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Mining Firm Titan Introduces Lumerin, a Project Aiming to Commodify Bitcoin’s Hashpower

Mining Firm Titan Introduces Lumerin, a Project Aiming to Commodify Bitcoin’s HashpowerOn October 21, the bitcoin mining pool operator Titan revealed a new decentralized hashpower routing protocol called Lumerin. The open-source project aims to commodify bitcoin’s hashpower “through smart contracts, making hashpower tradable.” Bloq’s Mining Arm Titan Announces the Lumerin Protocol The bitcoin mining operation Titan, a subsidiary of the company Bloq Inc., has announced its […]

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Local Businesses in New York Urge Governor to Impose Statewide Bitcoin Mining Moratorium

Local Businesses in New York Urge Governor to Impose Statewide Bitcoin Mining MoratoriumThe governor of New York state, Kathy Hochul, has been urged by a group of local companies to deny business permits to bitcoin miners. The letter specifically asks for the “denial of permits for the Greenidge Generating Station and the Fortistar North Tonawanda Facility.” The letter also calls for the New York government to assess […]

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Second-largest Ethereum mining pool to suspend all operations

Launched in China in 2018, SparkPool controls over 22% of Ether’s hashrate as of today, second only to Ethermine.

Sparkpool, the second-largest Ethereum mining pool in the world, is suspending operations due to the ongoing Chinese crackdown on crypto.

The mining pool officially announced Sept. 27 it has suspended access to new users in mainland China in response to Chinese authorities initiating new measures to combat crypto adoption in the country.

Following initial restrictions made last Friday, Sparkpool will continue shutting down services, and plans to suspend existing mining pool users both in China and abroad on Sept. 30.

According to the announcement, the measures intend to ensure safety of users’ assets in response to “regulatory policy requirements.” “Further details about the shutdown will be sent out through announcements, emails, and in-site messages,” Sparkpool noted.

Launched in China in early 2018, SparkPool has emerged as one of the world’s largest mining pools for mining Ether (ETH) alongside the world’s largest Ethereum mining pool Ethermine. At the time of writing, SparkPool’s mining power makes up 22% of Ethereum’s global hashrate, slightly lower than Ethermine’s share of 24%, according to Poolwatch.io.

The news comes amid the Chinese government reinforcing its negative stance on crypto, declaring all crypto-related transactions illegal in the country last Friday. Some of the biggest cryptocurrency exchanges like Binance and Huobi have subsequently suspended new account registrations from mainland China, reportedly keeping servicing users in Hong Kong.

Related: Ethereum drops more than Bitcoin as China escalates crypto ban, ETH/BTC at 3-week low

SparkPool did not immediately respond to Cointelegraph’s request for comment.

SparkPool’s shutdown comes as Ethereum continues its switch from a proof-of-work consensus mechanism to a proof-of-stake model in 2022 — part of the long-planned upgrade known as Ethereum 2.0. As previously reported by Cointelegraph, Ether miners will not have many choices after Ethereum 2.0 finally arrives, as their mining equipment is set to become obsolete.

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100 years ago, Henry Ford proposed ‘energy currency’ to replace gold

Bitcoin appears to meet the definition of an energy-backed currency proposed by the famed American inventor during the interbellum period.

In 1921, American industrialist Henry Ford proposed the creation of an “energy currency” that could form the basis of a new monetary system — offering striking similarities to the peer-to-peer electronic cash system outlined in Satoshi Nakamoto’s 2008 Bitcoin (BTC) whitepaper. 

Front page of the New York Tribune dated Sunday, December 4, 1921. Source: Library of Congress

Bitcoin as an energy currency

On Dec. 4, 1921, the New York Tribune published an article outlining Ford’s vision of replacing gold with an energy currency that he believed could break the banking elites’ grip on global wealth and put an end to wars. He intended to do this by building “the world’s greatest power plant” and creating a new currency system based on “units of power.”

Ford, who founded Ford Motor Company in 1903, told the publication:

“Under the energy currency system the standard would be a certain amount of energy exerted for one hour that would be equal to one dollar. It’s simply a case of thinking and calculating in terms different from those laid down to us by the international banking group to which we have grown so accustomed that we think there is no other desirable standard.”

The specifics around currency values “will be worked out when Congress cares to hear about it,” he said.

Although Ford was never able to advance his vision of a fully-backed currency, Bitcoin has seemingly vindicated the idea a century later. Since 2009, more than 18.8 million BTC have been created through an energy-intensive mining process that requires computers to solve increasingly complex math problems. This proof-of-work mining process has drawn heavy criticism over its alleged environmental impact — a short-sighted claim that ignores Bitcoin’s abilily to accelerate the shift to renewable energy.

Related: Satoshi Nakamoto statue goes up in Budapest

Replacing gold, ending wars

On the relation between gold and war, Ford explained:

“The essential evil of gold in its relation to war is the fact that it can be controlled. Break the control and you stop war.”

Some of Bitcoin’s most ardent supports believe the cryptocurrency’s sound money principles could eliminate war by reducing the state’s ability to fund conflict through inflation. While a gold standard makes it harder for governments to inflate their currency, “international bankers,” as Ford explained, controlled the bulk of the bullion supply. This process of controlling and accumulating precious commodities allowed financial elites to create an active market for money, which thrived during wartime.

The remnants of the gold standard were abandoned in 1971 by U.S. President Richard Nixon, who said his government would temporarily suspend convertibility between dollars and bullion. The so-called quasi-gold standard would last until 1973, with all definitions linking the dollar to bullion removed by 1976. However, in effect, the gold standard system was eliminated by the British government in 1931, with the U.S. following suit two years later.

Related: Bitcoin set to replace gold, says Bloomberg strategist on Bretton Woods’ 50th anniversary

The New York Tribune article circulated on Reddit’s r/CryptoCurrency page on Saturday, where it received considerable upvotes. While Satoshi Nakamoto never mentioned Henry Ford in online forum posts, some Reddit users speculated that Bitcoin’s creator may have been influenced by the late industrialist. Others jokingly said Satoshi was actually Ford’s reincarnate, given the latter’s apparent belief in reincarnation.

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Crypto mining needs to be redefined before simply casting it away

To ensure a sustainable future for blockchain and crypto, we need to reimagine the mining process and restructure PoW systems.

Blockchain mining networks are often victims of their success. The two contemporary realities that demarcate the mining landscape and cause blockchains to fall short of what they promise are 1) the ongoing technological arms race driven by inherent competitive greed; and 2) the rising energy costs associated with proof-of-work (PoW) mining. Blockchains built on the PoW consensus have become highly unequal and increasingly centralized in terms of their hash rate. This concentration of mining power in fewer and fewer hands is an attack on the fundamental requirement for distribution and decentralization that blockchains possess.

In addition, the motivation to ramp up mining power has a knock-on effect in terms of runaway energy costs, which have the potential to cause irrevocable environmental harm, as has been the crux of the Chinese Bitcoin (BTC) mining saga. To ensure a sustainable future for blockchain and cryptocurrencies, the hash rate must be distributed more equitably, ensuring that the chief components of distribution and decentralization are kept intact. This requires a reimagining of the mining process as we know it and necessitates a restructuring of PoW systems.

Related: Green Bitcoin: The impact and importance of energy use for PoW

The detrimental impact of mining re-centralization

Before unpacking what such a solution may look like, it is worth emphasizing the extent of the issues. The PoW consensus was, and continues to be, essential to Bitcoin’s enduring popularity, success and reliability. Most notably, PoW offers a solution to the well-known Byzantine Generals’ Problem in the fields of mathematics and computer science, through an incentivization setup and ongoing resource commitment that makes it infeasible for a malicious party to interfere with honest consensus.

Distribution and decentralization remain the crucial aspects of solving the dilemma where parties must agree on a single strategy to avoid complete failure, by enabling widespread consensus on “the message” and eliminating the risk posed if some of the involved parties are corrupt or unreliable. Yet, the more centralized and dominated by a small number of entities a blockchain network becomes, the less the consensus protocol can function as a solution to this problem. The rise of massive ASIC farms enables a handful of powerful players to exert control over the blockchain infrastructure, thereby threatening its ability to remain distributed and decentralized — and, ultimately, trustless.

This “late-stage” issue of the PoW consensus arises through how miners are incentivized through competition for the block reward. Although an essential part of the game-theoretic structure for keeping the network secure, this all-or-nothing race to the top also creates serious issues. In particular, it gives rise to the allegorical “cheating athlete problem,” which describes how when the reward for a race is worth a great deal, participants will do just about anything to win, including cheating. Imagine a group of athletes at the starting line of the first of a series of races, wherein each one will try to cross the finish line first and win a prize.

There is a certain amount of luck involved in winning each race (it is not simply the fastest who triumphs), but the chance of winning increases with the speed of the athlete. Cheating, in this case, is defined as gaining a substantial advantage over the other runners through the use of technology and/or collusion, such that the winner of each race is not sufficiently random as to provide a solution to the Byzantine Generals’ Problem (namely, distributed consensus through a sufficiently randomly distributed resource commitment).

It is in a similar vein that the PoW race leads to the development of ever more energy-hungry machines and larger mining farms, reducing the decentralization and distribution of the network, and preventing the resource commitment from acting as a means of trustless verification. Additionally, it drives the overall energy usage of the network, potentially to a point where it could impact the environment negatively if left unchecked.

Related: Measuring success: Offsetting crypto carbon emissions necessary for adoption?

Balancing the protocol for blockchain mining networks

To develop a solution to the cheating athlete problem, it is necessary to begin with the realization that it is not the total hash rate of a blockchain network that gives it security; rather, it is how that hash rate is distributed. To this end, one seeks a solution where re-distribution of hash rate is a fundamental feature of the protocol (rather than being left to politics, or centralized committees — no matter how well intentioned).

It is possible to balance the chances of winning “the race” by applying a handicap to those runners who are significantly faster and giving an edge to those runners who are significantly slower. In a blockchain network, this can be implemented through a peer-to-peer, thermodynamic-like balancing process that adjusts the individual hashing difficulty for miners smoothly and verifiably. This allows the network to move toward equilibrium in the effective hash rate and circumvents the worst excesses of centralization of mining power on the network, all while continuing to operate autonomously with no trusted third-party involvement.

There are vast many implementations of blockchain technology currently in existence, the majority of them possessing some form of economic or monetary value and employing an underlying technology that aims to best ensure the security and efficiency of the network. However, an algorithmic balancing protocol, which pushes the network closer toward a homogeneous distribution (although not all the way — a completely “flat” network would bring its own economic and security problems) can achieve the optimal balance between the distribution and economic incentivization. This can substantially reduce monopolistic mining practices while keeping the carbon footprint of the network to a minimum by disincentivizing the continuous ramping up of processing power through costly technologies and the building of large ASIC farms.

A greener, fairer, more secure future

The issues posed by the widespread mining re-centralization we see commonly today pose a significant challenge for the PoW consensus, but they shouldn’t spell its end. Emerging as revolutionary technology innovation, PoW solved a longstanding mathematical and computer science problem that paved the way for the success of Bitcoin and many other cryptocurrencies, while promising an entirely new means of economic exchange. There is a danger that we won’t fully explore the transformative power of PoW if we cast it aside too hastily.

Related: Staking will eat proof-of-work for breakfast — Here’s why

There are similarities here with humanity’s exploration of economic systems. Capitalism is one of the greatest, most progressive systems ever developed in human history — improving innovation, lifespan, opportunities and quality of life for billions of people. However, left unchecked, it can drive unprecedented wealth, inequality and potentially even take us to the brink of climate catastrophe. Rather than abandon it entirely, what societies typically try to do is to balance the pros and cons of this system — to create a form of tempered capitalism in which greed and monopolistic endeavors are not allowed to dominate entirely, so that a more responsible, functioning, fairer society can emerge and flourish. This is largely what societies have tried to implement (to varying levels of success) in the form of wealth redistribution through, for example, taxation, anti-monopoly laws, etc.

Similarly, the PoW consensus is a revolutionary invention but needs tempering to curb the worst excesses of greed within the system. Collectively, we have a chance — and the responsibility — to align the PoW consensus protocol more with the needs of society and with its original purpose by reducing monopolistic tendencies and preventing crypto mining re-centralization. Simply put, instead of reinventing the wheel (abandoning PoW in favor of risky alternatives), what is needed is a way to harness the wheel more effectively to build a machine that connects and changes the world.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Alexander Hobbs is the director of science at Zenotta. Alexander is a Ph.D. graduate in theoretical astrophysics and has authored numerous scientific publications in the areas of supermassive black holes, galaxy formation and dark matter and has spoken at a number of international conferences and workshops. Prior to joining Zenotta, he held postdoctoral positions at the Institute for Astronomy at ETH Zurich in Switzerland and the Institute for Computational Science at the University of Zurich.

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Staking will eat blockchain for breakfast — Here’s why

The market for staking has accelerated rapidly recently, and a shift to PoS will ensure that the blockchain ecosystem is more resilient.

In early July, JPMorgan released a report in which two of the bank’s analysts projected that the staking industry would be worth $40 billion in rewards by 2025. The report anticipates that once the Ethereum 2.0 network completes its transition from proof-of-work (PoW) to proof-of-stake (PoS,) payouts will more than double, up to $20 million from the current $9 million. Within the next four years, it will double again.

With the rapid rise of staking over the last few years, it’s hardly surprising that traditional finance analysts are starting to take note. While the JPMorgan analysts are correct that the market will continue to grow, however, even $40 billion could be a conservative estimate.

If that seems ambitious, then consider how quickly the current market for staking has accelerated over the last few years. Of the top six staking platforms, only Cosmos and Algorand launched staking before 2020. The other four — Cardano, Ethereum 2.0, Solana and Polkadot — only went live with their variation of PoS over the last fifteen months or so. Furthermore, those platforms now account for around half of the total staked value.

Related: ​​The staking race: Late entrant Ethereum lags behind rivals with Eth2

In the wake of this dramatic growth, venture capital (VC) investment is pouring into the crypto space. As one of crypto’s proven growth segments, decentralized finance (DeFi) is currently attracting the kind of investment that is making mainstream headlines. The Financial Times reports that private investors have already backed 72 DeFi companies this year, outpacing 2020 even before the year is halfway through.

The vast majority of these DeFi apps are based on PoS platforms, indicating that we can see traffic levels on those networks increase exponentially over the coming months and years. More traffic means more fees which means more generous rewards for validators and stakers, making staking a no-brainer for generating passive income.

PoW proves vulnerable to mining clampdowns

The reasons why projects are turning to PoS hardly need revisiting. Ethereum’s scalability problems under PoW are well-documented and much-discussed. PoS offers the opportunity for faster throughput and lower fees. However, recent events underscore more than ever why PoW is no longer fit for purpose.

As the Chinese authorities have taken Draconian steps to outlaw cryptocurrencies, miners have staged a mass exodus to avoid falling foul to the law. Some have migrated across international boundaries and some have dumped their mining equipment on the market, resulting in Bitmain halting shipping of its newest models.

It’s to Bitcoin’s (BTC) credit that the price has held as well as it has, indicating the resilience and maturity of the crypto markets.

However, the events in China have underscored that PoW is vulnerable to the kind of censorship that blockchain aims to resist. Bitcoin’s power consumption proved to be its biggest weakness over recent weeks, and it’s a scenario that could repeat in any other country where PoW miners choose to exploit low-cost electricity.

The climate controversy

Bitcoin’s energy consumption also has another Achilles Heel, and one that’s been hotly debated this year — its effects on climate change. While renewables offer one workaround, PoS offers a far more attractive workaround — eliminating energy consumption dependency altogether.

Related: No, Musk, don’t blame Bitcoin for dirty energy — The problem lies deeper

Many environmental advocates invoke the analogy of coal-guzzling power plants to illustrate the dangers of PoW. Taking this analogy a step further, PoW can be considered as the engine that drove crypto through its “Industrial Revolution” phase. For the digital era, however, we need a more sustainable and resilient engine that can reach cruise speeds for long into the future without losing power or causing unknown collateral damage along the way.

PoS — a model for the future

None of this is a criticism of Bitcoin or PoW, both of which have proven their ability to last the distance. Bitcoin’s resilience means it will be around long into the future. However, new platforms and projects are self-evidently shunning PoW in favor of PoS. Therefore, it seems inevitable that many PoW platforms will simply fade out through lack of use over time.

Ultimately, for the blockchain sector, this is a good thing. Aside from the endless accusations of environmental destruction, a shift to PoS will ensure that the ecosystem is more resilient against external forces. Furthermore, by eliminating the need for expensive mining equipment, PoS makes joining a blockchain network as a validator more democratic and removes barriers to entry. Making staking more attractive improves the likelihood of validators joining the network, increasing security.

As the returns available in the traditional financial markets diminish over the coming years, and while governments seek to recoup the debts they incurred over the last year or two, staking will become an increasingly attractive prospect for investors. For those of us who’ve watched the inexorable rise of staking over the last year or two, the only question is: Does the JPMorgan prediction go far enough?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Tushar Aggarwal, an early member of the LuneX Ventures, is the founder and CEO of Persistence, an ecosystem of bleeding-edge financial applications focusing on both institutional and crypto-native users. Tushar is listed in Forbes 30 under 30 Asia.

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Four Low-Cap Crypto Assets Spike More Than 100% Within One Week

Four altcoins, all of which individually boast a market capitalization of below $600 million, have recorded growth of over 100% in just seven days. At the top of the list is TrueFi (TRU), a decentralized finance (DeFi) protocol that supports uncollateralized lending. According to CoinGecko, TRU surged from a seven-day low of $0.14 to $0.75, […]

The post Four Low-Cap Crypto Assets Spike More Than 100% Within One Week appeared first on The Daily Hodl.

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ETH 2.0 will help Ether outpace Bitcoin, Pantera Capital CEO predicts

Ether has more potential than Bitcoin as a newer cryptocurrency, and the latest EIP 1559 will help the token trade more like a fixed asset, Pantera Capital CEO said.

Amid the looming Ethereum London hard fork, Pantera Capital CEO Dan Morehead predicted that the upcoming upgrade would likely help Ether (ETH) outpace Bitcoin (BTC) as the largest cryptocurrency.

As a newer cryptocurrency, Ether has more potential than Bitcoin, Morehead said at the Reuters Global Markets Forum on Monday, noting that the latest Ethereum Improvement Proposal (EIP) 1559 upgrade will help the digital token to trade more like a fixed asset.

One of five EIPs in ETH London upgrade, EIP 1559 is an anticipated update to Ethereum’s existing fee structure, introducing a minimum payment for sending Ethereum transactions and move away from a bidding system that allows miners to prioritize the highest bids. Designed to programmatically adjust fees for users to pay the lowest bid for each block, EIP 1559 upgrade would potentially make Ether a deflationary asset.

“You’ll see a transition of people who want to store wealth, doing it in Ether rather than just Bitcoin,” Morehead predicted, adding that the cryptocurrency’s shift to Ethereum 2.0 will significantly reduce Ether’s mining energy consumption levels compared with the one of Bitcoin. Ethereum’s wide implementation in decentralized finance applications would also help Ether grow bigger than Bitcoin, he said.

Despite predicting a brighter future for Ether, Morehead is still optimistic about Bitcoin’s growth in the future. The CEO reportedly predicted that Bitcoin would trade between $80,000 and $90,000 by the end of 2021, rising above $120,000 within a year. Surging mainstream adoption could further drive Bitcoin price to as high as $700,000 in the next decade, Morehead noted.

Related: Ether price hits 2-week high as London hard fork momentum builds

Launched in 2015, Ether is the second most valued cryptocurrency, with a market capitalization amounting to $290 billion at the time of writing. Scheduled to take place on Wednesday, the Ethereum London is one of the biggest Ethereum upgrades designed to move its blockchain from proof-of-work to proof-of-stake, meaning that the network would mostly rely on staking instead of mining. Launched in 2009, Bitcoin relies on the PoW consensus algorithm.

Morehead is not alone in thinking that Ethereum could outperform Bitcoin in the future. Mike Novogratz, founder and CEO of crypto investment firm Galaxy Digital, predicted in late June that Ether could become the “biggest cryptocurrency one day.”

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5 easy ways crypto investors can make money without needing to trade

Want to get paid to HODL? Here are five easy ways crypto investors make money without trading.

Large price jumps and 100x gains get a lot of attention from pundits and influencers in the cryptocurrency community because they offer the hope of overnight riches.

In reality, these opportunities are few and far between. Not to mention, only a handful of traders actually manage to catch these waves and cash out in time to lock in life-changing money. 

Fortunately, catching a large price surge is far from being the only way for crypto investors to make a buck, and the recent rise of decentralized finance (DeFi), nonfungible tokens (NFTs) and the slow march of mainstream crypto adoption provides a near endless stream of investment opportunities.

Let’s have a look at five different ways crypto holders can make an easy buck without actually having to trade.

Staking

Staking, which rewards users for locking tokens on a protocol as collateral for transaction validation, is one of the best ways to earn a yield on assets held in a crypto-based portfolio.

In August, the Ethereum network will switch from a proof-of-work (PoW) consensus model to a proof-of-stake (POS) model, and Ether (ETH) holders who stake in the Eth2 contract can earn up to 5.83%.

Under this new PoS system, token holders actively participate in transaction validation by locking their coins in nodes on the network that then vie for a chance to verify transactions, create new blocks and receive the rewards that come along with it.

Data from Staking Rewards shows that a stake of 10 Ether currently results in a weekly earning of 0.0075 ETH, worth $17.96 at current prices, and a yearly earning of 0.3876 ETH which is currently worth $933.69.

Calculated staking rewards for Ether. Source: Staking Rewards

The percentage yield for Ether decreases as more tokens are locked on the network so the final earnings may change.

Currently, the top five crypto assets by staked value are Cardano’s ADA, Ether, Solana (SOL), USD Coin (USDC) and Polkadot (DOT).

Top 5 crypto assets by staked value. Source: Staking Rewards

All things considered, staking provides one of the best low-risk opportunities in crypto to gain a bigger stack regardless of market sentiment or performance, while also helping to support the network through transaction validation.

Lend crypto for low-risk yields

The growth of the DeFi sector led to the development of a diverse crypto lending ecosystem, where users can deposit their cryptocurrencies to various lending protocols in exchange for rewards in the underlying token or in different assets like Bitcoin (BTC), Ether and various altcoins.

Aave is the top lending protocol at the moment and the platform offers yield opportunities for tokens on the Ethereum and Polygon network with its native coin MATIC.

Top 7 Aave lending pools on the Polygon network. Source: Aave

The chart above shows the top seven lending pools available through the AAVE protocol on Polygon and rewards are paid in Wrapped MATIC (WMATIC), with the current deposit annual percentage yield (APY) being 1.92% and a yearly estimated APY of 6.1%.

Other top lending protocols include Curve (CRV), Compound (COMP), MakerDAO (MKR) and Yearn.finance (YFI).

Lending offers another low-risk way to earn a decent yield, in both bull and bear markets, on tokens that don’t offer user-controlled rewards like staking.

Earn fees and tokens from providing liquidity

Liquidity provision is one of the primary components of a DeFi platform, and investors who choose to provide funds to emerging platforms are often rewarded with high percentage returns on the amount staked, as well as a percentage of the fees generated by transactions within the pool.

Rewards for ETH-USDC liquidity pool on QuickSwap. Source: QuickSwap

As seen in the image above, providing liquidity to an Ether/USDC pool on QuickSwap will entitle an investor with a percentage of the $23,098 in total daily distributed rewards and a fee APY of 33.81%.

Ideally, long term investors would be wise to research the available pools on the market, and if a liquidity pair comprised of solid projects or even a stablecoin pair such as USDC/Tether (USDT) looks appealing, it has the potential to be the blockchain version of a savings account that offers far better yields than can currently be found in any bank or legacy financial institution.

Maximize returns by yield farming

Yield farming is the concept of putting crypto assets to work in a way that generates the highest yield possible while minimizing risk.

As new platforms and protocols emerge, they offer high incentives to depositors as a way of mining for liquidity and increasing the total value locked (TVL) on the protocol.

Rewards for STKGHST-WETH LP deposits on DinoSwap. Source: DinoSwap

The high yields offered are generally paid out in the native token of the platform as seen above, where a user has deposited a liquidity pool token for an STKGHS-WETH pair which has an APR of 189.2% and has so far generated a reward of 3.312 DINO.

For long investors who hold a portfolio filled with an assortment of tokens, yield farming is a way to gain exposure to new projects and obtain new tokens without having to spend new funds

Related: Here’s why DinoSwap’s (DINO) TVL rose above $330M a week after launch

NFT and blockchain gaming make ‘play-to-earn’ a reality

Blockchain gaming and NFT collecting is another way to produce a return on a crypto portfolio without spending new funds.

Axie Infinity is the most popular example at the moment, and the in-game play involves trading, battling, collecting and breeding NFT-based creatures known as Axies.

Playing Axie Infinity generates rewards in the form of Smooth Love Potion (SLP), an in-game token that is used in the Axie breeding process and also trades on major cryptocurrency exchanges. Users can swap SLP for dollar-based stablecoins or other large-cap cryptocurrencies.

According to data from Your Crypto Library, “Today, the average player earns between 150 to 200 SLP per day,” which, at current market value, is worth between $40 and $53.50.

In some parts of the world, that amounts to the income provided by a full-time job. For this reason, Axie Infinity has seen a massive uptick in user activity and new accounts in countries like Venezuela and Malaysia.

Crypto investing, lending, staking and play-to-earn blockchain games provide a much higher return on investment than traditional banks offer on savings and checking accounts. As the blockchain sector grows, it’s likely that investors will continue to flock to platforms that offer high yields for engaging with the protocol.

Want more information about trading and investing in crypto markets?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Ethereum’s 2.0 upgrades aren’t the game-changer that could bring more users

Ethereum might be the darling of the blockchain world, but it’s likely that the awaited Eth2 will not attract wider mainstream adoption.

Ethereum 2.0 (Eth2) is being pegged as the blockchain Messiah of Ethereum. Newsflash: it's not. The long-awaited changes are not expected to solve core issues that are plaguing the network and forestalling wider adoption.

Vitalik Buterin, the brilliant mastermind behind the Ethereum blockchain, considers the personnel working with Ethereum as a bigger problem than the actual software, as he stated in a recent interview with Forkast news. While the personnel working on the project may or may not be problematic, it's surely not the only shortcoming. As promising as the new rollout may seem, the kind of software upgrades set to be introduced will not solve the long-term problems plaguing the network from reaching the heights Buterin and his disciples once envisioned.

Related: The great tech exodus: The Ethereum blockchain is the new San Francisco

The major problems

Ethereum currently runs on a proof-of-work (PoW) system that enables only up to 15 transactions per second or so — double that of the Bitcoin (BTC) blockchain — and is widely considered as impractical for building any expansive decentralized finance, or DeFi, ecosystem. As a result, gas fees are incredibly high on Ethereum. Because so few transactions can be processed per second, the price to process faster becomes competitive. Research by Dune Analytics shows that 2-5% of transactions on Ethereum-based decentralized exchanges (DEXs) failed due to complications such as insufficient gas prices.

Related: Ethereum fees are skyrocketing — But traders have alternatives

Another core issue the Ethereum platform faces, but often disregards, is poor user experience (UX) design. As a result, the average users who may be interested in engaging with decentralized finance applications (DApp) or a nonfungible token (NFT) marketplace, for example, will avoid doing so because most user interfaces are not only not intuitive, but also lack sufficient educational resources to give users the know-how to use the platform.

Users are expected to set transaction fees in gas price and gas limits for transaction processing. Yet, how many users realistically know this without going down the intense rabbit hole of cryptocurrency jargon and information? Insider Intelligence reported that 25% of United States adults don’t understand or know how to invest in digital currencies. How could users be expected to know without access to effective educational tools, for example, that sending payment from two separate wallets to the same receiving address would not cause a nonces conflict? In all likelihood, the vast majority of regular users would not be aware in the slightest of such a problem to begin with.

Related: Mass adoption of blockchain tech is possible, and education is the key

Ethereum 2.0

To respond to these long-standing issues, Ethereum's overseers announced the launch of Eth2 as a series of upgrades over its existing model, which would include switching to proof-of-stake (PoS) and sharding. The proof-of-stake concept states that people can mine blocks and validate transactions according to how many coins they hold. The Ethereum Foundation announced that it expects the switch to PoS to be completed by the end of 2021. As the Ethereum Foundation explained in a recent blog post, “the energy requirements remain unchanged” compared with the old PoW system.

Related: When will Ethereum 2.0 fully launch? Roadmap promises speed, but history says otherwise

Sharding is expected to take much longer and, according to Ethereum’s website, “shard chains could ship sometime in 2022 depending on how quickly work progresses” after the current Ethereum mainnet merges together with the Beacon Chain proof-of-stake system. Sharding is the process of splitting a database horizontally in order to spread the load, reducing network congestion and increasing transactions per second. The shard chains are expected to give Ethereum more capacity to store and access data.

The new upgrades are designed to be more environmentally conscious and speed up the processing of transactions. In addition to these upgrades, the blockchain programming language is expected to change from the traditional Ethereum Virtual Machine (EVM) to one that can be adopted by developers using C++ or Rust, which will simplify coding directly into a browser. While the infrastructural upgrades may prove beneficial in some capacities, such as improving the flow of transactions, they still miss the mark.

First, Ethereum 2.0 has been in the works for years, leaving many users wondering when the actual full upgrades will happen. Proof-of-stake is intended to reduce mining cost and energy consumption, however, network throughput will only increase if block times are reduced and/or block sizes are increased. Furthermore, sharding only helps applications that can run independently from one another and only need to be synced every once in a while. But DeFi's inherent decentralized and open-sourced nature means that the sharding-style processing would need to run transactions through a relay chain and thus slow down the entire process.

Related: Where does the future of DeFi belong: Ethereum or Bitcoin? Experts answer

More importantly, on the user experience front, Ethereum is still lagging behind to a large extent that remains unsolved by the rollout of the Eth2 upgrade. While Ethereum claims it will release upgrades that solve the transaction processing speeds and high gas fee problem to a degree, the foundation shows a blatant disregard for issues that, if resolved, would open doors for a greater number of users who are currently daunted by Ethereum’s unfriendly interface.

Even when the expected upgrades will eventually roll out, users will still have difficulty setting transaction fees in gas prices and gas limits for transaction processing. Even beyond Ethereum, the UX issues are not unique to Ethereum and are common on other blockchains that use EVM protocols, such as Binance Smart Chain and Polygon. Because other Ethereum-compatible chains that use EVM protocol suffer from the same UX issues, it is difficult to envision a future in which even EVM-based chains will also be truly accessible to the average user.

In addition to the lingering gas fee parameter issues, transactions have long confirmation times that typically result in delays, asynchronous transaction submission and confirmation notices. Quite often a user will not receive confirmation right after the transaction, leaving too much uncertainty regarding whether the targeted recipient received the transaction. For users who are accustomed to instantaneous results on the web, like e-commerce situations, this is a strange and frustrating user experience.

Ethereum might be the darling of the blockchain world, but at some point, the hype may just turn out to be hot air, and it’s very likely that the long-awaited upgrade will not attract wider mainstream adoption. It’s not clear if the expected changes will be able to deliver the promises of the Ethereum Foundation's head honchos. Until Ethereum can solve some of the deeper issues at heart, it's doubtful that Eth2 will make a significant difference for anyone outside of the community of Ethereum enthusiasts. For now, Ethereum 2.0 is not a much-needed game-changer, but rather a cosmetic upgrade.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Adrian Krion is the founder of the Berlin-based blockchain gaming startup Spielworks, with a background in computer science and mathematics. Having started programming at age seven, he has been successfully bridging business and tech for more than 15 years, currently working on projects that connect the emerging DeFi ecosystem to the gaming world.

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