Our DeFi experts share their knowledge and answer your questions about decentralized finance, covering topics like dApps, DEXs, DAOs, yield farming & staking, DeFi protocols, and more.
3 Best Low-Fee Stablecoins Worth Considering
Any trade you make on a crypto exchange has a basic trading fee. In most instances, the trading fee follows the maker/taker system, incentivizing stakers that provide liquidity by charging lower transaction fees. Nonetheless, bids submitted to stablecoin markets, two fiat currencies, or wrapped tokens like WETH/ETH are charged a flat fee irrespective of whether they are maker or taker orders. To view the comprehensive stablecoin fee structure, visit your exchange’s fee schedule page. You can see the fees you will be charged by checking the currency pair your bid falls under. Popular Low-Cost Stablecoins According to a recent stablecoin study conducted by the Department of Economics at Rutgers University, transaction fees vary significantly among the sampled stablecoins—Tether (USDT), USD Coin (USDC), and Dai Stablecoin (DAI). Again, because the transaction costs affect block creation time, the cost and completion time are difficult to predict. The study shows that: The average cross-section fee of USDT is $3.44, with an average percentage fee of 0.20%. The cross transaction fees for USDC are higher than USDT. Its average fee is $13.03, with an average fee of 0.84%. DAI transaction costs are quite similar to those of USDC, though the medium cost for USDC is less by nearly $3. Let’s have a closer look at each of these stablecoins: USDT USDT is the first and biggest stablecoin by market cap. USDT was developed by the BitFinex exchange in 2014 as RealCoin before rebranding to Tether in November of the same year. The pros of USDT include high market capitalization, stability, and fast transactions. Its cons include centralization and lack of transparency regarding its fiat reserves. USDC Circle and Coinbase jointly developed the USDC stablecoin in 2018. It’s mainly backed by the US dollar and licensed by reserved assets. USDC’s pros include being fully backed by US-regulated fiat reserves, transparency in its operations, and minimal price fluctuation. Its main drawback is having a lower market cap than USDT. DAI This is a crypto-backed ERC-20 token that is overcollateralized via Maker vaults. Unlike the stablecoins above, DAI embraces a decentralization approach through smart contracts and a governance token to control price stability. DAI offers collateralized loans, uses smart contracts to lock tokens in contracts, and allows regular independent auditing of its reserves. Conversely, DAI seems a bit complex for crypto newbies and exposes users to smart contract risks, especially hacks.
Asked a year ago
How to Get an Initial Coin Offering (ICO) in 5 Simple Steps
An Initial Coin Offering (ICO) is similar to an Initial Public Offering (IPO) where a new coin is introduced to the crypto industry. A crypto project can get an ICO to raise funds. Interested individuals can join the ICO by purchasing the project’s token offering. The token’s utility is closely tied to the product or service the project is providing. Here are five simple steps on how to get an Initial Coin Offering. Step 1: Determine Your Technological Needs Assess how blockchain technology will integrate with your daily business activities and how you intend to use it to improve your products or services. There are legal implications that will affect your technological choice and your platform offering. Therefore, how your business accepts crypto, stores it, and educates customers and investors are essential to the compliance step. It should be based on a legal framework applicable to your ICO. Step 2: Choose a Jurisdiction for Your ICO Since U.S. securities laws apply to ICOs in all the states, you can launch your token offering outside the United States. Some crypto-friendly countries have favorable laws, like a broad pool of authorized investors and fewer financial disclosures. Additional benefits include better tax treatment and lenient penalties for non-compliance. You can consider investing in countries such as Malta, Gibraltar, Singapore, and Switzerland. Step 3: Write a Detailed and Clear White Paper Your white paper presents information on how your project works. As such, a good white paper should raise the confidence and trust of potential investors. This document should contain legal statements about the securities laws and other regulations applicable to your ICO. Previously, the Securities and Exchange Commission (SEC) profoundly mentioned a crypto project’s white paper when it wanted to shut it down. Step 4: Select the Best Launching Platform You need to choose the platform where you will be conducting your ICO. Previously, most projects chose to launch their ICO tokens on the Ethereum blockchain. Ethereum is well equipped with ICO development tools and smart contract functionalities to launch ERC-20 tokens smoothly. However, Ethereum’s high gas fees and scalability issues have created multiple Ethereum alternatives. Platforms like BNB Smart Chain (BSC), Solana, Polygon, Avalanche, etc., have merged as ideal ICO launch pads because of their low-cost transaction fees and high scalability. Step 5: Marketing Lastly, develop a well-defined marketing strategy to help you reach out to potential partners and investors. This can include developing a website any interested parties can be referred to who are looking for information. Supplement this with social media marketing by posting engaging content that leads back to your website and utilizing paid advertisements to reach your target audience. Also, consider providing limited free coins to potential users as well as a space where feedback can be discussed.
Asked a year ago
How Do DAI Tokens Work?
Dai is the first decentralized stablecoin, as opposed to a semi-centralized stablecoin like USDC, that aims to maintain its value with the US dollar through a 1:1 peg. It strives to solve one of the major challenges facing the mass adoption of cryptocurrencies—volatility. Unlike other stablecoins issued by centralized entities, Dai is the native currency of the Maker Protocol, a decentralized autonomous organization (DAO) built on the Ethereum network. How Is DAI Created and Destroyed? Dai is created when a user borrows against locked collateral and is destroyed when the user repays their loan. For example, if you lock ETH or any other accepted crypto in the Maker Protocol, you will receive a loan in the form of new Dai tokens. When you repay the loan, the protocol burns the Dai tokens and gives you your collateral. Importantly, the Dai ecosystem is governed through a democratic system of governance. Here, every change and decision affecting Dai is executed after approval by most token holders. What Is DAI Pegged To? Dai is pegged to the US dollar on a 1:1 ratio by leveraging the Target Rate Feedback Mechanism (TRFM). When the Dai price is below $1, TRFM rises and pushes the price upwards. When the price increases, Dai holders make profits, and the demand for Dai increases. As the demand rises, the supply of Dai begins to reduce because users borrow tokens from the market via Collateralized Debt Positions (CDPs). Therefore, they make the Dai price rise to its target price again. Benefits of Dai Over Other Collateralized Stablecoins Here are the main benefits of Dai over other centralized stablecoins: Complete financial independence Dai is managed by the Maker Protocol, eliminating intermediaries from the equation. This means Dai tokens cannot be censored or frozen.Self-sovereign money generation You can create Dai by locking collateral in the Maker Protocol to eliminate counterparty risks instead of trusting a custodian with it.Savings Dai holders can put their assets into use and earn the Dai Savings Rate (DSR) by depositing Dai in smart contracts. You can access these contracts via the OKEx Marketplace, and by using crypto wallets such as Oasis Save and Argent wallet. Convenient, fast, low-cost remittance Unlike most stablecoins, you can use Dai to repay loans and perform cross-border and other online payments cost-effectively. Transparency minting mechanism Unlike in centralized stablecoins where custodians might mismanage the locked funds (remember the collapse of TerraUSD), Dai embraces transparency through the use of smart contracts in managing its reserves.
Asked a year ago
Types of Crypto Cold Wallets
A cold wallet is a physical vault that keeps your digital assets offline, as opposed to a crypto hot wallet which is an online vault. While storing your assets offline minimizes online attacks significantly, most cold wallets lack backups—if you lose your private keys, you may lose access to your assets completely. Also, ensure that you purchase this type of crypto wallet directly from the manufacturer instead of dealers since it might be compromised and vulnerable to attacks. There are two types of cold wallets: Paper Wallets As the name implies, a paper wallet is a cold wallet that requires users to write down or print their private keys on a piece of paper, including QR codes for easier access. This makes it hard to hack a paper wallet as no third-party has access to your private keys. However, you can easily lose or misplace the paper containing your private keys. Paper wallets also consume more time when making transactions and require more technical knowledge to operate. A paper wallet is integrated into the software to facilitate crypto transfers from blockchain to the public key printed on the paper wallet. Therefore, you must have some assets in a software wallet before transferring them to the public address shown on the paper wallet. Popular paper wallets include MyEtherWallet, Wallet Generator, and Bitcoin Paper Wallet. Hardware Wallets If you prefer a modern solution, hardware wallets guarantee secure private key storage in multiple formats. These wallets often resemble USB devices and are always offline unless plugged into a gadget. As such, hardware wallets are one of the most secure types of cold wallets. You approve transactions using private keys offline and only connect to the internet to upload transactions into a blockchain. The device requests transaction information and verifies it itself—no third party is involved. Therefore, hardware wallets are ideal for users with a good amount of crypto holdings and long-term holders. Hardware wallets can just be expensive to acquire—prices range from $30 to $300. Popular hardware wallets include Ledger Nano S, Ledger Nano X, and Trezor Model One.
Asked a year ago
The 3 Different Kinds of Crypto Hot Wallets
Asked a year ago
The Role of DAOs in Decentralizing Venture Capital
How CBDCs & Stablecoins Can Coexist in the Crypto World
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