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Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT? (

Destroy the fake PUNK to prove that you are the real PUNK.

Written by: LeftOfCenter

As a non-homogeneous token, each NFT is irreplaceable and unique. This unique attribute is naturally suitable for the field of art NFT with unique value. In other words, when we cast a piece of NFT artwork on the blockchain, it is equivalent to registering and confirming the right to the work. The creator, owner and all subsequent transaction records of this work will be recorded on the chain .

However, this is only established on the basis of the existence of a blockchain. Once the cross-chain is cross-chain, there may still be the problem of the same work being submitted multiple times by people who want to test it.

DeFi Big Whale 4.8 re-enacted the recently popular CryptoPunk NFT and copied it to the BSC Binance Smart Chain for distribution. Each punk can spend one BNB token for minting, and the total supply is 9,999. After this group of punk was released, it was sold out in less than an hour.

This is equivalent to sending a set of exactly the same pirated Punk NFT on the Binance Smart Chain. The holder is equivalent to forking the original NFT on Ethereum. Obviously this is a deliberate social experiment and a value test. Is the test buyer real punk or fake punk?

A long-planned social experiment?

The original Twitter name of DeFi Big Whale Four Eighty Four was 0xB1, so he issued a set of exactly the same pirated punk NFT, what exactly did he want to do?

For buyers who grabbed this group of punk NFTs, compared to the original Punk’s lowest price of $35,000, spending one BNB on the Binance Smart Chain to cast a cryptopunk NFT seems to be a good choice.

CryptoPunks are the first digital art works on Ethereum with a built-in method to verify unique ownership, with a total supply of 10,000 pieces. The basic unit of CryptoPunks has 10,000 numeric characters. These characters will constitute different degrees of rarity attributes according to their type (such as alien, ape, zombie), as well as headdress, beard, hoodie, etc.

As people pay more and more attention to CryptoPunks, interest in buying CryptoPunks has also surged. In the last quarter of 2020 and the first two months of 2021, sales around CryptoPunk have reached tens of millions of dollars.

On-chain data shows that on February 22nd, a big whale purchased 34 Cryptopunks NFTs within 20 minutes, costing 557.5 ETH, which is about 1 million US dollars. Spencer Noon speculates that the whale is a billionaire venture capitalist, the founder and CEO of the investment company Social Capital, and the chairman of the aerospace company Virgin Galactic Chamath Palihapitiya. Chamath Palihapitiya is an American venture capitalist, engineer, SPAC initiator, and founder and CEO of Social Capital. He was an early senior director of Facebook, a new generation of star venture capitalist, good at mining undervalued technology companies and unknown software The value of startups is also a supporter of Bitcoin.

Another NFT Punk numbered 6487 was sold by address 0x1da533 to 0x561786 at a price of 550 ETH, valued at approximately US$1.05 million.

Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?NFT Punk, number 6487, is a bald female punk

In addition, in order to participate in the panic buying, this event also allowed users who did not know Binance Smart Chain to experience the Binance Smart Chain for the first time. Many buyers said, “The first time I use the BSC Binance Smart Chain, it is indeed very silky to use, and compared to the gas fee of hundreds of dollars on Ethereum, the cheap transaction cost is more acceptable.”

BSC brings a lower fee experience than Ethereum DeFi. In addition, the key data is also very attractive:
BSC TVL has exceeded 9.6 billion U.S. dollars, increasing from 680 million U.S. dollars on January 26 to 9.614 billion U.S. dollars on February 24, an increase of over 1310%, far exceeding the growth rate of Ethereum;

Most importantly, the BSC Binance Smart Chain ecosystem has also rapidly risen and expanded in the 5 months since its launch, and formed a preliminary prototype of a complete ecosystem , mainly consisting of DeFi, NFT, games, and development. The ecosystem covers nearly 26 different fields such as wallets, infrastructure, derivatives, and stablecoins.

Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?

Affected by the above, BNB, the dominant currency of the BSC ecosystem, has risen more than 5 times in the past month, far exceeding ETH in the same period.

However, if you know about this DeFi whale, it’s not difficult to speculate that his purpose of launching such an activity is obviously not to provide cheaper alternatives to punk NFT buyers, let alone to provide Binance smart chain. Drainage brings an early user experience. As most buyers and viewers have guessed, this may be a long-planned social experiment. Next, buyers are likely to be called on to destroy these punk NFTs.

Who are four eight four?

Who is the DeFi Big Whale Four Eighty Four?

The previous Twitter name of 1984 was “0xB1”. It was a recently emerging DeFi whale. Its DeFi token holdings accounted for 99%. It was also an early participant in multiple DeFi projects, one of which was only more than 5 months old. In the age account, DeFi tokens worth more than 30,000 ETH are held. The holding tokens include KeeperDAO, Badger, DIGG, YFL, YAX, UNI and 1INCH and other DeFi blue chip projects.

The amazing speed of wealth accumulation in the past six months of 1984 and its high-profile style different from other giant whales have allowed it to grow into a “flag” in the DeFi world , as an important “weathervane ” of DeFi projects , tracking its wallet address The holdings of assets are regarded as the easiest and most efficient way to mine the DeFi alpha project .

1984 is not only active in various DeFi protocols, but also interested in NFT. Recently, April 8th and 4th gave out up to 150,000 US dollars in prize money for the NFT commemorative competition. In January this year, 484 also bid for a very rare CryptoPunk collection at a high price of 600 ETH, but ultimately failed.

In addition, 1984 also purchased three CryptoPunk collections at a price of 130 ETH each; purchased the joint “BTC Whitepaper” of MEME and Badger due to the DeFi liquidity mining fire for 88.8 ETH; purchased it for 65 ETH The NBA Dallas Mavericks owner and billionaire Mark Cuban sold and created two same-version encrypted art NFTs in Rarible, and destroyed one of the NFTs after purchase, reducing it from the original tenth version to nine Version. Interestingly, encryption artist Beeple sold three open-version encryption art NFTs at Nifty Gateway, which were all packaged and bought by 484 at a price of 333.666 ETH recently, and these NFTs will no longer be sold.

1984 is also a very active DeFi donor. He has donated money to some DeFi projects many times. For example, he gave 5ETH to DeBank ‘s Ethereum address debanker.eth to thank debank’s asset overview function for quickly integrating multiple DeFi protocols. .

From this, we can outline the user portrait of this “DeFi whale”: an active DeFi user who not only believes in the spirit of openness and decentralization, but is also willing to try and fund some early experimental projects. It is also a solid DeFi practice. And preacher.

Destroy fake punk and become real. Punk?

In fact, as soon as the incident was launched, it has caused widespread controversy. Not only did some people question the motives of the 1984 , but also the punk on the two chains initiated a debate about “Who is the real punk?”

Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?

Some people speculate that the buyer may spontaneously destroy these NFTs to protect the interests of the authors and holders of these original punk NFTs. The true author and holder of an NFT work can be traced back to the open source code. And write verifiable rules for public viewing on the chain. This is the core spirit of cryptopunk, that is, “In math we truth, Code is law.”

In fact, buyers have been destroying these NFT punks.

Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?

In addition, actions such as “destroy” are also very similar to what a “DeFi whale” such as 4.84 would do.

Users who are familiar with April 4 may still remember that he revealed in the 2020 year-end summary tweet that “Bansky” will enter the NFT field.

Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?

Who is Bansky?

Bansky is an anonymous British graffiti artist, social activist, film director and painter. His street works are rich in political style and ironic, with some subversive, cynical black humor and vigilant sentences attached to the side; most of his graffiti is rubbed out using unique template technology, like a kind of art The social commentary expressed in a way has appeared in the streets, walls and bridges of different cities around the world, and has even become a fascinating urban appearance in the local area.

However, it was a work self-destruction incident that made Bansky famous and even out of the circle. On October 5, 2018, one of Banksy’s most famous works “Girl With Balloon” (Girl With Balloon) was held in London. According to Forby’s auction house, this is a reproduction painting drawn by him during 2006. It was sold for 1.06 million pounds. But at the moment of the deal, the painting was half-year-old by a paper shredder hidden in the frame. Half of the girl’s head was cut into pieces.
Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?

Soon after the incident, Bansky posted a video “surrender” on Instagram, showing how he secretly installed the paper shredder inside the painting. The video quoted Picasso’s famous phrase “The impulse to destroy is also the impulse to create,” Bansky said. A layout that was meticulously planned for many years was originally planned to be shredded, but it was half destroyed by a paper jam. Despite the destruction of the painting, the winning collector is still willing to collect it for 1.06 million pounds.

As an anonymous street artist, Bansky’s own graffiti painting itself was painted on the wall and printed on a T-shirt. As a result, it was framed with a high-quality picture frame, framed as a cultural symbol, which can be said to be a kind of cultural symbol. Formal capitalization. Bansky meticulously planned this auction of broken paintings and wanted to challenge the concept of art capitalization.

In the end, “Balloon and Girl” was not destroyed by this, but was reshaped on the spot and became a new work born at the auction site-“Love is in the Bin” (Love is in the Bin), a topical effect that made it The value of it has risen repeatedly. Some museum directors estimate that because the higher the publicity effect of an art work, the higher its value, the more valuable the painting will be.

Obviously, April 4th is also a supporter of this destruction behavior. Looking at the tweets before April 4th, we found that he had once implemented an act of destroying the NFT collection issued by Lindsay Lohan based on a Twitter vote. The reason was that Lindsay Lohan publicly supported Justin Sun’s project. Click here to see the Proof of Burn.

Why did the mysterious DeFi whale reproduce exactly the same CryptoPunk NFT?

From this point of view, April 4th is just to arouse public attention to NFT, and the use of this banksy social experiment makes us have to seriously think about the true value of NFT, if we can copy exactly the same NFT art on another chain Product and can be sold, so what is the value of NFT ?

Unlike Bitcoin and Ethereum, NFT is a non-homogeneous token, each is unique. In the application scenario of art assets, NFT’s unique scarcity and copyright verification mechanism that can be traced back to the creator, Is where its value lies.

In the Bitcoin fork, the winner is often the side that has gained wider community consensus, but the NFT fork is different. It also condenses the creator’s effort and value, and these things also have unique value for buyers. If everyone copies and pastes other people’s work and publishes it on another chain, as long as someone pays for it and it exists reasonably, then NFT will not have its own value.

Obviously, 1984 deliberately provoked such a value test, and it was also a screening experiment, testing your beliefs by launching a punk NFT bifurcation event: Is it true punk or fake punk?

We cannot predict the ultimate direction of this event, but what is certain is that this social experiment has just begun, and whether to choose to destroy or continue to hold will be determined by the NFT holders. Those who choose to continue to hold will spontaneously form a market. After some of the NFT punk is destroyed, these undestroyed artworks NFT punk will become more rare fakes, and will spontaneously form a second place on the decentralized exchange. Level market.

Those buyers who destroyed the re-engraved version of NFT punk successfully passed the value test of 4.8 by destroying fake punk and became real punk. Such destruction will be permanently recorded on the Ethereum blockchain as a proof of workload, and it is worthy of ( kong ) issuance ( tou ) an NFT true punk medal .



‘Crypto is exactly like dot com bubble; Bitcoin, Ethereum can survive it’ (

American television personality and entrepreneur, Mark Cuban thinks that the current Bitcoin market trend is similar to the dot com bubble burst caused by much speculation that inflated the stocks of internet companies. 

Bitcoin had been on a rally and set a record for another ATH of over $40k. However, as experts predicted, an incoming wave of correction caused the asset to recently reach as low as $31,000, after registering a 20% drop.

The billionaire stated that Bitcoin and Ethereum will be analogous to companies that survived the meltdown of the dot-com era. He implied that the two largest cryptocurrencies have the potential to survive if the crypto market bubble bursts and also continue to thrive; much like how Amazon, EBay, and Priceline made it past the bear markets of 2000 and 2001. Additionally, Cuban thinks that most other cryptocurrencies will not make it and said in a tweet: 

Further, Cuban said that “as during the dot-com bubble the experts try to justify whatever the pricing of the day is.”

Recently, JPMorgan found that Bitcoin millennials were now choosing to invest in “digital gold” over gold bullion, which could increase the asset’s prices to $146,000.

Even macro investor Raoul Pal predicted that Bitcoin would soar to $1 million in roughly five years’ time, highlighting the cryptocurrency’s restricted supply and favorable market demand.

However, according to Mark Cuban crypto was much like gold that is “supply and demand-driven.” He claimed that narratives about “debasement, fiat… are just sales pitches” and added

The biggest sales pitch is scarcity vs demand. That’s it

Cuban had referred to Bitcoin as a collectible in 2019 and gave it “no chance” of becoming a reliable currency. Calling it a religion rather than a monetary solution, he said that as long as people accepted Bitcoin “as a digital version of gold,” it would continue to be investable.

The self-made billionaire who made his fortunes by selling tech-focused firms to Yahoo and others, advised investors to “learn how to hedge” and said: 

Along the way MANY fortunes will be made and LOST and we find out who has the stomach to HODL and who doesn’t. My advice ? Learn how to hedge.

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What exactly does Facebook want to change from Libra to Diem? (

In December 2020, Libra suddenly announced that it was renamed Diem and confirmed that it would be launched in early 2021. At the same time, the original Libra Association was renamed Diem Association. As we all know, the social network giant Facebook has designed the cryptocurrency Libra before, so what is the purpose of this change of name Diem?

Facebook’s ambitions to enter the cryptocurrency market

In fact, as early as 2018, Facebook had a plan to develop a payment platform based on cryptocurrency. At that time, David Marcus, vice president of instant messaging application business, was appointed the head of the blockchain department. He had previously served as president of PayPal and was also a board member of the cryptocurrency exchange Coinbase. Then, Facebook began to hire more and more cryptocurrency developers. Gradually, the social media giant’s digital currency plan began to surface, and other details related to Facebook’s digital currency began to flow out. At that time, Facebook planned to turn the instant messaging app WhatsApp into a cryptocurrency remittance tool and was preparing to launch a pilot program in the Indian market, but ultimately failed.

In 2019, Facebook officially announced the launch of the digital currency Libra, and also disclosed in detail the specific structure of the project. At first, both Libra and its blockchain were supported by the Libra Association, a consortium of 27 large companies independent of Facebook. According to Facebook’s plan, they will build a digital currency wallet called “Calibra” for Libra (now renamed Novi), and will support independent governance voting, but this way allows Facebook to gain from the digital currency Libra Profit.

However, when the launch was announced, the Libra project still faced many regulatory obstacles, including the US Senate and some European regulatory agencies that did not support Facebook’s issuance of digital currency. Since then, the Libra digital currency plan has not developed as scheduled. By the end of 2019, some initial members of the Libra Association began to choose to leave, including PayPal, eBay, Visa, Mastercard, Stripe, Mercado Pago and Booking Holdings. In the end, Facebook had to rebuild the Libra Association, which also attracted some new members to join.

The time came to 2020. The whole year was not smooth for Libra, and it was not released as planned. They basically chose to remain silent throughout the year.

“Renovated” Libra-Diem comes out

As a “retrofited version” of Libra, it can be said that Diem is more similar to Tether (USDT) or other cryptocurrencies linked to fiat currencies. Diem will run on the autonomous Diem blockchain, and all tokens will be stored in a digital currency wallet called “Novi”. The renamed Diem project is cooperating with the Swiss Financial Market Supervisory Authority (FINMA) to obtain a payment service license, which will allow it to operate in certain areas if all goes well.

Different from other stable currency blockchains, in addition to being used for transaction payments, the Diem blockchain is programmable like Ethereum, which means that developers can create custom apps on Diem based on one A smart contract development language called Move, users can ensure network security in accordance with the logical constraints of “static typing”. In addition, there is another point similar to Ethereum, that is, the Diem blockchain is supported by validator nodes. The validator nodes are currently approved by members of the Diem Association. These nodes need to confirm transactions and verify blocks.

At present, Diem has been confirmed to be a stable currency. Like Tether and other stable currencies, it will be supported by traditional assets. If according to the early planning, Diem will be linked to government securities and legal tenders of different countries. According to the latest reports, Diem tokens will be fully backed by the U.S. dollar and anchored to the U.S. dollar. If it is pegged to the U.S. dollar, it means that the market value and circulation of Diem may not be fixed. The Diem Association can mint tokens when the Diem reserve increases, and it can also destroy the tokens when the reserve decreases. So far, there is no accurate data on the circulation of tokens issued when Diem goes online.

It is worth noting that although Diem has always promised to achieve global financial inclusion, they have to abide by regulatory regulations. The Diem blockchain is still controlled by a small group of validators who conduct transactions in accordance with Diem’s ​​LibraBFT consensus protocol. Confirm that this ensures that no participants (including Facebook and Novi) have too much power over Diem. This means that the Diem Association is likely to be able to blacklist some addresses, while also preventing token transactions that violate relevant regulations. If this is the case, the Diem design method may be contrary to the original intention of blockchain technology, because “Satoshi Nakamoto” originally designed Bitcoin for the purpose of providing people with absolute financial freedom and unstoppable transactions.

Diem’s ​​advantages

The Diem blockchain is actually very concerned about efficiency issues. The actual transaction processing speed is very fast, and it is expected to process 1,000 transactions per second when it goes online. This is very different from previous media reports that the testnet can only process 6-24 transactions per second, which is far lower than that of non-blockchain payment networks such as Visa or MasterCard.

More importantly, Diem promises that transaction fees are “close to zero”. On the Diem blockchain, the interest income of reserve assets will be paid to validators, which means that they do not need to pay from each transaction like other payment companies. Deduct 1-3% of the cost.

The Diem Association recruited troops to meet regulatory challenges,

It is worth mentioning that Facebook learned the lessons of the previous Libra project and knew the importance of obtaining regulatory approval. Therefore, the Diem Association recruited a number of key figures to lead the project, such as former Microsoft and VMware veteran Dahlia Malkhi. Chief Technology Officer; Christy Clark, a former HSBC executive, served as staff advisor; former US lawyer Steve Bunnell served as Chief Legal Officer. In addition, Kiran Raj was appointed as Executive Vice President and Deputy General Counsel for Growth and Innovation, James Emmett as Managing Director, Sterling Daines as Chief Compliance Officer, Ian Jenkins as Chief Financial and Risk Officer, and Saumya Bhavsar as General Law consultant. Judging from the work experience and industry background of these new members, they are likely to help the Diem project enter a new stage and meet regulatory challenges while ensuring organizational independence.

At this stage, the organizational structure of the Diem Association has not changed. In addition to a group of members who left in 2019, the current members as of December 2020 also include Coinbase, Uber, PayU, Rabbit Capital, kiva, iliad, Spotify, Temasek, Farfetch and so on.

Will cryptocurrency exchanges support Diem?

According to the information disclosed in the Diem white paper, the project is cooperating with “a number of fiercely competing cryptocurrency exchanges” in order to allow more users to freely buy and sell Diem tokens. But so far, we don’t know which cryptocurrency exchanges will support Diem. As of December 2020, no cryptocurrency exchange has clearly stated that it supports Diem, but as members of the Diem Association, Coinbase and Xapo may provide some support. In addition, it is not clear what practical applications of Diem will be, and no major company has announced support for the Diem transaction. But it should be noted that some companies in the Diem Association may accept the token, including well-known global companies such as Shopify, Spotify, and Uber, and they all have the possibility of accepting Diem token payments.

If more cryptocurrency exchanges support Diem trading in the future, more users will buy the token, which may further increase its market value. On the other hand, if Diem tokens can only be used through the Diem app, it is unlikely to attract the attention of the crypto community.

How do you see the future of Dime?

If all goes well, Diem will become the world’s first cryptocurrency issued by a large technology company. If you make a conservative estimate: assuming that 5% of Facebook’s 2.7 billion global users have purchased $50 worth of Diem tokens, then the total market value of Diem will reach $6.7 billion, which is enough to make Diem the top five in the world Bit cryptocurrency.

In addition, Facebook, a powerful brand, must be a plus to Diem’s ​​success. Not only that, there are some strong global companies among the members of the Diem Association, so it can bring great help to Diem in terms of exchange listing and commercial adoption.

However, the Diem project has also received a lot of criticism in the market. Although the project seems practical and efficient, it is not the same as other blockchain projects. In addition, Diem’s ​​centralization issue may also cause some internal divisions in the crypto community. Moreover, Facebook has not announced until now whether it will use Diem on its website, mobile application, and other affiliate products.

So is Diem still as ambitious as Libra before, or is it just a compromise by Facebook? Let’s wait and see!


Rethinking from the insurance agreement cover: what exactly is needed in today’s DeFi world (

从保险协议 Cover 再思考:今天的 DeFi 世界究竟需要什么

Author: Cai Yan (llamacorn), general manager of NGC Ventures Director

Since June of this year, we have witnessed a bull market in cryptocurrency led by DeFi and have seen more and more projects emerge. The price of tokens fluctuates and is sometimes manipulated by some bookmakers. Some people made money, some people suffered losses and pain. We are tired of research projects because there is no way to make money by simply researching fundamentals. Personally, I would like to remind you that the project can be forked or copied, but its core essence will not.

Let’s go straight to the topic below.

A recent article written by Multicoin Capital introduced the current state of the DeFi field. Reading this article is very convenient for newcomers to fully understand the DeFi market. On the basis of this article, I usually divide DeFi projects into two categories: ” old ” and ” new “.

“Old” DeFi projects are mainly pioneers that emerged in 2019 or earlier . At that time, DeFi was still in its infancy, and they seized the largest market share. The “new” DeFi project (although not determined by the release date) is a more aggressive and innovative project in this year’s fierce competition.

The following table briefly summarizes my thoughts.

从保险协议 Cover 再思考:今天的 DeFi 世界究竟需要什么

Compound ‘s liquidity mining is the fuse that ignited the DeFi bull market this year, but Uniswap and Year are real opportunities for retail investors to make big money. Some people call Uniswap the value discoverer of “Shitcoin”, helping many retail investors get their first pot of gold in the field of cryptocurrency investment. Many people also received generous airdrop rewards when $UNI was issued. Yearn is the real dark horse of this year. It enables smart contracts to interact seamlessly to release liquidity , just like the glue in DeFi Lego.

These two winners sparked my thinking, what do we need in today’s DeFi market? I think I can sum it up in three words.

  1. Limitless : the imagination of the agreement
  2. Light (light): the effectiveness of the design
  3. Liquidity (liqudity): willingness to participate

I will use Cover Protocol as an example to show my views.

Cover Protocol, formerly known as . Under the aura of Andre Cronje funding, Yinsure was a popular project for liquid mining at the beginning of its birth. After going online, due to a dispute between the two core members of the project, the high APY of liquidity mining did not last long. (More details can be Googled). In short, after this turmoil, the young founder of the Cover Agreement chose to take a break from university and become a full-time contributor to its project. In September of this year, Yinsure was renamed Cover Protocol.

从保险协议 Cover 再思考:今天的 DeFi 世界究竟需要什么

Infinity: the imagination of the agreement

When we build a new product, we need to know exactly what it should do, but we should not set limits on what it will develop into in the future. This is infinite —allowing customers to release their imagination when using the product.

The Cover protocol actually does this. In many people’s minds, insurance is always a very serious business, because it needs to protect people from accidental harm by accurately calculating the amount of claims and avoiding insurance fraud. Nexus Mutual is the pioneer of DeFi insurance. The project achieves this goal by hiring professional actuaries , while Cover Protocol has gone another way.

In September, Yinsure (the name of Cover at the time) launched a new experiment-using NFT to tokenize the insurance policy so that it can be freely traded and circulated. The market is very excited about this move, and Nexus Mutual’s policy sales are booming-Yinsure has almost exhausted the entire Nexus Mutual capital pool.

Yinsure named “mining Insurance” is in agreement Cover the evolution of “mining Shield” (Shield Mining / Farming). I believe that on the first day of the creation of Yinsure, its founders have decided to take a different approach-let the market freely determine demand and supply.

The Cover agreement contains three elements:

  1. Market Maker (MM);
  2. Insurance provider (CP);
  3. Insurance demand side (CS)

Four tokens:

  1. DAI (stable currency) represents the deposit that the market maker needs to mortgage;
  2. Claim rights of the insurance demander represented by CLAIM tokens;
  3. The rights of the insurance demander represented by NOCLAIM tokens;
  4. COVER token represents reward and governance token

Three fund pools:

  1. CLAIM-DAI pool;
  2. NOCLAIM-DAI pool;
  3. Cover-ETH pool

I created the following diagram to show the principle of the system.

从保险协议 Cover 再思考:今天的 DeFi 世界究竟需要什么

Aside from the traditional complicated premium or claim calculation model, the entire system circulates according to market demand . Every part of the insurance process has been tokenized, allowing users to assemble freely, thereby releasing people’s imagination. Cover protocol initially launched 10 types of protocols in their insurance market. You can freely choose your role in the system by analyzing APY and APR statistical information. I think we can further customize our insurance fund pool in the future.

Lightweight: the effectiveness of the design

Why do we need long and tedious project BP to express project ideas? Code and economics will explain everything.

Excellent projects have a lightweight core design . In the Cover agreement, the entire system operates based on a formula:

1 CLAIM token + 1 NOCLAIM token ≈ 1 Collateral (eg DAI)

Both CLAIM tokens and NOCLAIM tokens can be invested in the Balancer fund pool. This lightweight design allows the platform to be released quickly and operate smoothly.

Three days after the start, the Cover agreement encountered a claim. bug Agreement for the new strategy to be hackers looted nearly $ 20 million. The Pickle agreement is one of the first 10 insurance pools deployed by the Cover agreement. The community also responded quickly to this claim, and it only took 3 days from voting to claim. Almost all CLAIM (nonce 0) insurance tokens have now been paid in the form of DAI. The total payout is US$282,000 . Compared with other insurance agreements, the performance of the Cover agreement is very efficient and outstanding.

The community created an Internet celebrity meme

从保险协议 Cover 再思考:今天的 DeFi 世界究竟需要什么 Meme of Cover Protocol

Liquidity: willingness to participate

What is the most important element in trading? I think it is definitely liquidity . Mobility determines people’s willingness to participate and can establish a virtuous circle in the system. In the first few months when human liquidity mining is very popular, many protocols have chosen to push up the price of tokens to create an incredible high APY in order to attract more people to participate and increase the total locked value TVL. When currency prices fall, such behavior usually falls into a death spiral.

As I analyzed in the previous article, the liquidity of the Cover agreement first comes from its top-level design -making every aspect of insurance become tradable . You can easily buy and sell insurance policies by holding or not holding CLAIM tokens. By holding different tokens, you can switch your identity back and forth between market makers, insurance providers, and insurance demanders.

A beautiful description can be found in its white paper: “Once the CLAIM and NOCLAIM tokens are minted, they can be invested in the Balancer fund pool, sold on the auction platform Bounce, and even used in various lending platforms. Collateral (high risk, but technically feasible!)”.

Second, liquidity comes from token economics . The Cover token is defined by the team as a governance token with no value in itself, but in fact the token plays a very important role in increasing liquidity. I personally think that Cover is the balancer in the system .

Take a look at the formula in the white paper:

Actual insurance cost = purchase price of ClAIM tokens-mining rewards obtained by pledge

When you buy CLAIM tokens in the market, you may really have a real need to insure your assets in the agreement. If the mining rewards obtained by staking are very high (determined by the price of Cover tokens), your factual insurance cost may be 0 or even negative. (Here is an example given by the team:). This in turn will motivate people to take out insurance under the Cover Agreement. This is very different from the meaningless high APY of many DeFi protocols.

In addition, the worthless governance token Cover is only used to vote on claims. In Nexus Mutual, people must strictly pass the identity verification KYC process to participate in voting. I think this is a bit unfair to ordinary NXM token holders and prohibits them from enforcing their rights, while the Cover protocol is different. I think Cover will have more governance functions in the future.

The above is my humble opinion on the Cover protocol. Recently, Cover agreement and Year.Finance reached a cooperation. As a Cover holder, I am very happy to see that this young founder has taken the first step towards leading Cover to become a new unicorn company in the DeFi field. But I think that is not his ultimate goal, as he wrote on the Medium blog, ” Provide products that change the world “.


What exactly is a side chain? And not what? (

The side chain does not have the security expected by the majority of the Ethereum community, and cannot provide censorship resistance, finality, and capital ownership guarantees.

Original title: “Understanding “Sidechain””
Author: barryWhiteHat Translation: A Sword


The importance of Layer-2 to Ethereum is increasing day by day, and it has become a consensus.

However, “Layer-2” is an inaccurate label. When some people talk about “Layer-2”, they only mean “something not on Ethereum Layer-1”. But in fact, how the plan interacts with Ethereum Layer-1 is very important. Different schemes under the same name “Layer-2” can have vastly different characteristics. It can be argued that “Layer-2” should specifically refer to something with specific attributes (for example, we probably all agree that things deployed on AWS are not Layer-2, but there are also some projects with similar security guarantees, but they are also considered It is Layer-2). However, this is not my subject here.

What I am going to discuss here is the nature of sidechains .

The basic meaning of the side chain is: a group of verifiers submit the latest state of a chain to a smart contract (on the main chain), which is a type of system that advances in this way . These (latest state) checkpoints can be used by a bridge contract to support user deposits and withdrawals. Generally speaking, there will also be a leader election process between the group of validators to determine who will create the side chain block at a certain moment; for example, the PoA authority proof algorithm and the PoS algorithm. (Translator’s Note: From this definition, it can be seen that the author is discussing a side chain without a validity guarantee mechanism on the main chain; according to the broad definition of “side chain”, the author is discussing generalized side chain A subset; however, the original “side chain”, that is, the narrow concept of side chain, is generally the same as the author here. It depends on whether everyone is willing to treat “side chain” as a proper term, or is willing to take it. Its derivative meaning.)

Side chains also play an important role in the Ethereum ecosystem. They are temporary solutions for scalability and availability until researchers have developed better solutions . Products like xDai have also pointed out the demand for a better user experience and made it spread.

However, the side chain does not have the security expected by the vast Ethereum community . This is not to say that side chains should never be used. If people are fully aware of it, but are willing to use it, it is their own choice and it may be worthwhile. But if people don’t know it, it’s dangerous. This article hopes to provide some information. If everyone already fully understands these characteristics, it would not hurt me to write another article. But if this article can help everyone realize their misunderstanding, then it’s a good thing.

So what security features are missing in the side chain? Almost all of the side chains are not able to provide:

  • Censorship resistance

  • Finality

  • Guarantee of Fund Ownership

If you want all of these features, you may have to find another solution to replace the side chain. Of course, it is also possible to improve the performance of specific solutions in these dimensions while maintaining the core architecture of the side chain.

I think open discussions are good for everyone.

Censorship resistance

Obviously, the censorship resistance of side chains is weaker than that of (well-designed) blockchains. Otherwise, there is no need for blockchain at all. But here we dig deeper.

If a side chain has N verifiers, and any transaction can be reviewed as long as M verifiers unanimously agree, then only (NM) verifiers are required to join together to review a block. This leads to an interesting dilemma: to make it harder to review transactions, it will make it easier to review blocks. Because censoring transactions and censoring blocks are both bad things, the side chain cannot obtain strong censorship resistance at all. (Translator’s Note: The logic here is as follows, if only M validators do not agree to a certain block , The system cannot produce blocks, so naturally, only M validators can review a certain transaction by refusing to produce blocks; however, this also means that as long as NM validators agree, they can produce blocks at will. It is a block that contains other content but not a certain block, or even group play disappears).

This concern still exists when using PoS , and even calculating block weights based on equity makes it worse, because the number of independent entities reaching the threshold may be lower (even in the most ideal case, equity is sufficient Evenly distributed, it’s just the same as the situation without PoS, it won’t get better).

Data availability guarantee

Assume that only (NM) validators can create a block. Suppose that all other verifiers need to own the data of the entire state to be able to verify the new state. Then, as long as (NM) validators are malicious, they can:

  1. Create a new block

  2. Refusing to share block data with honest validators

  3. Essentially, N-(NM) = M honest verifiers are removed from the consensus process, so they have complete control of the entire system

How likely is this to happen? Obviously more specific details are needed to draw conclusions, but we can start thinking like this: What is the incentive for a rational verifier to share data with others? In the traditional authority certification mechanism, failure to do so may damage the reputation. However, the reputation mechanism is also very difficult to work, because there is actually no way to prove that the data is withheld, unless other people put all the data on the chain. Think this solution sounds like an optimistic rollup? That’s right, that’s it. This also means that a side chain with better security is essentially “degraded” into an optimistic rollup.

In most side chain schemes, validators can get some form of payment for their work. For honest verifiers, the reward will be shared among N verifiers. For dishonest verifiers, the same amount of rewards will only be shared among N-(NM)=M verifiers, so the verifier is fully motivated not to share the updated state with others (Translator’s Note: here The calculation is suspected to be wrong).

Here, there is a fundamental problem: it is difficult to identify data availibility attacks. For honest verifiers, it is difficult to tell whether someone launched the attack or the synchronization problem encountered by themselves.


Suppose the process of state transition is as follows:

state 1 => state2 => state3

And every conversion requires some transactions to take effect on the existing state to change the state. And finality means that once a transaction takes effect, it cannot be revoked.

The checkpoint of the side chain is sent to the Ethereum blockchain after the consensus of the verifier of the side chain, and is solidified according to the consensus mechanism of Ethereum. Some people may therefore think that the finality of the side chain is equivalent to the finality of Ethereum; to roll back the block of the side chain, you also need to roll back the block of Ethereum. But this is totally wrong .

Because finality means that the transaction cannot be rolled back, not that the new state cannot be used to replace the old state. As long as (NM) validators agree, they can perform the following state transitions:

state 1 => state2 => state1

(Using state1 to replace state3 is tantamount to rolling back the state2 that everyone has defaulted to, but this does not require the Ethereum main chain to roll back.)

Guarantee of ownership of side chain funds

Suppose the current state1=Alice:1000,Bob:0. That is, Alice has 1,000 yuan, and Bob has nothing. So if Bob is malicious and controls (or can efficiently corrupt) the vast majority of POA verifiers, what can he do?

He can perform a state transition, state 1 => state2 , and state2=Alice:0,Bob:1000. That is, steal all Alice’s money and give it to Bob.

Therefore, the defense of the side chain is reduced to that no (NM) verifiers agree to perform such an illegal state transition.

This is a well-known thing (at least I believe so), but I think it is necessary to remind everyone. Your confidence in a sidechain can only be that most of the validators will not do such a thing. Most security analysis of sidechains should focus on this point.

There may still be some people you can trust to some degree. Just like many of us (for many reasons trust) centralized service providers. Sometimes this sacrifice is worth it. The important thing is that you know that this is a trade-off.

The use of governance procedures as a means of defense

There is a saying: “We can use governance procedures to solve all the problems mentioned above.” This method is flawed, because the entire system will degenerate into a governance process. One reason this statement particularly worries me is that it means that the other attribute of the side chain is theater (when and why do we need such an attribute?). For example, if the governance process is the ultimate means of preventing the above problems, it also means that PoS and PoA are not important. The governance process of the system is the real PoA. Moreover, it is obvious that the same attack can also be launched against the governance process of the system.

Where can the characteristics of side chains be particularly useful?

In addition to some additional attributes of the side chain, such as faster block time (and therefore a better user experience), there are indeed some occasions where the characteristics of the side chain can shine. such as:

  1. You just want N -M validators to be able to perform arbitrary state transitions. An example is an enterprise application that hopes to have an advanced control authority.

  2. M=0, and N verifiers can perform any state transition. For example, a game involving four parties. The problem is that one verifier can shut down the chain.


At one time, sidechains were the only available solution under the premise of maintaining a certain level of Ethereum’s composability and interoperability. Now, as some other Layer-2 extension solutions mature, it is time to consider how the side chain can better integrate with other solutions.

There are some attributes that are suitable for integrating side chains:

  1. Achieve large-scale migration without fees to ensure that users will not be stuck due to fees and cannot withdraw.

  2. Replace the leader election mechanism with other solutions with stronger censorship resistance (PoS may be the wrong direction. See this post)

  3. A coordinator is needed to handle the difference between the two states on the chain.

  4. Add false proofs to prevent illegal state transitions.

With the maturity of optimistic rollup and optimistic VM technologies, the scope of the project’s trade-offs will also change. Therefore, now is a good time to reflect on the side chain properties and related trade-offs.


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