DeFi

Crypto projects can generate greater organic growth through fair launch

Published

7 months ago

4 July, 2024

Although the cryptocurrency industry presents itself as an egalitarian industry, the reality is often quite different: many new token distributions are biased in favor of a handful of private investors. These are usually the people who created the token, those connected to them, and the professional investment community, who are informed before the project launches.

A quick look at the token distribution of some of the most popular cryptocurrencies in the space reveals that early investors often control a large portion of these networks, while everyone else plays second fiddle. The general public often gets a few crumbs, and they have to pay much more for the handful of tokens they can get their hands on.

This explains the recent emphasis on what the cryptocurrency industry calls a “fair launch.” This is a concept that aims to address the inequalities that plagued most early projects by giving everyone an equal chance to acquire new tokens, regardless of their status or level of internal knowledge of the project.

In the cryptocurrency space, fair launches have become popular among more cynical crypto enthusiasts who believe the market is rigged by pre-mining, whitelisting, and venture capital allocations that prevent everyone from getting first access at the lowest possible price.

How do fair launches take place?

A fair launch refers to a token distribution plan that gives the broader community a chance to earn and purchase tokens up front, so that everyone has the opportunity to get in early and participate in its governance. A fair launch means that no one has early access opportunities, no pre-mining, and no allocation of any kind.

To enable a truly fair launch, it is necessary to define what “fairness” actually means. A useful framework adopted by many cryptocurrency projects was proposed in 20219 by researcher Hasu and venture capitalist Arjun Balaji, who defines the concept as ensuring that everyone has an equal opportunity to acquire tokens over a long period of time. The more people who know about a new project, the fairer the distribution of its tokens will be. For example, if the entire supply is sold within a month of the token launch, this cannot really be considered fair, as the market has not had enough time to become aware of the token.

Another aspect of fairness, according to Hasu and Balaji, is price equality. By this, they mean that no group or individual should be allowed to acquire new tokens at a price significantly below the market price. However, Hasu and Balaji do not rule out early access to tokens altogether, saying that discounts are acceptable if the tokens they acquire are to be acquired or locked up for a long period of time, as they need an incentive to take the risk involved.

Why should a project commit to a fair launch?

For projects that want to be able to claim to be truly democratic, it is important to give everyone the opportunity to get involved from the beginning, without any privileges for early investors. A fair launch means that early investors in the project cannot accumulate outsized influence over issues such as governance. This means that all decisions made by the community will truly reflect the will of the users of the network.

One of the problems with the traditional venture capital model, especially when applied to cryptocurrency projects, is that when a venture capitalist wants to cash out, they can dump a substantial number of tokens into the market shortly after the token is publicly launched. They let public investors drive up the price first, and then dump thousands more tokens into the market. This very often has the effect of driving down the market price of a new token, leaving public investors with much less value than they originally invested.

So, if a project wants to be loyal to the community that helps it grow, it must ensure that the distribution of its tokens is fair.

Examples of fair launch

One of the fairest ways to launch tokens is to incentivize the community to earn them through various activities that support the growth of the project.

Perhaps the best example of a fair launch is bitcoinwhich did not allocate tokens to anyone, but instead invited users to start “mining” coins by contributing computing resources to the network. Initially, this could be done with a basic PC powered by a simple processor. Bitcoin’s creator, one Satoshi Nakamoto, did not reserve any tokens for himself or anyone else, although he began mining coins before the network went live. Additionally, the initial number of participants in the Bitcoin network was small, as no one had heard of it in the nascent days of 2009/2010, when it was just getting started.

Another notable example of a fair launch is Financing of the yeara DeFi protocol that refused to allocate tokens, not even to its creator Andre Cronje. Instead, its first tokens went only to the liquidity providers who helped start its platform. While the YFI token hasn’t seen the same gains as Bitcoin this year, it still ranks among the top 200 cryptocurrencies and is considered one of the most successful DeFi projects, with more than 260 million dollars in total value blocked in June 2024.

More recently, the AI-driven blockchain network Qubic has designed what must be one of the fairest launches of all, strictly retaining its entire QUBIC token supply for those who secure its network via its useful proof-of-work consensus mechanism.

Qubic was founded by Sergey Ivancheglo, the creator of IOTA and NXT, which integrates blockchain to secure AI models via its uPoW-powered Quorum protocol.

Ivancheglo committed to a fair launch, rejecting any form of venture capital involvement, team allocation, or pre-mining. As such, QUBIC’s entire supply was only distributed to those who actually contributed to the network’s growth, meaning that governance is also dictated by these users, rather than external investors who would likely be more concerned with generating profits than the project’s actual long-term success. This was a solid model that has already proven itself, with Qubic recently reaching a $1 billion market cap and its mining network now spanning around 500,000 machines. It’s a showcase of how a fair launch model can be used. helping crypto projects drive organic growth.

It would be misleading, however, to claim that fair launches are always guaranteed to succeed. OpenDAO notably failed by opting for a token distribution model that retrospectively rewarded early adopters via an airdrop.

OpenDAO’s goal was to create a decentralized insurance protocol for non-fungible tokens sold on the OpenSea NFT marketplace. It allowed any wallet that had previously interacted with OpenSea to participate in its airdrop.

However, this token distribution model may have been too generous, considering that the project itself was not without its problems. While the launch was certainly fair, OpenDAO itself failed to establish a clear roadmap or goals, and security researchers have reported a number of issues with the protocol’s code. The negative perception of OpenDAO encouraged many token holders to dump their SOS tokens shortly after the airdrop in January 2022, causing its price to plummet. The value of SOS has flat since then, and today, it is known to be one of the least valuable cryptocurrencies of all, valued at $0.00000001739.

Equity must be applied properly

A fair launch does not guarantee the success of a project and is just one of the many options available to project teams when it comes to launching their token. The benefits of a fair launch include giving a project more credibility, as such projects are unlikely to be a scam if the founders do not get early access to its tokens. This means more transparency and the perception of fairness increases positivity around the project.

On the other hand, a fair launch may mean that the project team will struggle to find funding if the token launch is not well-planned, as early access is one of the main ways for the crypto industry to attract funds. Additionally, the lack of a large public launch means that the project will not be able to benefit from the traditional boost that many get following this event.

For crypto project teams, the concept of a fair launch can be inspiring and help drive significant growth and community adoption if done right. But project founders need to ensure that the community has a compelling reason to want to participate and help drive organic growth.

Fuente

DeFi

Haust Network Partners with Gateway to Connect to AggLayer

Published

6 months ago

1 August, 2024

Financial Block Staff

Haust Network Partners with Gateway to Connect to AggLayer

Dubai, United Arab Emirates, August 1, 2024, Chainwire

Consumer adoption of cryptocurrencies is a snowball that is accelerating by the day. More and more people around the world are clamoring for access to DeFi. However, the user interface and user experience of cryptocurrencies still lag behind their fundamental utility, and users lack the simple and secure access they need to truly on-chain products.

Haust Network is a network and suite of products focused on changing this paradigm and bringing DeFi to the masses. To achieve this goal, Haust Network has announced its far-reaching partnership with bridgeseasoned veterans in rapidly delivering revolutionary blockchain utilities for projects. The Gateway team empowers blockchain developers to build DAOs, NFT platforms, payment services, and more. They drive adoption of crypto primitives for individuals and institutions around the world by helping everyone build their on-chain presence.

Gateway specializes in connecting sovereign blockchains to the Aggregation Layer (AggLayer). The AggLayer is a single unified contract that powers the Ethereum bridge of many disparate blockchains, allowing them all to connect to a single unified liquidity pool. The AggLayer abstracts away the complexities of cross-chain DeFi, making tedious multi-chain transactions as easy for the end user as a single click. It’s all about creating access to DeFi, and with Polygon’s technology and the help of Gateways, Haust is doing just that.

As part of their partnership, Gateway will build an advanced zkEVM blockchain for Haust Network, leveraging its extensive experience to deploy ultra-fast sovereign applications with unmatched security, and enabling Haust Network to deliver its products to its audience.

The recently announced launch of the Haust Wallet is a Telegram mini-app that provides users with access to DeFi directly through the Telegram interface. Users who deposit funds into the wallet will have access to all standard send/receive services and generate an automatic yield on their funds. The yield is generated by Haust Network’s interconnected network of smart contracts, Haustoria, which provides automated and passive DeFi yielding.

As part of this partnership, the Haust Network development team will work closely with Gateway developers to launch Haust Network. Gateway is an implementation provider for Polygon CDK and zkEVM technology, which the Haust wallet will leverage to deliver advanced DeFi tools directly to the wallet users’ fingertips. Haust’s partnership with Gateway comes shortly after the announcement of a high-profile alliance with the Polygon community. Together, the three will work to build Haust Network and connect its products to the AggLayer.

About Haust Network

Haust Network is an application-based absolute liquidity network and will be built to be compatible with the Ethereum Virtual Machine (EVM). Haust aims to provide native yield to all users’ assets. In Telegram’s Haust Wallet, users can spend and collect their cryptocurrencies in one easy place, at the same time. Haust operates its network of self-balancing smart contracts that interact across multiple blockchains and then efficiently funnel what has been generated to Haust users.

About Gateway

bridge is a leading white-label blockchain provider that offers no-code protocol deployment. Users can launch custom blockchains in just ten minutes. They are an implementation provider for Polygon CDK and have already helped projects like Wirex, Gnosis Pay, and PalmNFT bring new utility to the crypto landscape.

About Polygon Labs

Polygon Laboratories Polygon Labs is a software development company building and developing a network of aggregated blockchains via the AggLayer, secured by Ethereum. As a public infrastructure, the AggLayer will aggregate the user bases and liquidity of any connected chain, and leverage Ethereum as the settlement layer. Polygon Labs has also contributed to the core development of several widely adopted scaling protocols and tools for launching blockchains, including Polygon PoS, Polygon zkEVM, and Polygon Miden, which is currently under development, as well as the Polygon CDK.

Contact

Lana Kovalski
haustnetwork@gmail.com

Fuente

DeFi

Ethena downplays danger of letting traders use USDe to back risky bets – DL News

Published

6 months ago

1 August, 2024

Financial Block Staff

Ethena downplays danger of letting traders use USDe to back risky bets – DL News

Ethena and ByBit will allow derivatives traders to use USDe as collateral.
There is a risk in letting traders use an asset partially backed by derivatives to place more bets.

Ethena has downplayed the dangers of a new feature, which will allow traders to put up its synthetic dollar USDe as collateral when trading derivatives, which are risky bets on the prices of crypto assets.

While allowing users to underwrite their trades with yield-bearing USDe is an attractive prospect, Ethena said there is potential risk in letting traders use an asset partially backed by derivatives to place even more derivatives bets.

“We have taken this risk into account and that is why Ethena operates across more than five different sites,” said Conor Ryder, head of research at Ethena Labs. DL News.

The move comes as competition in the stablecoin sector intensifies.

In recent weeks, PayPal grown up the amount of its stablecoin PYUSD in circulation 96%, while the MakerDAO cooperative plans a rebrandingaiming to increase the supply of its DAI stablecoin to 100 billion.

US dollar growth stagnates

It comes as Ethena has lost momentum after its blockbuster launch in December.

In early July, USDe reached a record level of 3.6 billion in circulation.

That figure has now fallen by 11% to around 3.2 billion.

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New uses for USDe could boost demand for Ethena’s products.

This is where the new plan, announcement Tuesday with ByBit, one of its partner exchanges, is coming.

Ethena users create USDe by depositing Bitcoin or Ether into the protocol.

Ethena then covers these deposits with short positions – bearish bets – on the corresponding asset.

This creates a stable support for USDe, unaffected by price fluctuations in Bitcoin or Ether.

Mitigate risks

While using USDe as collateral for derivatives trading is proving popular, it is unclear what the effects will be if the cryptocurrency market experiences major fluctuations.

Using derivatives as collateral to place more bets has already had disastrous effects.

In June 2022, Lido’s liquid staking token stETH broke its peg to Ether following the fallout from the Terra collapse.

Many traders who used looping leverage to increase their stETH staking yields were liquidated, creating a cascade that caused the price of Ether to drop by more than 43%.

Ethena Labs founder Guy Young said: DL News His office and his partners have taken many precautions.

Ethena spreads bearish bets supporting the USDe across the five exchanges it partners with.

According to Ethena, 48% of short positions supporting USDe are on Binance, 23% on ByBit, 20% on OKX, 5% on Deribit, and 1% on Bitget. website.

In doing so, Ethena aims to minimize the impact of an unforeseen event on a stock market.

The same theory applies to the distribution of risks across different supporting assets.

Fifty percent of USDe is backed by Bitcoin, 30% by Ether, 11% by Ether liquid staking tokens, and 8% by Tether’s USDT stablecoin.

Previous reviews

Ethena has already been criticised regarding the risks associated with USDe.

Some have compared USDe to TerraUSD, an undercollateralized stablecoin that collapsed in 2022.

“It’s not a good design for long-term stability,” said Austin Campbell, an assistant professor at Columbia Business School. said as the USDe launch approaches.

Young replied to critics, saying the industry needs to be more diligent and careful when “marketing products to users who might not understand them as well as we do.”

Ethena has since added a disclaimer on its website stating that USDe is not the same as a fiat stablecoin like USDC or USDT.

“This means that the risks involved are inherently different,” the project says on its website.

Tim Craig is DL News DeFi correspondent based in Edinburgh. Feel free to share your tips with us at tim@dlnews.com.

Fuente

DeFi

Cryptocurrency and defi firms lost $266 million to hackers in July

Published

6 months ago

1 August, 2024

Financial Block Staff

Crypto companies, defi lost $266m to hackers in July

In July 2024, the cryptocurrency industry suffered a series of devastating attacks, resulting in losses amounting to approximately $266 million.

Blockchain Research Firm Peck Shield revealed in an X post On August 1, attacks on decentralized protocols in July reached $266 million, a 51% increase from $176 million reported in June.

The most significant breach last month involved WazirX, one of India’s largest cryptocurrency exchanges, which lost $230 million in what appears to be a highly sophisticated attack by North Korean hackers. The attack was a major blow to the stock market, leading to a break in withdrawals. Subsequently, WazirX launched a program in order to recover the funds.

Another notable incident involved Compound Finance, a decentralized lending protocol, which suffered a governance attack by a group known as the “Golden Boys,” who passed a proposal who allocated 499,000 COMP tokens – valued at $24 million – to a vault under their control.

The cross-chain liquidity aggregation protocol LI.FI also fell victim On July 16, a hack resulted in losses of $9.73 million. Additionally, Bittensor, a decentralized machine learning network, was one of the first protocols to suffer an exploit last month, lo m ing $8 million on July 3 due to an attack targeting its staking mechanism.

Meanwhile, Rho Markets, a lending protocol, suffered a $7.6 million breach. However, in an interesting twist, the exploiters research to return the stolen funds, claiming the incident was not a hack.

July 31, reports The Terra blockchain protocol was also hacked, resulting in a loss of $6.8 million across multiple cryptocurrencies. As crypto.news reported, the attack exploited a reentrancy vulnerability that had been identified a few months ago.

Dough Finance, a liquidity protocol, lost $1.8 million in Ethereum (ETH) and USD Coin (USDC) to a flash loan attack on July 12. Similarly, Minterest, a lending and borrowing protocol, saw a loss of $1.4 million due to exchange rate manipulation in one of its markets.

Decentralized staking platform MonoSwap also reported a loss of $1.3 million following an attack that allowed the perpetrators to withdraw the liquidity staked on the protocol. Finally, Delta Prime, another decentralized finance platform, suffered a $1 million breach, although $900,000 of the stolen funds was later recovered.

Fuente

DeFi

The Rise of Bitcoin DeFi: Then and Now

Published

6 months ago

1 August, 2024

Financial Block Staff

The convergence of Bitcoin’s robust security and Layer 2 scaling solutions has catalyzed the emergence of a vibrant DeFi ecosystem.

By expanding Bitcoin’s utility beyond simple peer-to-peer payments, these advancements have opened up a new frontier of financial possibilities, allowing users to participate in decentralized lending, trading, and other complex smart contract operations on Bitcoin.

Read on to learn about the rise of Bitcoin-based decentralized finance and how the space has expanded to accommodate a new generation of native assets and features.

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What is DeFi?

Decentralized finance (DeFi) represents a paradigm shift in financial services, offering internet-based financial products such as trading, lending, and borrowing through the use of decentralized public blockchains.

By implementing blockchains, smart contracts, and digital assets, DeFi protocols provide financial services through a decentralized ecosystem, where participants do not have to deal with intermediaries when transacting.

What is Bitcoin DeFi?

The inherent limitations of the Bitcoin mainchain in supporting the intricacies of decentralized finance have created the need to develop smart contract-based Layer 2 solutions.

Additionally, the advent of the Ordinals protocol in 2023, which facilitated the emergence of fungible token standards such as BRC-20 and Runes, catalyzed the growth of DeFi on the Bitcoin blockchain.

This expansion in protocol diversity has broadened the applications of the world’s leading cryptocurrency network beyond the core base-layer use cases around value preservation and transactional capabilities.

Therefore, Bitcoin DeFi has become a nascent sector within the digital asset market, after previously being a missing essential part of the Bitcoin ecosystem.

Bitcoin DeFi in its early days

Integrating decentralized finance (DeFi) concepts into the Bitcoin ecosystem has been a journey of innovation and perseverance. Early attempts to bridge the gap between Bitcoin’s fundamental simplicity and DeFi’s complexities have spawned pioneering projects that, while laying essential foundations, have also encountered significant obstacles.

Colored coins

Colored coins represented an early foray into tokenizing real-world assets on the Bitcoin blockchain. By leveraging the existing network to track ownership of assets ranging from stocks to real estate, this approach highlighted Bitcoin’s potential as a platform beyond digital currency. However, scalability and practical implementation challenges have limited its widespread adoption.

Counterpart

Building on the colored coins, Counterparty has become a platform for creating and trading digital assets, including non-fungible tokens (NFTs), on Bitcoin.

The introduction of popular projects like Rare Pepe NFTs has demonstrated the growing appeal of digital collectibles. However, constraints around user experience and network efficiency have hampered its full potential.

These early experiments, while not fully realizing their ambitions, served as valuable stepping stones, informing Bitcoin DeFi’s subsequent developments. Their challenges highlighted the need for more sophisticated infrastructure and protocols to harness the full potential of decentralized finance on the Bitcoin network.

Bitcoin DeFi Today

Today, building DeFi applications on Bitcoin is primarily done in the realm of Layer 2 (L2) networks. This architectural choice is motivated by the limitations of Bitcoin’s base layer in supporting complex programmable smart contracts.

Bitcoin’s original design prioritized security and decentralization over programmability, making it difficult to develop sophisticated DeFi protocols directly on its blockchain. However, the recent emergence of protocols like Ordinals, BRC-20, and Runes, while not DeFi in their own right, has sparked possibilities for future DeFi-like applications on the main chain.

In contrast, L2 solutions offer a scalable and programmable environment built on Bitcoin, enabling the creation of various DeFi products.

By expanding Bitcoin’s capabilities without compromising its core principles, L2s have become the preferred platform for developers looking to build DeFi applications that encompass trading, lending, staking, and more.

Leading L2 networks such as Lightning Network, Rootstock, Stacks, and Build on Bitcoin provide the infrastructure for these efforts. Some of these L2s have even introduced their own native tokens to the network, further expanding Bitcoin’s DeFi ecosystem.

Essentially, while Bitcoin’s core layer presents challenges for DeFi development, its security and decentralization have provided a foundational layer for the innovative L2 landscape to thrive.

Bitcoin Layer 2 offers a promising path to building a robust and thriving Bitcoin-based DeFi ecosystem that offers trading, staking, lending, and borrowing. All you need is a DeFi Wallet like Xverse to access the new world of decentralized financial services secured by Bitcoin.

Conclusion

The integration of DeFi principles into the Bitcoin ecosystem, primarily facilitated by Layer 2 solutions, marks a significant evolution in the digital asset landscape.

Building on the foundational work of pioneers like Colored Coins and Counterparty, the industry has evolved into more sophisticated platforms like Rootstock, Stacks, and Build on Bitcoin to create a thriving Bitcoin-powered DeFi ecosystem.