Altcoins

One Ethereum Gaming Altcoin Stands Out From Rest of Emerging Market, According to Coin Bureau

The closely followed analyst and host of the popular Coin Bureau channel says that one metaverse altcoin has more potential than most crypto assets in the sector. In a new video update, the pseudonymous analyst known as Guy tells his 2.07 million followers that while its price action has looked underwhelming for many months now, […]

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Bitcoin Crypto News

Crypto Payment Channel Banxa Reduces Its Staff By 30% To Survive Crypto Winter

The cryptocurrency market has been facing a second bloodbath without any gap for the first time in history, disrupting the blockchain industry to a vast extent. Consequently, crypto-oriented businesses, including exchanges and payment channels, reduce their workforce due to decreased crypto trading volume affecting the revenue. Similarly, the Australian crypto payment channel, Banxa, used to […]

Crypto News

ViaBTC Capital | Reasons Behind Solana’s Frequent Downtime: Design Flaws in the Gas Economy

What is the gas fee? In the blockchain world, the gas fee is a fee that users have to pay to the blockchain network for each transaction. For example, when a user makes a transfer on Ethereum, miners must package his transaction and put it on the blockchain to complete the transaction. This process consumes the computing resources of the blockchain, and the fee paid to miners is called the gas fee. Gas economy Imagine that each public chain is a society or a city, and gas would be the currency that users need for various activities in the city, and the economic designs of gas have far-reaching impacts on the public chain’s future development. Today, we will illustrate the significance of the gas economy from the perspectives of performance and value capture. Performance – The frequent network congestion of Solana In early May, Solana’s mainnet lost consensus, and block generation was suspended for 7 hours. The mainnet was down due to the NFT minting of a new NFT project. Users turned to bots for sending transactions as much as possible to increase their success rate of minting. This led to 6 million transactions per second on the Solana mainnet, which jammed the network. Moreover, as Solana transmits consensus messages as a special transaction message between validators, the heavily congested network also disabled the normal transmission of consensus messages, eventually leading to the loss of consensus. This is not the first downtime of Solana. Last September, the public chain suffered a 17-hour downtime due to the massive trading volume created by on-chain bots during the launch of the hit project Raydium. A 30-hour Solana downtime incident happened at the end of January 2022 when the BTC price plunged from $44,000 to $33,000 during a market crash and created plenty of arbitrage opportunities. Meanwhile, the liquidation/arbitrage bots on Solana, which center on DeFi, kept creating massive transactions, which resulted in network downtime. When comparing Solana to a conventional IT system, we can tell that the downtime resembles a DDoS attack. 「A DDoS (distributed denial-of-service) attack refers to adding traffic from multiple sources to exceed the processing capacity of a network so that real users would not be able to acquire the resources or services they need. Attackers often launch a DDoS attack by sending more traffic to a network than it can handle or sending more requests to an application than it can manage.」 Instinctively, many people would think that Solana’s downtime is rooted in its public chain designs: the monolithic design of Solana inevitably leads to downtime. At the moment, mainstream public chains use two kinds of designs: the modular and the monolithic. The modular architecture refers to a modularized deployment where consensus, storage, and execution are implemented separately so that the collapse of the execution layer will not compromise the security of the consensus layer. At the same time, mainstream designs adopted by Avalanche’s Subnet, ETH 2.0, and Celestia’s Rollup can all diverge massive transactions. On the other hand, although Solana as a whole is designed to enable fast transactions, scalability and security were sacrificed. However, the modular design of a public chain is not the key because although the consensus stayed secure, the individual rollup could still suffer from downtime when facing overwhelming transactions in a very short period. In other words, the modular design just lowered the systemic risks (e.g., a certain rollup could halt but the rest can survive) for the public chain. The gas design is the real reason behind Solana’s downtime, and more network downtime is on the way if the design is not improved. – The gas mechanisms of different chains The figure below shows the gas designs of three mainstream public chains. On Solana, the gas fee is based on the number of signatures. The more signatures a transaction uses, the higher the gas fee. However, the maximum memory capacity of each transaction is fixed, and so is the maximum gas fee per transaction, which helps users easily calculate the cost of sending massive transaction requests. Moreover, transactions on Solana are not sequenced, which means that when the cost of sending massive requests is lower than the profit (arbitrage, NFT minting, etc.), users would use bots to send transactions on a large scale to increase the likelihood of the execution of their transactions. This is also the reason behind the downtime events that took place on Solana. Ethereum and Avalanche share similar gas designs. Both feature the base fee and the priority fee, which creates an inherent sequencing issue because transactions with a higher priority fee would be first executed. As such, although users can still use bots to create massive transactions on Ethereum and Avalanche, their transactions will not be executed no matter how many requests are sent when the priority fee becomes insufficient, and they have to wait in line. Considering the cost of gas, such a design eliminates the possibility of network downtime arising from massive transactions at the economic level. Source[1] – Improvement by Solana Economic isolation has always served its purpose better than methodological isolation. Solana has already started to build its own Fee Market by introducing a concept similar to the priority fee. Meanwhile, Metaplex, Solana’s NFT market, will also adopt a new concept called Invalid Transaction Penalty, which means that users will have to pay a fee for invalid transactions when minting NFTs. Value capture Value capture is the reflection of a gas economy via the market cap of the gas (the native crypto of the chain). The market cap of a native coin is roughly determined by two factors: cash flow and monetary premium. – Cash flow When it comes to charging the gas fee, most public chains follow the same approach: lower the gas fee as much as possible to attract users from Ethereum. From the perspective of cash flow, such an approach is unsustainable. Of the three mainstream public chains, only Ethereum stands with a considerable net cash inflow, although the network is still issuing more Ethers. If we consider additional issuance as a type of subsidy, then the net expenditure of Ethereum per day would be about $25.7 million if the annual issuance rate stands at 3.21%. Solana and Avalanche, on the other hand, have an income of $6,250 and $42,000 a day on average, with a daily net expenditure of $4.6 million and $1.86 million and a yearly issuance rate of 6.93% and 5.22%. The high net expenditure & high issuance rate significantly dilute the market cap of the public chain coins. Source[2] Let’s turn to the destinations of cash flows. Under Ethereum’s current mechanism, the base fee is burned, while the priority fee is offered to miners. Compared with the gas burning and distribution mechanisms of Solana and Avalanche that offer the gas fee to validators, the miner reward is a design that compromises value capture. Ethereum uses the PoW design for block generation, and most of the miners adopt a business model under which tokens that have been mined are sold to cover the mining cost (such as electricity fees and maintenance costs). Therefore, the part of the gas fee paid to miners will most likely go out from the ecosystem. It would be better to give the gas fee to validators because the cost of running a node is not as high as operating a mining factory. Since there are not significant ongoing operating cost, validators are more likely to invest the rewards they’ve received in the nodes, which makes the ecosystem safer without diluting the value of the native coin. Burning fees might be the most direct and effective way to capture valuee and benefits both node stakers and token holders. In addition, MEV constitutes another major source of revenue for public chains. According to statistics from Flashbots, from 2020 to now, $600 million worth of MEV has been paid to miners, which is a conservative estimate. Source[3] – Monetary premium Monetary premium refers to the appreciation of a public chain coin in terms of its practical value and value storage. Most existing public chain coins are carrying out massive issuance, which makes them poor value storage, and the practical value forms the backbone of their market cap. The growth of the ecosystem of a public chain coin will create scenarios where it can be used as a payment method. For instance, most NFT transactions are settled with public chain coins. Meanwhile, most emerging public chains also consider the practical value as the primary means of appreciation, which is why they have set negligible gas fees to attract traffic and new users. Meanwhile, some public chains have built foundations worth hundreds of millions of dollars to encourage more developers to build DApps in their ecosystem. The logic behind such an approach is to make big investments to attract users in the initial stage and try to recover the cost later. Conclusion To sum up, the gas design of a public chain will have profound impacts on the future development of a public chain, and a poor design could lead to poor value capture and even performance bottlenecks. When evaluating a public chain project, we can also get a rough picture of its development strategy and future growth through its gas designs.   [1] https://docs.solana.com/implemented-proposals/transaction-fees#congestion-driven-fees,https://ethereum.org/en/developers/docs/gas/,https://docs.avax.network/quickstart/transaction-fees/ [2] https://cryptofees.info/,https://moneyprinter.info/,https://solanabeach.io/ [3] https://docs.solana.com/implemented-proposals/transaction-fees#congestion-driven-fees,https://ethereum.org/en/developers/docs/gas/,https://docs.avax.network/quickstart/transaction-fees/

Crypto News

Bit.com Plans to Double Workforce as Layoffs Mount in Crypto and Financial Markets

The crypto markets are going through a rough phase. Bitcoin has crashed more than 70% in 8 months. Amidst the crash, several companies are laying off their employees, desperately trying to save cash. However, not all companies are facing the hammer of fate. Bit.com, the second-largest crypto options exchange, seeks to double its workforce amidst layoffs. But why? Let’s explore. The Crypto Recession Crypto winter is frequently used in the cryptocurrency, DeFi and blockchain industry to denote the current recession that has hit the industry after it made phenomenal gains in 2021. The global economic condition, post-COVID economic losses and record inflation worldwide have led to mass layoffs in the industry. Coinbase recently trimmed off 18% of its employees to save cash. BlockFi announced the layoff of 400 employees. Crypto.com also wants to lay off a similar number of employees. However, these layoffs also bring an opportunity to hire some of the best minds in the industry. These are talented people suffering at the hands of fate. Bit.com is a full-suite cryptocurrency exchange offering spot, futures, perpetual contracts, options and savings. They are one of the top 3 exchanges for cryptocurrency options . The exchange is launched by Matrixport, which is already a Unicorn With a $1B Valuation in 2021. The exchange has its core principles built around security and risk management features. A top-grade firm, Cactus Custody, handles its security. Jihan Wu founded Matrixport in 2019 and the mining rig manufacturer Bitmain. Recently they have announced to launch USD options within the next few months as a part of their service portfolio. Bit.com hiring amid layoffs Bit.com is hiring because it is a golden opportunity. With so many qualified personnel joining the talent pool and ready to get hired at a moment’s notice, it is a dream come true for many. For example, several exchanges will be desperate to hire Coinbase employees. The reputation gives them a distinct advantage. Bit.com is taking the maximum benefit of this opportunity by hiring the best talents available in the industry. As per media reports, they are seeking to double their workforce, with a majority of the new hires to be engineers. Undoubtedly this workforce will have a majority of highly skilled employees hired at reasonable salary packages due to the ongoing market crisis. “We have experienced the ups and downs, and we also committed to the potential future. Crypto enthusiasts and experienced talents are welcome to join Bit.com” said Lan Yue, COO of Bit.com.  A drawback of such hiring could temporarily affect the company’s finances. But we can safely assume that the executives have thought about this before going on such a hiring spree. As claimed by Lan: ”Bit.com has been hiring and growing aggressively since the beginning of 2022. The recent collapse of the market has no direct impact on our original runway, we have the capacity to stick to our developing and hiring plan. Bear market may bring our users negative sentiment, it also brings us time to strenghten our product and risk management for the next bull market” A few benefits that they might derive from this hiring are, for example, that they can choose from a large, diverse talent pool. Also, they will get experienced candidates from top competitors that are difficult to get otherwise. Lastly, employees could join immediately without any notice or waiting period. Which will give Bit.com a fast push in its talent strategy. However, this could also backfire in several ways, starting from putting stress on finances. There is severe uncertainty in the US economy, a major source of capital funding for cryptocurrencies and a major market. Further, several jurisdictions have a severe regulatory crackdown on cryptocurrency companies, including high taxation (30% in India) while European countries seek a ban on the proof-of-work system. All of this, combined with high inflation, is expected to affect the buying capacity of crypto investors and traders. Conclusion The world’s economic downturn has also had a bad effect on the cryptocurrency and blockchain industry. With layoffs and cost-cutting from several big crypto companies, there is an opportunity for many companies like Bit.com to hire in good numbers. If this activity goes well with hiring, they could highly benefit from having top-of-the-line professionals in their company.

Altcoins Blockchain

Cardano (ADA) Founder Charles Hoskinson Addresses Congress, Argues for Real-World Uses of Crypto and Blockchain

Cardano (ADA) founder Charles Hoskinson is addressing Congress in an attempt to detail the real-world use cases of crypto assets. In a prepared testimony to Congress on the topic of digital asset regulation, Hoskinson says blockchain technology helps marketplaces thrive due to its decentralized and permissionless nature. “Distributed ledgers (i.e., blockchains) store information that needs […]

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Crypto News

Sandbox (SAND) Blows Up 20% Over Last 24 Hours Following ‘Takeover’ Rumors

Sandbox has become one of the most important Metaverse cryptocurrencies to keep an eye on this year. Sandbox (SAND) is currently selling at $1.31, an increase of 20% based on data from CoinMarketCap. The rally occurs just days after Microsoft and Meta, among other technology giants, announced the founding of the so-called “Metaverse Standards Forum.” Other facets of virtual reality are also being researched, as the Sandbox environment has expanded into much more than a gaming platform. Suggested Reading | Storj (STORJ) – A Relatively Unheard Crypto – Leads Gainers With 30% Rally Sandbox (SAND) Lights Up 7 Straight Green Candles As shown on the SAND chart, the daily time frame chart obtained seven consecutive green candles. Near the $1.11 mark, the SAND price confronts severe supply pressure, with intraday trading volume reaching $386 million, suggesting a 3.22 percent decline. Source: Tradingview Friday night’s bulls blasted over the 10-day horizontal boundary, propelling the price of SAND cryptocurrency well above the bearish’ critical hedging level of $0.90. The recent bottom of the SAND token, on the other hand, has served as a significant support level for the bulls. The Sandbox is an Ethereum-based game in which players can purchase parcels of virtual land. Occasionally, the value of these virtual properties may reach millions of dollars, and everyone could profit greatly if the metaverse becomes as successful as many anticipate. The ‘Metaverse Standards Forum’ Meanwhile, the Sandbox could be on the crosshair of an established tech company planning a takeover, based on rumors circulating on social media. The declared objective of the Metaverse Standards Forum, which was unveiled on Wednesday and is comprised of Sony and Alibaba, is to foster coordination and cooperation among the hundreds of enterprises competing for position on the enormous metaverse landscape. Suggested Reading | Top 5 Cryptos Taking A Major Beating In The Ongoing Market Mayhem Reuters quotes Nvidia executive Neil Trevett, who is chairing the MSF, as saying any company, including those in the crypto industry, can join the group. A property in Sandbox was recently acquired by HSBC, one of the world’s top banks. HSBC’s interest in Sandbox metaverse lands indicatesthat they appreciate its significance. SAND total market cap at $1.76 billion on the weekend chart | Source: TradingView.com Meta Eyeing Sandbox Buyout? On Sunday, The Sandbox co-founder and COO Sebastien Borget replied to Messari on Twitter if Meta purchasing a virtual world like The Sandbox Game makes him “bullish.” Borget’s response was brief and unequivocal: “This will never happen.” Many Web3 community members remain dubious. Animoca Brands’ founder and executive chairman, Yat Siu, has previously referred to Meta’s goals as “digital colonialism.” Animoca Brands is a $5 billion software and venture capital firm responsible for a variety of metaverse projects, including The Sandbox. Danny Greene, general manager of the Meebits DAO, stated to a crypto news outlet that customers will ultimately battle for a decentralized future and that “these are companies that represent shareholders.” Featured image from Smart Valor, chart from TradingView.com