeFi protocol is the perfect example of using innovation to address user needs. The functionalities of Curve DAO CRV token as a utility token as well as governance token separate it from other decentralized exchanges. With the unique operating model as a decentralized exchange aggregator, Curve.fi protocol can reach out to more users in the future. 

In addition, the additional opportunities for liquidity providers can also play a crucial role in driving the value of CRV tokens in the future. As of now, Curve relies profoundly on the value proposition of guiding users to the suitable decentralized exchanges offering the best rates. Learn more about Curve.fi protocol and its role in the future of DeFi now.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

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Many people have perceived cryptocurrencies as a viable option for hedging against higher inflation. However, you must also know that cryptocurrencies also qualify as inflationary and deflationary assets. Will they help you combat inflation? The following post might help you find the answer with a detailed overview of inflationary and deflationary cryptocurrencies and the differences between them. 

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What is Inflation vs Deflation?

One of the first aspects of a discussion about inflationary vs deflationary crypto would focus on the difference between inflation and deflation. Both the terms might seem to have jumped out of an accountant’s handbook for any cryptocurrency beginner. Inflation points to a growth in prices of products and services when excess currency is in circulation, thereby causing the currency to lose value. 

On the other hand, deflation points to growth in the value of a currency along with the relevant drop in pricing of products and services. It is important to note that deflation is the consequence of limited currency in circulation. Inflation is good to an extent as it empowers the economy by driving people to spend more. On the other hand, inflation can turn into a serious issue when the prices grow faster in comparison to salaries.

Did you notice the common element in the difference between inflation and deflation? The answer is the supply of the currency. Fiat currencies are generally inflationary as it is possible to increase their supply according to your will. Since the overall economic activity remains constant in any situation, the value of a single unit of the currency drops. Deflation implies the reduction of demand and increase in supply, which can lead to higher purchasing power of the fiat currency. How does the concept of inflation and deflation fit in the domain of cryptocurrencies?

Inflationary Cryptocurrencies

As the world turns towards cryptocurrencies as a hedge against inflation, it is important to learn more about inflationary and deflationary cryptocurrency alternatives. The concepts of inflation and deflation are also applicable for cryptocurrencies as they are governed by the laws of supply and demand. 

An inflationary cryptocurrency is one with an increasing number of tokens in circulation. Some of the common approaches for introducing new tokens through mining, staking, and other methods can help in increasing the circulating supply of tokens. The increasing supply of the token would cause a drop in its value. As a result, users have to spend more tokens for purchasing a specific product, asset, or item. 

Dogecoin is the best example of inflationary cryptocurrencies in an inflationary vs deflationary cryptocurrencies debate. One of the creators of Dogecoin removed the hard supply cap of 100 billion DOGE in the year 2014. The move was particularly directed towards ensuring an unlimited supply of the asset. Subsequently, the supply of the token could easily outpace demand, thereby decreasing the value of all Dogecoin tokens. 

On the other hand, you can also identify other inflationary assets, such as Bitcoin, which feature inflation only to a specific limit. How can a cryptocurrency be a limited inflationary asset? The total circulating supply of Bitcoin is 21 million, thereby implying that there could be 21 million Bitcoins ever in circulation. Once the supply limit runs out, Bitcoin mining would disappear, thereby turning Bitcoin into a deflationary cryptocurrency. 

Interestingly, Bitcoin has employed an innovative mechanism for slowing down inflation by halving it. Period every four years, Bitcoin network reduces the number of Bitcoins that can be mined and entered into circulation. Some of you might be wondering about the fact that 19 million Bitcoins are already in circulation, thereby leaving little time for mining the rest. 

On the contrary, the gradually dropping rewards for mining would suggest that the 21 million mark might be years away. Bitcoin treads the thin line between inflationary and deflationary cryptocurrency with a considerable reduction in mining rewards. For example, the mining reward in 2016 amounted to almost 12.50 Bitcoins. In 2020, the rewards dropped to almost 6.25 Bitcoin and would round up to 3.125 BTC in 2024. Halving is an effective mechanism for reducing the number of cryptocurrency tokens in circulation. 

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Deflationary Cryptocurrencies

Deflationary cryptocurrencies are the ones where the supply of coins would decrease over the course of time. Therefore, the value of every coin would increase even in scenarios with consistent demand. On the other hand, different projects use unique deflationary initiatives for specific objectives. A detailed understanding of deflationary cryptocurrencies is an important requirement to learn the difference between inflationary and deflationary cryptocurrency alternatives in the market. 

One of the examples of showcasing deflationary cryptocurrencies refers to the crypto exchange Binance. The crypto exchange destroys a few of its native Binance Coins or BNBs to reduce the supply every quarter. Similarly, the crypto exchange Polygon also burns its native MATIC tokens to reduce supply of the token. 

In addition, you must also learn about the examples of cryptocurrencies that serve as central banks. Such cryptocurrencies use inflationary as well as deflationary methods for maintaining the value of the token. The best example of such a deflationary cryptocurrency refers to the TerraUSD or UST stablecoin. The TerraUSD network, or Terra Network, mints and destroys its tokens to maintain the price of the stablecoin constant at $1. 

Your understanding of inflationary vs deflationary crypto would also focus on the understanding of Ethereum as a deflationary cryptocurrency. The native token of Ethereum, i.e., Ether, was a completely inflationary asset at one point in time. On the other hand, Ethereum introduced an update in August 2021 to make Ether deflationary during rising in network activity. The update introduced a clause for burning ETH to reduce supply. According to the reports of a tracking website, over 1.7 million Ether coins amounting to more than $4.5 billion have been destroyed. 

The example of Ripple also shows a different approach for making its native token, XRP, a deflationary cryptocurrency. Ripple released 100 billion XRP tokens at once and locked away around 55 million tokens in 2017. The locked tokens would be released on a periodic basis to maintain liquidity. In addition, users have to pay a small transaction fee with every transaction featuring XRP. The Ripple network also burns the transaction fee for maintaining the deflationary nature of its XRP token. 

Factors behind Economics of Inflationary and Deflationary Crypto

The economic implications associated with inflation and deflation of fiat currencies can be quite confusing. However, the inflationary vs deflationary cryptocurrencies comparison presents a more straightforward interpretation of both concepts. Inflationary cryptocurrencies feature a system that enables a continuous growth in the number of tokens in supply. 

On the other hand, deflationary cryptocurrencies feature a system with tokens in supply reducing gradually over time. The deflationary mechanisms can include periodic burnout of tokens or lowered minting rewards. How do you differentiate an inflationary cryptocurrency from a deflationary cryptocurrency? Here are the three important factors for the economics underlying inflationary and deflationary cryptocurrencies. 

• Maximum Supply

Some cryptocurrencies have set a hard cap on the number of tokens they can ever put in circulation. The best example of a cryptocurrency with a maximum supply limit is Bitcoin, with its 21 million BTC mark. 

• Circulating Supply 

The most important factor of difference between inflationary and deflationary cryptocurrency refers to the token’s circulating supply. Circulating supply refers to the total number of cryptocurrencies associated with a specific blockchain moving around on the chain. 

• Total Supply 

The total supply refers to the total supply of tokens defined for a specific cryptocurrency token. It may also point to the number of tokens mined till now on the blockchain network, thereby creating similarities with the description of circulating supply. 

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Basis for Inflationary and Deflationary Cryptocurrencies Comparison

The most critical highlight in a comparison between inflationary and deflationary cryptocurrency draws attention to demand and supply pertaining to a specific cryptocurrency. A better understanding of tokenomics pertaining to inflationary and deflationary cryptocurrencies can set the ideal foundation for comparing them. The important factors in the tokenomics of a specific cryptocurrency include overall production, distribution, and quality of a cryptocurrency token. 

The tokenomics of a cryptocurrency are generally outlined in the whitepaper of the concerning blockchain. You can use the whitepaper of a blockchain to identify whether the native token offers an unlimited and gradually increasing supply or a restricted and gradually dropping supply. The cryptocurrencies with a fixed supply, such as Bitcoin, Binance Coin, Ripple, and Cardano, can showcase a reduction in supply alongside driving higher demand. As a result, these cryptocurrencies can gain value improvements over the course of time.  

Can the whitepaper help you identify the difference between inflationary and deflationary cryptocurrency? First of all, you need to discard the common beliefs regarding inflationary cryptocurrencies. Some of the inflationary cryptocurrencies with unlimited supply, such as Ethereum and Dogecoin, are not as bad as people imagine. 

They might be serving lower demand and higher supply now. However, one should understand how the crypto ecosystems don’t fall prey to economic downturns like the fiat currencies. Irrespective of an unlimited supply, an inflationary asset would never affect the long-term picture of demand and supply. 

Take the example of Ethereum, which does not have any hard cap. Irrespective of the hard cap, Ethereum blockchain allows only a specific amount of ETH to be mined every year. Assume that the existing ETH supply has a market capitalization of almost 100 million, then users can mine only 18 million ETH every year. In this case, the inflation rate would be 18%. With continuous growth in market cap of ETH over the course of time, the inflation rate would reduce gradually. 

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Inflationary vs Deflationary Cryptocurrency Comparison

The general action of investors might turn towards deflationary cryptocurrencies over the inflationary crypto assets. However, you can notice how inflationary cryptocurrencies can also bring plausible benefits alongside working on new mechanisms for reducing inflation. For now, the inflationary vs deflationary crypto debate ultimately rounds up on one plausible observation. 

The observation suggests that inflationary and deflationary cryptocurrencies have their unique advantages and drawbacks. For example, inflationary cryptocurrencies can cause scenarios where demand overpowers supply. At the same time, they are also essential for continuing the mining process without any interruptions. On the other hand, deflationary cryptocurrencies can help you capitalize on the benefits of a price surge, an important value benefit for investors. 

Here is an overview of the comparison between inflationary and deflationary cryptocurrencies on the basis of different factors.

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• Supply 

The obvious aspect in the overview of inflationary vs deflationary cryptocurrencies points at supply. As a matter of fact, the difference between inflationary and deflationary cryptocurrencies is all about the change in supply of the native token. In the case of an inflationary cryptocurrency, you have an increased supply of the token in circulation. On the other hand, a deflationary cryptocurrency is one that offers a reduced supply of cryptocurrencies. 

• Purchasing Power

The purchasing power of inflationary and deflationary cryptocurrency also serves as one of the basic pointers in their comparison. One of the evident observations about an inflationary cryptocurrency would refer to the lower purchasing power. When the number of tokens of a specific cryptocurrency has increased in circulation, it loses its value. On the other hand, the deflationary cryptocurrency would gain value due to the limited supply. The reduced supply alongside the consistent demand can support growth in pricing of the deflationary cryptocurrency. 

• Conversion

The flexibility for conversion of inflationary to deflationary assets is also another important aspect in the comparison between the two types of cryptocurrencies. Inflationary cryptocurrencies are inherently inflationary, which means that they come with an unlimited supply. On the other hand, the inflationary vs deflationary crypto debate must focus on how inflationary cryptocurrencies can turn into deflationary cryptocurrencies temporarily.

Inflationary cryptocurrencies can impose deflationary mechanisms for fighting inflation in certain cases. For example, Ethereum, which has an inflationary cryptocurrency ETH, burns a specific share of the tokens at times of high activity. However, deflationary cryptocurrencies are deflationary by nature and could not be created according to will. The specific examples of deflationary cryptocurrencies show how they use distinct mechanisms or restrictions to restrict the supply of tokens in circulation.

• Value

One of the significant highlights in a comparison between inflationary and deflationary cryptocurrencies would also refer to their value. How are inflationary and deflationary cryptocurrencies different in terms of their value for crypto in general? The difference between inflationary and deflationary cryptocurrency would show you that deflationary cryptocurrencies would increase in value over the course of time owing to scarcity. 

On the other hand, it is important to note that demand also plays a critical role in driving the value of deflationary cryptocurrencies. Without any demand, the value of an asset would decrease considerably, contrary to the general expectations. When you consider the value of inflationary cryptocurrencies, you might not fetch much with them right now. However, the value of intrinsic cryptocurrencies rests in diverse use cases, such as the popular example of Ether for DeFi applications.   

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Final Words

The inflationary vs deflationary cryptocurrencies debate offers interesting insights into the world of cryptocurrencies. Even the crypto landscape is not immune to the clauses of inflation and deflation, owing to the factors of demand and supply. The differences between inflationary and deflationary cryptocurrencies basically reflect the fact that supply of a cryptocurrency determines its value and purchasing power. 

However, you must notice mechanisms for converting inflationary cryptocurrencies into deflationary cryptocurrencies through burning tokens or fixing caps on circulating supply. The differences between inflationary and deflationary cryptocurrencies are essential for every investor interested in cryptocurrencies. At the same time, it is also important to learn every risk factor associated with cryptocurrencies in detail. 

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post Inflationary vs. Deflationary Cryptocurrencies- Key Differences appeared first on 101 Blockchains.

Crypto enthusiasts jumped on the NFT bandwagon immediately and have explored many promising value advantages. However, beginners must know how to transfer NFT to another wallet to ensure that they can ensure safer storage of their NFTs. It would also help NFT investors take better control over what they want to do with their digital assets. The following post offers an outline of the best practices for transferring NFTs to another wallet.

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Methods for Transferring NFTs to Other Wallets

NFT owners must know about the option of NFT transfer to wallet of their choice for different reasons. For example, some NFT owners may want to transfer their NFTs to another wallet for trading purposes. On the other hand, you can also seek to transfer an NFT to another crypto wallet by exchanging it in return for another asset. 

Interestingly, you can find different methods to transfer NFT to wallet of your choice, depending on the sending and receiving wallet. In some cases, you must also know the methods for transferring NFTs from marketplaces to your crypto wallets. Here is an outline of the different scenarios for transferring NFTs to different wallets, with unique sender and recipient wallets.

Sending NFTs to another Wallet

The first and most common scenario for any NFT owner would be to send NFTs to another wallet from their wallet. Crypto wallets such as the Phantom Wallet by Solana and the popular Metamask wallet are quite popular choices for holding NFTs. Before you seek the individual methods for transferring NFTs, you must know the general steps for moving NFTs from one crypto wallet to the other. Here are the simple steps which show how to transfer NFT to another wallet, regardless of the choice of marketplace or wallet. 

• Access the NFTs tab in your crypto wallet and choose the NFT you want to transfer.
• Select the “Send” option and provide the public address or the ENS of the recipient. 
• Provide confirmation for the transaction. 

All these three steps are a common highlight in NFT transfer to wallet of your choice. The steps can help in ensuring safe transfer of NFTs to the recipient wallet you want. However, it is important to identify the most critical factor in ensuring a successful NFT transfer process, the recipient’s address. 

Before you confirm an NFT transfer transaction, you must check the public wallet address of the recipient. A small mistake in the recipient wallet address can send your valuable NFT to the wrong wallet permanently, with no chance of recovery. Therefore, you should be careful and double-check the public wallet address of the recipient before transferring NFTs to the concerned recipient.

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Notable Use Cases of NFT Transfer to Wallets

The common method to transfer NFT to wallet of your choice can feature slight variations in the different use cases. How can you define use cases for transferring NFT between wallets? The best answer to the question would reflect on sending NFTs from popular NFT marketplaces to the popular crypto wallets. As of now, the most renowned wallets for NFT holders are Metamask and Phantom Wallet. 

You need to find out how NFT transfer works for these wallets. At the same time, it is also important to reflect on the best practices for transferring NFTs between two different wallets. On top of it, you might also want to learn about the steps for transferring NFTs from marketplaces to hardware wallets. Here is an outline of some of the top practical methods for NFT transfer to different wallets. 

Transferring NFT to Metamask from OpenSea

OpenSea is the biggest and most popular NFT marketplace right now. If you want to know how to transfer NFT from OpenSea to Metamask, you can use the following steps.

• Sign in to the OpenSea NFT marketplace with your account credentials and browse the NFTs in your collection.
• Select the NFT you want to transfer.
• Enter the public wallet address where you want to send the NFT. You have to provide the Metamask public wallet address in this section. 
• Provide confirmation for payment of fees to ensure the NFT transfer process. You can do so by selecting the “Confirm” option, and OpenSea marketplace will transfer NFT to wallet immediately. Remember that the transfer process proceeds only after fee payment. 

Transferring NFTs to Phantom Wallet

Another popular choice of crypto wallets among NFT owners points at the Phantom Wallet by Solana. The Phantom Wallet has been tailored for assets that exhibit compatibility with Solana blockchain. Here are the steps for sending an NFT to the Phantom Wallet without any complexities.

• Access the Phantom Wallet with your credentials and select the “NFT Collectibles” option. 
• Choose the NFT you want to send to a Phantom wallet address. 
• In the next step, enter the public wallet address of the recipient Phantom Wallet user to confirm the NFT transfer process. 
• The NFT transfer process would also require a network fee. You can confirm your affirmation for paying the network fee by selecting the “Send” option. 

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Transferring NFT to Metamask from Binance 

The practical methods for transferring NFT from marketplaces to popular wallets are not the only benchmarks for NFT transfer between wallets. The answers for how to transfer NFT from OpenSea to Metamask or to the Phantom Wallet offer a generalized idea of the process. In addition, you need to learn about transferring NFTs from one wallet to another. Let us take the example of transferring NFTs from Binance to Metamask wallet with the following steps. 

• Sign in to your Binance NFT account with the credentials through User Center. 
• Choose the NFTs for transfer. You can select the token ID of the NFT if you want to transfer multiple NFTs from a single collection. The product page can help you find the token ID when you click on the NFT. 
• Review the NFT’s network and provide the transfer fees in the native currency of the network from your wallet. The prices for transfers can vary considerably according to the extent to which the network is busy. 
• Enter the public Metamask wallet address to which you want to transfer the NFT and click on Send. 

You can find the NFT in the new Metamask wallet, with the transfer taking only about a few minutes. 

Transferring NFTs from OpenSea to Ledger

The discussion on transferring NFTs between wallets generally rounds up on sending an NFT to the Phantom Wallet or Metamask. On the other hand, you must also identify the steps for transferring your NFTs from an NFT marketplace to a hardware wallet. Here are the simple steps for transferring NFTs from the OpenSea NFT marketplace to a Ledger hardware wallet. 

• Confirm that the Ledger hardware wallet device features an updated version of Ethereum app. In addition, you must also verify whether blind signing is active on the device. 
• Access the OpenSea marketplace and connect your Ledger hardware wallet by using Metamask.
• Open the Metamask browser extension with your credentials for accessing your Ledger Metamask account. 
• Now, choose Metamask from the wallet on the OpenSea website you can find in the Metamask window itself. 
• All you have to do is connect the Ledger Metamask account with OpenSea. Metamask helps in effective integration of OpenSea with your Ledger Ethereum account. 
• Access the OpenSea website and select Profile option, where you can find the Ledger NFT collection and the transferred NFTs.

Important Concerns while Transferring NFTs between Wallets

The simple methods to send NFTs to another wallet make it easier for anyone to deal with NFTs. However, you must be careful of certain risks during the process of transferring NFTs between wallets. First of all, you should never disclose your secret recovery phrase to any individual. In addition, you must be careful about the correctness of the public wallet address of the recipient in NFT transfer transactions. Most important of all, remember to wait for confirmation of payment before transferring an NFT to another wallet. 

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Final Words

The different answers for NFT transfer to wallet of your choice serve practical and effective solutions for moving NFTs. Non-fungible tokens are an interesting class of assets, and their adoption depends prominently on how easy they are to use. In such cases, transferring NFTs between wallets becomes more than just a necessary practice for every NFT owner. 

The present trends in technology focus more on web3 and how it can transform the future. Since NFTs serve an integral role in the emerging web3 ecosystems, it is important to learn about them and achieve a competitive edge. Most important of all, the value associated with NFTs calls for an emphasis on the best practices for transferring them between wallets. Keep exploring to learn more about NFTs and their practical implications.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post How to Transfer NFTs To Another Wallet appeared first on 101 Blockchains.

At this point in time, the discussions on total value locked in DeFi would draw references to the rise of NFTs, DeFi, and other decentralized solutions. What is the significance of total value locked in the emerging world of decentralized finance? The following post offers a detailed explanation of total value locked and its importance, as well as the methods for calculating TVL. 

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What is Total Value Locked?

The first thing you must note in a discussion on Total Value Locked or TVL in the domain of DeFi focuses on its definition. TVL basically denotes the total value of the assets staked in the smart contracts of a DeFi platform. It works as an indicator of the funds available throughout different DeFi platforms for transactional, borrowing, and lending capacities. You can estimate the TVL for DeFi industry by evaluating the sum of the total value locked in all the DeFi apps. The TVL associated with a DeFi app showcases a promising indicator of its effectiveness in garnering attention from monthly active users for different transactions. 

You must have another notable confusion regarding total value locked in DeFi, especially with respect to market capitalization. It is important to note that TVL is a specific indicator for DeFi projects only. On the other hand, market capitalization is an indicator of market value for any blockchain-based platform issuing its own tokens. Most important of all, the TVL value in DeFi differs from one platform to the other. 

At the same time, it is also one of the critical metrics for DeFi platforms associated with swapping and lending. Why? The importance of TVL in DeFi becomes quite clear with the ability to direct influence usability and returns from DeFi applications for end-users. DeFi applications generally seek a higher TVL value for drawing in more users. How? Higher TVL suggests the capabilities of the DeFi platform for efficient swaps alongside desired supply of liquidity in lending markets. 

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Existing State of Total Value Locked in DeFi

Before you dive deeper into questions like “How important is TVL?” you need to check the existing state of TVL. Decentralized finance, or DeFi, skyrocketed to popularity in 2020, with many new solutions evolving as new forms of investment. DeFi assets are generally associated with interest and rewards from the services like staking, liquidity pools, and lending, available as smart contracts. For example, TVL could show investors whether it is reasonable to stake their assets in the concerned DeFi platform. 

As of now, the TVL in DeFi amounts to almost $172 billion throughout different DeFi applications worldwide. The growth of TVL in the domain of DeFi has been phenomenal, considering the fact that TVL amounted to around $400 million two years ago. One of the biggest phases of growth in the TVL for decentralized finance happened between 2020 and 2021. The most popular protocol accounting for a major share in the total value locked for the DeFi sector is MakerDAO. In addition, many other popular protocols such as Aave and Curve also contribute to the growth in TVL for the domain of decentralized finance.

Significance of TVL for DeFi

The importance of TVL in DeFi is an integral highlight for the growth of the overall DeFi landscape. DeFi platforms need capital in the form of liquidity or collateral in the trading pools. The total value locked in a specific DeFi platform is not only an indicator of the value of assets in the protocol but also its appeal to users. 

A better TVL is an obvious indicator of effective usability for investors and traders. The growth in TVL for a particular DeFi protocol brings about plausible improvements in usability, liquidity, and popularity for the platform. All of these factors can result in credible chances for success of the DeFi project. 

Higher TVL indicates that a DeFi protocol has more capital locked in the platform. As a result, users could capitalize on a wide range of benefits and better yield. On the contrary, a lower TVL obviously implies a lack of capital, which ultimately translates to lower yields for users. The answer to “How important is TVL?” ultimately rounds up how it is better than the market capitalization estimate. 

First of all, you must have figured out how the total value locked for a DeFi platform serves as a credible indicator of its performance. It serves as an effective and simple metric for evaluating the popularity of a project by identifying an estimate of the number of monthly active users. Therefore, you cannot deny the significance of total value locked in DeFi for finding out the robustness of a project. 

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Difference between TVL and Market Capitalization

You might wonder about market capitalization as an indicator of a project’s performance. However, market capitalization of a DeFi protocol basically showcases the support for a protocol by active alongside passive investors. On the contrary, the total value locked serves as a clear indicator of performance of a protocol in the DeFi domain. 

Passive investors might not use the protocol itself and must have invested in the protocol for favorable returns at a later stage. Passive investors purchase the tokens of protocols in anticipation of appreciation in price of the tokens, thereby facilitating growth in market capitalization. However, total value locked or TVL showcases the actual usability of the platform with investors.

Can you ignore the market capitalization of DeFi projects as an indicator of their value? Market capitalization offers an impression of the future potential of a specific DeFi protocol. On the other hand, total value locked in a decentralized finance project showcases how the protocol is performing now. 

Where Can I Find the Total Value Locked for a DeFi Protocol?

The analytics firm platforms such as DeFi Pulse and DeFi Llama can help you find the TVL for a specific decentralized finance protocol. These platforms provide a detailed display of the total value locked in DeFi protocols worldwide. You can easily identify the DeFi protocols with the highest volume of crypto assets staked in the platforms. Interestingly, the two different analytics firms use distinct ways of monitoring the TVL of decentralized finance protocols. 

DeFi users must know that DeFi Pulse tracks the smart contract transactions of the DeFi protocol on the Ethereum blockchain. It figures out the TVL value by using the total balance of ERC-20 tokens and Ether in the protocol. On the other hand, DeFi Llama utilizes a different method for calculating the TVL. DeFi Llama takes the combined balance of all DeFi chains or every individual platform distinctively for calculating TVL.

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How to Calculate Total Value Locked in Decentralized Finance?

The continuous arrival of new DeFi protocols has emerged as one of the challenges for evaluating TVL in DeFi protocols. It is difficult for aspiring users to figure out the exact estimate of total value locked for the overall market. You can also face difficulties in determining which DeFi protocol would be a safe choice right now. For starters, users can look for the popular protocols with TVL amounting to almost $1 billion. 

Higher TVL is an obvious indicator of the high demand for the DeFi protocol, alongside suggestions that the protocol offers valuable use cases and has the backing of a strong developer team. On the other hand, DeFi projects with lower TVL must come under scrutiny if they offer higher yields. For example, such instances might be promotional scams where new DeFi platforms want to gain trust and market shares. 

The importance of TVL in DeFi serves a clear impression of the necessity to come up with a TVL estimate for DeFi projects immediately. However, it is also important to know how to calculate the total value locked for a decentralized finance protocol. What are the important factors which help you calculate the TVL for a decentralized finance protocol? The three critical aspects in determining the total value locked for a DeFi protocol include, 

• The existing supply of the DeFi protocol
• Maximum circulating supply of the DeFi protocol
• Existing price of the DeFi protocol

You don’t have to go through complicated steps to determine TVL in DeFi protocols. The process begins by identifying the market capitalization of the DeFi project by multiplying the supply of the DeFi project with its existing price. In the next step, you must divide the market capitalization by the maximum circulating supply of the protocol for finding out the TVL. Division of the total market capitalization of a locked asset by the TVL estimate can provide a clear impression of the TVL ratio. 

If you are still wondering about “how important is TVL?” you must notify the significance of the TVL ratio. The TVL ratio is an important indicator of whether a particular DeFi asset is overvalued or undervalued. For example, if the ratio falls lower than 1, the asset is undervalued and better suited to investors. On the other hand, an asset could be overvalued if the market cap crosses beyond the TVL estimate. 

Highest TVL in DeFi Landscape

Since total value locked is specific to the DeFi landscape, it is important to look for the best project with highest TVL. Somewhere around the beginning of 2020, the total value locked in DeFi platforms amounted to almost $630 million. Interestingly, MakerDAO was one of the first protocols which led the tables in terms of DeFi TVL estimates. 

As of now, new protocols such as Aave and Curve have also entered the market and surpassed the previous leaders. For example, Curve has a total TVL of almost $17 billion, while MakerDAO has a TVL of $11.5 billion. Other popular DeFi protocols with a high TVL estimate include Lido and Anchor. Lido has a TVL estimate of $15.4 billion, while Anchor sits with a $12.6 billion TVL. 

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Final Words

The Ethereum network is the leading force of DeFi applications and is the biggest network in terms of DeFi TVL. However, you should note that the DeFi landscape is constantly evolving with the introduction of new protocols and solutions. The leaders of yesterday have paved the road for new competitors in terms of TVL based on their valuable use cases. 

The importance of TVL in DeFi becomes clear on the grounds of its role in showcasing the immediate potential of a DeFi protocol. As a result, it turns out to be a better indicator than the market cap of a specific DeFi project. It not only guides investors regarding the actual value of new or existing DeFi protocols but also paves the road to easier DeFi adoption. Learn more about TVL and how it plays out in the broader decentralized finance landscape.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post Importance of TVL (Total Value Locked) in DeFi appeared first on 101 Blockchains.

The benefits of stablecoins can help users capitalize on the perks associated with different decentralized payment alternatives. The following post offers you a detailed introduction to USD Coin explained in simple terms with a focus on its origins and how it works. You can also learn about the potential use cases and the benefits and limitations of the USD Coin in the following discussion.

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The Need for Stablecoins

Popular cryptocurrencies such as Bitcoin and Ether take up all the attention in the crypto space. Both the coins account for a total of 60.6% market share in the domain of crypto, thereby proving their dominance. On the other hand, many new blockchain projects and cryptocurrencies have been gradually evolving for a large-scale transformation in finance. 

However, price volatility in crypto makes them a risky asset for investors. Stablecoins evolved as an important class of digital assets with price stability, which can help in countering the massive value fluctuations in cryptocurrencies. Before you dive into details of the USDC Coin, you must learn the essential benefits of stablecoins. 

Stablecoins help in safeguarding your capital and profits in deflationary periods. Most important of all, stablecoins allow users to transfer funds without leaving the crypto ecosystem as they don’t need conversions to fiat currency. Therefore, stablecoins can also provide a viable solution for unregulated exchanges which don’t facilitate conversion to fiat currency. In addition, stablecoins present a cost-efficient and faster alternative when compared to fiat money. 

What is USD Coin?

The foremost highlight in any discussion on USDC would focus on what is USD Coin and how it works. US Dollar Coin or USDC is a stablecoin with a 1:1 pegging ratio against the actual US Dollar. In simple words, one US Dollar Coin or USDC is equal to one actual US Dollar. It can offer considerable stability in the market. Although designed initially as an ERC-20 token, the USD Coin has expanded effortlessly into the Solana and Algorand blockchain networks. Why did the creators of USDC think of such a stablecoin, and who were they?

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Reasons for Creating USDC

The introduction to USD Coin or USDC is incomplete without reflecting on the reasons for introducing the stablecoin. Was USD Coin developed with the sole objective of dealing with price volatility? As a matter of fact, the underlying reasons behind creating USDC also focus on the sophistication of systems alongside the volatility in cryptocurrency market. The sudden changes in asset prices can be quite challenging for new investors. On the other hand, stablecoins such as USDC can offer a credible store of value alongside avoiding the volatility evident in cryptocurrencies. 

In addition, the outline of USD Coin explained in detail also showcases another important reason for coming up with USDC. Generally, the UI and features offered by cryptocurrencies can be complicated for new investors. Unless you are a technically skilled user, you are more likely to encounter confusion in using cryptocurrencies. USDC was created for an easier onboarding process to help users familiarize with cryptocurrencies easily. 

Origins of US Dollar Coin

Another important highlight in the discussion what is USD Coin draws the limelight toward the creators of the stablecoin. The founder of USDC, Circle, launched the stablecoin in September 2018 with the support of the crypto exchange, Coinbase. Another notable partner of Circle in creating USDC is Bitmain, which helped Circle in garnering a $110 million initial investment.

Now, the governance of USDC depends on the CENTRE consortium, including Coinbase and Circle. Another remarkable highlight regarding USD Coin points to the fact that it was the first stablecoin listed on the Coinbase crypto exchange. Subsequently, another notable exchange, Binance, added USDC to its listing. 

The popularity of USDC or USD Coin increased by huge margins after its availability for trading in more than 80 countries. Many people used stablecoin as a viable hedge against fiat currencies. At the same time, DeFi solutions have also led to massive growth in the demand for US Dollar coins. As of now, the circulating supply of USDC has crossed 9 billion, with a promising future revolving around evolution of infrastructures pertaining to permissionless decentralized protocols. 

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Working of USD Coin

The overview of the definition and background of USD Coin serves a credible impression of one of the most popular stablecoins. However, it is also important to look for answers to “how does USDC work” to figure out its special highlights. On the other hand, you must find out the answer from a technical perspective. 

The first highlight in the working of USD Coin refers to the creation of a USDC token upon depositing a dollar. Therefore, the USDC coin of a user is permanently burned for maintaining a consistent 1:1 pegging ratio. Another important aspect in ensuring the working of USDC stablecoin would point to the necessity of transparency and trust. Therefore, the CENTRE consortium delivers routine updates to ensure consistency in the 1:1 ratio. 

It is important to note that the USD Coin has been based on the ERC-20 standard with a tokenization process. The notable steps in the tokenization process are, 

• Users have to apply for the KYC verification process. 
• Upon completing the KYC verification process, users would receive a particular bank account for a wire transfer. 
• The party issuing the USDC would leverage a smart contract for creating the USD Coin or USDC amount for the corresponding amount of dollars transferred by the user.
• The user would receive the USDC coin in their wallet, and the dollars transferred by them would go into the reserve. 

What happens during the redeeming process? If customers want to convert their stablecoins into USD, then the reverse tokenization process comes into play. You can send a petition to the person, agency, or platform issuing USDC, and the smart contract would come into play for the conversion process.

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Special Highlights of US Dollar Coin

The answers to “how does USDC work” serve a clear impression of how it is one of the best stablecoins. However, the USD Coin is not the first or the most popular stablecoin backed by the US Dollar. Tether is one of the prominent competitors of the USDC stablecoin and has been around for quite a long time. On the other hand, Tether is currently under intense levels of scrutiny regarding the authenticity of its finances. Tether had claimed that they had a real dollar in the bank backing every Tether token in circulation. 

Unfortunately, an ongoing investigation has proved that the claim is false. As a result, alternatives among US Dollar-backed stablecoins such as True USD, the US Dollar Coin, and Gemini Dollar have taken a center stage now. These alternatives come with the assurance of better transparency in the auditing and funding processes. The features of USD Coin explained in detail can offer credible advantages for revising the way you perceive stablecoins. Here are some of the special highlights which separate USD Coin from the other stablecoins available now. 

• Regulations 

The first special highlight you can find with USDC stablecoin draws attention to the parent company, i.e., Circle. As a financial services firm, Circle is a registered company in the United States. Therefore, it falls under the ambit of the US Government’s Financial Crimes Enforcement Network or FinCEN, which focuses on fighting off money laundering. 

• Speed

One of the common highlights in ‘what is USD Coin’ focuses on the speed of transactions. Generally, you would have to wait for a long time when you want to send US Dollars to other people and institutions. Why? You have centralized institutions such as banks, and their complicated procedures slow down your transactions. On the contrary, USDC can offer the stability of US Dollar while ensuring faster speed of transactions, just like in cryptocurrencies. 

• Audits

Another special highlight of the USDC Coin refers to the facility for auditing. One of the most popular accounting firms, Grant Thornton, carries out audits on USDC, thereby ensuring its credibility. 

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Use Cases for USDC Stablecoin

The identity of USDC as a stablecoin and its unique features show what it is capable of. It serves as a stable digital asset, which you can use in different unique ways when compared with other cryptocurrencies. Here are some of the notable use cases of US Dollar Coin, which would gain momentum in the future. 

• Simpler Accessibility of Crypto Markets

You can capitalize on the essence of ‘how does USDC work’ to ensure easier access to the domain of cryptocurrencies. USDC helps you purchase, sell and exchange funds without leaving the cryptocurrency ecosystem at any point. Rather than following the burdensome task of converting your cryptocurrencies into fiat currency, you can exchange your crypto assets for USDC. Interestingly, almost every big cryptocurrency exchange accepts USDC stablecoin. Whether you choose a centralized or decentralized exchange, you have multiple options for managing your crypto assets. 

• Crypto Payments

The next striking use case of USD Coin or USDC refers to the domain of crypto payments. USDC can serve the ideal traits required for enabling crypto payments. For example, crypto payments in USDC can work as a great choice for paying employees. On top of it, you can also notice news about startup employees and professional athletes working on negotiations for crypto payments. 

As of now, Bitcoin and Ether seem to have the upper hand in the crypto world, albeit with the limitation of price volatility. Therefore, it is practically impossible to consider such assets for regular crypto payments. On the contrary, the USD stablecoin can help safeguard recipients against the concerns of price volatility. Furthermore, users can leverage their USDC to obtain cryptocurrencies or assets of their choice.

• Governance

The use cases of USD Coin explained in detail would also focus on how it aids governance. USDC, along with many other stablecoins, have found many use cases in governance policies. As a matter of fact, USDC enables easier transfer of relief funds because of the ability to transfer to internet-connected businesses and individuals. 

USDC stablecoin also provides the basis for international donations alongside moving the roadblocks associated with cross-border bank transfers. The functionalities of USD Coin can also help citizens of countries afflicted with high inflation rates with exposure to the US Dollar. 

• Cross-Border Payments

Speaking of exposure to the US Dollar, the outline of “how does USDC work” must also reflect on the ease of cross-border payments. Traditional approaches for transferring local fiat currency to businesses and individuals in other parts of the world can be costly. On top of it, cross-border payments can be quite time-intensive alongside impose considerable levels of inconvenience. 

For example, the payment process can take a few days and demand hefty transaction fees. On the other hand, a reliable solution like the USDC stablecoin can serve as an effective solution for cross-border payments. USD Coin can help in making cross-border payments or remittances easily to any individual with a cryptocurrency wallet. Most important of all, the USDC stablecoin facilitates all these advantages at only a fraction of the total cost of bank payments. 

• Access to DeFi

The most striking highlight among use cases of USDC would refer to the opportunity for accessing DeFi solutions. USD Coin can work as ideal leverage for capitalizing on the features of DeFi applications for lending your crypto assets. For example, lending USDC could help you earn more in comparison to traditional savings accounts. On top of it, the US Dollar Coin also offers the flexibility for investing your funds rather than locking them up in one account.

Limitations of US Dollar Coin

The details of the introduction to USDC Coin showcase an impression of the benefits they can offer. For example, you can notice the evident benefit of safeguards against price volatility in crypto. Similarly, the easy-to-use UI and features of USDC make it easier for almost everyone to use stablecoin. 

However, you would also come across a few limitations with US Dollar Coin, such as the competition among stablecoins. Popular alternatives such as Tether still dominate the stablecoin market, thereby creating setbacks in adoption of USDC. Furthermore, the price stability of USDC stablecoin creates problems in price appreciation.

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Bottom Line

The introductory insights on USD Coin or USDC deliver a comprehensive explanation of one of the most popular stablecoins. With the primary objective of offering price stability, USDC can serve a broad range of functionalities. It features special highlights such as regulations and audits, which increase trust in the USDC stablecoin. On top of it, the use cases of USDC extend beyond cross-border payments, crypto payments, and access to DeFi services. 

You must also notify the possible use cases of the US Dollar Coin in governance, particularly for transferring relief aid. As the world of decentralized applications matures, businesses, governments, and crypto users can seek new value advantages with stablecoins. Explore to learn more about US Dollar Coin and its practical implications in the broader crypto landscape.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post All You Need to Know About USD Coin (USDC) appeared first on 101 Blockchains.

The internet is not the way it used to be, and it will continue to change further in the future. Since the introduction of the internet in 1993, many applications have been created to change the lives of normal people. The assurance of a better user experience with the power of internet served as a vital boost for adoption of the internet. 

As the discussion on the evolution of internet shifts towards web 5.0, it is important to look for a proper web 5.0 definition and what it entails. The following post helps you reflect on the transition of the internet from web 1.0 to web 5.0. You can understand the distinct features of web 5.0 alongside the advantages and limitations associated with the new version of the internet.

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Stages in the Evolution of the Internet

The web has evolved through multiple stages to reach the phase of conceptualizing web 5.0. Any outline of web 5.0 explained in detail would also focus on the transition between different versions of the web. What are the factors responsible for driving the changes in different stages of the evolution of web? Here is a brief overview of the changes in the web over the years. 

• Web 1.0

The first version of the internet, web 1.0, focused more on read-only applications. During this stage, websites primarily served the role of setting an online presence for delivery of content. 

• Web 2.0 

Web 2.0 implied the beginning of the read-write web, which offered the facility for interaction alongside effective control to users. Some of the big tech giants we know today, such as Facebook and Twitter, thrived in the web 2.0 era of the internet.  

• Web 3.0

The onset of discussions on “What is Web 5.0” appears reasonable considering the development of web 3.0. Also defined as the semantic web, web 3.0 features integration, data, automation, and discovery alongside encouraging globalization and mobility. With the power of decentralization, web 3.0 aims to offer the best of AI, machine learning, and spatial 3D computing. 

• Web 4.0

The concept of web 4.0 relies heavily on functionality. It focuses on using wireless communication to enable connectivity between people and connected objects in physical and virtual worlds. Some tech enthusiasts have also termed web 4.0 as the symbiotic web, signaling the existence of humans and computers in a symbiotic relationship. 

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Definition of Web 5.0

Considering the scale of improvements introduced by the previous versions of the web, it is important to wonder about the reasons for introducing web 5.0. However, let us start with a clear web 5.0 definition to develop a better impression of what it is capable of. Web 5.0 has been designed as a decentralized web platform that can allow the flexibility and resources for developing decentralized web applications. 

The primary objective of web 5.0 would focus on empowering users to reclaim control and ownership of their data. As of now, the web 5.0 version is still under development. However, some experts have pointed out that web 5.0 would be more of a combination between web 2.0 and web 3.0. 

What will be the advantage in a web5 blockchain environment when you can have the same benefit with web3? Web 5.0 would not only create a decentralized web platform with semantic capabilities but also introduce emotional intelligence on the web. The vision behind web 5.0 focuses profoundly on enabling emotional connection between humans and computers. 

You can think of possibilities with web 5.0 examples, such as a website that can map the emotions of a person. The website can use facial recognition as a tool for mapping the person’s emotions when the user wears a headphone. Users can interact with the website, and the website would respond accordingly based on emotions of the person.

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Origins of Web 5.0

If you are seeking real examples of use cases for web 5.0, then you are a bit early. Jack Dorsey, the ex-CEO of Twitter, announced the web 5.0 project recently, following his criticism of web 3.0. Dorsey has pointed out the existing limitations in web 3.0 by stating that ownership is still a myth as venture capitalists and limited partnerships would take on a major share of the web. According to Dorsey, web 3.0 would maintain centralization in many aspects, thereby calling for development of web 5.0. 

The development of web 5.0 is an important highlight in guides on “what is web 5.0,” and most important of all, everyone wants to know who will develop web 5.0. The Bitcoin business unit of Block, Inc. would take charge of the development of web 5.0. Jack Dorsey announced in June 2022 that the Bitcoin business unit of his financial payments company, The Block Head or TBD, would work on developing web5. TBD believes that web 5.0 would introduce improved control of users over data storage and decentralized identity. As of now, the web 5.0 project falls under the scope of open-source development, with more time remaining for a specific release date of the platform. 

Most important of all, Mike Brock, the leader of TBD, has pointed out some remarks about the web5 blockchain assumptions. He has assured that the web 5.0 platform of TBD would be considerably different from another web 5.0 models by including more than just the value of blockchain technology. However, the team would experience many challenges in discarding the assumptions regarding decentralization of the internet. 

Working of Web 5.0

The details of web 5.0 explained clearly would also reflect on the working of web5, as it helps in developing a better understanding of the concept. You can assume a simple example to understand the working of web 5.0. Have you ever wondered how virtual assistants can predict the needs of users by interpreting their behaviors? The concept of web 5.0 basically introduces a predictive virtual assistant, but on a broader scale. Web 5.0 could facilitate easier interpretation of various pieces of information on various complex levels. The internet would interpret information with logic as well as emotion in web 5.0. 

The working of 5.0 also emphasizes how the use cases for web 5.0 can find a place in the everyday lives of people. As a matter of fact, web5 would be organically associated with almost every activity of an individual. Web 5.0 would capitalize on the power of AI for empowering communication between computers alongside making interactions between humans and computers similar to interactions between humans. Web 5.0 also proposes completely new and exclusive experiences to each user based on their emotions. The future developments in the domain of blockchain, AI, and machine learning would serve as inputs in improving web 5.0.

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Important Features in Web 5.0

You cannot complete a discussion on web 5.0 without an explanation of web 5.0 features and how they are better. However, it is also important to note that web5 is still under development, thereby leaving limited clarity regarding its features. On the other hand, users can expect a wide range of features once the platform has been developed and implemented. At the same time, you cannot ignore the two most significant features highlighted in the web 5.0 definition. Users can get total control over their identity and true ownership over their data. 

• Control over Your Identity

An overview of the prime use cases for web 5.0 would focus on empowering users with control of their identity. Assume that an individual, John, has a digital wallet that helps her manage authorizations, identity credentials, and her data for connecting with different apps and external connections. 

John can use the wallet to enter his sign-in credentials with a decentralized social media app. The application knows their identity of John, and he wouldn’t have to create a profile. Any interactions John makes with the app would be stored on a decentralized web node. Now, John could switch to other social media apps, along with her social persona created on the present social media app. 

• Data Ownership

One of the significant highlights of web 5.0 explained clearly also draws attention to data ownership. Decentralized web implied the promise of offering true ownership of user data. However, centralization is still a concern with the supposedly “decentralized” web. On the contrary, web 5.0 aims to empower users so that they have ownership over their data. 

Let us assume another choice of web 5.0 examples to understand its features. Ryan loves movies and cannot afford to have his personal data locked with one streaming service provider. In order to achieve the personal data storage approach, Ryan must find similar movies alongside creating similar watch lists on every streaming app. Bring in web 5.0, and Ryan can have more than the advantages of decentralization. 

The web 5.0 features for enabling true user data ownership could help Ryan store his preferences and settings on a decentralized web node. Now, with the different streaming apps, Ryan users can access the preferences and settings on the decentralized web node. As a result, Ryan could have a seamless and personalized movie-watching experience across different platforms. 

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Advantages and Drawbacks of Web 5.0

Web 5.0 is under development now, and there is a lot of time before the world familiarizes with use cases for web 5.0 in real-life scenarios. However, that cannot stop anyone from wondering about the potential benefits it can introduce for users. At the same time, it is also important to take note of the setbacks with web 5.0, which can influence user experiences. Here is an outline of the most notable value advantages of the web 5.0 platform. 

• The emotional intelligence aspect of web 5.0 would provide the ideal platform for users to expand their creativity. 
• The ecommerce sector can capitalize on the emotional intelligence element in web 5.0 for developing the infrastructure for real-time communication with users. With a specific focus on interpreting the emotions of users, ecommerce sector can leverage web 5.0 to improve value in user experiences. 
• One of the significant and recurring highlights in an overview of web 5.0 explained points at the benefits of control over your own identity and data. The existing versions of the web are centralized in nature, and the ones who claim better decentralization don’t stand true to their claims. Web 5.0 would let you maintain complete control over your data and decide how to use it. Users can also use their digital identity securely across multiple applications and services. 
• Speaking of security, the foundations of web 5.0 would develop on the basis of inspiration from Bitcoin. Jack Dorsey believes that Bitcoin is the most secure decentralized network and settles the doubts about web5 blockchain equation to rest. Web 5.0 would offer the benefits of decentralization and cryptographic security to users with the help of blockchain. 

Even if web 5.0 presents some credible advantages, the platform has also been subject to considerable downsides. First of all, the web 5.0 project is still under development, and no one knows how the project will shape up. On top of it, the benefits of web 5.0 would depend profoundly on large-scale adoption. 

Future of Web 5.0

The future of web 5.0 is quite unclear as of now, especially without any detailed roadmap. Web5 focuses on developing completely decentralized solutions which can allow financial interactions and social communication. At the same time, the need for safeguarding control over user data and identity is also a critical concern for web 5.0. As of now, The Block Head or TBD focuses on developing four important components of web 5.0. The components include a decentralized web node and decentralized identifiers. The other components for web 5.0 are a self-sovereign identity service and a self-sovereign identity SDK.

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Bottom Line

The views of Jack Dorsey regarding web 3.0 served as the foundation for discussions on ‘what is web 5.0’ right now. Many of you might assume that web 5.0 is basically the fantasy of a tech magnate who has discovered a new love in cryptocurrencies and blockchain. Well, there is no way to undermine the capabilities of Jack Dorsey for innovation and technological advancement. At the same time, the value advantages of web 5.0 and the possible benefits show how it can transform the web. Explore to learn more about web 5.0 to broaden your knowledge. 

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post What is Web 5.0 – Explained appeared first on 101 Blockchains.

According to the founders of the index, MVI aims to capture the trends in transition of entertainment, business, and social activities towards virtual economies, on the foundations of blockchain technology and NFTs. The following discussion helps you understand the metaverse index or MVI and its components with a detailed introduction to basics. On top of it, you can also learn about the existing tokens on the index and methods for buying MVI.

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What is Metaverse Index?

The first thing in any discussion about MVI or metaverse index would obviously emphasize its definition. MVI is basically an index product designed for tracing the trends pertaining to transition of entertainment, business, social activities, and sports to virtual environments. It was launched in 2021 by Index Coop, a crypto index solution provider. Index Coop itself is a decentralized, community-driven organization responsible for creation and maintenance of other crypto indices such as Bankless BED Index and DeFi Pulse Index. 

The metaverse is a massive and open live virtual universe which can offer many interesting benefits to users. Users can have a sense of provenance, shared spatial awareness, and social presence. At the same time, the metaverse opens up the doors to an extensive virtual economy. It is also important to note how digital ownership and free markets in the metaverse use blockchain technology, thereby setting a difference from social contracts governing web2 solutions. 

MVI, or the Metaverse NFT Index, can help investors discover an opportunity for investing in the metaverse. How? The index can help in capitalizing on the choice of metaverse protocols rather than investing your assets on one platform or token. You can think of MVI as a gateway for beginners into the world of the metaverse. Who developed the index?

Origins of Metaverse Index

One of the significant details in a guide on investing in metaverse index would focus on its origins. The founders of MVI, Verto0912, and DarkForestCapital, launched the index for the first time without any external partners. It was the first sole project of Index Coop. Verto0912 and DarkForestCapital have been the early members of Index Coop since its foundation in 2020. 

Verto helped in resolving the low liquidity issues in certain tokens by modifying the calculation of weighting in the initial proposal for MVI. Index Coop also supported the development of MetaPortal as a substack for establishing MVI as a unique brand. The MetaPortal serves as a reliable tool for the methodologists to develop expertise in the metaverse. What type of tokens can you find in the MVI index?

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Inclusion Criteria for MVI Tokens

The benefit of investing in the desired metaverse protocol through MVI can be quite appealing. You might look for a Metaverse Index chart to figure out the calculations before landing up in the metaverse. However, it is important to identify the criteria for tokens that can be included in the MVI index. If you want to invest in a specific asset, you must know about what it has to offer you. Here are some important conditions for inclusion in the MVI index. 

• Ethereum-based

The first criterion for including a token on metaverse index is that the token should be available on Ethereum blockchain. MVI plans on revising this criterion by introducing a multi-chain Set Protocol infrastructure. 

• Market Capitalization

The token must have a circulating market capitalization of more than $50 million. 

• Operation History

The protocol eligible for metaverse index or MVI must have around 3 months of history of operations. In addition, the token of the protocol must showcase a price and liquidity history of a minimum of 3 months. 

• Protocol Category

As of now, the Metaverse NFT index rightly fulfills the purpose of its name through inclusion of NFTs. The protocols included on MVI must comply with specific token categories such as NFTs, music, entertainment, augmented reality, and virtual reality. MVI would add more token categories with the growing maturity of the market. 

• Liquidity

The tokens eligible for inclusion in MVI must register proof of consistent and reasonable levels of DEX liquidity on Ethereum. 

• Security

A protocol suite for the Metaverse Index chart should also pass through an independent security audit. At the same time, a product methodologist must have reviewed the results of the security audit. Without audits, methodologists can use subjective assessment of the protocol on the grounds of other criteria and interactions with community. 

• Staking

The tokens listed on MVI or metaverse index will not be staked at the beginning of the index. On the contrary, an increase in liquidity can open up the scope for yield generation through staking on MVI. 

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How Does Metaverse Index Work?

The most important highlight in the working of MVI is the index weight calculation method. In addition, you must also learn about the index maintenance process as they account for the methodology of the metaverse index. The discussion on “what is metaverse index” would remain incomplete without identifying how MVI works after selecting tokens for inclusion.

• Calculation of Index Weight

The working of MVI involves the immediate step following the identification of eligible tokens. It is important to estimate the suitable weighting for every token in the index. Methodologists calculate the final weights of the tokens in metaverse index by determining the aggregate value of DEX liquidity and square root of the market capitalization of tokens. The square root of market capitalization of the token accounts for around 75% of their final weight. On the other hand, the DEX liquidity accounts for the remaining 25% of the final weight of a token. 

The basic index weight calculation method emphasizes liquidity, and it ensures that the index does not include overallocated to assets that cannot be rebalanced through DEX. The adequate sum of liquidity for tokens associated with Metaverse Index or MVI is important for preventing significant slippage in monthly rebalances. The simple formula for calculating the weight of each token is as follows,

TW= 75%xRMCW + 25%xLW

TW represents the total weight of a token in MVI.

RMCW represents the square root of market capitalization of the token.

LW is the aggregated DEX liquidity of a token. 

• Index Maintenance

Another significant aspect in the understanding of MVI or metaverse index refers to the index maintenance process. The methodologists take care of the index maintenance process to preserve the index quality. The index maintenance process involves two distinct stages, the determination phase, and the rebalancing phase. In the determination phase, tokens are subjected to a re-evaluation of inclusion criteria for adding or deleting tokens from the index. The determination phase happens in the final week of the quarter. The rebalancing phase involves modifications in the index composition for updating new weights in the first week of the upcoming quarter. 

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Which Tokens Are Available on MVI Now?

The obvious question for any individual interested in investing in metaverse index would emphasize the tokens available in MVI now. Here is an outline of the tokens you can find in the index now. 

Illuvium

Illuvium has evolved as one of the popular metaverse gaming platforms based on Ethereum blockchain. The native governance token of the platform is ILV.

Axie Infinity Shards

AXS, the governance token on Axie Infinity, is a leading name in the play-to-earn landscape right now. 

Enjin

ENJ is another notable entry in the current Metaverse Index chart and serves as the utility token for powering up the NFT economy of Enjin. The ENJ token can help in development, trading, and monetization of gaming NFTs. 

Decentraland 

The MANA token of Decentraland is also one of the notable entries in MVI as Decentraland is a pioneer among metaverse platforms. 

The Sandbox 

The SAND token of Sandbox, a community-driven metaverse platform, is also a top player in MVI index for its role in fuelling a gaming economy.

Some of the other notable tokens available on the metaverse index include the following, 

• WAXE (WAX)
• AUDIO (Audius)
• ERN (Ethernity Chain)
• NFTX (NFTX)
• TVK (Terra Virtua)
• RARI (Rarible)
• DG (Decentral Games)
• WHALE (WHALE)
• REVV (REVV)
• MUSE (NFT20)                       

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Where Can You Buy Metaverse Index?

The MVI token lets you capitalize on the value of a wide base of metaverse protocols without concentrating the risk on one platform or token. If you are wondering where to buy metaverse index, then you must look for the reasons to do so. First of all, you can buy MVI if you are interested in the metaverse and don’t know where to start investing. 

You would find the advantage of encompassing multiple trends in the world of metaverse without betting on one specific platform, token, asset, or virtual experience. Interestingly, you don’t have to search too far for investing in metaverse index, as you can find it on Ethereum and Polygon. You have to connect your wallet with the required amount of ETH and swap it for MVI. In addition, decentralized exchange aggregators are also a great answer to purchase metaverse index. 

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Bottom Line

The overall introduction to metaverse index showcases how it can revolutionize the metaverse experience for users. If you take a closer look at how it works, MVI brings the best of all metaverse platforms and tokens into one pool. Any MVI token holder can have the privilege of drawing the best of multiple metaverse platforms and tokens according to their requirements. 

You don’t have to put all your money on a single metaverse token and trust in its long-term potential for growth. On the contrary, MVI follows a straightforward approach to including the best tokens in the index. If you want to invest in MVI, you need to dive deeper into research regarding financial, tax, and legal implications of the same. Learn more about MVI and how it can drive the adoption of a metaverse in the future.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

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Moloch DAO is one of the most popular alternatives for self-organizing, funding, and developing the necessary public infrastructure for ETH 2.0. The interesting highlight of Moloch is that it focuses on a new attempt to resolve philosophical conflicts among humans when they have to coordinate with each other. The following discussion helps you figure out essential information about Moloch DAO and how it works. 

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Definition of Moloch

The first thing about a discussion on Moloch DAO would focus on answers to “What is Moloch DAO” and its significance. First of all, you must notice that Moloch is a simple and open-source DAO framework tailored with three distinct value advantages. Moloch offers the benefits of extensibility, security, and usability. Users can have less code with Moloch, thereby resulting in lesser bugs and more security. 

The easy-to-understand and use tech in Moloch ensures better usability irrespective of the complex technology. Moloch DAO framework also features the ability to extend functionalities to cope with new community needs. The popularity of Moloch DAO depended on its design as a Minimum Viable DAO alongside the introduction of ‘ragequit.’ With the help of the ‘ragequit’ feature, members can go away from the DAO by exchanging their shares in return for a claim on assets in the treasury.

Moloch DAO was introduced to the Ethereum ecosystem in February 2019, followed by many other DAOs. What does the Moloch DAO achieve? The answer focuses on the goals of Moloch DAO for funding and supporting the development of public goods project pertaining to ETH 2.0. As of now, Moloch DAO has supported many projects with almost $700,000 in grants. 

Some of the notable projects featuring contributions from Moloch DAO include Lighthouse, Ethereum Cat Herders, DApp Node, and Tornado Cash. In addition, the DAO has also convinced community members to design alternative funding systems. For example, the Open Grants system includes an allocation of 3600 ETH for ETH 2.0 development. 

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Working of Moloch DAO

The discussions on Moloch DAO would also draw the limelight on questions like “How does Moloch DAO work?” and the basic framework. One of the most interesting highlights in the working of Moloch DAO would refer to the minimum viable DAO design. Therefore, the architecture of the Moloch DAO framework is considerably simple, with only one smart contract for each DAO. As mentioned previously, the Moloch DAO framework focuses on extensibility, security, and usability. However, the identity of Moloch DAO among other frameworks relies on primary features of the DAO framework, such as,

• Weighted Voting

The Moloch DAO ensures varying governance weights for members in an Ethereum ecosystem as an improvement over multisigs, which allocate a single vote to every member. 

• Permissioned Membership

The most striking highlight of Moloch DAO focuses on permissioned membership, where existing members vote on addition of new members. 

• Ragequit

Ragequit is also another critical highlight in discussions on “What is Moloch DAO” and how it works. It implies that members could withdraw some or all their membership shares from the DAO in return for a proportionate claim on the assets in the DAO treasury. 

• Non-transferable Governance

Another significant feature of Moloch DAO focuses on non-transferable governance power. Non-transferable governance basically implies that voting and economic rights are illiquid. 

Submission and Processing of Proposals

The features can help you understand the answer to “How does Moloch DAO work?” with a clear idea about the series of actions. You must note that any action in Moloch DAOs happens through proposals. At least one member of the DAO must sponsor a proposal after it has been submitted. The voting period for a proposal begins after sponsoring process, and members could vote on the proposal according to individual shares. Eventually, a proposal with more votes in its favor can pass in the DAO without any mandatory quorum requirement. 

After passing, the proposal has to complete a grace period before its execution. The grace period is an opportunity for members who did not vote for the proposal to ragequit. As a result, minority members can enjoy better safeguards without the need for a quorum. Proposals in Moloch DAO can help in granting shares to new members alongside transferring assets to recipients from DAO treasury. Another interesting highlight of Moloch DAO for the Ethereum ecosystem refers to the special helper smart contracts, also referred to as Moloch Minions. The special helper smart contracts can help Moloch DAO interact directly with different smart contracts. 

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Reasons for Introducing Moloch V2

The factors responsible for introducing Moloch V2 also serve as important highlights in understanding the future of the DAO framework. One of the foremost objectives for designing Moloch V2 focused on improving coordination at a technical level. How does Moloch DAO achieve the same? Moloch V2 emphasizes grant-giving and funding with projects showcasing the explicit desire for issuing capital in stable currencies. 

This is a plausible alternative to the option to ragequit your shares in Moloch DAO for the funding. Here is an overview of “How does Moloch DAO work?” to identify the process of issuing grants on Moloch V1. Here are the important steps in working on Moloch V1, which showcase the necessity of Moloch V2. 

• An existing DAO member can submit the proposals, and another DAO member processes the proposal on-chain. 
• After passing a proposal, the grantee would receive shares according to their reasonable claim on ETH in the Guild Bank. Users could then ragequit the shares and receive wETH. 

What is the problem in such approaches with Moloch V1? The proposals might take around two weeks to process from submission to finish. As a result, the value of the shares could change considerably in a limited period of time owing to volatility in ETH. It is important to remember that the primary goal of a DAO should focus on accessibility to any individual who supports the DAO’s cause. Therefore, the process of submission and passing of proposals must be simplified further to welcome newcomers on board easily. 

What Are the Highlights of Moloch V2?

The overview of “What is Moloch DAO” is incomplete without an overview of the important highlights of Moloch V2. Some of the important details which empower Moloch V2 include the following.

• Multi-token Support 

The new Moloch v2 DAOs could store almost 200 different assets in comparison to one, thereby enabling DAOs to hold assets other than Ether. For example, stablecoins, project tokens, and time tokens can enter the DAO ecosystem. 

• Funding Proposals

DAO users can receive funding in DAO assets such as DAI or ETH. Therefore, the future of Moloch DAO would witness lesser members opting for ragequit option. For example, a proposal can include a request for completing mitigating the volatility on 1000 DAI during a two-week processing period.

• Open Submissions

Another important feature of Moloch V2 that opens it up to the wider Ethereum ecosystem refers to Open Submissions. In accordance with the new feature, anyone could submit proposals independently, even the non-members of the DAO. This is a promising improvement over-relying on a DAO member for submitting a proposal. 

• GuildKick

The most plausible and innovative improvement in Moloch V2 is evident in the introduction of GuildKick. It shows that Moloch DAO is truly a public goods project meant for the community’s interests. If you find any member working against the interests of the DAO, you can force a ragequit on them. With the help of a unique proposal, users can ensure that malicious agents are kicked out of the DAO. The malicious agent would have they’re shared burned as they receive the relevant share in the assets of the DAO treasury. 

• Trade Proposals

The new advancements in Moloch DAO have also included an emphasis on better treasury management within the DAO environment. Trade proposals can help DAOs in swapping the collateral associated with them. For example, trade proposals can help in swapping DAI for transferable and interest-bearing assets such as Chai.

• Voting Updates

A simple update in the proposal processing schema of Moloch V2 includes marking proposals as “Unsponsored Proposals.” Any proposal submitted to the DAO is marked as an “Unsponsored Proposal,” and members could choose the DAO they want to sponsor. The remaining process is the same as Moloch V1. 

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Future of Moloch DAO

The features and components in the simple understanding of how Moloch DAO works show how the DAO is an effective intervention for public goods project landscape. The primary goal of Moloch DAO focuses on offering a public infrastructure for ETH 2.0. Therefore, the future of Moloch would focus on improving these benefits. 

First of all, you need to note that the simple DAO framework has depicted humongous growth with around 100 Moloch forks in existence. Popular examples such as Orochi, MetaCartel, Rocket, and Raid Guild have helped in collective aggregation of over 200 proposals. All the proposals amounted to the efforts of 300 different members to evaluate the best side of DAO coordination. 

The interesting and powerful performance outcomes of Moloch DAO invite attention to the future of Moloch DAO and what it entails. The answer to your doubts about the next stage in evolution of Moloch DAO refers to Moloch V2.

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Final Words

The detailed overview of the working and new improvements in Moloch DAO showcase that it is an integral tool for the future of decentralized applications. Moloch DAO focuses on empowering the Ethereum ecosystem for better scalability and easier access to capital for project development. The simple overview of “What is Moloch DAO,” and its working can empower beginners to enter the world of DAOs. 

Moloch DAO offers promising value in different use cases, such as better grant allocation and improved governance. Interestingly, you can learn more about Moloch DAO with simple documentation offered on its official website. Dive deeper into the technical specifications of DAOs and how they can transform the future of blockchain and crypto applications.

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*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!

The post What is Moloch DAO? appeared first on 101 Blockchains.