Following the top stories in the crypto ecosystem for the week, Ethereum layer-two rollup network Arbitrum One has caught the eyes of speculators by showing a significant growth in breaching and going beyond the $1.5 billion of total value locked (TVL) in protocols using its services on Sept 11, as DeFi degens rushed to invest in the first early farming & agricultural DApps launching on the network. This surge has been shown to grow by roughly 2,300% this past week.
It was suggested that this might be due to the rumor which started on social media (like Twitter) that the protocol intends to issue its token in the coming days. Off-chain Labs launched the second layer to mainnet on Aug 31. (less than two weeks ago) which followed an influx of a $120 million funding round. Arbitrum currently holds 65.7% of all capital locked on layer-two networks, followed by the second-layer decentralized exchange dYdX with 14.6%.
About 80% of Arbitrum’s growth can be attributed to the ArbiNYAN yield farm (related to the Nyan cat meme), as most users are still flocking. This is the first Farming platform, which has lured & attracted investors with multi-thousand percentage returns for staking its native token.
The hype surrounding the ArbiNYAN must have been underrated, as rapid migration of liquidity onto Arbitrum has occurred, impacting the broader DeFi ecosystem. Arbinyan has 1.48 Billion TVL, meaning that almost all of the funds in Arbitrum have been moved to get the astounding yields the farm is offering (3,314.70% APY in the Nyan pool as at the time of writing).
A significant share of the capital flowing to Arbitrum also appears to have come from so-called ‘Ethereum killers’.
Dune Analytics data shared to social media on Sept. 12 indicated that while Arbitrum’s TVL grew by roughly 2,300%, the TVL of bridges to Solana, Fantom, and Harmony had shrunk by 58%. 36%, and 62% respectively that same week. The Arbitrum bridge TVL absorbed the Solana bridge TVL. Arbitrum (Ethereum Layer 2) is the Solana killer.
Cryptocurrencies were thought of as a risky addition to the financial world until their popularity rose along with their several use cases. With the addition of the DeFi and blockchain technology, the crypto world is challenging the traditional financial world to step up its game.
By providing a robust and decentralized alternative to traditional financial services, crypto has transformed the way people use financial services. Several additions such as dApps, blockchain technology, yield farming, and tokenization have made the crypto space an invaluable resource. Tokenization, in particular, has seen tremendous growth with more platforms bringing real-world institutions to the crypto world.
Student Coin is one such unique platform that, through its ecosystem, brings tokenization to the academic sector. The platform has an ongoing ICO till April 30th, where it has already raised over $28 Million.
About Student Coin
Student Coin is an advanced blockchain ecosystem that helps organizations, corporations, institutions, and individuals to create and manage tokens. Its comprehensive suite of products provides exceptional services and onboarding for investors and students.
The Student Coin ecosystem is built upon Ethereum and Waves, making it user-friendly and adaptive to the individual’s requirements. The founder and CEO, Wojciech Podobas, is a crypto expert and wrote two books: “Cryptocurrency Encyclopedia: the comprehensive guide through the 100 most important cryptocurrencies” and “Advanced Technical Analysis The Complex Technical Analysis of Asset.”
Started in 2018 for a student’s club of Kozminski University in Warsaw, the company now enlists students from over 500 global institutions with prominent names such as Harvard, NYU, and London School of Economics.
The Utility Token $STC
Student Coin issues its utility token, $STC, to the students, and the investors can purchase it to fund the student’s education and tuition fees. In return, the investors will receive a percentage from the student’s future earnings.
This is a fresh concept that has gained immense popularity, evident from Student Coin’s IPO’s recent success, where several investors, institutions, organizations, and students showed interest. Student Coin is an innovative concept bringing tokenization to the educational sector and helping students along the way.
There are mainly two phases in the market cycle which is accumulation and distribution. Price trades sideways during these phases before breaking up or breaking down and changing the trend. So what is accumulation and distribution
The definition of Accumulation is – The act of buying more crypto of a security without causing the price to increase significantly. After a decline, a crypto may start to base and trade sideways for an extended period. While this base builds, well-informed traders and investors may seek to establish or increase existing long positions. In that case, the crypto is said to have come under accumulation.
The systematic selling of a crypto without significantly affecting the price. After an advance, a crypto may start forming a top and trade sideways for an extended period. While this top forms, a crypto may experience distribution as well-informed traders or investors seek to unload positions. A quiet distribution period is usually subtle and not enough to put downward pressure on the price. More aggressive distribution will likely put downward pressure on prices.
SO what happens after accumulation? The price starts to break the resistances and starts going up. And what happens after distribution? The opposite. The price starts declining.
Coins which are in accumulation right now.
What happened to the coins which broke out of the accumulation phase?
Do note – This is not financial advice, please conduct your own research.
Coin selection is the process that describes how the algorithms driving Bitcoin choose which of your Bitcoins to spend when you approve a spending transaction.
If you have 1.2 BTC in your wallet and you pay out 0.3, you have 0.9 BTC left, right?
Well, yes. But it isn’t necessarily that simple. After all, you can have $100 in your physical wallet. That $100 could comprise two fifties, or it could be five twenties, or 100 one-dollar bills. Each time you spend one of those paper notes, you will likely get some change back. Over time, if you keep paying with bills, you’ll only have a pile of nickels and dimes left over.
That 1.2 BTC in your digital wallet is no different. The difference with BTC is that when you approve a BTC spend, you also have to pay the transaction fees. So the process of choosing which specific Bitcoins are handed over in the spend is more of a costly one.
Coin Selection in Action
Let’s go back to your hypothetical wallet with 1.2 BTC in it. Knowing it’s unlikely that you actually have one whole BTC and 0.2 BTC, let’s assume you have the following:
Now, when spending 0.3 BTC, you’d hope the algorithm would combine the 0.2 and 0.1 BTC to reach the spend value. It makes good sense, and given how Bitcoin calculates fees, there are lower costs in doing it this way.
The good news is that this is likely to happen. However, this is only since the Bitcoin developer team updated the algorithm earlier this year, to ensure more streamlined coin selection. Before this update, the coin selection process was a little less sophisticated.
Continuing with the above scenario, when you approved the 0.3 BTC spend, the older version of the algorithm would almost always create a change output. This means it would invariably have taken the 0.4 or 0.5 BTC, and return the change of 0.1 or 0.2 BTC to your wallet, less the fees.
While the algorithm update is good news for the future, the fact is that there are years of Bitcoin transactions that happened before this update. This has created a digital equivalent of everyone having a wallet comprising 70% nickels and dimes, and perhaps 30% notes of value. The difference being that you can’t take your Bitcoin wallet into the bank and ask them to change all of those Satoshis back into Bitcoins for you.
As annoying as small change can be, it’s easier to handle than fragments of BTC
How Does This Happen?
Bitcoin runs on a concept called UTXO, or unspent transaction output. This is essentially the same concept that prevents a double-spend from happening. Each time a spend transaction is authorized, the Bitcoin algorithm ensures that the wallet contains at least the value of the spend plus fees before the PoW consensus protocol approves the transaction.
Bitcoin opted for the UTXO mechanism because it keeps the proof of work algorithm simple. It also permits parallel processing across multiple accounts, which enhances scalability. Finally, it allows for Simple Payment Verifications (SPV), lightweight clients that can verify a payment’s inclusion in the blockchain without downloading the full database.
However, UTXO has some drawbacks. Most notably, it doesn’t work for smart contract platforms given that each output can only be owned by one person. As explained by Vitalik Buterin, this is why Ethereumopted for a different model, often called the Account/Balance Model. Although this model offers some benefits over UTXO, scalability is not one of them. Thus, for all the many benefits Ethereum offers, scalability is an issue that continues to plague its developers.
The upshot is that yes, Bitcoin has now updated the algorithm. Coin selection is a more sophisticated process as a result, targeting UXTO values that best match transaction value. But, the situation remains that there are many, many tiny pieces of Bitcoin now circulating.
Last year, one Bitcoin developer attempted a complex calculation to work out the possible value of these tiny pieces. He concluded that Bitcoin is comparable to a vault, two-thirds full of low-value trinkets, and one-third full of high-value items. Eventually, fees for moving the trinkets out of the vault could end up being more than the value of the trinkets themselves.
A Possible Solution?
It was blockchain developer Mark Erhardt who first proposed how to optimize the Bitcoin coin selection algorithm. Although, it was Andrew Chow who implemented the update. Erhardt now works for BitGo, which develops enterprise cryptocurrency solutions for institutional investors. There, he has developed Predictive UTXO, which helps to offset the fees involved in spending many small UXTO values.
Bitcoin transaction fees are lower when there is less traffic on the network, and much higher when traffic is high. This is why many people were complaining about high fees during December 2017 when Bitcoin’s value spiked at nearly $20k.
Predictive UTXO uses an algorithm to bundle together the tiniest fragments of BTC in transactions when fees are lower. When fees go up, it will minimize transaction sizes to offset the increase. In this way, Predictive UTXO is saving up to 30 percent on fees for BitGo clients.
If Predictive UTXO could be rolled out across other exchanges and wallets, it will provide some cushioning against the fees involved in spending the tiny BTC fragments that now exist in many of our wallets.
If you’re interested in knowing more about coin selection in general, here is an excellent presentation explaining coin selection and UTXO in detail. Warning: it is a long one!
Some people may consider that fees are so small so as not to matter. While fees can end up being pennies on the dollar, savvy investors know that compound interest matters. If we can reduce fees and reinvest the difference, they are potentially worth far more in years to come. At least, assuming the price of BTC goes up.
As my grandmother used to say, take care of the pennies, and the pounds will take care of themselves. Pounds refers to sterling, but the principle also stands for dollars – and your Bitcoins.
Like other precincts of public-service delivery, cryptocurrencies are getting steady acceptance in the judicial quarters as well. In a recent case, a Federal judge allowed an accused hacker to pay bail amount in cryptocurrency.
New Trend: Crypto Bail Bondsmen?
According to U.S. Attorney Office, an Italian/Serbian dual-citizen, Martin Marisch was charged with intrusion and hacking network installations of video-game development company Electronic Arts (EA) located in San Francisco Bay Area. He was previously arrested by the FBI on 8th August while trying to flee via a flight to Serbia.
Martin Marisch was presented in a Federal Court on the 9th of August and charges of illegal network intrusion were framed against him by the U.S. Attorney’s Office and the FBI. After the hearing, Federal Judge Jacquline Corley ordered the release of accused Marsich to half-way house on the condition that he pays an equivalent of $750,000 in cryptocurrencies for bail, which can be in the form of BTC, Altcoins or as the defendant may prefer.
Not a new precedent
This development may seem odd to people accustomed to conventional legal norms but U.S. Judges have full authority to select bail terms in accordance with the assets of the defendant. Real-estate possessions are oftentimes utilized to post bail charges. In this case, it became evident to the judge that the defendant has access to large sums of cryptocurrencies.
Marisch is alleged to have stolen critical information from EA systems to obtain in-game currency, which is used by gamers to buy and sell in-game items. According to the company, losses occurring from the selling of stolen video game accounts amount to around $324,000. While an affidavit presented by the FBI in the court stated that a San Francisco Bay Area video game company found 25,000 of their gaming user accounts had been compromised by this network intrusion leading to severe financial losses.