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Bitcoin, which had soared for a week, turned down. According to the Virtual Asset Exchange on the 8th, as of this afternoon, bitcoins were traded at 70821,000 won each. Compared to the previous day’s increase to 79.5 million won, it fell more than 8.6 million won.
On the afternoon of the 8th, the bitcoin price is displayed on an electronic board installed in the’Upbit’ lounge of the cryptocurrency exchange in Gangnam-gu, Seoul.
News1 It is written with content provided through <�News Connect>.
Translator|Jade
Source|Blockchain.News
The price of Bitcoin has been soaring this week, hitting a record high of US$19,918 on December 2, and is currently consolidating around US$19,000. The price of Bitcoin is largely driven by the demand of professional investors and institutions, who regard digital assets as a safe haven against the weakening of the US dollar. With the recent adoption of mainstream payment methods, retail investors’ investment in Bitcoin is also rapidly increasing.
According to Reuters (December 3), in this round of Bitcoin price increases of nearly 165%, it was mainly North American investors who made significant gains. This trend represents a shift in the encryption market, which was usually dominated by investments from Asian countries such as China, Japan and South Korea.
The report pointed out that “in mid-November, the weekly net inflow of bitcoins (mainly acting as new buyers) to platforms that mainly provide services for North American users increased by 7,000 times this year to 216,000, worth US$3.4 billion.”
At the same time, according to data from the blockchain analysis company Chainalysis, Asian exchanges lost 240,000 bitcoins, worth US$3.8 billion, during the entire November, compared with January when 1,460 bitcoins flowed in.
Reuters also reported that by strengthening the supervision of Bitcoin and cryptocurrencies, US investors have also been attracted. In general, the US exchanges are more strictly regulated, and government agencies such as the US Department of Justice and the Office of the Office of the Superintendent of Currency are also constantly working to clarify regulatory requirements.
Curtis Ting of Kraken Cryptocurrency Exchange told Reuters:
“You will start to see the difference between markets more and more often, that is, the difference between a market without regulation or unclear regulation and a market with regulation.”
However, despite the data showing that Bitcoin’s dominance has shifted from Asia to the United States, industry experts warn that it is too early to announce a fundamental shift in the market, especially when the new crown pneumonia pandemic has caused market chaos this year. .
Bitcoin’s acceptance as a wealth reserve continues to increase
Bitcoin broke through $19,800 and reached a record high before the market cooled down. According to Peter Smith, the co-founder and CEO of Blockchain.com, the cryptocurrency market is returning to the level of 2017 price increases, but this time there is more room for growth, which is exciting.
Speaking of the rising sentiment in the US market, Smith said:
“From 2011 to 2014, Bitcoin was a huge experiment. From 2014 to 2017, we realized that it would work. From 2017, the Bitcoin frenzy will be inevitable. Bitcoin will be unstoppable.”
Bitcoin has been regarded as a wealth reserve and its acceptance has increased. Many people believe that Bitcoin will replace gold as a safe-haven asset. Smith agrees with this view that the gold market can compete with Bitcoin. But the CEO of Blockchain.com predicts that Bitcoin will soon be at least 10% of the market value of gold, which is 20 times today.
Bitcoin billionaires Tyler Winklevoss and Cameron Winklevoss also predict a similar situation with Bitcoin. The founder of Gemini Exchange told CNBC that by 2030, the price of Bitcoin will soar to 500,000 U.S. dollars, and will replace gold as a hedge currency with a market value of 9 trillion U.S. dollars. Tyler said:
“Our argument is that Bitcoin is gold version 2.0, which will overturn gold, which means that its market value must reach 9 trillion, so we think that one day we can see Bitcoin with a price of $500,000.”
According to the billionaire Bitcoin investor, even at its current highs, the room for price increases in Bitcoin makes it a good investment.
“Bitcoin is worth holding. If you haven’t bought it yet, now is the best time, because we think there will be a 25-fold upside.”
Perhaps unlike most people’s guesses, the fastest growth in the market value of the digital currency field in 2020 is not the bitcoins bought by users of the popular mobile payment application Cash App, or DeFi (decentralized finance) technology. Ethereum, the application of which has landed and developed rapidly, is the US dollar stable currency Tether (USDT).
So far in 2020, the total market value of digital currencies has increased by 106.74%. Among the top five digital currencies, Tether has the fastest increase in market value. The year-to-date scale has increased nearly three times, becoming the world’s third largest cryptocurrency by market value, with a valuation of approximately US$16 billion .
Tether has done a “stable” business in a volatile market.
Strong demand from derivatives and emerging markets
Tether is a digital currency anchored to the US dollar. Tether was created by Bitfinex to solve the problem of stable exchange rates in digital currency transactions, and has played an extremely important role in the trading market from day one. According to data from Chainalysis, digital currency trading is the main demand for USDT. In the past six months, 97.9% of the newly minted USDT was directly transferred to the exchange from the official Tether account.
Compared with different types of trading platforms, the recent increase in USDT funds inflows into derivatives trading platforms has been the highest, with an average growth rate of 248% over the past 7 days compared to 180 days.
In 2020, with the intervention of hedge funds and financial institutions, the demand for derivatives is increasing. In the digital currency trading market, the most popular product is the “reverse swap contract” (BTC-based derivatives). This historical origin comes from before Tether was accepted by the market, such as the “reverse swap contract” of the derivatives platform BitMEX. Derivatives”. With the rise of emerging derivatives trading platforms (such as FTX and Binance Futures), they have launched various “USDT-denominated derivatives” and have been recognized by retail traders. Whether it is a trading platform, market maker or trader, a large amount of USDT will be required to gain exposure.
The Block’s BTC derivatives position data shows that USDT-standard BTC perpetual swap positions have increased by about 300% year-to-date on the Binance Futures platform, while the total position of the well-known reverse derivatives trading platform BitMEX has fallen by nearly 38% year-to-date. The USDT derivatives market is becoming more and more vigorous.
The heavy users of digital currency come from emerging markets, usually from Eastern Europe, Africa, South America and East Asia. The top three countries in the global digital currency penetration rate are Ukraine, Russia and Venezuela.
Due to the many uncertainties brought by 2020, according to Google Trends data, the global market’s attention to Tether has doubled in the past year, and the demand for offshore finance has risen rapidly.
From the data of USDT holding liquidity, it can be seen that the use of stable currency Tether nearly 5 billion U.S. dollars is classified as non-liquid, which also accounts for the majority. In addition to being used for market transactions, it is also considered by the market as a store of value.
Multi-chain issuance reduces costs
With the aging of the Omni protocol, most of the current Tether on the chain is in the Ethereum network. In recent years, there have been more and more other competing public chains (such as TRON, EOS, Algorand, etc.) and the Layer 2 expansion network (OMG). ) USDT is issued.
The above figure shows that after the Fed expanded its credit scale, the price of Bitcoin has also seen a significant increase. From the perspective of the graphic trend, it is almost in line with the direction of gold and US stocks.
The correlation coefficients between Bitcoin and gold and the S&P 500 index that we have calculated through specific calculations strongly confirm this point.
Tether’s CTO (Paolo Ardoino) stated that the USDT migration to the OMG network will reduce costs and ease the congestion of the Ethereum network.
In January 2020, Tether also issued a privacy stablecoin worth 15 million U.S. dollars in the sidechain liquid created by blockstream, and the monitoring tools could not monitor the details of its transactions.
At present, more and more blockchains and protocols are supporting USDT. In addition to Ethereum and TRON, which are the public chains that carry the largest Tether, there are also many protocols that are also issuing stable coins, such as BCH’s Simple Ledger (SLP), The stablecoin ecosystem is becoming more and more diversified to meet the needs of different segments.
Market competition and compliance
In addition to USDT, USDC is the largest among the common competitive stable digital currencies, and there is also the decentralized stable currency Dai, which is over-collateralized by digital currencies. At present, competitive stablecoins account for about 32% of USDT’s circulating market value and are gradually rising. Although it does not directly compete with Tether, the participants in the stablecoin field are becoming more and more diversified.
Although the business of stablecoins is growing, the biggest challenge is compliance and cross-border supervision. After the “Paradise Documents” and hacker attacks in 2017, USDT has been regarded as the last straw for systemic risks. In 2019, New York State prosecutors took their parent companies IFinex Inc and Bitfinex to court. In September 2020, the New York Attorney General’s Office continued to conduct an in-depth investigation into Ifinex used Tether to make up for Bitfinex’s loss of $850 million in 2019. It can be seen that although stablecoins have now developed into the cornerstone of the blockchain industry, they also face many challenges.
The difference between Nsure and Nexus Mutual is reflected in the source of funds, pricing method and claims process.
Original title: “Nsure: What is different from Nexus Mutual”
Author: Blue Fox Notes
With the rise and development of DeFi, open financial insurance, especially DeFi contract insurance, has become more and more important. Insurance is an indispensable part of the DeFi puzzle. At present, the development of DeFi insurance is still in its early stage, and insurance products are not yet mature. In addition to Nexus Mutual, there are more open financial insurance projects on the way. Nexus Mutual alone is not enough.
Compared with some DeFi insurance projects, the Nsure team has many years of deep cultivation background in the insurance field, which is conducive to its construction of open financial insurance projects that can be implemented. This time, Blue Fox Notes AMA invited the two co-founders of Nsure, Jeff Ren and Alex Peng. Jeff has a management and research role in the Nsure team. He has a double master’s degree in engineering and business. He once wrote storm surge models for the US National Oceanic Administration. Jeff has done a lot of research on blockchain protocols and ecology since 2017, and served as the investment and research director of the ChainFunder fund. Alex is responsible for actuarial and insurance model design in the Nsure team. Alex is a master of financial engineering and has more than 10 years of working experience in insurance companies. He has worked in Aon America and Hong Kong, and has extensive experience in insurance product design, actuarial analysis and market development.
The following is the record of this AMA:
* Briefly introduce what is Nsure? *
Jeff: Nsure Network is an open insurance platform prepared for open finance. It is a decentralized “Lloyd’s” that provides a trading platform for people who want to transfer risks and capital willing to take on risks.
At the end of this year, Nsure will launch the Alpha version. By then, you can insure the Defi projects and smart contracts you want to protect on the platform.
At the same time, you can also put ether and some stable coins into the capital pool to mine Nsure Token. When you become a Nsure Token Holder, you can participate in the project Staking to help the platform underwrite and get the benefits of premiums, and you can also participate in governance through Nsure DAO.
Why did the Nsure team choose to open up the financial insurance field?
Jeff: The explosive development of DeFi this year is obvious to all. However, in recent years, many incidents such as hacker intrusions or contract bugs have led to losses for Defi users and gradually exposed the risks of smart contracts. Participants of the DeFi project will naturally seek insurance products to manage their risks, but the corresponding insurance products are actually very lacking in the traditional insurance industry. The main challenge that traditional insurance companies face is that DeFi is too new and there is not enough data to allow insurance companies to do traditional actuarial pricing.
Estimated based on the insurance penetration rate of 5-10%, the current DeFi market needs at least US$500 million in insurance, but the current DeFi insurance is only one-tenth of this amount, so we think this is a market with huge potential.
Smart contracts are just the beginning. When we built the Nsure platform, we hoped to be suitable for a wider range of insurance needs, including the capital risks of traditional exchanges, or catastrophe insurance that is still relatively missing in the traditional insurance industry. As with traditional insurance products, demand and supply can be matched on the Nsure platform. By introducing more low-relevance products, Nsure holders can achieve higher and more stable returns on the platform. For the smart contract insurance alone, we estimate that the premium market demand is US$50-200 million, which is equivalent to the existing property and casualty insurance market with annual premiums of US$2 trillion. We believe that the room for growth is very large.
Nsure is an agreement to open up financial insurance and also an insurance market. What is the motivation for users to purchase insurance on Nsure? And why is the insurer willing to provide underwriting? How does Nsure provide the best support for both supply and demand?
Alex: At home and abroad, everyone’s pursuit of wealth growth and high returns on capital has remained the same. For example, in the 16-17th century, the trade between the European and American continents created huge wealth and attracted a lot of capital and manpower. But at the same time, high returns are often accompanied by high risks, such as shipwrecks, pirates, and fires.
For individuals, although the probability of these events is not particularly high, if they occur, it is a catastrophic blow, and the capital has a strong need to transfer risks. The Crypto market also has strong demand, but the existing market cannot be well satisfied.
The initial form of insurance was that all shipholders gathered to share risks. Slowly, high yields attracted more capital and professionals to enter. At the same time, professional service platforms and institutions were established. Lloyd’s has since the 16th century cafe Development to today’s largest insurance platform. To some extent, insurance has also promoted the development of modern economy.
Nsure draws on the operating model of Lloyd’s of the United Kingdom to provide a place for transactions between insurance demanders and capital suppliers. The dynamic pricing model can effectively mine the price corresponding to the risk according to demand and supply; capital mining can flexibly provide corresponding capital demand; at the same time, the three-stage claim settlement process protects the interests of policy holders; finally Nsure will provide a large amount of Materials and information help everyone earn enough risk premium.
How is the price of insurance on Nsure calculated? How to calculate the underwriter’s income?
Alex: Compared with traditional insurance, insurance companies will provide a quote, and consumers can choose to buy or not. Nsure’s premiums are determined by a dynamic pricing model. The dynamic pricing model takes capital demand (total insurance purchasing power) and capital supply (total number of pledged Nsure tokens) as parameters, and jointly determines the final premium in the model. The advantage of this pricing model is that premiums are sensitive enough to both supply and demand. When supply increases, premiums will become lower, and when demand increases, premiums will become higher. Moreover, the ratio of supply and demand together determines the magnitude of premium growth, which is consistent with Market rules.
The insurer’s income comes from three sources. The first is that the insurer who pledges tokens can earn 50% of the premium, and the insurer can obtain higher leverage by pledge of non-related items to get higher premiums. If no loss is reported, the insurer’s profit is the 50% of the premium. If the project has a loss, the pledge token equivalent to 50% of the claim amount will be destroyed. The value of this part of the token is the insurer Loss. Therefore, the first part of the income of the insurer is the premium minus the claims, that is, the contracting income.
In addition, the insurer can also obtain voting rights in the claims process by pledge tokens, and participation in this process will also have corresponding benefits. Finally, as the holder of the Nsure token, the insurer also enjoys the right to co-governance in the DAO, and at the same time allocates the newly generated tokens to enjoy the profit from the token appreciation.
In the near future, we will gradually publish information on Insurance Knowledge 101, how to become an excellent insurer, etc., on the official website, and there will be Becoming Nsure Underwriters activities later. Welcome everyone to pay attention. While familiarizing with the concepts, we will study how to obtain higher returns.
From the public information, Nsure has a “capital mining” plan. So, what is “capital mining”? Why start the “Capital Mining” program?
Alex: The insurance industry is a capital-heavy industry. How to get the corresponding capital to expand the business is the first consideration. Traditionally, there are two ways: the first is the form of mutual insurance (Mutual), which collects funds from policy holders, and Nexus Mutual has borrowed from this form; the other is a joint-stock company that uses stock to finance, such as large insurance companies PICC, Ping An, etc.
Joint-stock insurance companies now occupy about 80% of the market. The main reason is that they have more flexible ways to obtain capital and can expand the market more quickly; and due to the pressure of shareholder returns, they are more sensitive to customer grasp, new products, and industry changes.
Since the beginning of the year, the DeFi industry represented by liquid mining has ushered in a spurt of development, and everyone has increasingly recognized this form. We also believe that this form can be very flexible to solve the capital needs of decentralized insurance, so the Nsure team was established.
The number of mining is fixed, the income depends on the price of Nsure tokens, and the price depends on the development of the business.
In the event of a claim, how to guarantee the rights and interests of insurance users? How to guarantee reimbursement?
Jeff: First of all, we will try to clearly define the specific event of the claim. Nsure’s definition of DeFi insurance is the loss caused by the failure of the smart contract. Other risks such as: systemic risk (the collapse of the Ethereum network), because the loss caused by personal operation is not covered by the guarantee, and we will publish it on the official website later Examples of historical events are analyzed and defined.
After we define the claim event, there will be a three-stage voting process to make a specific claim decision, as shown below:
The first round is the voting round of policyholders. We believe that the risk of smart contracts is an event. All insured persons are victims. In rare cases there will be personal damage. Therefore, the first round of voting is decided by all policyholders. Whether to file a claim collectively.
In the second round, professional audit institutions were introduced. We believe that the judgment of smart contracts requires professional institutions to participate in judgment. Ordinary people’s judgments about events often come from news, forums, etc.
The third round is a referendum. Whether it is the claim settlement party or the Nsure Holder party, if the auditor believes that the judgment of the audit institution is wrong, it can pledge Nsure token to challenge. The conclusion of the referendum is the final conclusion.
What can Nsure tokens be used for? What supports the value of Nsure tokens?
Alex: First of all, Nsure tokens can be used as mortgages to collect premium income, because the income of different mortgage strategies will be different, and there may be a difference of 10% to 80% or even higher, which requires certain research. We will gradually provide more materials, and let everyone gradually become familiar with them in the following activities. For token holders who do not have the energy to research, they can authorize a specific Syndicate, some professional personnel or team, to manage it, and they charge a certain fee.
Secondly, Nsure tokens can participate in community operations and governance, and will receive corresponding rewards, such as claims voting, parameter research settings and other activities. Finally, Surplus Pool is all the assets of Nsure tokens. As the business develops, it will continue to accumulate in the long term, and the corresponding Nsure token value will also increase.
How does Nsure’s governance work?
Jeff: Nsure DAO is a platform where Nsure token participates in governance, and its functions are currently being gradually improved. Governance has always been the most important part of whether each project can obtain community support. The upgrade of the main agreement, whether to stop mining when the reserve pool is sufficient, the correlation coefficient setting of each project, the proposal and listing of new projects, and the decision on the cooperation of the audit agency will all be determined by NsureDAO. The current governance process of NsureDAO is similar to that of Compound, and the proposal will be based on executable code.
Nexus Mutual is currently one of the main players in DeFi insurance. What is the difference between Nsure and Nexus Mutual? Are there any problems that Nexus Mutual has not solved, but Nsure can solve it?
Alex: First of all, we believe that Nexus Mutual is very innovative and very successful. We have many common ideals with them, and we may explore more cooperation with them in the future.
Our main difference lies in the following 4 points:
1. Different sources of funds. We have adopted a more flexible shareholding system, and they are co-insured; we use capital mining to attract funds to carry out business. Token price is a market decision. Higher prices attract more funds to carry out business, and more business Generate higher returns and further support the Token price. The price of NXM is determined in the form of a bonding curve. The price theoretically fluctuates in a range. When more funds are needed, the price drops, and when there is excess funds, the price rises.
2. Due to the needs of physical companies, they need to fill in KYC before buying the insurance policy. We believe that this block prevents a lot of demand. For example, we cannot participate in the needs of KYC countries. We are not in the first stage of the development stage-Crypto products. Need KYC.
3. Different pricing methods. Our price is determined by both demand and supply, while the price of NXM is only determined by supply. This also caused the embarrassing situation that their prices were too low before, but there was no insurance policy to buy. With the interaction of supply and demand, the entire market will develop more benignly.
4. The claims settlement process is also a big improvement, Jeff gave a detailed introduction before.
What is the current stage of opening up the financial and insurance field? What do you want to stand out in the end?
Jeff: From the data of defipulse, the total lock-up of DeFi has been above US$10 billion since September.
As you can observe, the insured amount is only 0.42%. As mentioned earlier, compared with the standard of the traditional industry, generally speaking, more than 5% of the capital scale will be insured, and there is at least 10 times the room for growth of open financial insurance.
At present, we see that many insurance projects have risen due to the development of DeFi, and Nsure’s unique token economic model guarantees its scalability.
To give a specific example: when the demand for compound insurance increases, Nsure’s quotation model will increase the premium of compound insurance → the increase in premium will increase the income of underwriting → the price of Nsure token will be positively affected and appreciate in the secondary market → Increase in mining output → attract more funds to take risks for larger insurance coverage → meet compound’s insurance needs.
Nsure’s unique risk assessment model also ensures that the risk of everyone involved in Nsure’s mining and underwriting is controllable. There are correlation evaluation coefficients between each project to prevent excessive capital leverage and cause huge losses.
Source link: mp.weixin.qq.com
Crypto investing firm Grayscale recently released its 2020 Bitcoin Investor Study. The report used data from a survey which digitally polled a sizable number of individuals in the U.S. between June and July. Grayscale found the majority of the surveyed people were keen on buying Bitcoin (BTC).
“In 2020, more than half (55%) of survey respondents expressed interest in Bitcoin investment products,” Grayscale wrote in its October 2020 report. “This marks a significant increase from the 36% of investors who said they were interested in 2019.”
The numbers in Grayscale’s report come from data compiled by research company 8 Acre Perspective. The firm asked 1,000 U.S. persons about their Bitcoin investment interest, or lack thereof. The digitally polled group ranged from age 25 to 64, with minimum household earnings of $50,000 and a minimum of $10,000 of capital at their exposure for investment.
Similarly, Grayscale’s 2019 report used data from 1,100 Americans, polled in March and April 2019 under the same monetary and age parameters.
“Among those who reported investing in Bitcoin, 83% have made investments within the last year, indicating that digital currencies are an increasingly attractive component of modern investment portfolios,” Grayscale’s 2020 report detailed.
The report’s findings show Bitcoin’s popularity has increased in the U.S. “Based on this year’s survey, the market of potential Bitcoin investors is 32 million strong — compared to 21 million investors just one year ago,” the report explained.
“This year, 62% of investors reported that they are ‘familiar’ with Bitcoin, compared to 53% in 2019. In addition, nearly half of those surveyed predicted that digital currencies will be regarded as mainstream by the end of the current decade.”
The report also noted that parties interested in BTC were similar to mainstream market participants, although those keen on Bitcoin purchases run about seven years younger, on average.
Additionally, the report pointed out a correlation between interest in Bitcoin and the COVID-19 pandemic.
Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Benjamin Pirus
Compare Optimistic Rollup and ZK Rollup from the perspectives of flexibility, scalability and cost.
Original Title: “Starting from Expansibility: Understanding Optimistic Rollup and ZK Rollup”
Written by: William Wang
In the previous article, we discussed the extensible application of ZK Rollup in Layer 2 and briefly introduced its principles. In this article, we will introduce the working principle of Optimistic Rollup and its comparison with ZK Rollup, as well as Findora’s innovation in this area.
What is Optimistic Rollup
Optimistic Rollup is a technology that uses OVM (Optimistic Virtual Machine) to extend Ethereum’s general smart contracts on L2. OVM has complete functions and can be compatible with EVM (Ethereum Virtual Machine) execution environment, and it is mainly used in layer 2 systems. Its look, feel, and behavior are very similar to the Ethereum main chain. The structure of Optimistic Rollup borrows heavily from Plasma and ZK Rollup designs. However, a certain degree of scalability has been weighed to allow fully universal smart contracts to run in Layer 2 protected by Layer 1.
If it can be deployed in a short period of time, it can migrate existing dApps and services through a simple method that compromises security/scalability within a reasonable range. Meet the growing demand of ETH1.0.
In order to better understand the usage scenarios of Optimistic Rollup on the Ethereum mainnet, let’s first refer to the following example:
We assume that a developer has written a Solidity smart contract.
- The developer sends the transaction off-chain to the Bonded Aggregator, the producer of the layer 2 block, who is responsible for deploying the contract. Anyone with Bond can become an Aggregator, and there can be multiple Aggregators on the same chain.
- Aggregator can charge fees in any way you like, including account abstraction or meta transactions.
- Then, the Aggregator must immediately assure the developer that its transaction will be included in the new block, otherwise the Aggregator will lose the Bond.
- Aggregator then uses local transaction transfers and calculates the new State Root.
- Aggregator submits a new Optimistic Rollup block containing the transaction and state root as a transfer transaction to the Ethereum main network.
- If someone downloads the block and finds that the block is invalid, and proves that the block is invalid, you can dismiss the malicious Aggregator and the Aggregator’s Bond that continues to build on the invalid block. Part of the bond owned by the Aggregator will be rewarded to the prover.
This is the simplest operating logic of Optimistic Rollup smart contract.
Since the state generated by each current transaction is part of each effective Optimistic Rollup state afterwards, this is also one of the ways to ensure the security of this smart contract . This smart contract approach is very similar to what we see on the Ethereum mainnet today. So, what are the similarities and differences between Optimistic Rollup and ZK Rollup?
In Optimistic Rollup, when the new state root is released by the operator, it will not be checked by the Rollup smart contract every time. However, if an incorrect state transition is issued, other operators or users (must observe the conditions of the contract in the L1 Rollup and execute each transfer transaction) can observe invalid transactions and restore incorrect blocks, thereby eliminating malicious attacks Operator.
In comparison, ZK Rollup is a more complex technology. Now that ZK Rollup is used for token transfer and some relatively special applications, it will take longer to implement general smart contracts with ZK Rollup, and it needs more time to effectively package the entire EVM into zero-knowledge proofs. More research work. However, once ZK Rollup is fully developed, all existing Ethereum dApps and services will be able to easily migrate to ZK Rollup.
ZK Rollup will solve several basic problems of Optimistic Rollup:
- Eliminate Tail Risk: Steal funds from OR through complex but feasible attack vectors;
- Reduce the withdrawal time from 1-2 weeks to a few minutes;
- Empowers high transaction confirmation speed, and can achieve unlimited exit flow;
- Default privacy.
Optimistic Rollup is also a good tool for ZK Rollup. The extension to L2 requires users to make drastic changes in the usage habits of e-wallets, oracles, and dApps. Optimistic Rollup has prepared an ecosystem in advance for this initiative, which brings expansion possibilities for DApps that cannot be built on ZK Rollup. This will give ZK Rollup enough time to mature and make it seamless, while maintaining the development trend of Ethereum. Below we briefly compare Optimistic Rollup and ZK Rollup through several aspects.
Flexibility: universal computing
Optimistic Rollup
Although Optimistic Rollup can be used in some special application scenarios, the most important innovation in this technology is OVM: Optimistic Virtual Machine. OVM can support the implementation of arbitrary smart contract logic. From this perspective, almost everything possible in Ethereum is also possible in OVM, including smart contracts and their composability. OVM can be based on EVM, EWASM or any other virtual machine.
If used with EVM, another benefit of OVM is that it can support Solidity code. Therefore, OVM can easily transfer most of the existing code base directly.
It is ideal for OVM to directly use the existing EVM code, and it must not be that simple to implement. The implementation of OVM will need to change the format of Ethereum CALLDATA and adopt a complex response protocol to achieve fraud proof. This may lead to divergence between OVM and EVM, which makes it impossible to correctly handle edge cases. This means that it is still difficult to rewrite existing contracts to OVM.
Another challenge for implementation is that fraud proofs for larger blocks may exceed the gas limit of L1. This makes these fraud proofs have to be broken down into multiple ETH transactions.
ZK Rollup
So far, all existing operations of ZK Rollup have focused on token transfers or atomic swaps. There are several main reasons.
First of all, there is still no effective technology that can be used to concise recursive proof combinations for different Zero Knowledge Proofs. Executing different smart contracts in the same block requires a recursive combination of different zero-knowledge proofs. Moreover, every new version of the smart contract requires a new trust setting process, which is obviously unrealistic. At present, the validators of STARK, a zero-knowledge proof technology that does not require trusted settings, only deal with a very limited type of problem. The STARK verifier must execute each constraint of the proven calculation statement at least once, which also means that we cannot repeatedly integrate and execute smart contracts with different architectures.
With the emergence of SNORK (Succinct Non-interactive Oecumenical (Universal) Arguments of Knowledge), the above-mentioned situation has begun to change. SNORK is a new generation of zero-knowledge proof based on a different set of encryption models called polynomial commitment schemes. Although the trusted setting is still required, it is now universal and can be updated. Once completed, you can continue to use it in any different program at any time. The Supersonic developed by Findora is a completely new, completely concise and transparent ZK-Snark technology.
Looking at it so far: Now the obstacles to establishing a general smart contract on ZKP have been eliminated. ZK Rollup can fully support the same programming model as EVM (including seamless composability and interoperability). Although the learning time for Solidity developers will not exceed 1 day, the initial contract may require a dedicated DSL. Ultimately, in view of the latest developments in zero-knowledge proof technology, we hope that all existing ETH contracts can be effectively transplanted with minimal effort.
Expansion and transaction costs
Optimistic Rollup
- The current estimate is about 4k gas/tx per transfer.
- Equivalent to about 100 TPS
- When using BLS signature aggregation, this number can reach up to 500 TPS.
- If EVM compatibility is broken, the throughput may theoretically increase to the limit of ZK Rollup.
- Actual throughput limit (token transmission): 500 TPS.
ZK Rollup
- The public data cost of each tx transmission in the material test network is currently 16 bytes and costs 272 gas/tx.
- In addition, the cost of certification is estimated to be approximately 300,000 gas.
- Even if we assume that a proof cost of 1M gas needs to be provided in the worst case, the estimated transaction limit will still exceed 2140 TPS.
- Gas cost is a big bottleneck because it is decentralized and anti-censorship. We expect this factor to decrease significantly over time.
- Actual throughput limit (token transfer): more than 2000 TPS-similar to VISA.
In many cases, ZK Rollup can save a large part of the cost. Although Optimistic Rollup requires users to post complete transaction input, a big difference of ZK Rollup is that users can do it without complicated operations in the two options. Out of choice, in ZK Rollup, we can flexibly choose between the following two options:
- The transaction input minus the witness does not affect the state transition,
- Only publish transaction output.
Since any Rollup will stay in each block shard, the cost of CALLDATA (and Rollup transaction cost) will not change much unless bandwidth becomes cheaper.
Optimistic Rollup is still in the proof-of-concept stage. Hope we can see the version on the mainnet soon. If it turns out that it is relatively easy to transplant existing code, many projects will gradually start to adopt it and establish a new infrastructure: for example, L2 technical support will appear in the wallet and so on.
For Ethereum, both types of Rollup must undergo similar infrastructure changes in e-wallets, oracles and other smart contract components.
Findora will deploy ZK Rollup from the bottom and directly support this expansion solution that is only available on L2 on Ethereum. Although the ZK Rollup in Ethereum is very mature in some application scenarios, such as token trading, it will take some time for a fully universal smart contract to reach a version that can be adopted by the main network.
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Compare Optimistic Rollup and ZK Rollup from the perspectives of flexibility, scalability and cost.
Original Title: “Starting from Expansibility: Understanding Optimistic Rollup and ZK Rollup”
Written by: William Wang
In the previous article, we discussed the extensible application of ZK Rollup in Layer 2 and briefly introduced its principles. In this article, we will introduce the working principle of Optimistic Rollup and its comparison with ZK Rollup, as well as Findora’s innovation in this area.
What is Optimistic Rollup
Optimistic Rollup is a technology that uses OVM (Optimistic Virtual Machine) to extend Ethereum’s general smart contracts on L2. OVM has complete functions and can be compatible with EVM (Ethereum Virtual Machine) execution environment, and it is mainly used in layer 2 systems. Its look, feel, and behavior are very similar to the Ethereum main chain. The structure of Optimistic Rollup borrows heavily from Plasma and ZK Rollup designs. However, a certain degree of scalability has been weighed to allow fully universal smart contracts to run in Layer 2 protected by Layer 1.
If it can be deployed in a short period of time, it can migrate existing dApps and services through a simple method that compromises security/scalability within a reasonable range. Meet the growing demand of ETH1.0.
In order to better understand the usage scenarios of Optimistic Rollup on the Ethereum mainnet, let’s first refer to the following example:
We assume that a developer has written a Solidity smart contract.
- The developer sends the transaction off-chain to the Bonded Aggregator, the producer of the layer 2 block, who is responsible for deploying the contract. Anyone with Bond can become an Aggregator, and there can be multiple Aggregators on the same chain.
- Aggregator can charge fees in any way you like, including account abstraction or meta transactions.
- Then, the Aggregator must immediately assure the developer that its transaction will be included in the new block, otherwise the Aggregator will lose the Bond.
- Aggregator then uses local transaction transfers and calculates the new State Root.
- Aggregator submits a new Optimistic Rollup block containing the transaction and state root as a transfer transaction to the Ethereum main network.
- If someone downloads the block and finds that the block is invalid, and proves that the block is invalid, you can dismiss the malicious Aggregator and the Aggregator’s Bond that continues to build on the invalid block. Part of the bond owned by the Aggregator will be rewarded to the prover.
This is the simplest operating logic of Optimistic Rollup smart contract.
Since the state generated by each current transaction is part of each effective Optimistic Rollup state afterwards, this is also one of the ways to ensure the security of this smart contract . This smart contract approach is very similar to what we see on the Ethereum mainnet today. So, what are the similarities and differences between Optimistic Rollup and ZK Rollup?
In Optimistic Rollup, when the new state root is released by the operator, it will not be checked by the Rollup smart contract every time. However, if an incorrect state transition is issued, other operators or users (must observe the conditions of the contract in the L1 Rollup and execute each transfer transaction) can observe invalid transactions and restore incorrect blocks, thereby eliminating malicious attacks Operator.
In comparison, ZK Rollup is a more complex technology. Now that ZK Rollup is used for token transfer and some relatively special applications, it will take longer to implement general smart contracts with ZK Rollup, and it needs more time to effectively package the entire EVM into zero-knowledge proofs. More research work. However, once ZK Rollup is fully developed, all existing Ethereum dApps and services will be able to easily migrate to ZK Rollup.
ZK Rollup will solve several basic problems of Optimistic Rollup:
- Eliminate Tail Risk: Steal funds from OR through complex but feasible attack vectors;
- Reduce the withdrawal time from 1-2 weeks to a few minutes;
- Empowers high transaction confirmation speed, and can achieve unlimited exit flow;
- Default privacy.
Optimistic Rollup is also a good tool for ZK Rollup. The extension to L2 requires users to make drastic changes in the usage habits of e-wallets, oracles, and dApps. Optimistic Rollup has prepared an ecosystem in advance for this initiative, which brings expansion possibilities for DApps that cannot be built on ZK Rollup. This will give ZK Rollup enough time to mature and make it seamless, while maintaining the development trend of Ethereum. Below we briefly compare Optimistic Rollup and ZK Rollup through several aspects.
Flexibility: universal computing
Optimistic Rollup
Although Optimistic Rollup can be used in some special application scenarios, the most important innovation in this technology is OVM: Optimistic Virtual Machine. OVM can support the implementation of arbitrary smart contract logic. From this perspective, almost everything possible in Ethereum is also possible in OVM, including smart contracts and their composability. OVM can be based on EVM, EWASM or any other virtual machine.
If used with EVM, another benefit of OVM is that it can support Solidity code. Therefore, OVM can easily transfer most of the existing code base directly.
It is ideal for OVM to directly use the existing EVM code, and it must not be that simple to implement. The implementation of OVM will need to change the format of Ethereum CALLDATA and adopt a complex response protocol to achieve fraud proof. This may lead to divergence between OVM and EVM, which makes it impossible to correctly handle edge cases. This means that it is still difficult to rewrite existing contracts to OVM.
Another challenge for implementation is that fraud proofs for larger blocks may exceed the gas limit of L1. This makes these fraud proofs have to be broken down into multiple ETH transactions.
ZK Rollup
So far, all existing operations of ZK Rollup have focused on token transfers or atomic swaps. There are several main reasons.
First of all, there is still no effective technology that can be used to concise recursive proof combinations for different Zero Knowledge Proofs. Executing different smart contracts in the same block requires a recursive combination of different zero-knowledge proofs. Moreover, every new version of the smart contract requires a new trust setting process, which is obviously unrealistic. At present, the validators of STARK, a zero-knowledge proof technology that does not require trusted settings, only deal with a very limited type of problem. The STARK verifier must execute each constraint of the proven calculation statement at least once, which also means that we cannot repeatedly integrate and execute smart contracts with different architectures.
With the emergence of SNORK (Succinct Non-interactive Oecumenical (Universal) Arguments of Knowledge), the above-mentioned situation has begun to change. SNORK is a new generation of zero-knowledge proof based on a different set of encryption models called polynomial commitment schemes. Although the trusted setting is still required, it is now universal and can be updated. Once completed, you can continue to use it in any different program at any time. The Supersonic developed by Findora is a completely new, completely concise and transparent ZK-Snark technology.
Looking at it so far: Now the obstacles to establishing a general smart contract on ZKP have been eliminated. ZK Rollup can fully support the same programming model as EVM (including seamless composability and interoperability). Although the learning time for Solidity developers will not exceed 1 day, the initial contract may require a dedicated DSL. Ultimately, in view of the latest developments in zero-knowledge proof technology, we hope that all existing ETH contracts can be effectively transplanted with minimal effort.
Expansion and transaction costs
Optimistic Rollup
- The current estimate is about 4k gas/tx per transfer.
- Equivalent to about 100 TPS
- When using BLS signature aggregation, this number can reach up to 500 TPS.
- If EVM compatibility is broken, the throughput may theoretically increase to the limit of ZK Rollup.
- Actual throughput limit (token transmission): 500 TPS.
ZK Rollup
- The public data cost of each tx transmission in the material test network is currently 16 bytes and costs 272 gas/tx.
- In addition, the cost of certification is estimated to be approximately 300,000 gas.
- Even if we assume that a proof cost of 1M gas needs to be provided in the worst case, the estimated transaction limit will still exceed 2140 TPS.
- Gas cost is a big bottleneck because it is decentralized and anti-censorship. We expect this factor to decrease significantly over time.
- Actual throughput limit (token transfer): more than 2000 TPS-similar to VISA.
In many cases, ZK Rollup can save a large part of the cost. Although Optimistic Rollup requires users to post complete transaction input, a big difference of ZK Rollup is that users can do it without complicated operations in the two options. Out of choice, in ZK Rollup, we can flexibly choose between the following two options:
- The transaction input minus the witness does not affect the state transition,
- Only publish transaction output.
Since any Rollup will stay in each block shard, the cost of CALLDATA (and Rollup transaction cost) will not change much unless bandwidth becomes cheaper.
Optimistic Rollup is still in the proof-of-concept stage. Hope we can see the version on the mainnet soon. If it turns out that it is relatively easy to transplant existing code, many projects will gradually start to adopt it and establish a new infrastructure: for example, L2 technical support will appear in the wallet and so on.
For Ethereum, both types of Rollup must undergo similar infrastructure changes in e-wallets, oracles and other smart contract components.
Findora will deploy ZK Rollup from the bottom and directly support this expansion solution that is only available on L2 on Ethereum. Although the ZK Rollup in Ethereum is very mature in some application scenarios, such as token trading, it will take some time for a fully universal smart contract to reach a version that can be adopted by the main network.
Source link: mp.weixin.qq.com
From the perspective of value capture, compared with the governance token of DEX, the platform currency of centralized exchanges is built on sound financial logic, and has practical uses such as “deduction of handling fees” and “participation in IEO”, which have greater Imagination space.
Original title: “UNI VS platform currency, who is the best catcher of transaction value? 》
Written by: Song Xiaowan
Since Uniswap announced the launch of its governance token on September 17, the controversy surrounding UNI has never disappeared.
Uniswap airdropped 150 million UNI to nearly 250,000 addresses that had invoked Uniswap V1 or V2 contracts. The current price exceeded 1 billion yuan. It was called a good story in the history of miracles in the currency circle.
Under the prestige, UNI rose by 125% in just two days. Supporters of UNI are a rare productive asset in the encryption field, calling UNI the “next BNB” or even the “next Bitcoin”.
It is also said that the best pit in UNI, the most buried people. The total market value of UNI is 35 billion yuan. “How many years will it take to pay back by dividends. Moreover, it does not even have the right to dividends. It relies on the governance power of the virtual head and brain to fudge? Most of the tokens are in the hands of the project party and investment shareholders. , To buy with cash, how much money do you have to spend to buy the number of votes with such a little right to speak?” said the blogger “Cuban Zuo Lanqi”.
Which is right and wrong is hard to be determined, but if Uniswap is placed in the competition sequence of the three major exchanges, how will UNI exist?
UNI or platform currency, which one is better?
According to the exchange token equation issued by Multicoin Capital, exchange token network value = exchange generated value * efficiency of capturing token value.
The indicators for judging “value created by exchanges” include: income, daily users, website traffic, breadth of product supply, community credibility, quantity, liquidity, management team capabilities, etc.
The efficiency of value capture refers to the ability of the token price to increase as the market share of the exchange increases. Such as repurchase and destruction, cash flow, speed sinking, transaction discounts, voting rights, destruction/price ratio, inflation/distribution ratio.
According to the formula provided above, UNI is clearly not dominant. Regardless of the efficiency of exchange creation or value capture, the current UNI cannot be compared with the platform currency of the head centralized exchange .
Uniswap has a total turnover of more than 20 billion US dollars in the past two years and has more than 250,000 unique addresses. The daily trading volume of the top exchange can reach 1 billion U.S. dollars, and Binance had 9 million users at the end of 2018.
In comparison, the advantages of UNI are :
- UNI is a rare productive asset in the encryption field.
- High efficiency and low cost. The Uniswap team has less than 20 people, and almost no server costs are required. However, there are hundreds of thousands of employees in the head exchange, which is expensive for maintenance and operation.
- The holders of the platform currency have no say in the development of the token economy, while the holders of UNI can participate in exchange governance .
At the same time, there are 6 hidden dangers behind UNI:
- There is no threshold for Uniswap token issuance, which leads to uneven quality of tokens. Traditional exchanges selectively list tokens and pass quality screening. Uniswap can only trade ERC-20 tokens, while traditional exchanges can trade tokens from different public chains.
- Uniswap adopts AMM (Automatic Market Maker System). AMM can only generate transaction prices, but cannot find market prices . Therefore, arbitrageurs have to be introduced to fill the AMM prices until they converge with the market prices. In other words, Uniswap cannot exist alone for the time being and must rely on the market price given by CEX.
- Transactions on Uniswap require the payment of Gas fees. This part of the cost is outflow and intercepted by the Ethereum miners. However, the transaction of platform currency basically does not require additional fees, and it is a closed system. For example, on September 17, the gas price of the Ethereum network continued to rise after the UNI was officially launched, and once exceeded 700Gwei.
4. Doubtful governance issues. According to the rules, Uniswap needs 10 million UNI to initiate a proposal. OKEx chief researcher William said: ” Currently, the main function of UNI is to govern voting , but from the point of view of currency holding addresses, the top five addresses account for half of the usage. The actual value of UNI is very low.” - UNI is an inflation currency. After 4 years, the annual inflation rate of UNI will remain at about 2%, and the platform currency will continue to deflate due to repurchase and destruction.
- Insufficient incentives for UNI holders.
OKEx stated that 30% of the processing fee per quarter will be used to repurchase OKB in the secondary market. Huobi said that 20% of the quarterly revenue of Huobi Global and Huobi DM is used for HT repurchase, while the previously announced burn amount of BNB is 20% of the quarterly net profit, until the number of BNB was reduced to 100 million, and the BNB burn ratio was no longer disclosed later.
What is the gain from holding UNI other than the rise and fall of tokens? It is reported that Uniswap’s 0.3% transaction fee was previously used to reward liquidity providers (LP). Now, UNI holders will charge 0.05% of each transaction fee, and the reward for liquidity providers is reduced to 0.25%. UNI is not dominant in dividends.
DeFi has risen rapidly. DeFi tokens such as LINK, YFI, LEND, and UNI have successively ranked among the top 100 or even the top 10 in encrypted market capitalization, but they are not comparable to UNI. UNI’s voice is louder and more ferocious, perhaps because it has launched an impact on the top of the encrypted world’s food chain: once UNI succeeds, the structure of the encrypted world will be reconstructed.
Different from the mature financial logic of the platform currency, part of the UNI’s 15 billion market value comes from the imagined potential value , which shows that investors give hope to the track behind UNI, similar to the extremely high valuation of technology stocks in the securities market .
Compared with UNI, which is in full swing, the prospect of platform currency looks much bleak.
The dilemma of platform currency?
From the perspective of value capture, compared with the governance token of DEX, the platform currency of the centralized exchange is built on a sound financial logic, and has practical uses such as “deduction of handling fees” and “participation in IEO”, and is supported by profits , Dividends or repurchases make it exist for long-term appreciation, and continued deflation gives it more room for imagination.
But the objective fact is that under the impact of DeFi, the platform currency seems to have become “destroyed”, lacking wealth effect, and not being pursued by investors.
Why does the platform currency fall into price dilemma?
Inner contradiction
As mentioned above, the current appreciation logic established by most exchanges for platform coins lies in the deflation caused by repurchase and destruction. An inherent conflict arises here. Most of the exchange’s income is tokens, and it is necessary to sell coins to obtain profits. This will cause the price of the currency to fall; and repurchase or dividends are required, which may increase the price of the currency. So the question is, which operation has more impact?
In terms of specific repurchase strategies, the exchange will implement more strategies that are beneficial to the exchange, rather than the strategies of investors. This is an inherent contradiction between exchanges and users.
The chips are getting scattered
In the turbulent market cycle, the platform currency has been favored by more and more investors with the labels of “deficient”, “valuable”, and “long-term rise”, but it is precisely because of this that its chip distribution has become more and more scattered .
Overly scattered chips will inevitably lead to mutual restriction of investors’ trading behaviors. The final result is that platform currencies tend to fluctuate up and down within a range without generating a large market.
Therefore, in order for the price of the currency to rise, there must be a force to control and lock a certain percentage of the bargaining chips, which will cause a certain scarcity effect in the market, and at the same time be willing to buy at a higher price, thereby promoting the rise of the currency price. Arouse FOMO emotions.
As platform currency chips become more dispersed, the exchange’s ability to control platform currency chips will become weaker and weaker. In other words, the price of platform currency will become more market-oriented .
Rat barn serious
Due to the asymmetry of information, the platform currency will often become the “cash machine” for exchange employees. It can accurately ambush information by predicting important positive events in advance and wait for the good news to be shipped. Therefore, many top exchanges It is not surprising that the currency price has suddenly been smashed when the platform currency appears “good” and has not been fermented .
Continue to sell pressure
In the exchange system, in addition to the “face” of the exchange, the platform currency also assumes certain financial functions, such as an incentive for ordinary employees and executives, and the exchange will use platform currency to pay wages. This is inevitable Continue to produce selling pressure, suppressing prices.
If we have to say, the last reason is that under the situation of scattered chips, the exchanges are not able to control the order, and the cost of the order is getting higher and higher. Nowadays, the exchange is increasingly lacking the motivation to actively pull the order. More from the “excellent performance” of competitors’ platform coins and the corresponding competitive KPIs.
“Why use the money earned on the exchange to offer money to Leek?” a senior exchange executive once said.
When the exchange’s platform currency chips are more and more dispersed, and the exchange is no longer willing to take the initiative to take the initiative, then the more market-oriented platform currency is still a worthy investment target?
“My answer is that the platform currency is still worth long-term investment.” Shenchao analyst Li Feng said: “From the perspective of development trends, centralized exchanges are still the mainstream of transactions for a long time. They are in price discovery, matching efficiency, and comprehensive services. The platform has a greater advantage, and the value of the platform currency has real profit support.
As long as the business of the exchange grows, the value growth logic of the platform currency remains unchanged. Under the influence of continuous repurchase and destruction, the price of the platform currency will maintain a steady growth every year.
Even with the impact of DEX, centralized exchanges will rely on the exchange public chain to actively participate in the DeFi ecosystem, blurring the boundary between DEX and CEX.
“If you have to make a suggestion to the exchange, then it is recommended that the exchange give the platform currency more governance functions. ” Li Feng said: “The platform currency does not necessarily make you rich, but at least it will not make you lose money or go bankrupt. It’s a good word.”
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