Category Archives: Smart Contracts
This security tool can detect honeypots and other Web3 scams – Cointelegraph
As the Web3 world evolves, so too do scam techniques. As crypto literacy continues to grow among all demographics, scammers are developing new approaches and refining old tricks to bilk victims out of their assets.
One of the newer schemes is referred to as the honeypot scam. This tactic may have a soft name, but can create severe losses.
The term honeypot is commonly used in cybersecurity to describe a deceptive setup designed to attract individuals.
Honeypot scams include several fraudulent schemes. One of them involves smart contracts that feign a design flaw that allows any user to extract Ether (ETH) Ethereums native currency from the contract by sending a certain amount of Ether in advance. However, when a user attempts to exploit this apparent vulnerability, a hidden trapdoor, unbeknownst to the user, thwarts the attempted Ether siphoning. The primary goal is to focus the users attention solely on the visible vulnerability while hiding any evidence of a secondary vulnerability within the contract.
The scam operates by luring victims using an apparently easy-to-access wallet. For example, the wallets recovery phrase may have been leaked. Victims try to access it, thinking they can transfer funds from this wallet. To make the transaction to their own wallet, victims must often deposit a native network token to cover the transaction fees. However, a script or sweeper bot swiftly redirects these tokens elsewhere before the victim can act.
To identify such scams, crypto holders should look for unsolicited seed phrase shares, immediate wallet transfers upon deposit, or unfamiliar direct messages on social platforms.
Honeypot schemes can be easily detected by Web3 Antivirus (W3A), a browser extension that can perform a smart contract and token analysis in real time. The tool can integrate with Chrome, Firefox, Brave and Edge, enabling crypto users to interact safely with decentralized finance (DeFi) and Web3 applications.
Web3 Antivirus constantly updates to keep pace with scammers and their freshest schemes. In one of its latest updates, version 0.10, the tool significantly improved the precision of honeypot detection. The antivirus can identify the exact type of honeypot that users encounter, keeping them away from potential losses.
Besides honeypots, version 0.10 introduced the detection of the following new scams:
The Web3 security tool detects sketchy moves not only of a contract the user may interact with, but of all related contracts. Thus, it can see if a contract had been involved in rugpulls, Ponzi schemes, terrorism financing, spam or theft.
Source: Web3 Antivirus
At the beginning of September, W3A also released version 0.11, the most up-to-date upgrade. It brings more clarity to transaction details, showing possible decentralized exchange (DEX) pairs and their liquidity whenever users want to buy ERC-20 tokens.
The latest version also monitors transaction tax fees, alerting users whenever the commission exceeds 15%, while anything above 50% is flagged as a honeypot scam altogether.
From now on, Web3 Antivirus is also available for the Spanish-speaking audience, and its localization specialists are working to extend the language options.
Thanks to Web3 Antivirus, the Web3 space is safer, which is essential for mass adoption. Scam techniques like honeypots, permit attacks and phishing are quickly detected by this tool, preventing crypto users from potential losses.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you with all important information that we could obtain in this sponsored article, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor can this article be considered as investment advice.
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This security tool can detect honeypots and other Web3 scams - Cointelegraph
The Future of Computing is.. Confidential – Forbes
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Confidential computing (CC) is set to have a profound impact on all our lives and yet today hardly anyone recognises the term.
The Confidential Computing Consortium defines CC as protecting data in use by performing computation in a hardware-based Trusted Execution Environment. These secure and isolated environments prevent unauthorized access or modification of applications and data while in use, thereby increasing the security assurances for organizations that manage sensitive and regulated data.
Today the importance of encrypting data while its being transmitted across networks, or while in storage, is widely appreciated and there are a plethora of tools and companies focused on these tasks. But protecting data while in use ie while it is being processed by a CPU (or nowadays with AI applications, increasingly using a collection of GPUs) has so far been a highly specialist undertaking, that is not widely understood in the business community.
And yet this last mile of data protection makes all the difference in enabling developers to build flexible and trusted applications - that can process any private data in a fully trusted, provably-controlled manner. Resolving this last-mile of data protection will have a transformative impact across all areas of computing from enterprise-scale cloud applications to IoT devices in the home. Combined with other recent innovations - from multi-party computation and blockchain - there is now no limit to creating provably-trusted software systems from efficient currency tokens and smart contracts to ad-hoc multi-party exchanges.
Historically, ensuring data privacy and security, needed to rely on a high degree of control over the execution environment. For example, enterprises would typically process their data on-premise, in their own secure data centres, or through trusted vendors, rather than in a general cloud environment. There are serious problems with this approach however, including: the high costs of running and securing a data centre; the increasing complexity of operating systems, with new vulnerabilities continually being found; a similar issue with hypervisor software also means that common forms of virtualisation come with an irreducible security risk. There is finally the risk that internal engineers are careless, or even bad actors: according to Verizons 2023 Data Breach Investigations Report nearly 1 in 5 company data breaches are the fault of the companys own people.
Furthermore, it is no longer just large businesses that need to be aware of data security risks; increasingly they affect every person in every home with the increasing penetration of smart IoT devices that process ever more private data.
More recently homomorphic computing has been trialled as a possible approach to address these issues. With this approach the data is never decrypted, and so is at no risk of being leaked (short of the crypto key being compromised). However, there are severe constraints on how data can be processed while still encrypted. For example, it is feasible to find the average value of an otherwise secret dataset, but executing a general data-dependent smart-contract is beyond the reach of this approach. Homomorphic encryption schemes also create a significant computing overhead, which makes them far too costly or too cumbersome for most practical applications.
In contrast, confidential computing uses a trusted hardware execution environment which offers far more flexible and practical solutions.
A trusted execution environment (TEE) is a secure area of a CPU that is designed to protect data and processes within it from being tampered with whether from buggy software, malware, or even direct attacks on the hardware.
TEEs typically use hardware-based security measures such as memory isolation, secure boot, and hardware-based key storage to ensure the environment is secure. They will typically also use software-based security measures such as encryption and authentication to protect any sensitive data and ensure that only authorised applications can access the TEE. The most common (hardware-based) TEEs are AMDs SEV and Intels SGX, both of which use remote attestation techniques to provide cryptographic proof of the TEEs integrity and authenticity at runtime.
So given the availability of these devices, what is holding back their widespread adoption? The answer, simply, is that they are still just too difficult to use - at least for the typical developer to embed into their normal workflows to create new software applications. And this is why a number of startups are starting to bridge the gap. One initiative from our own IQ Capital portfolio is the Klave.network which promises to make it easy for any developer to design and productise applications based on smart contracts, just by using a familiar programming language.
There has been some disquiet about Central Bank Digital Currencies (CBDCs) being a threat to citizens rights due to governments ability to track (and potentially block) individual transactions in real-time, and intruding on their privacy by the collection of all this data.
However, a CBDC designed on confidential computing principles can be as private as cash is today, whilst still allowing tracking of aggregate economic trends and preventing money-laundering-enabled crime. But confidential computing also offers many other design choices: for example, allowing investigators to ask questions about an individual transaction, without having to obtain the full details of that transaction at least until required to do so by a recognised court. Another key design choice is how different CBDCs can interact with each other, and with other forms of wealth such as cryptocurrencies.
It is imperative that these design choices are properly discussed before CBDCs become widely adopted, as making big changes later on is likely to be costly, if not infeasible.
But the most promising potential for confidential computing is to allow businesses to partner and collaborate using generalised smart contracts. For example, a company that has detailed financial data on its customers can share that data with another organisation which wants to use it to train a machine-learning model, without that data being exposed to the organisation, and without the company having any access to the organisations machine-learning model. Both sides get what they want without any privacy or security risk to either party.
Another very real example is using CC based smart-contracts for privacy-enabled financial exchanges to trade non-fungible products. SoftMetal is a recently-launched trading platform where bids and asks for multi-element metals are matched, filtered by quality parameters selected by buyers and sellers, on an exchange-type auction mechanism without either party being aware of the others details until a match is found and agreed.
There will be many more such innovations as confidential computing finally goes mainstream and becomes widely adopted in the developer community. The true challenge is now faced by business leaders who need to consider how their current business models will be disrupted by this technology, and how they could and should be adopting it to create vastly more complex and valuable business ecosystems than is possible today.
I am a managing partner at IQ Capital, a venture capital firm, based in the heart of Cambridge, one of the UKs leading tech hubs. We have been investing in deep technologies such as AI for over 20 yearsSince starting in venture capital I have completed deals into over 50 technology companies, and looked into thousands of candidates in the process. I specialise in helping our portfolio companies to establish product-market fit, building and iterating the technology, and targetingthe key marketing messages. I hold an MBA and BSc from Manchester University and sit on several boards including Iotic, SensEye, Oxford Space Systems and Speechmatics.
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THORSwap DEX Proves in One Move that DeFi is Not Decentralized – CCN.com
THORSwap suspends platform following FTX hack tied to trades
Key Takeaways
THORSwap, a decentralized exchange (DEX) that operates on the multichain THORChain infrastructure, has initiated a maintenance mode in order to impede the transfer of illicit cash by malicious entities on the network.
On October 6th, THORSwap implemented a state of maintenance mode as an urgent response to mitigate the potential transfer of illicit cash. The decision was made subsequent to consultations with advisors, legal counsel, and law enforcement, as indicated in the initial notification.
However, many supporters of DeFi and decentralized crypto services will note the level of control and censorship this took.
THORSwap did not immediately respond to a request for comment.
Although the decision to temporarily suspend the platform was met with disapproval from the majority of the community, it was made with the intention of ensuring the long-term satisfaction of the DEXs clients. The corporation did not provide any additional details regarding the ongoing investigations and measures for remediation.
This action was taken after the alleged FTX hacker transferred 22,500 ETH ($38 million) this week, including ether for Bitcoin via ThorChain. The FTX hacker has approximately 163,000 ETH ($275 million) in Ether spread across multiple wallets and is renowned for suspicious withdrawals from the defunct crypto exchange FTX.
The vulnerabilities of smart contracts remain a prominent avenue via which malicious individuals exploit the DeFi market to misappropriate cash.
In contemporary practice, it has become practically obligatory for these projects to use the services of a third-party auditing firm to execute smart contracts, therefore significantly enhancing their security.
Furthermore, the emergence of crypto insurance has become increasingly prominent since it safeguards investors in the event of a theft. The DeFi market is currently facing a pressing need for enhanced protection measures, owing to the increasing number of attackers targeting new participants in this widely sought-after domain.
According to THORSwap, the contemporary decentralized economy presents a notable paradox wherein centralized exchanges predominantly facilitate cross-chain asset trades.
In order to establish an economic system immune to censorship, the implementation of decentralized exchanges (DEXs) is needed.
Numerous decentralized exchanges, such as Uniswap, primarily facilitate trading for a limited number of assets inherent to a singular blockchain. An example of a DEX is SushiSwap, which functions on the Ethereum blockchain and exclusively facilitates transactions involving ERC-20 tokens.
While single-chain DEXs offer utility, their capacity to facilitate the exchange of local assets between different blockchain networks hinders the expansion of decentralized economies.
According to a statement made by the US Treasury Department in April, DeFi services that do not adhere to anti-money laundering and countering the financing of terrorism (AML/CFT) rules provide a substantial risk of facilitating illicit finance. This is due to the simplicity with which criminals can exploit these services.
As per the research from the government agency, DeFi services are required to adhere to anti-money laundering and countering the financing of terrorism regulations, irrespective of their assertion of being fully decentralized, as they are still classified as financial institutions under the Bank Secrecy Act (BSA).
The regulatory framework around decentralized exchanges is currently developing and remains mostly ambiguous. DEXs provide distinct regulatory problems due to their operational structure, which lacks a central authority.
Applying traditional regulatory frameworks to DEXs is typically challenging due to the absence of a centralized body that can be held responsible.
The absence of a centralized authority poses challenges for regulatory entities in effectively implementing conventional compliance protocols, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) verifications.
Nevertheless, the increasing popularity of DEXs and the potential hazards they provide to users and the broader financial system have prompted regulators to intensify their investigation.
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THORSwap DEX Proves in One Move that DeFi is Not Decentralized - CCN.com
Wall Street Sees Blockchain Technology as a Game-Changer – The Daily Hodl
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Wall Street is placing a lot of hope on blockchain technology to streamline asset trading. Analysts predict that $5 trillion worth of assets could be tokenized on blockchains by 2030.
However, stringent market regulations and the SECs reputation for being leery of cryptocurrencies could put a brake on the financial sectors ambitions.
According to a report by asset management firm Bernstein, tokenization of assets translates into a $5 trillion opportunity over the next five years, with $2 trillion in currency and bank deposits and $3 trillion in stablecoin and CBDC tokens.
Analysts added that stablecoins and CBDC tokens, along with yield farming in decentralized markets, will compete with bank deposits as investments and savings vehicles.
The Citi Global Perspectives and Solutions 2023 report echoes this sentiment, projecting that by 2030, $4-5 trillion in tokenized digital securities will be circulating, with $1 trillion being attributed to DLT- (distributed ledger technology) based trade finance.
A total of $1.9 trillion of non-financial corporate and quasi-sovereign debt, $1.5 trillion of real estate funds, $0.7 trillion of private equity/venture capital and $0.5-$1 trillion in securities financing and collateral, as well as $1 trillion in trade finance, would be tokenized by 2030.
According to estimates, blockchains total market addressable by 2027 will be $147 billion.
Whats the deal with blockchain on Wall Street
Wall Street is restricted when it comes to investing in and trading certain financial assets like fixed income, private equity and other alternatives compared to public equities, resulting in under-allocation of such assets and a premium for assets with operational access.
Some assets might have been assumed to be unpopular among investors because theyre hard to access or expensive to manage.
Nowadays, different components of financial market infrastructure are operated through different systems, some of which were developed in the time of COBOL and Telex.
Payments have their own technology, as do asset discovery and pre-trade matching, while clearing and settlement are operated separately.
Several layers of the financial industry handle the same data, but they do it in their own isolated systems, so a lot of information has to be exchanged.
Exchange trading involves a complex communication scheme. Cross-border payments pass through multiple hoops on the correspondent banking system.
CSDs (central security depositories) and CCPs (central counterparty clearing houses) perform post-trade settlement on funds and bonds, each designed to reduce counterparty risk and settlement failures.
An industry-wide unified system would help fix this problem. Tokenization and DLT come into play here no more reconciliation, settlement failures, waiting for faxed documents or originals to arrive by post or investment choices limited by operational difficulty in access.
In the end, a digitally native infrastructure will be globally accessible, available 24/7/365, and integrated with smart contract and DLT-enabled automation systems, which will allow for use cases that are not possible with traditional infrastructure.
Depending on the clients investment philosophy or profile, new products could range from debt instruments that accrue daily, hourly or even minutely, to embedding real-time ESG (environmental, social and governance) monitoring.
At the level of a smart contract, the nuances of each asset can be captured.
For example, a smart contract can be programmed to automatically distribute cash tokens for corporate actions or dividends.
Hence, tokenization provides 24/7 seamless liquidity for applications such as collateral, atomic and instant settlement, rapid asset discovery, conditional payments, corporate actions controlled by smart contracts and new product features, as well as compliance enforced at the token level.
Lessons to learn
While tokenization initiatives have grown considerably in the past few years, it is equally important to examine current challenges and learn from them.
As one example, we can look at the ASX (Australian Securities Exchange).
To enhance clearing, settlement, asset registration and post-trade issuer services, ASX re-platformed its CHESS (Clearing House Electronic Sub-Register System) in 2015.
In theory, the project aimed to change the technology stack without affecting the business process.
The team stopped the project and wrote off the $165 million investment due to a series of issues, despite the technologys quality and efficiency promise.
Among the lessons Wall Street can learn from ASX include the following.
Regulatory and legal aspects
The SEC has recently taken action against several crypto companies, causing many to speculate about their intentions towards the industry.
Nevertheless, when you see someone like Larry Fink of BlackRock, the largest asset manager in the world, file to launch a Bitcoin ETF, you know he knows whats coming.
Moreover, if you consider that Invesco, Fidelity, WisdomTree and other huge financial firms are also filing for a spot Bitcoin ETF, you realize that these companies wouldnt do anything without knowing it would work.
And to top it all, when you hear Feds Jerome Powel say crypto has staying power, you know it really does.
So, we need to learn to read the tea leaves to interpret all those signals and not get swayed by fears pushed upon us.
While the US struggles to get things done on crypto regulation, the crypto regulatory environment in other countries is quite encouraging.
With its landmark MiCA (Markets in Crypto-Assets) law an act that has been five years in the making Europe is laying down a red carpet for cryptocurrency.
In terms of legal aspects of tokenization in trade finance, the UK has recognized electronic trade documents as legal documents.
This represents an important milestone for blockchain deployment since English law governs 80% of global financial transactions.
A law enacting the Law Commissions recommendations on electronic trade documents was signed into law on July 20, 2023.
Final words
Although blockchain technology could disrupt traditional financial markets in a significant way, and major financial institutions appear to be eager to embrace it, there are still a lot of regulatory, legal and technical hurdles to overcome before it can be widely adopted.
Even so, many experts believe that this technology will eventually become an integral part of the global financial system.
Maria Carola is the CEO of StealthEX.io, an instant, non-custodial cryptocurrency exchange with over 1,300 assets listed. After graduating the University of Vilnius, Maria spent almost a decade in the crypto space, working in marketing and management for a variety of blockchain projects including wallets, exchanges and aggregators.
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Wall Street Sees Blockchain Technology as a Game-Changer - The Daily Hodl
Base L2 Breaks Above $500 Million TVL 6 Weeks After Mainnet Launch – U.Today
Vladislav Sopov
Base, second-layer scaling solution for Ethereum (ETH) curated by leading US exchange Coinbase, surpassed Solana (SOL) by TVL
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Base, an Ethereum-based L2 on OP Stack by Optimism, is eating out the market share of the largest scalers. After six weeks of explosive growth, it left some veteran smart contracts platforms in the dust.
Coinbase's L2 scaling network Base smashed through $500 million in total value locked across various protocols. This milestone was achieved despite the pale performance of Ethereum (ETH), Optimism (OP) and other major DeFi tokens, L2Beat data says.
Currently, the aggregated USD-denominated volume of value locked in decentralized finance (DeFi) protocols on Base is estimated at $533 million. This is equal to 5.15% of the net volume of the L2s segment.
According to DefiLlama, another tracker of blockchain data, Base's TVL is $370 million. However, even with the lowest of estimations, it eclipses Solana (SOL), an established smart contracts platform.
As covered by U.Today, in September, Coinbase's L2 Base witnessed explosive growth in both transactions and unique addresses. On Sept. 14, 2023, it processed over 1.88 million transactions, surpassing all competitors.
In terms of total 24-hour transactional volume, the Base blockchain exceeded Avalanche (AVAX), Optimism (OP) and Tron (TRX), DefiLlama's data says.
As such, amid all L2 platforms launched in the last two years, Base has become the undisputed leader. Now, it is only surpassed by Optimism (OP) and Arbitrum (ARB), the largest L2 scalers.
It should also be noted that despite the major hype, the team is not going to release a Base governance token in the near future. However, Coinbase's Chief Legal Officer Paul Grewal admitted that this scenario is not ruled out entirely by the developers.
At the same time, all BASE tokens offered by airdrop runners on X are blatant scams and are only used to steal users' cryptocurrency.
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Base L2 Breaks Above $500 Million TVL 6 Weeks After Mainnet Launch - U.Today
Ethereum Staking Momentum Falling, What’s Going On? – Bitcoinist
The number of Ethereum (ETH) holders choosing to stake, effectively locking their coins in the smart contracts platform, is falling. According to CryptoQuant data, as of August 23, the staking inflow total stood at 30,656, down from 404,704 registered on June 1.
The staking inflow total, which measures the number of unique addresses moving coins to the official Beacon Chain deposit address for staking purposes, rose steadily from around 5,952 on April 3 to 404,704 on June 1.
This spike was significantly buoyed, as data shows, with the activation of the Shapella upgrade on April 12. To illustrate, between April 12 and June 1, the staking inflow total rose from 16,736 to 404,704, a more than 25X increase.
The Shapella upgrade allowed Ethereum validators to withdraw their coins for the first time since they began locking in late December 2021. This update gave validatorstasked with validating transactions and keeping the network securean option to keep staking their coins or exit.
However, according to Dune Analytics, the number of validators rose from around 568,000 on April 12 to over 913,000 as of early September 2023.
In September 2022, Ethereum powered off the proof-of-work consensus protocol to validate transactions to a proof-of-stake consensus. Instead of miners, Ethereum now relies on validators. When writing, there are over 813,105 active validators who have, in total, lockedover 26 million ETH.
The 92% contraction in staking count is concerning. However, it doesnt necessarily mean the Ethereum network is now susceptible or flawed.
Specifically, while the metric tracks the number of ETH holders choosing to stake and earn rewards on Ethereum, the tracker doesnt reveal the number of those who withdraw during this period.
A sharp increment in the number of ETH unlockedas shown by the number of validators deactivating their nodesor choosing not to validate transactions could cause worry. This might open the network to centralization concerns since liquidity-staking providers like Lido Finance are increasingly popular following the Shapella upgrade on April 12.
To quantify, Lido Finance, a dominant decentralized finance (DeFi) protocol with a total value locked (TVL) ofover$13.9 billion when writing on September 22, channels hundreds of thousands, if not millions of ETH, from holders, allowing them to earn staking rewards.
Feature image from Canva, chart from TradingView
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Ethereum Staking Momentum Falling, What's Going On? - Bitcoinist
Deflationary Crypto Coins: How Their Value Increases by the … – Cryptopolitan
Description
Cryptocurrency enthusiasts and investors worldwide are highlighting a fascinating trend deflationary cryptocurrencies. These digital assets, governed by innovative tokenomics models, promise to increase in value over time, attracting seasoned traders and newcomers. To appreciate the allure of deflationary cryptocurrencies, its essential to grasp the economic principles of supply and demand. In contrast to traditional Read more
Cryptocurrency enthusiasts and investors worldwide are highlighting a fascinating trend deflationary cryptocurrencies. These digital assets, governed by innovative tokenomics models, promise to increase in value over time, attracting seasoned traders and newcomers.
To appreciate the allure of deflationary cryptocurrencies, its essential to grasp the economic principles of supply and demand. In contrast to traditional fiat currencies vulnerable to inflation, deflationary crypto coins operate uniquely. They methodically reduce their total supply, fostering a sense of scarcity and enhancing the tokens intrinsic worth.
This Cryptopolitan guide is a comprehensive list and explanation of deflationary crypto coins. Our objective is to acquaint you with this captivating concept and shine a spotlight on influential deflationary cryptocurrencies set to make waves beyond 2023.
A deflationary cryptocurrency is a digital or virtual currency with a unique economic model designed to reduce its overall supply over time. This stands in contrast to traditional fiat currencies, which are typically inflationary, meaning their supply increases gradually.
In a deflationary cryptocurrency, several mechanisms work together to decrease the available tokens or coins. The primary goal is to create scarcity, which can potentially lead to an increase in the value of the cryptocurrency. Heres a brief overview of how deflationary cryptocurrencies work:
Token burning: Many deflationary cryptocurrencies incorporate a mechanism called token burning. When transactions occur on the blockchain, a portion of the tokens used as transaction fees is intentionally destroyed or burned, removing them permanently from circulation. This reduces the overall supply.
Limited total supply: Deflationary cryptocurrencies often have a capped or limited total supply, meaning theres a maximum number of tokens that can ever exist. For example, Bitcoin has a cap of 21 million coins.
Scarcity and demand: As the supply of the cryptocurrency decreases over time due to token burns and the limited total supply, the economic principle of supply and demand comes into play. With a reduced supply and growing demand, the value of the cryptocurrency may increase.
Incentives for holding: Deflationary cryptocurrencies frequently incentivize users to hold their tokens rather than trade or sell them. This is because holding can lead to potential price appreciation due to scarcity.
Deflationary cryptocurrencies have taken the world of digital assets by storm. In contrast to traditional fiat currencies, which tend to lose value due to increasing supply and central authority control, these unique digital assets operate on a different economic principle. Their tokenomics model is designed to reduce their circulating supply over time, primarily achieved through mechanisms like token burning or smart contracts that regulate the token supply.
The core idea behind deflationary cryptocurrencies is to enhance the value of the tokens investors hold. As the supply of these tokens decreases, scarcity sets in, driving up demand and increasing the tokens value. This fundamental concept has garnered significant interest from investors and speculators looking for assets with the potential for substantial appreciation over time.
Deflationary cryptocurrencies have gained significant traction in the crypto sphere in recent years. Developers and investors alike have been drawn to their unique tokenomics models and the promise of value appreciation. Consequently, numerous deflationary tokens have been introduced into the market, each with features and value propositions.
Deflationary mechanisms hold substantial significance within the crypto market, revolutionizing the dynamics of digital assets in multiple ways:
Deflationary and inflationary cryptocurrencies represent two different economic approaches in the digital asset market.
Deflationary cryptocurrencies
Deflationary cryptocurrencies, such as Bitcoin, follow a model that gradually reduces the total token supply. This is achieved through methods like token burning or supply capping. The underlying principle is that scarcity enhances token value, aligning with the fundamental supply and demand concept.
Inflationary cryptocurrencies
On the other hand, inflationary cryptocurrencies, like many fiat currencies and stablecoins, gradually increase their token supply, often under the control of central authorities. This continuous issuance could lead to decreased value due to oversaturation.
Divergent economic principles
Deflationary models rely on scarcity to drive up token worth, while inflationary models prioritize stability but can erode purchasing power over time. Long-term investors often favor deflationary tokens for their potential for value appreciation, while those seeking stability may opt for inflationary tokens.
Investment considerations
Investors choose between these models based on their financial objectives and risk tolerance. Deflationary models offer the prospect of higher returns, but come with increased volatility. In contrast, inflationary models provide a more stable store of value, but may lag in asset appreciation.
When considering an investment in deflationary cryptocurrencies, investors should take several key factors into account to make informed decisions and manage their risks effectively.
Bitcoin (BTC) is a leading deflationary cryptocurrency renowned for its scarcity and pioneering blockchain technology.
The halving mechanism
At the core of Bitcoins deflationary model lies the halving mechanism. Approximately every four years, miners reward for validating transactions is halved. Initially set at 50 BTC, it was reduced to 25 BTC in 2012, 12.5 BTC in 2016, and further halved to 6.25 BTC in 2020. This reduction in miner rewards curtails the rate at which new Bitcoins are created, making it more difficult and resource-intensive to mine as time progresses.
Impact on supply
The halving mechanism ensures that Bitcoins supply grows at a diminishing rate. supply cap of 19.49 million coins, this scarcity drives Bitcoins increasing value. As the supply growth slows, the cryptocurrency becomes increasingly resistant to inflationary pressures that plague traditional currencies.
Current status of Bitcoins supply
As of today, over 18.8 million Bitcoins have been mined, leaving approximately 2.2 million yet to be brought into circulation. With each passing day, Bitcoins supply increases slower, reinforcing its position as a deflationary digital asset.
Binance Coin (BNB) is a prominent deflationary cryptocurrency created by Binance, one of the worlds largest cryptocurrency exchanges. BNB offers various use cases within the Binance ecosystem, including trading fee discounts, participation in token sales, and more.
Deflationary features
BNB incorporates a deflationary model, ensuring a decrease in its supply over time. One key deflationary feature is the regular token burn conducted by Binance.
Buyback-and-burn approach
Binance employs a Buyback-and-Burn strategy to reduce the supply of BNB tokens. In this process, Binance uses a portion of its profits to buy BNB tokens from the market. These tokens are subsequently removed (burned), reducing the overall circulating supply. This strategy creates scarcity, ultimately driving up the value of BNB.
Current supply and burning process
As of the latest available data, the total supply of BNB is capped at 200 million tokens. Periodic token burns, typically performed quarterly, remove a portion of BNB from circulation. The exact number of tokens burned varies with each event but is designed to steadily decrease the total supply of BNB over time.
Litecoin (LTC) is a distinguished deflationary cryptocurrency often regarded as the silver counterpart to Bitcoins gold. Created by Charlie Lee in 2011, Litecoin was designed to offer faster transaction confirmation times and a different hashing algorithm. LTC has become one of the most enduring and widely accepted cryptocurrencies in the market.
Halving events and supply effects
Litecoin, like Bitcoin, undergoes halving events approximately every four years. During these events, the block reward that miners receive for confirming transactions is reduced by half. This reduction in block rewards serves as a deflationary mechanism, slowing down the rate at which new LTC is created. As a result, Litecoins supply growth becomes more gradual, mirroring the scarcity-driven approach of Bitcoin.
Maximum supply
Litecoin has a maximum supply limit of 84 million coins, four times the maximum supply of Bitcoin. This cap contributes to the deflationary nature of LTC, as it ensures that the total number of Litecoins in existence will never exceed 84 million. This scarcity factor, combined with halving events, plays a pivotal role in sustaining and increasing Litecoins value over time.
PancakeSwap, a prominent decentralized exchange (DEX) built on the Binance Smart Chain (BSC), has rapidly risen to prominence within the DeFi (Decentralized Finance) space. Central to its ecosystem is the native token, CAKE.
CAKEs role and supply regulation
CAKE serves as the utility and governance token of PancakeSwap. It plays a pivotal role in the platforms operations, including liquidity provision, yield farming, and decision-making through its voting mechanism.
PancakeSwap employs a deflationary mechanism through token burns to regulate its supply and enhance its value. These burns involve the deliberate removal of CAKE tokens from circulation. For instance, a portion of the fees generated from transactions on the platform is used to buy CAKE tokens from the market and then burn them, effectively reducing the token supply.
Current supply status
As of the latest available data, PancakeSwap had conducted several successful token burns, resulting in a decrease in the total CAKE supply. This deliberate reduction in supply is designed to make each remaining CAKE token more scarce, potentially driving up its value over time.
Polygon (MATIC) has emerged as a vital solution in the cryptocurrency market, primarily addressing scalability issues within blockchain networks. Its significance lies in its role as a Layer 2 scaling solution for Ethereum, one of the most widely used blockchains.
The deflationary model via transaction fees
MATIC implements a unique approach to deflation by using transaction fees. Users who conduct transactions or interact with decentralized applications (dApps) on the Polygon network pay fees in MATIC tokens. These tokens are then effectively burned or removed from circulation.
This deflationary mechanism serves two key purposes. First, it reduces the overall supply of MATIC tokens, potentially increasing their scarcity and value. Second, it aligns user incentives, as the burning of MATIC through fees encourages holding and staking of the token.
Current MATIC supply data
As of the latest available data, Polygon has conducted a significant number of token burns through transaction fees, contributing to the deflationary model. The exact supply figures may vary over time due to these burns, but the strategy remains focused on gradually reducing the total supply of MATIC tokens.
There are tokens that can possess both inflationary and deflationary characteristics like the SOL token. Solana is both inflationary and deflationary. Solana is considered an inflationary token since the token has an infinite supply. However, the Solana token also employs a deflationary mechanism by charging transaction fees that are paid in SOL tokens to maintain the value of SOL tokens.
Additionally, the Solana ecosystem regularly burns the SOL coins to sustain the value of its governance token. There are several ways a crypto coin can qualify as a deflationary token, and burning the tokens is one of the proven ways since it regularly reduces the supply of SOL tokens that subsequently drives up the demand and value of the Solana.
The Tron network is one of the largest blockchain networks that have gained popularity over recent years. The TRX token is the native digital token used in the Tron network, a blockchain network widely known for its solid support for decentralization. In 2021, the TRX tokenomics was switched from the popular inflationary model to the deflationary model that it uses to date. The change came after the Tron community suggested the benefits of transitioning from an inflationary to a deflationary token system. The transition made TRX the first token to make the change, in 2021.
The Ripple platform has undergone several legal complications that have affected the general growth of cryptocurrency. The deflationary token also employs a unique deflationary model that allows it to maintain the value of the XRP token. When XRP tokens are mined, miners have to pay transaction fees for each transaction on the platform.
The uniqueness of Ripples deflationary model comes from how it handles the transaction fees paid during the mining process. The deflationary model burns all the transition fees collected, unlike other platforms that issue the tokens as a reward to miners.
Similar to Bitcoin and Litecoin, Terras LUNA coin is a deflationary token with a finite amount of tokens set to 1 billion. The token is therefore deflationary in that it limits the number of tokens in circulation over time. The native token on Terra Networks total supply of 1 billion was released at launch and the circulating supply continues to reduce with time.
The CRO token is the native digital token of the Crypto.com platform. one of the most aggressive crypto platforms with an aggressive marketing campaign in the past few months.
Before the launch, the platform burned nearly 70 billion tokens which were estimated to be worth $10 million at the time. The total supply of the tokens is locked by smart contracts on the platform that is scheduled to be burned monthly making it a deflationary token.
Bitcoin cash is a deflationary token, with a maximum supply of 21,000,000 coins. The tokens are regularly burned which has led to the increase in the price of the BCH tokens. The Bitcoin cash halves the miners rewards after every four years which ensures the circulating supply making it a deflationary token.
The Filecoin blockchains native token is the FIL token. The Filecoin blockchain network is unique in that it is an open-source platform that allows for the decentralized storage of files within its network.
There are several criteria to determine deflationary tokens. FIL token makes the list of deflationary tokens simply because it has a fixed supply of 2 billion tokens.
The ETC token also makes the list of deflationary tokens since it has a unique deflationary model. For mining ETC tokens, the platform has 5 ETC as the initial block reward for miners on the platform. The deflationary model of ETC is meant to decrease the block rewards by 20% after every 5 million blocks mined. Approximation shows that 5 million ETC blocks could be mined after an estimated period of 2.5 years.
The FTX token is the native digital token used in the FTX central exchange platform. The centralized exchange platform has grown incredibly over the years, renowned for providing affordable trading fees to its users. The FTX Token has a ticker symbol of FTT and is considered a deflationary token.
The FTT coin is deflationary because it is used on the FTX centralized exchange by traders to pay fees. Additionally, the tokens supply decreases with time, which progressively increases the demand for the token, making FTT a deflationary token.
The Safemoon platform employs a specific deflationary model that has been explained above. Among the common deflationary mechanisms available today, the Safemoon token utilizes the burn-on transaction method. The burn on-chain transactions on Safemoon charge a 10% rate on transactions within its platform.
The 10% tax charged on the Safemoon platform is re-distributed to care for deflation. Approximately 2.5% of the total tax charge is burned, through a smart contract that sells the tokens into BNB. The transactions are equivalent to burning the tokens making the SAFEMOON coin a deflationary token.
As we have seen from the examples of deflationary models, the number of coins in circulation reduces, and the value of each coin increases. Deflationary cryptocurrencies have a maximum supply cap that cannot be changed. Now, if you want to make a cryptocurrency token that has a lot of features and is tightly connected to a dApp ecosystem, youll need to hire a skilled token development team. But the general steps can be outlined below.
Deflationary cryptocurrencies are reshaping the digital asset landscape, offering a unique economic model that emphasizes scarcity and potential value appreciation. As these innovative tokens reduce their supply over time through mechanisms like token burning and limited issuance, they stand in stark contrast to traditional inflationary fiat currencies.
Investors looking to explore the world of deflationary crypto coins should consider essential factors. Tokenomics and the mechanisms driving deflation are paramount, ensuring the models sustainability. Project viability, market demand, and community engagement play pivotal roles in the success of these cryptocurrencies.
Risk management is crucial, as deflationary models can introduce price volatility. Diversification across various assets can help mitigate risks and balance a portfolio. Additionally, staying informed about regulatory developments and maintaining a long-term perspective are key to navigating the dynamic crypto market.
Each deflationary cryptocurrency presents a unique value proposition, from Bitcoins pioneering halving mechanism to Binance Coins innovative buyback-and-burn strategy, Litecoins steady halving events, PancakeSwaps utility-driven token burns, and Polygons transaction fee-based deflation. These mechanisms enhance the appeal of these assets for both seasoned investors and newcomers seeking opportunities in the crypto market.
As the crypto landscape evolves, deflationary cryptocurrencies remain at the forefront of economic experimentation, challenging conventional fiat models.
Deflationary cryptocurrencies are digital assets designed to decrease their total supply over time through mechanisms like token burning or capped issuance. This contrasts with inflationary fiat currencies.
These tokens become scarcer as their supply decreases, adhering to the law of supply and demand. This scarcity can lead to increased demand and higher token values.
Deflationary mechanisms ensure sustainable growth and prevent oversaturation in the cryptocurrency market, making these tokens appealing to long-term investors.
Token burning involves the intentional removal of tokens from circulation. It reduces supply, which can drive up token values and enhance scarcity.
Deflationary tokens are often considered better for long-term investments due to their potential for value appreciation. Short-term trading may expose investors to price volatility.
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Deflationary Crypto Coins: How Their Value Increases by the ... - Cryptopolitan
Stellar (XLM) Readies for Its Biggest Protocol Upgrade: Details – U.Today
Tomiwabold Olajide
Stellar to receive its biggest and most complex protocol upgrade to date, introducing smart contract support
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Blockchain-based payment network Stellar (XLM) readies for its biggest, most complex protocol upgrade to date, "Protocol 20 Upgrade," which will introduce support for Soroban smart contracts.
In an exciting upcoming development, Soroban's smart contract support will be added to Stellar's testnet on Sept. 20 at 3:00 p.m. UTC. Soroban makes this known in an X post, adding that the Soroban Futurenet will remain live and unaffected for the time being.
The Stellar testnet will also upgrade on Wednesday, Sept. 20, at 3:00 p.m. UTC to release candidate versions of Stellar Core and Horizon.
As the Protocol 20 upgrade would introduce new network settings that validators control, the initial upgrade vote might be followed by a series of additional votes to adjust the settings.
As stated by Stellar in a blog post explaining the details of the upgrade, mainnet validators are likely to schedule an upgrade vote date for six weeks after stable releases come out. Thus, the date for the public network upgrade vote is TBD, which means "to be determined."
Stellar, however, promises to provide an update in this regard as time goes on. It also promises to immediately supply timelines for the votes and also update with new dates as new information comes in or as new releases come out.
Stellar garnered attention in the past week after it unveiled its much-awaited teaser, which was a fancy commercial with British actor Idris Elba. A new look for Stellar was also undertaken with a website rebrand.
On Sept. 14, Stellar also introduced "Decentralife," a series that explores the authentic stories of individuals creating real-world change through blockchain technology.
At the time of writing, Stellar (XLM) was less moved by the upgrade news. XLM was up 1.40% in the last 24 hours to $0.119, mirroring the general rise in the crypto market.
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Stellar (XLM) Readies for Its Biggest Protocol Upgrade: Details - U.Today
Soroban Smart Contracts to Launch on Stellar, Dubbed By Far The Biggest Protocol Upgrade Yet – CoinCodex
Key takeaways
Stellar has announced that the Soroban Smart Contracts upgrade is set to go live on testnet on 20 September. Until now, Stellar has not had a virtual machine that can execute custom code like other leading layer-1 blockchains, such as Ethereum, Solana, Aptos, and others. The Sorobon upgrade, therefore, will introduce a competitive smart contract language that could encourage more decentralization and innovation in the Stellar ecosystem.
Previously, the Stellar network could only support simple smart contracts known as Stellar Smart Contracts (SSCs). SSCs can track multiple on-chain transactions at once; however, the breadth of customization is limited when compared to other leading chains.
Stellars move to incorporate a more advanced smart contract language has been dubbed by far the biggest protocol upgrade yet. Soroban Smart Contracts will unlock greater versatility for developers on the Stellar blockchain, which could lead to a growing number of decentralized applications (dApps) being launched within the ecosystem.
The major Sorobon milestone follows a recent announcement from Stellar that unveiled a new look for the brand, intended to better connect the blockchain to the real world. Stellars new identity was initially met with disappointment from investors, but the price of XLM has since recovered after news broke about Sorobans testnet launch.
The price of XLM crashed in the aftermath of a recent announcement that it had changed its brand identity. It seems as though investors may have been disappointed that Stellar has moved away from its core follower base, and has instead targeted a different market entirely.
XLM fell 7.5% on the day the rebrand was announced and had been in a downtrend since 10 September, just before the rebrand was unveiled. Since yesterday, however, XLM has recaptured a key level of support at ~$0.117 and may be ready for further upside on low timeframes if it can hold this level.
Zooming out, XLMs Soroban upgrade could spark new life into the market. Its certainly a major development for the ecosystem, and investors will be watching keenly during the testnet phase hoping that it goes off without a hitch. The CoinCodex algorithm forecasts a slow reversal for XLM, highlighting a possible breakout in March 2024 that would mark the beginning of more bullish price action if it unfolds.
Ethereum (ETH) combined the ability to create complex smart contracts with distributed ledger technology to great effect when it first launched back in 2015. The widespread popularity of Ethereums transparency, accessibility, and immutability has made ETH the second most valuable cryptocurrency by market capitalization and the largest ecosystem of dApps by TVL.
Until now, Stellar (XLM) has not attempted to compete with Ethereum. The blockchain serves a different function and has different kinds of users primarily, Stellar aims for more equitable access to DeFi by creating real-world infrastructure that brings people on-chain, serving legacy financial institutions and other enterprise clients.
The move for Stellar to introduce a complex smart contracts language means that it will now support many of the same functions as other leading layer-1 networks, including Ethereum, but with greater connectivity to traditional finance systems.
Whether Stellar can compete with Web3s largest ecosystem remains to be seen, but the recent rebrand which included a helpful tone and a partnership with actor Idris Elba may indicate that it has plans to conquer mainstream markets instead.
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How To Use GPT-4 To Write And Debug Solidity Smart Contracts – Blockchain Magazine
Smart contracts have revolutionized the way transactions and agreements are carried out in the blockchain space. These self-executing contracts, often written in Solidity, enable trustless and automated interactions on blockchain platforms like Ethereum. However, writing and debugging Solidity smart contracts can be challenging, as accuracy and security are paramount. In this article, well explore how
Smart contracts have revolutionized the way transactions and agreements are carried out in the blockchain space. These self-executing contracts, often written in Solidity, enable trustless and automated interactions on blockchain platforms like Ethereum. However, writing and debugging Solidity smart contracts can be challenging, as accuracy and security are paramount. In this article, well explore how you can harness the power of GPT-4, a state-of-the-art language model, to assist in writing and debugging Solidity smart contracts with accuracy and confidence.
Solidity is a high-level programming language specifically designed for writing smart contracts on the Ethereum blockchain. These contracts are integral to decentralized applications (dApps), initial coin offerings (ICOs), and various blockchain-based services. Solidity code defines the rules and logic governing these contracts, making it essential to ensure code correctness and security.
Solidity code, once deployed, is immutable, meaning any errors or vulnerabilities can result in significant financial losses or even exploitability. Ensuring accurate and secure contract code is, therefore, paramount. Traditional methods of code review and debugging may not always catch subtle issues or optimize code for efficiency.
Solidity is a high-level programming language designed explicitly for writing smart contracts on the Ethereum blockchain. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They automatically execute and enforce the terms without the need for intermediaries, ensuring trustless and transparent transactions.
In the context of Ethereum, Solidity serves as the language for defining the rules and logic of these smart contracts. It allows developers to specify how funds should be managed, conditions for transactions, and more, all in a secure and decentralized manner.
Well-written and secure smart contracts are paramount in the blockchain ecosystem. Any errors or vulnerabilities in smart contract code can lead to significant financial losses or exploits. Due to the immutable nature of blockchain, once a contract is deployed, it cannot be changed. Therefore, ensuring accuracy, security, and efficiency in the code is of utmost importance.
Writing and debugging Solidity code can be a complex and challenging task. Some of the key challenges include:
Also, read The Ultimate Solidity Cheatsheet: Top 10 Things For Your Solidity Cheatsheet
GPT-4, short for Generative Pre-trained Transformer 4, is a cutting-edge language model developed by OpenAI. It is renowned for its natural language understanding and generation capabilities. GPT-4 builds on the successes of its predecessors, offering improved accuracy, context comprehension, and language generation.
GPT-4 can understand and generate human-like text in a variety of languages, making it a versatile tool for a wide range of natural language processing tasks.
GPT-4 can assist developers in generating Solidity code in several ways:
The use of AI, such as GPT-4, for Solidity code generation offers several benefits:
Incorporating AI into the Solidity development workflow can lead to more reliable, efficient, and secure smart contracts, advancing the state of blockchain technology and making it more accessible to developers worldwide.
To leverage GPT-4 for generating Solidity smart contract code, youll need to set up your development environment. Here are the steps to get started:
Now that your environment is set up, you can start using GPT-4 to generate Solidity smart contract code. Heres a step-by-step guide:
Smart contract development in Solidity can be complex, and errors in code can have serious consequences. Some common errors include:
GPT-4 can be a valuable tool for identifying and fixing errors in Solidity code:
Heres an example of how GPT-4 can assist in debugging Solidity code:
Issue: Reentrancy Vulnerability
Description: My contract allows external contracts to withdraw funds, but Ive noticed a potential reentrancy issue. How can I prevent this?
GPT-4 Response: To prevent reentrancy attacks, you can use the checks-effects-interactions pattern. First, perform all checks and state changes, then interact with external contracts. Use a mutex or state variable to control access to critical functions to ensure reentrant calls cant modify the contracts state concurrently.
To write secure Solidity code, consider the following best practices:
When using AI-generated code, its crucial to:
Code review and testing are critical steps in the development process, regardless of whether code is generated by humans or AI. Code review helps identify issues, enforce coding standards, and ensure code quality. Testing, especially using adversarial techniques, can reveal vulnerabilities and corner cases that may not be evident during code generation.
In the world of smart contracts, where security is paramount, the combination of AI assistance, rigorous code review, and comprehensive testing can help developers create robust and secure Solidity code, reducing the risk of exploits and vulnerabilities in blockchain applications.
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How To Use GPT-4 To Write And Debug Solidity Smart Contracts - Blockchain Magazine