Featured | Examining various centralized and decentralized crypto lending platforms

Satoshi Masamoto: 5 daily high-quality articles on cryptocurrencies

Today's content includes:

1 Review each centralized and decentralized crypto lending platform;

2 Some games require a closed ecosystem;

3 trillions of ETH use cases;

4 The concept of charging fees and taxes in decentralized asset transactions;

5 Blockchain social network: Use blockchain for monetization and data storage.

1 Review of various centralized and decentralized crypto lending platforms

Brief: – The jurisdiction / legal structure of almost all centralized platforms is not transparent – ​​It is unclear whether the assets of the lenders are really as claimed by the centralized platform The platform poses significant security risks (administrator key management, possible errors, reliance on MakerDAO and USDC)

Before investing in cryptocurrency loans, the authors took a closer look at most lending platforms. The following centralized platforms were reviewed: NEXO, Celsius, BlockFi and Crypto.com. The decentralized platforms reviewed include Compound, Nuo, and Ethlend (Aave Protocol).

NEXO summary:

  • Higher yields (also applicable to fiat currencies)
  • Credissimo is a legitimate lender, ensuring NEXO always has customers
  • NEXO tokens are eligible for dividends when used as loan collateral
  • Network of Jurisdictions and Shell Companies
  • Lack of clarity regarding the following NEXO earnings / dividends
  • NEXO token arbitrage lacks clarity
  • Who is the borrower?

Celsius summary:

  • Good yield
  • Exotic loan collateral options
  • Registered with the SEC
  • Withdrawal Policy
  • Who is the borrower?
  • Only accessible via mobile app
  • Inadequate explanation for high production

SALT summary:

  • Exempted to some degree from SEC review
  • Interesting borrowing options
  • Cannot be lender
  • Users have very limited permissions
  • SALT token, ICO history missing utility

BlockFi summary

  • Winklewoss twins frown dissatisfied at anyone trying to steal BlockFi funds
  • Good yield
  • No historical red flags (read: no useless ICO)
  • The interest rate is determined by the reading leaf
  • Stablecoin collateral is limited to GUSD and directly linked to Gemini (increase system risk)
  • Who is the borrower?

Crypto.com summary:

  • If a company uses its internal funds only for liquidity purposes, it means providing users with good deposit security
  • Flexible loan lock-up period
  • Unclear legal structure
  • Token Cut Leek History (hence the name change)
  • Only accessible funds via smartphone app
  • Lack of focus
  • Provide multiple products at once (credit cards, loans, cryptocurrency exchange, quantitative transactions)

Compound summary:

  • Established as the largest decentralized participant
  • Relatively good liquidity
  • Repeated reviews show less frequent and serious trends
  • Clear jurisdiction
  • Administrator private key is the central point of failure
  • Difficult Oracle (Rising Price) Vulnerabilities

Ethlend / Aave Summary:

  • Aave supports FIAT pinned loans
  • P2P loan-P2P
  • Low liquidity / quantity
  • Outdated information about price predictions
  • Need more audits

NUO Abstract

  • Insurance funds can protect you by sacrificing profits and reducing risk
  • Significant potential benefits through market imbalances
  • Margin trading on Kyber and Uniswap
  • Instant liquidity (untested)
  • Lack of proper audit reports
  • Centralized closed-source Oracle can wipe out draining your account during network congestion
  • Low liquidity of activity loans and reserve pools

Full text link: https://medium.com/100-towers/critical-review-of-crypto-lending-platforms-3faea809a618

2 Some games require a closed ecosystem

Tony Sheng got married and went to Multicoin. It looks like I haven't written an interesting coin circle article for a long time. This article is about games, but I actually think it has some inspiration to the currency circle. Especially when we are passionate about openness. The excerpt is as follows:

By clearing more difficult missions, players can get better gear rewards, which allows them to clear even harder missions and provide them with better gear rewards, and so on. Over time, players need to get higher gear quality to complete new, more difficult content.

It is unrealistic for all members to be fully equipped with the best equipment. Therefore, in order to bridge the gap, players can increase their power with consumable items that temporarily increase their power. These consumable items can be very expensive and end up being one of the player's biggest cost centers.

Warcraft is about progress. To make progress, you need better equipment to clear more difficult content. Sometimes you need consumables to help you clear content.

In order for the game to survive, progress needs to feel rewarded. For it to be rewarding, progress needs to feel valuable. To make progress worthwhile, investments need to be costly.

The classic World of Warcraft works because (1) progress takes a lot of time, (2) it is difficult to get the best equipment, and (3) the gold in the game feels worth it. This equipment is enough to clear the most difficult missions. Although the in-game economy is not perfect, it is relatively balanced

For World of Warcraft and other progress games, a closed ecosystem is vital to its survival. Allow gold coins in the game to be traded as fiat money, and vice versa, or allow players to freely trade items and trade between the two games, which will actually destroy the game.

I'm not trying to explain the whole concept, but just to observe that one of the most beautiful things in these virtual game worlds is that they can (need) be isolated from all other worlds.

Full text link: https://tonysheng.substack.com/p/some-games-need-closed-ecosystems

3 trillions of ETH use cases

Bankless's Ethereum milk article is to propose the concept of ETH as an economic bandwidth to promote trust in the economy. In short, even though the Defi market is getting bigger and bigger, the valuation of Ethereum can't support it, so it must rise.

Projects such as MakerDAO and Compound leverage Ethereum's delicensed financial infrastructure to create new paradigms of global finance. MakerDAO allows global access to trust the stable value. Compound opens the door to high yields for the global population.

What is the common theme? All these monetary agreements require permission to trust the value that drives them. Where does this value come from? Not dollars. Not Bitcoin. Ether.

in short:

ETH is the de-trust value that provides economic bandwidth for Ethereum's de-licensed currency protocol.

Over the past few years, these currency protocols have continued to consume more and more Ethernet economic bandwidth. By the second half of 2019, DeFi's consumption of Ethereum's economic bandwidth has increased significantly, and it is now consuming nearly 3% of the total economic bandwidth of assets.

All these projects are devouring the economic bandwidth that Ethereum trusts.

Trust the importance of economic bandwidth.

In order to build an economy of trust, you need the value of trust. Only decentralized encrypted native assets that settle on the chain without central support can gain value without trust. BTC and ETH can be viewed as trust assets in their respective networks.

The total flow value of these untrusted assets is the network's untrusted economic bandwidth. In other words, the total economic bandwidth of Ethereum in US dollars is the liquid market value of Ethereum.

High economic bandwidth is essential for the free financing of Ethereum. The higher the economic bandwidth, the more financial assets the network's underlying trustless assets can bring. If the value of Ethereum (in US dollars) increases 10 times, the ability of Ethereum to mortgage new financial assets will also increase 10 times.

However, because Ethereum's total bandwidth is only $ 16.2 billion, today Ethereum cannot even support the economy of a small country, let alone the financial system of the entire world.

Full text link: https://bankless.substack.com/p/the-trillion-dollar-case-for-eth-eb6

4 The concept of charging fees and taxes in decentralized asset transactions

Decentralized exchange fee systems are useful and have a reason, because they limit abuse, otherwise they may bloat applications, increase Gas costs and prices, and of course cause some transaction concentration problems.

But if one's goal is to create an exchange without a centralized owner, how do you set fees or taxes and redistribute those sets fairly within the constraints imposed by the Ethereum system? This article gives two concepts and some problems derived from these two concepts, and thinks about them.

Concept 1: Time-based Harberger tax

People can use leases or "time tokens" similar to pioneer taxation, allowing people to buy time on DEX. In this way, DEX can automatically auction time tokens for each period and redistribute the collected money to the token owner of the previous period.

Problem: By implementing a time-based Harberger tax, people will need platform time tokens as a prerequisite for using the service. Unless the supply of time tokens is increased to alleviate this burden, this may lead to a negative user experience, increase friction, and restrict visitors from paying the highest fees.

Concept 2: Price Voting Tax Expenditure

"Voting tokens" can be used to set fee prices to be listed on the Dex by consensus, and the fees collected are then redistributed to the holders of the voting tokens. This more traditional fee limits the number and duration of orders without creating a token-based barrier to entry.

Question: If price voting tax payments are to be implemented, there are some factors that need to be considered in the initial voting token issuance. If you want to linearly auction tokens at a promised price, you can raise a lot of money from the whale, but essentially, you have fewer voting rights.

Full text link:


5 Blockchain Social Network: Monetization and Data Storage Using Blockchain

This article will provide a survey of social applications that include blockchain in their design. Social applications using blockchain are decentralized to varying degrees. Some use blockchain for data storage, some use monetization, and some use data storage and monetization.

Even if the next-generation blockchains are more scalable, they still seem unsuitable for storing social media content that is volatile, transient and does not require a global agreement on its status.

Although there are many disadvantages to using the blockchain to store social data, many applications have adopted the method of storing social content on the blockchain. Other companies offload storage to more scalable p2p networks such as IPFS.

One disadvantage I have observed in social networks that monetize content is that user behavior is transparently driven by monetary incentives, but it feels less real. This also applies to influencer culture on Instagram, but the cryptocurrency social network accepted it from the beginning. Or there may be an incentive structure that has not yet reached the proper balance.

  • Data storage and monetized blockchain

Steemit Steemit is a Reddit / Medium style social network that uses Steem to monetize user content. There are more than one million users. User identities and post data are stored on the Steem blockchain. In addition to relying on Steem's price appreciation, Steemit also monetizes users who promote its posts. Voting is affected by reputation, which accumulates with age, so older accounts of early adopters have more power in the network. The fact that Steem tokens can be easily mined at an early stage means that Steemit's incentives are aimed at early adopters.

Dtube Dtube is a decentralized version of YouTube. There are approximately 187,000 user accounts and 1.7 million visitors per month. It stores data in a decentralized network, which is more scalable than the blockchain. Video is stored in IPFS, and GunDB is used for messaging. Dtube was originally monetized using Steem, but is currently publishing its own tokens on the new blockchain. Similar to Steemit, the creator of a video receives tokens that are proportional to the reputation of the user who enhanced their video.

BCH, BSV Some social networks are built on the Bitcoin fork, using cryptocurrency to monetize and store data. Memo is built on Bitcoin Cash (BCH), while Twetch is built on Bitcoin SV (BSV).

MEMO Memo is a Twitter-style social network that uses Bitcoin Cash to monetize user content. It stores user data on the blockchain permanently and publicly, and each action is stored in the OP_RETURN transaction of Bitcoin Cash. It has a novel reputation system based on the ratio of the number of people you follow to the number of people who are following you and the number of people blocking you.

Twetch Twetch is a Twitter alternative that uses Bitcoin SV to monetize user content. A new user creates a moneybutton account for sending and receiving funds. Once users have a moneybutton, they can interact with the Twetch network, which looks and works like Twitter, but most operations are done in currency. Published data is permanently stored on the BSV blockchain.

  • Blockchain monetization

Minds Minds was a Facebook alternative created before the tokenized network existed, but since then tokens have been added to monetize user content. The data layer and user identity are not decentralized. They have over 1 million registered users and approximately 100,000 MAU (monthly active users). The platform itself makes money through content promotion. Users can earn tokens by voting, commenting or uploading, and use these tokens to promote their posts.

Dlive Dlive is a Twitch-style real-time streaming media platform. It initially used Steem, then switched to its own token, then was acquired by Tron, and is currently changing tokens. It has about 5 million users. The popular Youtuber PewDiePie switched to live streaming on Dlive in April 2019, resulting in a 67% increase in users.

  • Data storage blockchain

Peepeth Peepeth is a "permanent Twitter" built on Ethereum and IPFS, with about 6,500 users. It focuses on decentralized data rather than monetizing user interaction. Account information is stored on the Ethereum blockchain, and data is stored in IPFS with a link to the account on Ethereum.

Zbay Zbay is a new social messaging application based on Zcash. It stores messages in encrypted memo fields for private transactions. Most social applications that store data on the blockchain do not provide privacy because all interactions are permanently recorded in the public ledger. Zbay stores messages permanently on the Zcash blockchain, but only private key holders who control the addresses they send to can see them.

Full text link: https://medium.com/@jaygraber/blockchain-social-networks-c941fb337970