Layer 2 Solutions: Taking Scalability to New Heights

In this article we will explore the concept behind Layer 2 Solutions and the problems they are solving in blockchain.

Introduction

According to the CAP theorem (also known as Brewer's theorem) first proposed in 1998 by Eric Brewer before Seth Gilbert and Nancy Lynch propounded it in 2002, a distributed system cannot attain consistency, availability, and partition tolerance simultaneously. This same opinion holds sway among blockchain experts for blockchain protocols. The belief often referred to as blockchain trilemma suggests that blockchain cannot achieve three of its core principles: security, scalability, and decentralization simultaneously.

By implication, the blockchain trilemma said, a protocol can achieve decentralization and security while sacrificing scalability and vice versa. The blockchain trilemma provided an answer to why centralized networks can boast thousands of transactions per second and the blockchain networks like bitcoin and Ethereum can only afford a few tens of transactions per second. In that light, the trading system sacrifices decentralization while achieving high throughput, secure and scalable network. To scale up blockchain protocols, developers began looking to salvage the situation.

So far, to solve the trilemma belief, several approaches are taken. The proposed solutions to achieving scalability are Layer 2 and Layer 1 solutions respectively.

Layer-1 and Layer-2 Solutions

Although this article focuses on Layer 2 solutions, it will be necessary to lay a background that includes Layer 1 solutions. It will highlight several Layer 1 and Layer 2 solutions as well as references to top Layer 2 implementations you should know about.

Layer-1 Solutions

Often referred to as on-chain solutions, Layer-1 solutions are the scalability solutions that require redesigning the underlying protocols of the base protocol. Look at the Layer-1 solution as say, redesigning Ethereum or Bitcoin protocols to increase throughput and reduce fees. For instance, Visa, MasterCard, and other payment processors process an average transaction per second of 5000 while Bitcoin and Ethereum process 4 and 15, respectively. Going by the current design of these blockchain networks, as users of the networks grow, the TPS will keep reducing and transactions keep getting unnecessarily slow, hence, the need for a redesign. The Layer-1 solution entails redesigning the underlying protocols of the networks to allow for throughput, energy efficiency, and cheaper transaction fees. 

There are thus several methodologies employed to redesign the base protocols. Although some of them are still at their experimental stage, they include: 

Consensus-Based Protocol Redesign

This consists of redesigning the consensus protocol of the base protocol to scale transactions and efficiency. The leading blockchain networks like Bitcoin and Ethereum have leveraged PoW consensus that allows miners to solve cryptographic puzzles to validate and verify blocks thereby making it energy-demanding and tedious. Nonetheless, PoW systems are secured but often characterized by high transaction fees and low throughput when there is network congestion. To mitigate this risk and achieve a scalable network, PoS consensus becomes a good choice. Instead of miners solving cryptographic puzzles using enormous energy, users stake coins on the blockchain.

PoS consensus is set to cut down the high cost of transaction and throughput of the PoW networks. It is yet in its experimental stage, but some protocols are already developing on it. Among the top projects are Solana, Avalanche, and Ethereum. Ethereum termed its proposed PoS version Ethereum 2.0. From a frontier phase, Ethereum will be going full serenity next year by launching a Proof-of-Stake (PoS) consensus algorithm. Unlike the high cost of transaction and low TPS of Ethereum 1.0, Ethereum 2.0 is expected to dramatically and fundamentally increase the capacity of the Ethereum network while increasing decentralization and preserving network security.

Sharding

Also in an experimental stage, sharding is adapted from distributed databases as one of the Layer-1 scaling solutions. Employing a Sharding Layer-1 scaling solution means breaking the state of the base protocol into distinct datasets called "shards". Here, tasks are managed by shards, simultaneously processed in parallel and they collectively maintain the entire network.

Each node in a network represents a shard instead of maintaining a copy of the entire main chain to allow scalability. Each shard across the network provides proofs to the mainchain and interacts with one another to share addresses, balances, and general states using cross-shard communication protocols. Although in an experimental stage, awaiting its launch in 2022, Ethereum 2.0 is exploring the implementations of shards.

Layer-2 Solutions

Instead of implementing the changes of the parent protocols of the blockchain, Layer-2 solutions took scalability to a whole new height. Layer-2 solutions are those scalability solutions that entail adding a layer to the base protocol to increase throughput. They take transactions off the main chain, hence, are called off-chain solutions. 

The off-chain solution doesn't allow base protocol structural changes since the second layer is added as an extra layer. For that reason, Layer-2 scaling solutions have the potential to achieve high throughput without sacrificing network security.

Layer-2 solutions consist of smart contracts built on top of the main blockchain. Those secondary layers are for scaling payments and off-chain computation. Layer-2 solutions can be achieved in various ways. For example;

Rollups

Rollups are one of the Layer-2 scaling solutions built on the Ethereum blockchain. Unlike the Layer-1 solutions, they are secondary layers that allow users to perform transactions off the main Ethereum chain (Layer-1). It is designed to post transactional data on Layer-1 thereafter, hence, inheriting the security of the base protocol. Rollups possess the following properties:

  1.  Executes transaction outside Layer-1.
  2. Proofs transactions on Layer-1, thereby improving the security of Layer-2.  
  3. Using the transactional data on Layer-1, rollup smart contract in Layer 2 enforces correct transaction execution on it. 
  4. Operators stake a bond on the Rollups smart contract which they get incentivized to verify and execute transactions correctly. 

Rollups can either be zero-knowledge or optimistic Rollups. They both differ in their security model:

Optimistic Rollups

Optimistic rollups is a Layer 2 solution designed to enable autonomous smart contracts using the Optimistic Virtual Machine. By default it doesn't perform any computation, hence, can offer up to 10-100x improvements in scalability depending on the transaction. It sits parallel to the main Ethereum chain on Layer-2. Transactions on Optimistic rollups are written on the main Ethereum chain in form of call data thereby further reducing the gas cost. 

As stated ab initio, Optimistic rollups do compute transactions outside of the main layer in the form of batches and submit only the root hash of the block to the main chain. Hence, the need for a mechanism (fraud proofs) to ensure transactions are legitimate That way, when someone notices a fraudulent transaction, the rollups initiate fraud proofs before running a transactional computation using available state data. By implication, Optimistic rollups take significantly longer to confirm transactions than zero knowledge rollups. 

There are currently multiple implementations of Optimistic rollups that you can integrate into your dApps. They include; OptimismOff-chain Labs Arbitrum RollupFuel NetworkCartesiOMGX

Zero-Knowledge Rollups

This is a type of rollup on the ethereum blockchain. It bundles hundreds of transactions off-chain and generates a cryptographic proof known as Succinct Non-Interactive Argument of Knowledge (SNARK), often called validity proof.

The ZK-rollup smart contract maintains and updates the state of all transfers on Layer 2 with validity proof. Instead of the entire transactional data, the ZK Rollups needs only the validity proof, which goes on to simplify transactions on the network. Validating a block is quicker and cheaper in ZK Rollups because less data is included.

There are multiple implementations of ZK-rollups that you can integrate into your dApps. They include; LoopringStarkwareMatter Labs zkSynczkTubeAztec 2.0, and so on. 

Channels

A State Channel is a Layer-2 scaling solution that facilitates two-way communication between the participants which will allow them to perform transactions off the main blockchain. Typically, for a recurring payment State Channel does not require a recurring validation by nodes of the Layer-1 network to improve overall transaction capacity and speed. The underlying blockchain is sealed off via a set of smart contracts or multi-signature seals off. Leveraging the smart contract pre-defined by participants, they can directly interact with each other without the need of the miners. Upon the completion of the transaction or batch of transactions on a state channel, the final “state” of the “channel” and all its inherent transitions are recorded to the underlying blockchain. Some projects including Liquid Network, Celer, Bitcoin Lightning, and Ethereum's Raiden Network are currently deploying state channels scaling solutions.

Sidechain

A Sidechain is a secondary blockchain linked to the main blockchain via a two-way peg. Like most layer 2 scaling solutions, it uses an independent consensus and contracts to optimize throughput. On the sidechain, the main chain takes up security roles, confirming batched transaction records and resolving disputes.  

They are somewhat similar to channels, however, it differs in how they process transactions and the security impacts. Transactions are recorded publicly on the ledger, unlike the private records of the channels. Sidechains enable tokens and other digital assets to move back and forth freely from the main chain. When the sidechain completes a transaction, a confirmation is relayed across the chains, followed by a waiting period for added security. Due to their allowance to move assets around freely on the new network, a user who wants to send the coins/assets back to the main chain can do that by simply reversing the process.

Plasma

Plasma is a secondary chain on the Ethereum blockchain, proposed by Joseph Poon and Vitalik Buterin in their paper Plasma: Scalable Autonomous Smart Contracts. It comprises Merkel trees and smart contracts which create unlimited smaller versions of the main chain (Ethereum), called child chains. Integrating these child chains enables fast and cheap transactions off the main Ethereum blockchain into child chains.

Users can deposit and withdraw plasma chain funds, enabled by fraud proofs. For such a transaction to go on, there has to be communication between the child chains and the root chain, secured by the fraud proofs. Users deposit by sending the asset on the smart contract, managed by the plasma chain. Then the plasma chain proceeds to assign a unique ID to the deposited assets while the operator generates a batch of plasma transactions received off-chain at intervals. On the other hand, the contract initiates a challenging period during which anyone can use the Merkle branches to invalidate withdrawals if they can. 

Conclusion

Like the CAP theorem in distributed systems, the blockchain trilemma suggests that blockchain cannot achieve scalability, security, and decentralization simultaneously. However, the Layer-2 scaling solutions have come to challenge the thought system. It allows the mainchain to take care of security while maintaining scalable networks in its additional layers.

Also Read Arbitrum: Scaling without Compromise

Metaverse: A Fusion of Virtual and Actual World

One who is familiar with digital terms will not be new to the term "Metaverse". Metaverse create physical realities in a virtual world.

Just as there are entertainment Metaverses, there are art, social and medical Metaverses as well.

In fact, several games are built on the concept of Metaverses. Some of these games include FortniteAnimal Crossing, and Roblox. These games and many more present a concept of virtual reality in an augmented superset.

Over the years, several industries are beginning to see reasons to build their applications on the concept of the Metaverse. The government is seeking to hold virtual-physical meetings with leaders from around the world and artists are seeing potential in using the Metaverse to hold concerts too.

What then is the importance of the Metaverse that the crypto world is seeking to adopt? 

This article will extensively discuss all you need to know about Metaverse. We will also discuss it's importance with respect to blockchains and the digital world at large.

But first, what exactly is a Metaverse?

What is a Metaverse?

Simply put, a Metaverse is a concept of creating virtual spaces using a 3D augmented spectrum.

For instance, games that allow one to own lands, build cities, go outside space all operate on the concept of Metaverses. Any concept that presents a realistic virtual world is a Metaverse. This can be seen in plenty of Sci-Fi movies and even in novels.

The word Metaverse was first used in a fiction novel in 1992. The novel – Snow Crash by Neal Stephenson described it as a world outside our world.

Other examples are seen in virtual reality games like the Minecraft. Minecraft presents a unique medium for social interaction and relationships.

Students of the UC Berkeley were able to create a virtual campus on the Minecraft game. The students even conducted a virtual ceremony where each person joined with Minecraft characters.

Another application is the Roblox game. The Roblox game allows developers to create games and receive tokens as incentives. Afterwards, the developers withdraw their tokens outside of the game’s platform.

Furthermore, there is a wide application of Metaverse in the crypto world. There, Metaverses will allow users to own tokens, lands, and assets which can easily be traded while virtual money is converted to real money simultaneously.  

Aside from this, there are other applications of a Metaverse in the crypto world. We’ll discuss these shortly. Before we do, here is what to know about Metaverse basic foundation.

Metaverse Basic Foundation

The basic Metaverse foundation explains the components put together to build a blockchain Metaverse. These components are open standards, the internet, hardware, open programming language, and a decentralized ledger and smart contract.

The Internet

The internet is essential in creating a connection for digital assets. But the internet connection for blockchain Metaverse is highly secured.

Connections between computers on a decentralized network restrict authorized individuals or bodies like the government from gaining access. It only allows users of that network to gain total authority over their decentralized network.

Open Programming Language Standards

Metaverses use programming languages like web XR, javascript, WebAssembly, and HTML. Open standards of the media like 3D audio, images, and texts. It also uses 3D sequences and geometric figures and vectors.

Decentralized Ledger and Smart Contract

Metaverses are incorporated in blockchains, so they exhibit features of blockchain technology. They offer secure and plain transactions as well as public availability and support to the blockchain ecosystem.

Blockchain Metaverse and it's Importance

Many refer to the Metaverse as a replacement for the internet, whereas, it’s in actual sense the successor of the internet. Perhaps, it can be the next trillion-dollar project.

In the crypto world, Metaverses offer new experiences to gamers and creators of NFTs. Even in the decentralized platform, it offers permissionless and transparent transactions at high speed.

NFTs serve a foundational role in a Metaverse as they offer users the complete ownership of their lands. Afterward, one can sell off their virtual properties and exchange their money for real money.

A 259 parcel of virtual land in Sandbox was sold for over $900000 and it’s still the largest to date.

Arthur Madrid says people are easily blown away by the number of money players spend on digital assets. He thinks that making NFTs assets can add a layer to the already existing digital economy.

Mark Zuckerberg even said and I quote, 

"We want to get as many people as possible to be able to experience virtual reality and be able to jump into the Metaverse and to have these social experiences…",

This he said while referring to Horizon - the company’s experimental virtual reality project. Mark Zuckerberg is hoping to explore this using Facebook's oculus headsets.

Here are the main advantages of a Metaverse

Metaverses will allow fans to attend concerts virtually with characters that represent them. In April, Travis Scott helped a convert which had about 1 Million concurrent views. The concert which he held at on a Fortnite with half the attendee using the creative modes. 

While we cannot predict the future of Metaverses in the crypto world, we are certain that they will cause exponential growth in blockchains.

How does a Metaverse Work?

Up till now, the application of Metaverse is not popular among people and only a few projects use them.

Just like decentralized blockchains, Metaverses aren't owned by a single individual. The project is for everyone, and is owned by everyone. So, be sure of secured transactions on the Metaverse.

To own a part of the Metaverse, one has to invest in its architecture, services, and development. 

Since the project is still in its early phase, here is how it works and why it's the perfect successor of the internet.

Portability 

Metaverse creators have been able to create certain items. These items are virtual assets and can be sold and exchanged for real money. 

Likewise, you can transfer these items from one application to another without interference. Hence, the contents of the Metaverse is not "siloed"

Decentralized Nodes

Currently, there are over a thousand nodes that host the Ethereum network. Hence, the ethereum network is not held by an individual. So, one will not need any permission before carrying out any transaction.

The Ethereum network can do this due to its Metaverse projects as it will allow for permissionless transactions; transparent and quick.

And as you'll expect, the decentralized nodes are of great importance to the blockchain Metaverse. It also offers high-level security through its consensus mechanism. 

To Wrap It Up

Blockchain Metaverse is changing the way we interact in the digital world. It's changing the way we carry out virtual activities by providing more acceptable and realistic features to games and apps.

One common app that is looking to adopt this concept is Facebook. And other apps are looking to work with the project as governments are looking to enhance their modes of operation. Government officials are seeking to meet via virtual-physical platforms provided by Metaverse.

The importance of Metaverse on blockchains cannot be undermined. It allows users to transact easily and is permissionless. It also enables users to accrue virtual assets for themselves and exchange them for real money. To top it all, they can transfer assets from one app to another without any interference.

In a nutshell, the essentiality of the Metaverse cannot be undermined.

Also read Loot: The First On-Chain Community-Driven NFT Platform

Arbitrum: Scaling without Compromise

A new technology of blockchain, serving and acting as an optimistic roll-up called Arbitrum, just surfaced in the cryptocurrency world. This system allows Ethereum holders, users, protocols, and participants to participate and settle all transactions on the Ethereum mainnet. This serves as linkup loops to the main Ethereum crypto body. 

Arbitrum, therefore, serves as a Layer 2 cryptocurrency platform. By implication, the security and protection of the Arbitrum interface and network come from Ethereum itself. 

Generally, this makes the transactions scalable, faster, and interoperable, enabling compatibility and bonding of the Ethereum based applications with the Ethereum Cryptocurrency market. 

What is Arbitrum

Arbitrum, based on development, has passed and served as a system that ensured efficiency in the management and marketing of Ethereum amongst other layer 2 solutions. It is achieving several goals through the combination of Virtual machine crypto-architecture, networking design, and incentives. 

It has 4 significant benefits. They include; 

Scalability 

During the regular operation of Arbitrum, decentralized apps (DApps) using Arbitrum only have to navigate the main startup catalog or a chain of startups when they make transactions outside of Arbitrum. This allows ease of expansion and upgrades based on the general demand of the server network, unlike other blockchains. 

Generally, this is an advantage of enabling easy transmission of information from the user network to the server's network. It further lengthens the time and duration of the transactions without issues of connection or 'interface error'. This might arise due to an increase in the level of traffic on the Ethereum mainnet within or beyond the proxy counts. 

Privacy

Only the validated participants can be granted an entry and exit on the DApps, and only such participants need to know what is in the DApps code and storage margin. 

This system of upgrade to Arbitrum has enabled a user-network secure network, and all that is being published within this cryptocurrency margin are recognition of the DApps state. The users enabled sector such that messaging, recordings, messages, and currencies have end-to-end encryption between the network and the user's interface. 

The DApps creator also has free will to allow the user to see the internal server information. This is based strictly on the user demand, and the Arbitrum network verifying information and disclosure is purely optional.

Trust Guarantee

Arbitrum is unlike many other cryptocurrency channels for trading, storage, and transaction of coins such as state channel, sidechain, blockchain, main wallet, or private chain solution. It guarantees an exact, precise, and accurate execution as long as the validator of a DApp, which is usually the user acts honestly. 

No system upgrade allows liquidation of funds or turndown in the rate of transactions and amount of transactions made using Arbitrum.

Interoperability With Ethereum 

Arbitrum is an interoperable and interchangeable system that allows the open-source Arbitrum compiler to generate Arbitrum-ready code. You can also transfer Ether or any other Ethereum based token back and forth within the Ethereum and Arbitrum network. 

Interoperation scaling is enabled as the Ethereum system now runs as a significant interface in the Ethereum network system. This gives an overall boost to the Ethereum mainnet. Consequently, it reduces the cost of operation and gas fee that comes with the rush in the Ethereum mainnet by network users. 

Arbitrum Deployment on Ethereum 

Arbitrum platform is technically designed and centralized, making it better and more reliable than most blockchains. Proof of work platform by leveraging on general accessibility to the public and a lower costs of user-network leverage, this innovation of Arbitrum supports standard EVM contract deployment allowing standard Solidity smart contracts to be deployed on Arbitrum Chains using existing developer tools; an entire interface network of cryptocurrencies and tokens could be deployed but this deployment tool is set on the Arbitrum roll-up only and not the Ethereum.

Arbitrum uses roll-ups (a setup tool) to record batches of transactions on the Ethereum mainstream. The chain and execution of these transactions are on a scalable sidechain, while leverage is placed on the Ethereum network for security and result.

The major reason for Ethereum deployment on Arbitrum is to achieve better throughput and make transactions on the ethereum blockchain cost-efficient. 

This led to the advanced improvement of Ethereum by the community to make it more scalable and deployed on other scaling-solution channels like Arbitrum.

Arbitrum enhancement in Crypto-market

In recent times, cryptocurrencies have gained popularity in the world's exchange market. Unlike the stock exchange market, the crypto market is almost entirely online, and coins, tokens, and artifacts are being traded by various merchants worldwide. However, Arbitrum has solved significant problems in some of this retrospect. Insecurity and lack of fast servers have posed disturbance in the trading and merchanting of cryptocurrency for years till today. This is one of the many problems the Arbitrum helps in the general overview and boost of the system. 

Arbitrum is faster gaining popularity as it now scales 80% of all hurdles posed on using the Ethereum mainnet. This has not only given Ethereum the boost in its exchange as a cryptocurrency but has also helped to increase the general value of the Ethereum coin. 

Infrastructure 

So, many discussions have been done on the centralization and tactical approach of the Arbitrum network in helping to scale Ethereum during an increase in the demand for Ethereum on the main site leading to various cases such as an increase in gas fee and a slower network; however certain infrastructure has been put in place to allow transactions on the Arbitrum Scaling Solution, this infrastructure is basically by the creation of Arbitrum Virtual Machines (VMs). 

The Arbitrum Virtual Machines are first-class actors that perform specific functions logged into the Ethereum network, this form a send-receive network which helps to send and receive funds and messages as well as perform calculations and store data offline according to the code program on the network, generally this is a mechanism that helps reduce gas fee either during an increase in traffic on the Ethereum site or a crashing of the site. 

This infrastructure has made the Arbitrum VMs more scalable and private than the conventional way of implementing smart contracts on other scaling solutions such as Polygon and Optimism. 

Arbitrum manages the VMs off-grid the mainnet with minimal activity online to ensure correct execution. When someone creates an Arbitrum VM, they select a set of operatives responsible for executing the VM. The set of operatives are called Managers. They are responsible for the execution of the VM. Arbitrum thereby guarantees the correct and exact execution [even if other selected managers are corrupt]; because of the low on-chain work, Arbitrum VM is made more private. 

Comparison between Arbitrum and Other Layer 2 Solutions 

Arbitrum has posed many advantages to cryptocurrencies, many of these advantages are listed below; 

To Wrap It Up

Arbitrum has, over some time, gained publicity as a network operative system of Ethereum, leveraging over several system setups that have placed it above many layer 2 solutions and serving as an alternative route during network effect on the Ethereum mainnet.

Arbitrum is not just a solution to the problems posed by the Ethereum mainnet. It is a scaling option that has diverted and enhanced the usage and navigation of Ethereum, geometrically boosting the system by almost 100% and enabling many onsite users of the Ethereum.

Cryptocurrency traders and merchants are advised to engage in the Arbitrum network as more than an alternative but a new phase of Ethereum. 

Also read Casper: The Future-Proof Blockchain

Connext: A Guide To Multichain Ethereum

In this article, we will be exploring the Connext Network and its working mechanism.

Introduction

Since its inception in 2015, Ethereum has become the most sought-after blockchain due to its vast benefits, ranging from developing decentralized applications (dApps) to the ease of building other projects. However, as the popularity of Ethereum increases, it led to the congestion of the network, which resulted in slower transaction time and increased gas fees to carry out a transaction on the blockchain. 

Since these problems have been encountered, various solutions have been proposed to mitigate the issues. One of which is layer 2 - which enables transactions to be carried out outside the Ethereum mainnet but records the data on the Ethereum mainnet. Connext is a layer 2 solution that aims to solve the problem.

What is Connext?

Connext is an Ethereum based interoperable platform that connects Ethereum Virtual Machine (EVM) compatible chains and layer 2 solutions. Connext achieves its function without the use of a new external validator.

How Does Connext Work?

Connext works through the Noncustodial Xchain Transfer Protocol (NXTP) for its cross-chain transfer without depending on any external validator. 

The NXTP model consists of a locking pattern, off-chain routers, and SDK. The locking pattern prepares a transaction and fulfills it; the off-chain router passes call-data between chains, and the SDK prompts an on-chain transaction. 

How NXTP Carries Out Transactions

All transactions on the NXTP follow three stages which are:

i) Route auction: This is the route that users select for their transactions to follow. There are different routes that a transaction can follow. A user places a request on auction for the router to bid, and selects the route they prefer, the system (routers) seals the offer - which means that there is a price range and time limit for the transaction to be done.

ii) Prepare: This is the stage where the transaction is audited before being sent. The prepare stage involves both the sender-side chain and the receiver-side chain. The users send their transactions to a contract on the sender-side chain that manages transactions. The contract now has the router's sealed bid, which prompts the router to submit the same transaction to the transaction manager on the receiver-side chain, after which a specific amount is set aside and locked as liquidity. This stage ensures that there is an incentive for the router to carry out the transaction.

iii) Fulfill: This is the stage where a transaction is executed, or the transaction is returned if it doesn't complete. After the preparation stage on the receiver-side chain, the user sends a signed message to a relayer (it could be the router) which relays the signed message to the transaction manager on the receiver-side chain to complete a transaction and claim the funds locked by the router.

The router also submits the same message to the sender-side chain to complete the transaction and unlock the original amount.

Components of the NXTP System

  1. Contract: It follows the instructions given by the users and routers of the system to either lock or unlock funds.
  2. Subgraph: Caches on-chain data and events to enable scalable querying.
  3. TxService: It tries to submit the transaction to the chain even if it has to be done multiple times.
  4. Messaging: It takes care of anything involving message data over NAT.
  5. Router: It gets information from subgraph and messaging and submits the transaction to TxService for sending to the chain.
  6. SDK: It creates a transaction and gets the necessary information to start a transaction on the user side. 

Importance of the NXTP Model

  1. It only operates on-chain data.
  2. There is no room for double collateralization; hence transaction service becomes easier. 
  3. Data can never get out of sync.
  4. It doesn't give room for browser state data.
  5. Both the receiver-side and sender-side can unlock funds simultaneously, which prevents liquidity from leaking.
  6. Easy accessibility with Automated Market Makers and auctions.
  7. There is the possibility of a fully-stateless router.
  8. There is the presence of great crash tolerance for out of the box event.
  9. The platform is simple to build and easy to use.

Disadvantages of the NXTP Model

  1. It doesn't operate offline data; hence, we can't use it for batched conditional transfers in scalable micropayment.
  2. Though it has a crash tolerance, the router still has to reclaim its fund within a time frame.

NXTP Supported Chains 

Mainnets

  1. Ethereum
  2. Binance Smart Chain
  3. Arbitrum One
  4. Polygon
  5. xDai
  6. Optimism
  7. Fantom Opera

Testnets

  1. Goerli
  2. Rinkeby
  3. Ropsten
  4. Kovan
  5. BSC testnet
  6. Polygon Mumbai
  7. Arbitrum RinkArby
  8. Avalanche Fuji

Learn more about NXTP

Summary

Connext is an Ethereum based interoperability system that is highly capital efficient and truly trust-minimized. No other Ethereum based interoperable system has this advantage that Connext has.

Connext is a protocol that is easy to use on any Ethereum Virtual Machine compatible chain. It also supports non-EVM compatible chains though it requires rewriting the transaction and porting the contract. 

Also read The Cosmos Network: A Comprehensive Guide

History Of Ethereum Hard Forks

Introductions

Before the Ethereum Blockchain could reach its potential, it needed several transformations. Such transformations include migrating to Ethereum 2.0 also known as Serenity. ETH 2.0 is the much-awaited Ethereum upgrade that allows a more scalable, cheaper, decentralized, and secure network.

Ethereum has since chanted the course to migrating from the POW to POS consensus for cheaper transaction costs and better decentralization. Accompanying the upgrades are various hard forks promising various Ethereum Implementation Proposals, EIPs.

By the way, what is a fork, and what exactly is a hard fork? The fork is the process of copying and improving on an existing protocol, similar to the traditional software upgrades.

A fork can be soft, hard, accident, and intentional. It is a hard fork when it changes the rules of the blockchain protocol so that the old blockchain and the resulting blockchain are incompatible.

A hard fork is a radical upgrade that can make previous transactions and blocks either valid or invalid and requires all validators in a network to upgrade to a newer version. It’s not backward-compatible. A soft fork is an upgrade to the software that is backward-compatible and has validators in an older version of the chain that sees the new version as valid.

When two or more miners find a block at the same time, an accidental fork occurs but it is intentional when the rules of the network are being modified.

Ethereum Hard Fork And Others

Similar to other blockchain networks with active communities, Ethereum Blockchain has undergone soft and hard forks over time. For a brief, we need to reference other non-Ethereum hard forks before explaining Ethereum hard forks in detail.

So far, Bitcoin, the first implementation of blockchain launched by Satoshi Nakamoto, a pseudo-anonymous entity, has also undergone several hard forks. The most prominent Bitcoin hard forks are; Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, Segregated Witness (SegWit), Bitcoin Cash, and many others. From records, one common thing about the various hard forks, both Ethereum and Bitcoin hard fork, is that they are geared towards protocol upgrades which are done by network consensus. 

Why Fork Ethereum Blockchain?

Similar to other network and software upgrades, Ethereum concerns birthed the various hard forks. It ranges from security, centralization, fees, scalability, and other Eth 1.0 limitations. For instance, despite having a good run in Q1 and Q2 2021, Ethereum had its highest fees that scare developers. A simple swap on the Uniswap for example is as high as $100 while others could be $16-20. 

While we are set to discuss Ethereum Hard forks fully, it is important to note the Ethereum journey so far and link them to the hard forks accordingly. The journey as referred to here is the Ethereum developmental roadmap. 

Ethereum Developmental Upgrade And Associated Hard Forks

Ethereum has a four-stage development roadmap. They include; frontier, Homestead, Metropolis, and Serenity. Recall that, unlike most POW networks, Ethereum is way beyond currency and has to measure up to accommodate varying use cases and features. Hence, the need for a roadmap. 

Below explains the various journey so far; 

Frontier

The frontier is the first developmental roadmap of the Ethereum blockchain. It went live on July 30, 2015. Although it went live as a beta, it performed better than expectations. Developers began writing smart contracts and decentralized applications to deploy on the Ethereum Blockchain. Shortly after its launch, it experienced a hard fork called Ice Age. 

Ice Age, also known as “Frontier Thawing”, was the first (unplanned) fork of the Ethereum blockchain aimed at providing security and speed updates to the network.

Homestead

While the Frontier phase of Ethereum laid the groundwork for experimenting in Ethereum, the Homestead steps it up to its first production release. Homestead, the second major version of the Ethereum release, comes with several protocol changes and a networking change that provides the ability to do further network upgrades. 

The upgrades changes was activated at Block >= 1,150,000 on Mainnet

Block >= 494,000 on Morden

Block >= 0 on future testnets. The homestead hard forks include:

EIP-2: Main homestead hard fork changes

EIP-7: Hard fork EVM update. DELEGATECALL

EIP-8: devp2p forward compatibility. 

Ethereum Classic Hard Fork

The Ethereum Classic hard fork is a child of necessity after the homestead hard fork. It was in 2016 when hackers exploited DAO, one of the most notable Ethereum projects. As a result, developers initiated the Ethereum Classic hard fork to mitigate the DAO loss. 

The DAO, also called Distributed Autonomous Organization, raised $150m in Ether in a public crowd sale. 

The DAO, in principle, was to operate as a form of decentralized venture capital fund where investors would send Ether to the DAO to receive voting rights, whereafter those who had invested (and voted) would democratically decide on which projects to which the DAO should disperse those funds.

Contrary to the arrangement, the DAO was unable to complete its vision when millions of Ether vanished.

As a response, the Ethereum community moved to recover the funds by voting to change Ethereum’s baseline code to recover the lost funds and reimburse investors. As a result of the majority vote in the favor of this proposal, a hard fork and two separate blockchains were created. 

EtherZero Hard Fork

EtherZero is the second intentional Ethereum hard fork that took place in 2018. The hard fork went live at 4936270 block on 29 Jan 2018. Unlike the Ethereum Classic hard Fork, it was started by a group of tech geeks looking to provide a better platform for creating decentralized applications (dApps) and smart contract deployment. Contrary to other forks, it has no specific interest to speed up transaction rates. Rather, the development team was determined to make transactions completely free.

Metropolis

This is the third phase of the Ethereum upgrade and one of the notable hard forks. It is the forerunner to Serenity in the sense that it lays the background for early proof of stake (POS). Metropolis upgrade includes Byzantium, Constantinople, and early serenity. Byzantium is a backward-compatible upgrade aimed at integrating zero-knowledge protocol and delay of the network difficulty bomb. On the other hand, Constantinople is a non-backward compatible upgrade.

It represents a hard fork deployed to solve a security weakness allowing hackers to access users' funds and integrates a smart contract functionality that enhances the verification process as well as the reduction of gas price. Lastly, as a forerunner to serenity, it made the first attempt of implementing POS and account abstraction.

Serenity

Also known as the Ethereum 2.0, serenity is the latest Ethereum upgrade. It builds and improves on the successes of the previous upgrades and hard forks. The major improvement of the Serenity upgrade is porting from POW to POS fully. 

By implication, serenity increases its transaction capacity, changing gas fees and achieving scalability while achieving more eco-friendly coin generating and validating networks. 

The launch of the Beacon chain is Serenity's first step to revolutionizing the Ethereum network. From the Beacon chain, it pushes through to; Berin hard fork, London hard fork, and the upcoming Shanghai hard fork. 

Berlin Hard Fork

The Berlin hard fork is a forerunner to the London hard fork. It is named after the host city of the inaugural Ethereum Devcon convention. Berlin hard fork incorporates several EIPs which addresses gas price and introduces new transaction types. 

The Berlin hard fork went live at 12,244,000 on April 15 and proposes several EIPs. The EIPs include; EIP 2565, EIP 2718, EIP 2929 and EIP 2930. 

Before the Berlin hard fork went live, several delays were citing possible vulnerabilities and centralization concerns. Some believed the Berlin hard fork will be less impactful in the short term, but will further pave the way for the upcoming London hard fork. 

London Hard Fork

After the Berlin Hard Fork comes London hard fork, scheduled for July before being delayed to August 4. In preparation for the ETH 2.0 launch in 2022, London hard fork makes significant changes to Ethereum’s transaction fee system, which has long been a contentious subject.

Ethereum's London hard fork introduces two new known Ethereum Improvement Proposals (EIP), namely: EIP-1559 and EIP-3238. EIP-1559 is a proposed change to the way users pay gas fees on the Ethereum network. It also proposes a new transaction pricing mechanism that will create a base fee for each block. Usually, users enter a bid to pay their gas fees, but the EIP-1559 allows miners to prioritize transactions based on the fee added and use the fee as a reward for adding it to a block. Now, each block will have a fixed, associated fee instead. The EIP design allows the blockchain to burn the fee, reducing the overall supply of Ether (ETH). Thereby creating deflationary pressure on the cryptocurrency.

Ethereum 1.0 has a difficulty in mining called the difficulty time bomb. As miners reach the difficulty time bomb, it takes longer to mine a new block, and thus reward gets lower as well as slower transaction. To motivate users and encourage them to move to Ethereum 2.0 upon launch, EIP-3238 will delay the time bomb to enable the network to incentivize validators to Ethereum 2.0’s Proof of Stake consensus model at the correct time. It is suspected that if there is no consensus to move to the awaiting Ethereum 2.0, the scenario of Ethereum Classic will happen. Delaying the time bomb will lead to a 30-second block time ice age around Q2 of 2022, therefore, enabling "The merging" of Ethereum 1.0 with Ethereum 2.0.

Shanghai Hard Fork

The upgrade didn't stop at Berlin and London hard Fork. It proceeded to the Shanghai hard fork scheduled for OCTOBER 2021. Shanghai hard fork is promised to include the following EIPs; 

The new opcode BEGINDATA indicates that the remaining bytes of the contract should be regarded as data rather than contract code and cannot be executed.

Conclusion

Ethereum Blockchain so far has been a work in progress. It started from a four developmental roadmap Viz: frontier, homestead, metropolis, and serenity to achieve what we will call ETH 2.0 2022. Every upgrade of Ethereum accompanied an associated hard fork. The major Ethereum hard forks are Ethereum Classic, Shanghai, London, Berlin, Homestead, Constantinople, and Ice Age hard forks. It is expected that the Ethereum network will attain scalability with eco-friendly network fees and better decentralization. The ETH 2.0 is promised to provide a sustainable blockchain network that doesn't compromise any of the above features. 

ETF: An Overview To Exchange Traded Funds

Over the years, cryptocurrency has grown in leaps and bounds. There has been a significant improvement from the day it was first launched, and today the cryptocurrency space has more than a trillion-dollar market cap. Despite the growth associated with cryptocurrency, its volatility has made it increasingly difficult for new investors to put their money into it. ETF provides safety against risk and volatility. Many investors can invest in cryptocurrency through the ETF. 

What Is An ETF?

An ETF stands for exchange-traded fund. An exchange-traded fund means buying and selling an ETF the same way you buy and sell a stock. An ETF gives you the ability to spread your investment money across many underlying assets rather than have all your investment in one underlying asset. It can be used for diversification and security of investment because you can use it to get many assets. 

An ETF tracks the price of an underlying asset. For example, copper ETF tracks the price of copper. 

What Is A Cryptocurrency ETF?

A cryptocurrency ETF is an exchange-traded fund that tracks the price of the cryptocurrency. Investors can buy or sell a cryptocurrency ETF in the stock exchange the same way they buy and sell other stocks. An investor trades cryptocurrency ETF in the traditional market exchange and not a cryptocurrency exchange. 

How Does Cryptocurrency ETF Work?

The cryptocurrency ETF works the same way as other ETFs. The organization in charge of funds would need to own cryptocurrencies which serve as the underlying assets. The cryptocurrency would serve as shares that investors can buy. Once the investors purchase the shares as ETFs, they already own cryptocurrencies indirectly.

Since you cannot trade a cryptocurrency ETF on the cryptocurrency market exchange, you do not need a wallet to store it. For example, if you want to invest in bitcoin, you can get the bitcoin ETF from the stock exchange, and it would have the same value as the bitcoin. If the price of bitcoin increases, then the price of bitcoin ETF increases. If the price of bitcoin reduces, the price of bitcoin ETF also reduces. In essence, the price of the bitcoin ETF is dependent on the price of bitcoin.

The Top Currency ETF

There are cryptocurrency ETFs, and it is not surprising that the bitcoin ETF was the first. The first country to approve a bitcoin ETF was Canada. The name of the ETF is the purpose Bitcoin ETF and goes by the ticker BTCC on the Toronto Stock Exchange. BTCC was launched in February 2021. Three more bitcoin ETFs have been launched in Canada, bringing the total number of bitcoin ETFs to four.

Presently, Canada has approved four new Ethereum ETFs: CI Galaxy Ethereum ETF, Purpose Ether ETF, Evolve ETF, and Ether ETF. Toronto Stock Exchange is the place where all ETFs are currently trading.

The year 2021 might be the year of the cryptocurrency ETF as countries like the United States of America, Brazil, Chile, and the UAE, are considering launching it. To date, the U.S. Securities and Exchange Commission (SEC) has rejected all proposals to launch a crypto ETF. The reason cited by SEC for the rejection is related to crypto being volatile and non-regulation of the crypto market.

Despite all the rejections, we await a positive announcement from the SEC later by June. There is a high probability that a crypto ETF would be launched then. 

Blockchain ETF

Apart from the cryptocurrency ETF, we also have the blockchains ETF trading on the stock exchange. The popular blockchain ETFs are: 

Advantages Of Cryptocurrency ETF

Ease Of Investing

Cryptocurrency ETF makes it easy to invest in cryptocurrency because you do not need a wallet. You also do not have to sign up on any cryptocurrency exchange market. The use of an ETF reduces the chances of losing your cryptocurrency. And it also reduces the risk associated with having cryptocurrency directly. 

For example, if you store your cryptocurrency in a personal wallet, you could lose it once the password is lost. If a centralized exchange is compromised, you can also lose your funds if you have it there. In summary, a cryptocurrency ETF gives you leverage over the risk and volatility associated with cryptocurrency.

Diversification

It is easy to diversify with an ETF. You could invest in more than one underlying asset from different companies in your ETF.  For example, you could have bitcoin, Ethereum, Google stocks, Tesla stocks, Facebook stocks, Guinness stocks, Coca Cola stocks, and more in your cryptocurrency ETF. The advantage of this ETF is that it helps you to reduce your risk and diversify your portfolio. 

Tax Efficiency

The United States of America Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) regulate financial institutions. Cryptocurrencies are decentralized, and hence, no financial institution regulates them. Cryptocurrency ETF won't trade on decentralized platforms but regulated exchanges such as New York Stock Exchange, making it open to most tax havens and pension funds.

Long Term Return

Investors that want to invest in cryptocurrency and make better long-term returns can use cryptocurrency ETF.

Disadvantages Of Cryptocurrency ETF

Higher Management Fee

There are two ways a cryptocurrency ETF can be managed. It can either be managed actively or passively. An actively managed fund has a higher management fee than a passively managed fund. The management fee is higher for an investor with many cryptocurrency ETFs when compared with those with less.

Limitation To Trading Other Cryptocurrencies

For instance, you can trade bitcoin for Ethereum, but you cant trade bitcoin ETF for Ethereum. It is impossible to trade bitcoin ETF for Ethereum because it is an investment fund and not a cryptocurrency.

Centralized Regulation

Cryptocurrencies were created not to be centrally regulated. They were created to be decentralized and not regulated by any financial institution such as the central banks. Cryptocurrency ETF won't enjoy all these benefits because they are regulated by the financial institution where they are listed.

The Inaccuracy Of ETF

One of the advantages of ETF is the fact that you can use it to diversify your portfolio. The diversification advantage can also be a disadvantage as ETF may not track the accurate price of a cryptocurrency because of the value of its other holdings.

For example, a drop of 5% in Ethereum may not reflect a 5% drop in the price of an ETF that tracks numerous assets.

Inability To Buy Things With Your Cryptocurrency ETF

While you can directly use your cryptocurrency, such as bitcoin, to buy things and make payments, you cannot use your ETF to do such.

Cryptocurrency ETFs And Institutional Investment

For Institutional investors who could not get into the crypto market for many reasons, crypto ETFs could provide an entry point for them to invest.

Conclusion

Cryptocurrency ETF would open up a new era of investment all over the world if it is accepted. It would allow people who have low-risk tolerance to invest in cryptocurrency. However, if you have high-risk tolerance, there might be no need to invest in cryptocurrency ETFs since the return of cryptocurrency is higher than in ETFs.

Also, read about Opyn Protocol.

Opyn: DeFi's Options Protocol

What Is Opyn?

Opyn is an Ethereum based decentralized Options trading platform, which allows you to buy, sell and create Options. It is a trustless and permissionless insurance platform that protects user’s decentralized finance (DeFi) assets from risks.  There are three categories of Opyn users which are:

Basic Terms On Options Trading

To understand Opyn and how it works, you must understand some terms associated with DeFi and Options trading. Below is an explanation of the words.

What Are Options?

Options are the contract that gives you the right to buy or sell an underlying asset at a set price within a particular time frame. It is not a must to purchase or sell the underlying asset at the expiration time. You can decide to honor the contract or not.

We have two types of Options which are Call Options and Put Options. Option buyers are known as holders, while Option sellers are known as writers.

Call Options

A Call Option contract gives you the right to buy a specified asset at a set price within a particular time frame. You have a choice to either accept or not, as the contract does not make it compulsory for you to buy at the expiration time. A Call Option could be a Call Option buyer or a Call Option seller.

Call Option Buyers

A Call Option buyer is also known as a “Call Holder”. As a call holder, you can decide to exercise the right to buy an Option contract or not. To have the right to buy, you will pay a fee to the Option seller called the Premium.

Call Option Sellers

A Call Option seller is also known as a “Call Writer”. As a call writer, you must sell an Option contract to the buyer if he or she exercises the right to buy at the strike price. 

Put Option

A Put Option contract gives you the right to sell a specified asset at a set price within a particular time frame. You have a choice to either sell or not, as the contract does not make it compulsory for you to sell at the expiration time. A Put Option could be a Put Option buyer or a Put Option seller.

Put Option Buyer

A Put Option buyer is also known as a “Put Holder”. As a put holder, you have the right to sell an Option contract but are not obligated to do it. You can decide to exercise your right to sell or not. 

Put Option Seller

A Put Option Seller is also known as a “Put Writer”. As a put writer, you do not have an obligation to buy the underlying asset at the strike price. 

Premium 

The money an Option buyer pays to the Option seller to buy a contract is called a Premium. It is the income a seller gets for selling a contract. 

Bid Price

The “Bid price” is when a buyer is willing to pay a specific price to own an Option contract. 

Ask Price

The “Ask Price” is the price at which a seller accepts to sell an Option contract. The money you are willing to pay to buy an option contract is the premium.

Strike Price

When exercised, the price at which a seller can sell an Option contract or buy an Option contract is the strike price.

In The Money (ITM)

This term is different for both the Call Option and the Put Option. For the Call Option, ITM is when the current price of an underlying asset is greater than the strike price. While for the Put Option, ITM is when the current price of an asset is lower than the strike price.

Out Of The Money (OTM)

For a Call Option, OTM refers to the position where the strike price is greater than the current price for an asset. While for a Put Option, OTM is when the strike price is lower than the current price for an underlying asset.

At The Money (ATM) 

ATM is the same for both Put and Call Options. It refers to the position where the price of an underlying asset is the same as the strike price.

Example To Explain Options

Rich wants to sell 1 ETH for 3,000 USDT before 10 am on May 28, 2021. Stone is willing to buy 3,000 USDT for 1 ETH at Rich’s request. Rich pays Stone 5 USDT for having the right but not the obligation to sell his ETH. After the expiry date of May 28, 2021, Stone must buy from Rich if he decides to sell. If Rich doesn’t sell, he only loses 5 USDT and keeps his 1 ETH while Stone keeps his 3,000 USDT plus the 5 USDT. 

In the above example, 

Reasons For Using Option

The reasons for using Options differ for people. People use Options basically for:

  1. Risk management: People use Options to reduce losses that can occur from volatile assets such as ETH. 
  2. Income generation: When an Option expires, it becomes worthless. The worthlessness results in income generation.
  3. Speculation:  A user can predict the future price of an asset. The prediction can help an Option holder not invest a large percentage of their money in the asset but still profit if the Option closes in the money.

Step By Step Guide For Using The Opyn Platform

  1. Download a wallet such as Metamask and register.
  2. You have a phrase seed while registering, ensure you keep it well because that is the only way you can access your wallet during a loss.
  3. After registering, click on dApps in Metamask wallet.
  4. Search for Opyn.co.
  5. Click on the icon at the top right corner.
  6. You should connect your wallet, select Metamask from the Options to allow Opyn to have access to your wallet.
  7. A dropdown menu shows on the top left corner of the screen. Select the Options you want to perform and the expiration date you want for your Options.
  8. For instance, if you selected the Buy Call Option. 
  9. Choose your preferred strike price.
  10. Type your position size in the order box.
  11. Select the approve USDC button and confirm your selection. 
  12. Then, select buy oToken and confirm your selection. 
  13. Select done.
  14. Go to your dashboard to verify your trade.
  15. You just bought a Call Option.
  16. The same steps above apply for buying a Put Option. 

To sell Call Options and sell Put Options, you should follow the steps below:

  1. Follow the steps above from one to seven.
  2. Select a sell Put Option, for instance.
  3. Select your preferred strike price.
  4. Enter your position size in the order box.
  5. Select approve wETH (Wrapped Ethereum) button, and confirm your selection.
  6. The wETH serves as collateral for the trade.
  7. Select the issue oToken button, and confirm your selection.
  8. Then, select the approve oToken button, and confirm your selection. 
  9. Select sell oToken and confirm your selection.
  10. Go to your dashboard to verify your trade.
  11. The same steps above apply for selling a Call Option.

How To Reduce Or Cancel A Trade Before Expiration

  1. Locate your Opyn dashboard.
  2. Select the position you want to close on the active positions tab.
  3. Input the oToken quantity you wish to reduce or cancel.
  4. Click on “Buy Back” and confirm.
  5. In the close position box, input the oToken quantity again.
  6. Click “Burn and Withdraw” and confirm.
  7. Use Etherscan to ensure your transaction.

Conclusion

Opyn is an Ethereum based decentralized, trustless, and permissionless Options trading platform, which allows you to buy, sell and create Options. It is flexible, secured, and easy to use for three categories of users - sellers, buyers, and market makers to ensure against financial and technical risk in a DeFi, and also help users generate income.

With Opyn, you can buy and sell a call option, or buy and sell a put option. To start trading options using Opyn, you can use the guide in the article.

Also, read about Hegic Protocol.

OpenSea: A Walk To NFT Marketplace

OpenSea is a decentralized peer-to-peer marketplace to buy, sell and trade non-fungible tokens (NFTs). OpenSea markets itself as the largest NFT marketplace. Therefore, It is worth walking to explore the world of OpenSea and discover what it offers in the trade of NFT.

This article will take you through the questions like what OpenSea is, And what is the user journey in the platform.

What Is OpenSea?

With the surging popularity of CryptoKitties, Devin Finzer and Alex Atallah decided to create a decentralized platform to trade NFT. Hence, in 2018, OpenSea was formed. Since then, OpenSea is witnessing significant growth in the NFT market. Artwork by Beeple for $70 million and flying Pop-Tarts rainbow cat for $600,000 is trading on OpenSea.

The Growth rate of OpenSea is astonishing. OpenSea in March 2021, recorded $82.5 million in transaction volume.

Recently Logan Paul has announced the launch of his first NFT on Twitter, with networth of over $3.5 million. These announcements from influencers are adding fuel to the burning fire. 

NFTs acquire huge significance for Digital art. They are non-replicable digital assets which require a unique marketplace for its trade. Thats where OpenSea came into play. But before we take a deep dive into the OpenSea marketplace. If you still have some ambiguity regarding NFTs you may read more on this.

OpenSea, The Largest NFT Marketplace

OpenSea is like an amazon for NFTs. It has millions of unique digital assets. Besides having digital art it has multiple categories of collectibles, games items, music and other digital representations of physical assets.

Setting Up Your wallet

Wallet is a tool to connect with the blockchain, and to store, buy, and sell NFT. One thing to remember here is that OpenSea doesn’t provide the infrastructure to store the assets. So we need to connect with the external wallet. In this case we are using MetaMask. 

Trading On OpenSea

Trading on OpenSea is more to rely on smart contracts than the counterparty. You don’t need to trust the buyer or the third party. This is because OpenSea uses the Wyvern protocol. This protocol enables the swap to change the state of NFT ownership as soon as the seller receives the cryptocurrency ownership.

Connecting To OpenSea

After setting up the wallet, now it's time to connect with OpenSea and discover the world of it. To do so, click on the top right corner, then my profile, select MetaMask, sign in and follow the instructions in your wallet.

Creating Collections

Your page is empty for now. To create one, you can click on create, fill the description and hit Add. You can now see your collections at the window.

Searching For NFTs On OpenSea

The marketplace option is the heart of OpenSea. You can search for any NFT by typing name or can use various filter options.

Creating NFTs

To create your first NFT, click on the Add new Item. A new window will be open. You can add your metadata such as images/audio/video files with the NFT name below. You can also add external links and descriptions of the NFT.

This method can create only one NFT at a time. However, if you want to make multiple versions of the same artwork you can add the Edition numbers in the stats below.

You can also add unlockable content such as high-resolution files and private keys of Physical assets to ensure security. Once you are satisfied, you click on create and a new window of your NFT statistics will be open.

Buying NFTs On OpenSea

To buy NFT you first need to buy ETHs. Users also need to ensure that they accommodate gas cost by themselves.

Once you have finished purchasing ETH, bid on the NFT you intend to buy. You can also follow the auction. If you are the highest bidder in the auction you’ll get the NFT.

OpenSea Fee

OpenSea claims to charge the lowest fee in the NFT space. They take 2.5% of the sales price. There are no service charges for buyers.  You can learn more about their gas fee structure from here .

The Future Of NFT

The NFT market is growing vigorously and it can only be limited by imagination.There is no doubt that the NFT markets such as OpenSea and Rarible are poised to prosper in future.

Recently, AIRNFTs build on Binance smart chain has also launched. Apart from that Aleph.im has also announced a partnership with the polygon to offer an unstoppable storage solution for NFTs marketplace.

Also read about blockchain architecture.

HEGIC PROTOCOL: An Overview

Hegic protocol is the non-custodial, decentralized, and on-chain Option trading platform built on the Ethereum blockchain. Hegic allows you to buy WBTC and ETH Options or sell ETH Options using the Hegic token. To sell, you have to provide liquidity.

What is an Option?

An Option is a smart contract that gives you the right to buy or sell an underlying asset at a specific price within a certain time frame. There are two types of Options which are the Call and Put Option.

Call Option 

A Call Option is a contract that gives you the right but not the obligation to buy an asset at a certain price on or before a particular date. A buyer is known as a holder. 

Put Option

A Put Option is a contract that gives you the right but not the obligation to sell an asset at a specific price within a particular time frame. A seller is called a writer.

Strike Price

A Strike Price is the fixed price at which you can buy or sell an underlying asset if the Option is exercised (i.e., if you decide to buy or sell an asset). For example, the Strike Price is the buying price for Call Options and the selling price for a Put Option.

Option Premium

The price of an Option contract is called an Option Premium. There are four ways to trade Options, which are:

Buy Call

A Buy Call is a price above the Strike Price that you can exercise your right to buy. You may be wondering why you should buy an asset above the current price. The reason is explained with the example below. A Premium is paid to make a Buy Call. The risk involved with a Buy Call is minimal, as the maximum amount you can lose is the premium paid.

For example, if the Strike Price of Ethereum is $500, you can place a call to buy it at $600 within a week. Instead of paying $500 for the Ethereum now, you will pay $100 (Premium), and once the price gets to $700, you can exercise your right to buy and have made a net profit of $100. Your net profit is $100 because the Premium is subtracted from the total profit.

If the price is at $600 or below at expiration, the Option will expire worthless, and you will lose $100 (Premium) rather than $500 if you had bought without using an Option.

Source: https://www.hegic.co/

Buy Put

A Buy Put is the price below the Strike Price that you can exercise your right to buy. A Premium is also paid to make a Buy Put. The risk involved with a Buy Put is minimal, as the maximum amount you can lose is the Premium paid.

For example, if the Strike Price of Ethereum is $500, and you place a Put-Call at $400 within a week at a premium fee of $10, you can exercise your right to buy once the price gets to $400 or below before the expiry date. You will make a profit of $90 because the Premium will be subtracted from the gain. If the price does not decrease below $500 at the end of the week, you will lose just $10.

Sell Call

A Sell Call is a choice you make to sell a Call Option when the price falls below the Strike Price. A Premium is paid by the buyer of the call to you. Risk is high, as you are obliged to sell at the Strike Price if the buyer exercises the right to buy.

For example, if the Strike Price of Ethereum is $300, and the price falls below the Strike Price at the contract’s expiration. The seller will get a profit from the Premium paid. If the price becomes higher than the Strike Price, the seller will have an obligation to sell Ethereum at $300.

Sell Put

A Sell Put is the choice you make to sell a Put Option when the price falls below the Strike Price. A Premium is paid by the buyer of the call to you. Risk is high, as you are obliged to sell at the Strike Price if the buyer exercises the right to sell.

For example, if the Strike Price of Ethereum is $300, the price rises above the Strike Price at the contract’s expiration. The seller will get a profit from the Premium paid. If the price becomes lower than the Strike Price, the seller will have an obligation to buy Ethereum at $300.

Factors Affecting Option Prices

Three elements affect the Options price. These elements are:

Time to Expiration:

The time remaining for an Option contract to expire is called the Time to Expiration. A holder or writer can decide to exercise the, stop the contract to take profit or loss before the contracts expire, or let the contract expire and become worthless. 

Underlying Asset’s Price:

This is the Strike Price set for an asset. Any price above the underlying asset’s price in the Call Option is called out of the money. At the same time, any price below it is called in the money. The reverse is the case for the Put options. An increase in the underlying asset price causes an increase in the Call Option Premium and a decrease in the Put Option. A reduction in the asset price causes a decrease in the Call Option Premium and an increase in the Put Option. 

Volatility:

This is the extent to which an asset’s price swings. It can be a high volatility asset or a low volatility asset. The higher the volatility, the higher the price, and the lower the volatility, the lower the price. 

Conclusion

In conclusion, Hegic uses the American style Options to exercise your right before the expiration date. This style of usage is an excellent advantage of Hegic over the other decentralized Option trading platform.

Also read about Opium protocol.

Flow Blockchain: A Blockchain For Open Worlds

Introduction

Flow is a user-friendly, decentralized, and, scalable Blockchain designed to support the creation of crypto-related games, digital assets, and applications that power them. Flow ensures scalability without sharding which makes it possible to keep transactions atomic, consistent, isolated, and durable (ACID).

Developed in 2018 by dapper labs, the Flow was licensed for use in 2020 for developers interested in creating and trading NFT. It gives the power to control data to the consumers, and it also gives the liberty to create any digital asset that can be traded anywhere in the world. Flow is an open-source Blockchain with its smart contract, which can be used by billions of people to power their applications.

Why Flow?

In 2017, the dapper team launched CryptoKitties on the Ethereum network. CryptoKitties is a crypto-related game that allows you to buy, train, and sell cats online. The game became so popular that it brought congestion to the Ethereum Blockchain, causing it to stop. This event made the dapper’s team develop another Blockchain called FLOW. 

Flow was designed to meet the demand of crypto-games like CryptoKitties and other non-fungible token collectibles.

Working Of Flow Blockchain

Flow uses the multi-approach model to operate. This model is grouped into four pillars.

Multi-role Architecture

The four components that make up the validator node.
Source:https://assets.website-files.com/5f6294c0c7a8cdd643b1c820/5fcff1a16213f9d33a6db5ff_ezgif.com-resize.gif

Traditionally, nodes operate and process Blockchain transactions and carry out all the operations involved in transactions. The roles result in a slow transaction and cause the transaction not to be serialized. Flow was able to solve this problem without compromising scaling productivity with pipelining – a technique used for dividing the roles of the validator nodes into four.

They are as follows:

The consensus and verification nodes handle the security of the Blockchain. The nodes ensure that the network is functional and accountable through the use of crypto-economic incentives. If a faulty collection or execution node introduces erroneous data into the Blockchain, any other honest node can punish and recover from the erroneous data. The consensus and verification node only allows a high level of participation from individuals.

The execution and collection node takes care of the scalability and security of the network. The beauty of the multi-role architecture is that all nodes are accountable and verifiable by one another.

Learn about TRON Blockchain.

Resource-Oriented Programming

Flow uses a high-level programming language called "Cadence". Cadence is easy to read and enjoy because of its ergonomic syntax. It is easy to learn, audit, and highly productive. It was designed to be secure, minimize runtime error, and easy to use to create unique and durable applications. To learn Cadence, visit the Flow playground on play.onflow.org.

Developer Ergonomics

A developer determines the tools that can affect their productivity. The criteria for selecting the tools depends upon the installation process, configuration, administration, usage, and maintenance. Flow has designed open-source tools that meet the above criteria. The tools are:

Also, Flow made it possible for developers that built their smart contracts to deploy it to the mainnet in a ‘beta form'. This gives room to update before releasing it. Once released, the contract becomes immutable. Furthermore, Flow alerts the users that the code is not complete, so they can decide to wait until completion before use. This method of smart contract deployment is a deviation from the previous ways where a smart contract cannot be updated after launch. 

Flow reduces finality i.e. time taken for a transaction to be included in a block permanently - on Blockchains. Finality happens on Flow in seconds, which was previously not possible with other Blockchains.

Consumer-friendly Onboarding

You can pay with fiat, FLOW token or other crypto tokens for you to access the Flow network. Flow also gives the flexibility of owning a smart contract wallet that does not require seed phrases. You can easily create a smart user account on your wallet that is secured and supports automated processes. 

Advantages Of Flow

Conclusion

Flow was designed as a solution to the “slow finality” of the Blockchain without sharding. It had achieved this without compromising the safety and serialization of the Blockchain. The Flow team partnered with the NBA, and this partnership has increased the popularity of the Flow network. Flow has made it possible to build an application that users can enjoy worldwide.

Also, read about Azure Blockchain.