This past weekend, the Lightning Bounties team returned to the MIT Bitcoin Hackathon — not as participants, but as mentors. Just one year after winning Track 1 with our GitHub-Bitcoin payment integration, we found ourselves guiding 510 hackers through the challenges we had faced ourselves. This full-circle journey from competitors to coaches at the “Freedom Tech” hackathon highlighted not only Bitcoin’s growing ecosystem but also the powerful community knowledge transfer that drives innovation forward. Here’s our story of mentorship, technical challenges, and the incredible projects that emerged over those intensive 30 hours.

The Birth of Lightning Bounties

Last spring, we huddled around a table at MIT, frantically debugging Lightning Network connections as the final minutes of the 2024 hackathon ticked down. Our project — a system to automatically reward open-source contributors on GitHub with Bitcoin — was held together with equal parts code, grit, and Red Bull.

When Lightning Bounties was announced as the Track 1 winner we experienced that rare moment of validation every builder craves. The enthusiastic response from judges and fellow participants confirmed we’d identified a genuine problem worth solving in open-source development.

That single weekend transformed our trajectory entirely. Within a year, we evolved from a hackathon project to a vibrant startup featured in Bitcoin News and selected as a finalist in PlebLab’s Top Builder competition

Why We Returned as Mentors

We chose to mentor at this year’s hackathon because Lightning Bounties is living proof that a weekend project built on grit can evolve into something meaningful. The doors that opened for us — media exposure, accelerator programs, industry connections — are waiting for the next wave of builders too.

There’s something uniquely satisfying about watching someone solve a problem that once had you banging your head against the wall. Every time we helped a team navigate channel balancing issues or debug a payment flow, we weren’t just solving their immediate problem — we were shortening their learning curve by months.

Coming Full Circle: Mentors at MIT 2025

This year’s hackathon theme — “Freedom Tech” — embodied everything Lightning Bounties was built to support. For 30 straight hours, 510 hackers from around the globe transformed concepts into code, building tools for privacy, financial sovereignty, and censorship resistance. With 42 project submissions, this marked a massive turnout compared to the 300+ participants last year — a testament to Bitcoin’s growing developer interest and MIT’s pull in the space.

Walking through the hacking spaces transported us back to last year. The determined expressions, the excitement of first Lightning transactions, the shared frustration of debugging — it all felt familiar yet different from our new perspective. We saw teams experiencing the same roadblocks we had encountered, but now we could offer guidance instead of just commiseration.

The most rewarding moments came when teams would hit what seemed like a dead end, only to break through with a gentle nudge in the right direction. This is what Bitcoin development is truly about — shared knowledge collaborative innovation.

Lightning Bounties Workshop: Building L-Apps on MutinyNet

Our workshop at the MIT Bitcoin Hackathon 2025 was a cornerstone of our mentorship efforts, designed to empower participants to build Lightning Network applications without risking real funds. Titled _”Setup LNBits on MutinyNet”_, the session introduced hackers to testnet nodes from Voltage Cloud and LNBits’ API, providing a safe sandbox for experimentation. Participants learned how to:

• Deploy Lightning nodes in minutes
• Build functional applications like tipping bots or donation platforms
• Transition projects from testnet to mainnet seamlessly

The turnout was incredible, with over 50 participants, 19 Replit forks of our tutorial and an active Discord discussion buzzing with questions and ideas. Hackers left the workshop equipped with practical skills and ready to integrate Lightning payments into their hackathon projects. Several teams leveraged this knowledge, creating projects that embodied the hackathon’s “Freedom Tech” theme. From streaming payment automations to scalable developer tools, the workshop proved that hands-on mentorship can really help foster excitement and accelerate project creation.

Fork the Tutorial on Replit Here by Clicking here

The Judge’s Perspective: Lightning Bounties’ Enrique and Pavel

This year, we had the unique privilege of seeing the hackathon from yet another angle — as judges. Our team members Enrique and Pavel joined the judging panel, evaluating projects based on technical merit, impact, and originality.

”The level of technical creativity I saw was humbling,”_ Enrique reflected. _”The energy and inspiration from this year’s participants were a beautiful reminder of what can be accomplished with hard work.”

Pavel noted

”What impressed me most was how teams avoided the easy route, instead aiming high and truly excelling. These aren’t just forks with minor tweaks to existing projects — many hold real potential to enhance Bitcoin’s usability and adoption right now.”

Having been in the competitors’ shoes just a year ago, Enrique and Pavel brought a uniquely empathetic perspective to the judging process, asking the questions they wished they’d been asked, and looking for the passion behind the presentations.

The Winners

If there’s one thing that keeps Bitcoin builders humble, it’s watching the next wave of innovators take your ideas and catapult them into dimensions you hadn’t even considered. The innovation showcased at the MIT Bitcoin Hackathon 2025 left us genuinely impressed. Here are the projects that stood out for their creativity, technical excellence,

TANOS (Taproot Adaptor for Nostr-Orchestrated Swaps) took home the Track 3 prize, enabling trustless atomic swaps between Nostr events and Bitcoin Taproot UTXOs through adaptor signatures. Built in Go, it ensures either a Nostr event is revealed and Bitcoin is paid, or nothing happens — eliminating counterparty risk without escrows.

Payjoin Integrations claimed the Track 1 prize (our old stomping grounds!) With the power of vibe coding they launched a web app that educates the user on how payjoin works via a step by step walkthrough, while coordinating a real payjoin live. It is not merely an educational tool. It is the first use of PDK in JavaScript and the most complete implementation available in JavaScript.

The demo presents a sender and receiver wallet. They sync to Mutinynet using Bitcoin Dev Kit. The team shows examples of what sending and receiving could look like. They also give an “under the hood” look at the Payjoin process.

The Payjoin Integrations team’s victory is remarkable, not just for their outstanding project but also for winning over this year’s exceptionally competitive field. Their achievement is truly admirable! We are excited to closely follow the journey of this innovative project as it continues to evolve!

The Next Wave: Projects That Inspired Us

BitBet created a decentralized sportsbook using Discreet Log Contracts (DLCs) for resolving real-world events without trusted third parties. Their demo featured a live NBA game with odds updating in real-time — all without a bookmaker in sight.

Lightning Time reimagined payroll with a Lightning-powered streaming platform that makes payday an obsolete concept. Why wait two weeks when your earnings can flow to your wallet second by second? Their time-tracking integration was particularly clever, automatically streaming payments when you’re clocked in.

Zip Zap allows for social media tipping over Lightning, using BOLT 12 offers and taking advantage of the latest protocol upgrades to Lightning. Zip Zap enable nostr users to tip each other’s posts while maintaining self-custody and privacy.

Bitlook centralizes Bitcoin data in one dashboard, combining real-time blockchain and Lightning Network analytics with curated news. The project features Lightning wallet integration for transactions and an AI chatbot for Bitcoin education.

Reviu tackled academic gate-keeping with a peer-review platform where researchers stake sats to validate work pseudonymously. Quality rises to the top based on merit, not institutional affiliation — a refreshing approach to knowledge sharing.

Each project reflected not just technical skill but a deep understanding of how Bitcoin and Lightning can solve real problems in ways that traditional systems simply cannot.

Lightning Bounties: The Road Ahead

The energy at the 2025 MIT Bitcoin Hackathon reminded us why we built Lightning Bounties in the first place: to nurture innovation in the Bitcoin ecosystem through collaboration and incentives. The energy at MIT confirmed what we’ve suspected all along — Bitcoin’s future isn’t just bright, it’s blinding when viewed through the creative lens of builders who care deeply about financial freedom.

We’re expanding our commitment to nurturing Bitcoin’s builder ecosystem in two concrete ways:

First, we’re opening our mentorship pipeline to more hackathons. If you’re organizing a Bitcoin or Lightning-focused hackathon and need experienced mentors who’ve been on both sides of the judging table, reach out directly to our team. We’ll bring workshops, technical guidance, and firsthand perspective to your participants.

Second — and this one’s specifically for MIT Hackathon participants — we’re putting our money where our mouth is. If you’re continuing to build your hackathon project and hit technical roadblocks or bugs that need solving, reach out to us! Links below 👇 We’ll fund a bounty on our platform (app.lightningbounties.com) to help you overcome those challenges and keep your project moving forward.

💬 Discord Join our Discord community to connect with fellow bounty hunters, share insights, for assistance, and collaborate on solving bounties.

🌐 Website Visit our website to learn more about Lightning Bounties, view our blog, and track our progress.

🎯 Bounty Platform Interested in earning some Bitcoin? Go to our Bug Bounty Platform and Start Solving Bounties. New bounties are posted daily.

🐙 GitHub Explore our GitHub repo to access our platform’s source code, contribute improvements, and review reported issues.

🐦Twitter Follow us to stay updated with real-time announcements, active bounties, news, and memes.

📺 YouTube Subscribe to our YouTube channel to access educational videos, and learn through our in-depth tutorials.

💬 Discord Join our Discord community to connect with fellow bounty hunters, share insights, for assistance, and collaborate on solving bounties.

📝 Blog for the latest updates, insights, and success stories from our community of bounty hunters.

The next generation of Bitcoin innovation is already being built — we’d love to help you be part of it.

Lightning Bounties democratizes open-source contributions, offering Bitcoin bounties code contributions.

The State of Open Source Development

In the $1.5 trillion software industry, open-source software has become the foundation of innovation, with 90% of companies relying on it. However, a striking disparity exists: while 76% of modern codebases are built on open-source foundations, only 21% of maintainers receive compensation for their invaluable contributions. This misalignment is particularly glaring, considering GitHub’s massive ecosystem of over 100 million developers contributing more than 5.2 billion commits annually.

The challenge lies not in a lack of talent but in infrastructure and incentives. Millions of skilled developers, especially in the Global South, remain disconnected from high-impact opportunities due to traditional banking restrictions, complex payment systems, and geographical barriers. This untapped potential hinders innovation and stifles the growth of critical projects.

Introducing Lightning Bounties: A Solution for Global Collaboration

Lightning Bounties emerges as a transformative platform to bridge this gap, leveraging Bitcoin’s Lightning Network to create a truly borderless bounty aggregator for open-source development. By leveraging the speed and efficiency of the Lightning Network, Lightning Bounties enables immediate Bitcoin payouts for approved pull requests, eliminating delays and fees associated with traditional payment methods.

Key Features and Benefits:

1. Instant Compensation: Utilizes the Lightning Network for immediate Bitcoin payouts.
2. Global Accessibility: Opens doors for talent worldwide, including those in underserved regions.
3. Lowered Barriers to Entry: Seamless integration with GitHub streamlines the contribution process.
4. Diverse Contributions: Welcomes various forms of input, from coding to documentation and design.
5. Community-Driven Crowdfunding: Enables collective funding of critical issues and features.
6. Lightning-Fast Payments: Processes transactions at unprecedented speeds, regardless of amount or destination.

Driving Lightning Network Development

Lightning Bounties plays a crucial role in accelerating the growth and security of the Lightning Network itself. By incentivizing contributions to Lightning Network projects, the platform ensures that this vital infrastructure receives the attention and resources it deserves. This collaborative effort not only accelerates the network’s development, it also ensures its resilience, paving the way for a more efficient and scalable Bitcoin ecosystem.

Democratizing Participation and Promoting Diversity

Lightning Bounties emphasizes inclusivity by welcoming diverse contributions beyond complex coding tasks. This approach nurtures the growth of individual developers and cultivates a diverse community that taps into the collective genius of developers worldwide.

Aligning with Open-Source and Bitcoin Principles

Lightning Bounties embodies the ethos of both the open-source community and Bitcoin itself. It aligns with principles of transparency, collaboration, permissionless contribution, decentralization, and censorship resistance. By enabling anyone to contribute to open-source projects and be instantly rewarded, it creates a new paradigm where online collaboration mirrors these core values.

Fostering a Global, Decentralized Workforce

The Lightning Bounties platform transcends the limitations of traditional freelance models, empowering developers worldwide to collaborate seamlessly. It challenges the notion of a centralized workforce, fostering a paradigm of decentralized collaboration where talent is recognized based on merit, not location. This shift democratizes access to opportunities, enabling developers to forge their own paths as global freelancers.

A New Paradigm for Innovation

Lightning Bounties illustrates a paradigm shift in open-source collaboration and the future of work. By aligning with principles of decentralization, permissionless participation, and financial inclusivity, it paves the way for a more equitable and innovative digital economy. The platform’s commitment to financial inclusivity empowers individuals to take control of their financial futures and participate in the global marketplace on their own terms.

Conclusion

Lightning Bounties represents a transformative vision that aligns the ethos of open-source development with the principles of decentralization and global accessibility. By leveraging the Lightning Network and Bitcoin’s borderless nature, it empowers a global workforce of developers to contribute to the future of the decentralized web. As we move forward in this interconnected world, platforms like Lightning Bounties serve as beacons of what’s possible when technology, creativity, and inclusivity converge, paving the way for a more equitable and innovative digital future.

Disclaimer: I am a co-founder of Lightning Bounties :)

We’re just under 10 days away from one of the biggest events in crypto: the Bitcoin Halving. But what exactly is the Bitcoin Halving, and why is it getting so much attention?

In this article, we’ll discuss the Bitcoin halving, its significance, and how it affects the issuance of new bitcoins. We’ll also analyze previous Bitcoin halving events, examine the effects of Bitcoin halving on miners, and speculate about the long-term implications of the halving event.

What is the Bitcoin Halving?

The Bitcoin Halving is when the issuance of new Bitcoins decreases by 50%. This happens every 210000 blocks that are mined which translates to roughly 4 years. This mechanism is coded into the Bitcoin Protocol which ensures that the issuance of new Bitcoins cannot be altered until all 21 million Bitcoins are minted. Halving events are projected to occur through the year 2140 when Bitcoin reaches its total supply limit of 21 million.

The main purpose of the halving is to control Bitcoin inflation by reducing the rate at which new Bitcoins are introduced into the market. This design directly responds to the inflationary tendency often seen in traditional fiat currencies, where governments can print currency without limits, leading to depreciation.

What is the Significance of the Bitcoin Halving?

The halving of the block reward is a key feature of Bitcoin’s monetary policy, implemented to control the inflation rate, ensure the cryptocurrency’s scarcity, and increase its value over time.

• Each Bitcoin halving event reduces the number of new Bitcoins produced per block.
• Resulting in a lower supply.
• Bitcoin was created as a deflationary currency similar to gold.
• As it becomes scarcer and demand increases, the price likely increases in line with supply and demand economics.

The Bitcoin halving will ultimately cap the total supply of Bitcoin at 21 million coins.

This fixed supply is one of the fundamental characteristics differentiating Bitcoin from traditional fiat currencies, which can face inflationary pressures due to central bank policies.

Previous Halvings

Below is a chart that considers Bitcoin’s price 365 days before and after each halving, providing a great visual of the effects.

First Bitcoin Halving — Nov. 28, 2012

• The first halving occurred on Nov. 28, 2012, when the total blocks mined reached 210,000.
• The first halving occurred 1,425 days after Bitcoin’s inception on Jan. 3, 2009.
• In the year leading up to the halving, Bitcoin gained 385%, trading at $2.54. On the day of the halving, Bitcoin traded at $12.20, and one year later, it exploded to $1,007.39, gaining 8,069%.
• The block reward for miners was reduced from 50 BTC to 25 BTC, halving the reward supply.
• The reduction in rewards made BTC more scarce, leading to higher demand and usage, which positively influenced prices.
• Bitcoin’s creation occurred shortly after the 2008 financial crisis, and the halving coincided with a financial rebuild in the U.S.
• Bitcoin’s performance during this time demonstrated its potential as a store of value against inflation and its unique value proposition that the traditional financial system lacked.

Second Bitcoin Halving — July 9, 2016

• The second halving occurred 1,316 days after the first, when the total blocks mined reached 420,000 on July 9, 2016 — the shortest period between halvings.
• In the year leading up to the second halving, BTC’s price increased by 142%, trading at $269.68. On halving day, Bitcoin traded at around $650.96. One year later, Bitcoin grew 284%, trading at $2,506.17.
• The block reward for miners was further reduced from 25 BTC to 12.5 BTC.
• The market reacted strongly to the second halving, causing Bitcoin to hit new all-time highs (ATHs).
• With Bitcoin’s growth and initial coin offerings (ICOs) increasing in popularity, a crypto bull run ensued in 2017.

Third Bitcoin Halving — May 11, 2020

• The third halving occurred 1,458 days after the previous halving on May 11, 2020, when 630,000 blocks were mined.
• In the year before the halving, Bitcoin gained 17%, trading at around $7,325.08. On the third halving day, its price averaged $9,268.15, and in the following year, it ended at $56612.10, gaining 559%.
• The BTC mined per block decreased from 12.5 BTC to 6.25 BTC.
• The third halving occurred during the COVID-19 pandemic when economic turmoil and uncertainty led to unprecedented monetary stimulus measures by governments and central banks worldwide.
• The decentralized nature of Bitcoin proved to be a vital factor in its resilience and growing acceptance as a real asset class with utility.

Fourth Bitcoin Halving — April 2024

• The fourth halving event is expected sometime between April 15th and April 20th. It will occur when 840,000 blocks have been mined.
• The amount of Bitcoin mined per block will decrease from 6.25 BTC to 3.125 BTC, further reducing the supply of Bitcoin entering the market.
• When the fourth halving occurs, 93.75% of all BTC will have been mined, leading to greater asset scarcity.
• The average price of Bitcoin in April 2023 was $28,857.57. The current price hovers around $69,000.
• Bitcoin eclipsed a new ATH of $73,750.07 on March 14 because of the expected halving and increased exposure resulting from ETF inflows.
• For the first time, cryptocurrencies like BTC and Ether (ETH) were mentioned in the American presidential primary debate. With the mainstream adoption of crypto, an influx of government regulations and policies is sure to follow.
• According to a poll by Grayscale, inflation is the most pressing issue in America right now. Bitcoin’s scarce supply and decentralized nature make it a great hedge against inflation. More people will allocate funds toward Bitcoin as they become educated on the crypto and its value as a deflationary asset.
• As the rate of new Bitcoins entering the supply slows and ETF inflows continue to grow, Bitcoin is poised to have a strong run in the foreseeable future.

The Effects on Miners

The Bitcoin halving event has significant implications for miners, including decreased revenue, increased competition, operational costs, reliance on the price of Bitcoin, and the growing importance of transaction fees.

Decreased Revenue: The most immediate impact is a reduction in miners’ revenue. With the block reward cut in half, miners receive fewer bitcoins for securing the network.

Increased Competition: As block rewards diminish, competition for the remaining rewards will be more competitive. The reduction in rewards may prompt some miners to shut down their operations, while others may ramp up their mining efforts to compensate for the decrease in revenue.

Operational Costs: The cost of electricity, air conditioning, hardware, and other operational expenses significantly impacts mining profitability. Miners located in regions with low electricity costs and favorable regulatory environments are more likely to remain profitable compared to those operating in high-cost jurisdictions.

Price of Bitcoin: One of the most significant factors influencing mining profitability is the price of Bitcoin. As the block reward decreases, miners will rely increasingly on transaction fees and the value of their mined bitcoins to remain profitable. If the price rises sufficiently to offset the reduction in block rewards, miners can remain profitable. If prices move in the other direction, miners may struggle to cover their operational costs.

Transaction Fees: As the block reward diminishes, transaction fees may become the miner's only source of revenue. Miners can prioritize transactions with higher transaction fees to maximize their earnings. Increased adoption of Bitcoin for everyday transactions would contribute to higher transaction fee income for miners.

Long-Term Effects of the Bitcoin Halving

Inflation & Scarcity

One of the main factors behind the Bitcoin Halving is to offset inflationary effects on the Bitcoin Network by lowering the issuance rate of new Bitcoins by 50% thus creating scarcity for Bitcoin. This scarcity is a fundamental aspect of Bitcoin’s value proposition, positioning it as a deflationary asset and store of value over the long term.

Adoption and Awareness:

The halving event can draw attention to Bitcoin and as a whole, cryptocurrencies, increasing awareness and adoption. Media coverage and discussions around the halving often serve as an opportunity to educate the public about Bitcoin’s scarcity, decentralized nature, and potential as a hedge against inflation, resulting in more investors buying Bitcoin.

Historic Price Appreciation

In addition, Bitcoin halving events have historically been associated with significant price appreciation. The previous halvings saw Bitcoin hit highs, with the coin exceeding the $1,000 price following the 2012 halving and $20,000 after the 2016 halving. Following the most recent halving in 2020, the digital currency hit all-time highs of over $69,000. At the time of this writing, Bitcoin is hovering around $69,000 and reached its all-time high last month surpassing $73,000.

Conclusion

Bitcoin halving events have far-reaching implications for investors, miners, and the wider cryptocurrency ecosystem.

These events emphasize Bitcoin’s deflationary disposition and reinforce its scarcity-driven value proposition. By systematically decreasing block rewards, halving events introduce controlled inflation into the Bitcoin supply, akin to the supply dynamics of precious commodities like gold. This scarcity is hard-coded into Bitcoin’s protocol and contributes to its intrinsic value and positioning as a hedge against inflationary pressures.

While Bitcoin halving events may initially deliver challenges for miners, such as decreased revenue and heightened competition, they also catalyze adaptation and innovation within the mining sector. Miners are incentivized to optimize their operations and explore alternative revenue streams to maintain profitability in light of diminishing block rewards.

Overall, Bitcoin’s halving events serve as critical milestones in the evolution of Bitcoin, shaping its economic dynamics and reinforcing its status as a decentralized digital asset with enduring value.

Understanding the Bitcoin Halving: Significance, Effects, and Long-Term Implications was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

How a decentralized platform aims to bring back the creativity and free speech YouTube was built on before corporate influence.

Introduction

Creators are the heart and soul of any platform, yet YouTube treats them as disposable cogs in a machine. With no transparency or accountability for censorship decisions, it’s only a matter of time before any opinion outside approved parameters gets silenced. Viewers deserve better than algorithmic curation that shows us only what some corporate data miners deem safe and profitable. It’s about time the internet was reclaimed for independent voices rather than mainstream media propaganda.

Odysee seeks to recapture the spirit of the 2000s internet. Rather than favoring corporate content such as late-night talk shows, network television, and TV news, Odysee is a place for everyone, including independent creators.

Disclaimer

The purpose of this article is to spread awareness of the Odysee platform by showing a simplistic high-level overview. It doesn’t cover the legal implications related to the recent SEC action against the LBRY blockchain, nor does it examine in detail the relationship between the LBRY blockchain and Odysee, or the crypto-economic implications surrounding its native currency, LBC. Topics covered include What Odysee is, How Odysee Works, the Problems Odysee Solves, and the benefits of community-driven moderation vs censorship. If you want to learn more about the court case involving LBRY and the SEC, I suggest you read LBRY’s announcement here:

What is Odysee?

Odysee is a content-sharing platform that lives on a decentralized blockchain called LBRY. With Odysee, users can upload almost any file type such as GIFs, images, and audio files. But it’s mostly known for hosting videos.

The significance of hosting content on a decentralized blockchain like LBRY is that, when you upload media, it is resistant to deletion, and content won’t be demonetized. Users can freely express their appreciation by tipping content they find helpful, incentivizing a positive feedback loop of rewarding good content creation.

In contrast, if the content is of poor quality, the users on Odysee can click the slime button. The slime button is similar to the dislike button YouTube once had before they removed it in 2021. This feature is useful when identifying misleading or harmful content.

How it Works

Let me explain how content hosting works on Odysee using the example of Alice and her crypto education channel.

• Alice produces a crypto education video series called “Simple Crypto” where she explains blockchain and cryptocurrency topics in simple terms. She wants to reach a wider audience, so she uploads her content to Odysee.
• First, Alice uploads her video files to the Odysee platform. Under the hood, Odysee utilizes the LBRY blockchain to distribute the data. The videos are encrypted, sliced into pieces, and stored across the decentralized LBRY blockchain.
• Next, Alice receives a unique content address, like odysee.com/@SimpleCrypto. She adds standard metadata to each video like titles, image thumbnails, and video descriptions.
• Now Bob, who’s learning about crypto, searches for educational content on Odysee. He finds Alice’s channel and wants to watch her latest explainer on Zero-Knowledge Proofs.
• Bob’s Odysee app connects to the LBRY network, locates the encrypted pieces of Alice’s video, and retrieves them from various devices worldwide.
• Bob’s device then reassembles the pieces, decrypts the video using Alice’s key, and begins playing it instantly without any buffering or ads.
• Bob can now learn from Alice’s content without knowing about the technical process powering it from the backend.

✂️ How Odysee Works

From Whiteboard Crypto, a one-minute explainer on how Odysee works:

Problems Odysee Solves

With Alice’s videos now hosted on Odysee, viewers like Bob can easily access her educational content without the censorship risks that increasingly plague YouTube. In fact, there are several key benefits Odysee offers over YouTube.

For one, transparency is prioritized on Odysee since it doesn’t obscure public feedback like YouTube did by removing public dislike counts. Viewers benefit from seeing all opinions, allowing better discernment of quality. Odysee also combats spam and scams through its slime button, which allows users to downvote misleading or irrelevant comments — a persistent problem left unchecked on YouTube.

Perhaps most importantly, Odysee isn’t controlled by a single corporate entity like YouTube is by Google. Content isn’t subject to arbitrary demonetizations or deletions without warning due to YouTube’s opaque and ever-changing policies. By leveraging blockchain technology, Odysee provides true independence and neutrality and ensures no single party can censor or profit from others’ work without permission.

For creators like Alice, this means the freedom to discuss topics and share opinions without fear they may one day become banned or restricted. It gives power back to innovators and their communities rather than centralized gatekeepers driven by opaque algorithms and profit motives. With an infrastructure that can’t be removed, Odysee aims to restore the open spirit of the early internet where anyone could build an audience without barriers.

Community-Driven Moderation vs. Censorship

While Odysee aims to maximize freedom of expression, harmful or illegal content is prohibited.

Here’s how they address dangerous or offensive videos:

Rather than broad, ambiguous bans, Odysee focuses on specific criminal behavior. Content must not involve terrorism, graphic violence, or nonconsensual sexual acts. However, political views or provocative subjects are allowed if discussed respectfully.

If a video is reported, moderators review it against these clear, narrowly defined policies. Removal is a last resort; the goal is to have an open discussion whenever reasonable. If deleted, the creator gets an appeal process with a transparent explanation of why it violated guidelines.

Some may argue this approach risks allowing objectionable content. However, censorship is risky — it can be arbitrarily applied and stifle important discussions. Odysee believes communities, not companies, should determine what’s appropriate through rating systems.

Viewers also have control through customizable moderation tools. You decide what you see by hiding videos or blocking accounts you don’t want to engage with. This puts individuals, not platforms, in charge of filtering information.

Conclusion

Odysee provides an inclusive community that prioritizes transparency and free expression at the forefront.

By leveraging blockchain technology, no single entity can dictate what ideas are acceptable or profit unfairly from others’ work. Creators don’t need to fear unexpectedly losing their platform or income over minor infractions.

Viewers also gain autonomy through tools that return agency over their own feeds. Rather than algorithms manipulating what we see, individuals choose their online media experience.

While prohibiting harmful criminal acts, diverse opinions thrive through community self-governance. The goal is vibrant discourse, not broad censorship that silences debate. Clear policies coupled with appeal processes balance openness with safety.

Overall, Odysee seeks to bring back the spirit of the early internet by empowering all voices, not just those in power. In today’s landscape of growing online censorship, such neutrality is sorely needed to uphold a just marketplace of ideas.

Breaking the Chains with Odysee: A Decentralized Alternative to YouTube was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

A Brief History of Fantom.

The world of cryptocurrency is volatile, with many promising projects rising swiftly only to crash just as fast. But few chains can claim a journey as turbulent yet resilient as Fantom.

Fantom was one of the superstars during the summer of 2021. Fantom captured the attention of many degens and peaked at $8b TVL (Mar 2022). Fantom’s cheap fees and fast transaction speeds resulted in a thriving DeFi ecosystem of innovative dApps and a passionate community.

Then a series of unfortunate events led to Fantom getting decimated during the crypto winter of 2022 through 2023 (down more than 95% from all-time highs).

• Daniele Sestagalli Controversy
• Solidly Failure
• Andre Cronje Briefly Exits Fantom
• The Multichain Bridge Hack Drains Over $126 Million From The Fantom Ecosystem

Fantom seemed doomed to remain a ghost of its former self. Yet, like any determined spirit, Fantom refused to stay dead.

Instead of letting these bearish headwinds consume the protocol, the Fantom team kept their heads down and built innovative products that will drive Fantom to new horizons.

Since the return of @AndreCronjeTech several bullish developments came to fruition.

• Fantom Treasury Maintains a 30-Year Runway
• Fantom Sonic Upgrade
• dApp Gas Monetization Program

Now, with a series of innovative upgrades and the return of key developer Andre Cronje, Fantom is looking to make a monumental comeback. But the question on every crypto investor’s mind remains: are these new developments enough to fully revive Fantom from the depths of its previous downfall? To answer that, let’s dive deeper into the origins and unique qualities of the Fantom protocol, before examining the key events that led to its dramatic rise, fall, and potential renaissance.

What is Fantom?

Fantom is a platform that enables the development of crypto DApps and utilizes DAG (Directed Acyclic Graph), a data modeling and structuring technology that represents crypto transactions with vertices and edges. Unlike blockchains, which use blocks, DAG networks are comprised of vertices and edges stacked on top of each other. This design allows for highly scalable, decentralized, and permissionless transactions on the Fantom platform.

Fantom was created to address the shortcomings, including the lengthy transaction times of prior blockchain platforms like Bitcoin and Ethereum.

FTM is the Fantom network’s native coin, which can be used for governance activities, compensating validators, and providing network security.

What Makes Fantom Unique?

Fantom’s single-minded focus on supporting dApp development gives it a distinctive place within the cryptocurrency world, especially for developers. The FTM utility token has value, but it’s there to reward validators and make transactions run smoothly.

The unique aspect of Fantom is its rich ecosystem of modular tools, all of which can be snapped together to share information and speed development. Every element of the Fantom platform is designed with decentralization and interoperability in mind.

Fantom is also committed to transparency. For example, the platform’s source code is available via open-source licensing on GitHub. Anyone can create building blocks using Fantom source code and APIs.

Because of Fantom’s distinctive aBFT consensus algorithm, all transactions are executed with minimal cost.

Daniele Sestagalli Controversy

Cronje joined forces with Daniele Sestagalli, who goes by the name Dani. The two planned to launch a project called Solidly. But Sestagalli revealed in January that he had also been collaborating with Omar Dhanani, known online as Sifu, who changed his name to Michael Patryn. Dhanani in 2005 pleaded guilty to conspiracy to commit credit-and-bank-card fraud and identification-document fraud in the US.

Dhanani later joined forces with Canadian crypto exchange Quadriga co-founder Gerald Cotten, who died unexpectedly in 2019. Hundreds of millions of dollars in investor funds disappeared with him. Dhanani wasn’t accused of wrongdoing related to Quadriga’s collapse.

Solidly Failure

Solidly went live in February 2022. An automated market maker, it was meant to incentivize fee generation and reduce the slippage between the expected price of an order and its actual price at execution, to enable low-cost trades. Sestagalli was the publicity guy, and Cronje was the developer. The day Solidly launched, it was riddled with bugs, a shoddy UI, and a congested Fantom blockchain.

Andre Cronje Briefly Exits Fantom

As a result, Cronje caved from the backlash and announced he was leaving the project less than three weeks after it launched. Solidly’s TVL, which had peaked at $2.3 billion, fell by $370 million on the day of his announcement. It never recovered.

Under the circumstances, the entire Fantom DeFi ecosystem crashed as many Fantom users moved their assets and engagement to different blockchains. In the aftermath, Fantom’s TVL peaked at $8 billion but fell to $50 million, highlighting the significance of the fallout.

The Multichain Bridge Hack Drains Over $126 Million From The Fantom Ecosystem

On July 6, 2023, cross-chain bridge protocol Multichain experienced abnormally large, unauthorized withdrawals in what appears to be a hack or rug pull by insiders, leaving many Fantom ecosystem participants perplexed. Multichain’s exploit, which resulted in losses of more than $126 million, is one of the biggest crypto hacks ever recorded.

The Multichain bridge exploit resulted in a dramatic shift in Fantom’s DeFi ecosystem. As an independent Layer-1 blockchain, Fantom doesn’t have any “canonical bridges.” That is, Fantom relies on third-party bridging protocols to support non-native assets such as WETH or WBTC. Before its exploit, Multichain was one of the most popular bridging solutions for Fantom.

The Multichain team confirmed these were unauthorized transactions and advised all users to stop using Multichain services. Additionally, all Multichain bridged assets were depegged on Fantom’s decentralized exchanges, such as SpiritSwap, and protocols like Geist Finance were forced to shut down.

Andre Cronje Returns

While Cronje’s return was met with both hope and skepticism, his leadership provided the guiding hand Fantom needed. Like a phantom emerging from the shadows, his technical vision united the community’s efforts toward realizing Fantom’s full potential. With a suite of innovative upgrades already in motion, Cronje dove head first into spearheading the development required to bring Fantom back to life.

The following are some of the key initiatives and developments that came to fruition since Cronje’s break from Fantom.

Fantom Treasury Maintains a 30-Year Runway

In a November 2022 blog post titled “Fantom: An Inside Financial Peek at Being a Crypto Company,” Cronje shared bullish details about Fantom Foundation’s financial reserves. The post summarized holdings of over 450 million FTM tokens valued at over $100 million at the time of the post. Additional assets included more than $100 million in stablecoins and other cryptocurrencies, as well as $50 million in non-crypto funds.

Cronje also disclosed that with an annual salary budget of $7 million and no plans to sell FTM, these resources were projected to sustain operations for approximately 30 years. By publicly outlining Fantom’s reserves, Cronje aimed to provide transparency around the project’s long-term support.

“Nov 2022 — Over 450,000,000 FTM, > $100,000,000 in stables, > $100,000,000 in crypto assets, $50,000,000 in non-crypto assets. Salary burn rate $7,000,000 / year. We have ~30 years left (without having to touch FTM).”

Fantom Sonic Upgrade

Fantom Sonic is the name that covers the new Fantom technology stack, replacing the previous Opera. The new technology stack is included in the new Fantom Sonic Client that validators and other nodes will run to power the network, which comprises mainly the Fantom Virtual Machine (FVM), Carmen database storage, and an optimized Lachesis consensus mechanism.

In other words, Sonic is the next iteration of the Fantom network, with no hard fork required for the upgrade. Existing smart contracts, services, and tools on Fantom Opera should be fully compatible with mainnet Fantom Sonic as the FVM is fully compatible with the EVM and its programming languages (Solidity, Vyper, etc).

In unison, the three upgraded components of Sonic elevate Fantom to unprecedented levels and allow the network to achieve an anticipated 2,000 TPS at a finality of around one second with up to a 90% reduction in storage, putting Fantom far ahead of its peers.

Technical details here.

As users continue to embrace blockchain-powered applications, a single popular application can slow an entire network. This Sluggish performance of networks prevents the overall adoption of emerging decentralized applications. With its innovative technology, Fantom will allow new markets to adopt blockchain technology previously hindered by limited transaction throughput and slow finality.

We envision a new era of DeFi platforms, blockchain games, high-frequency oracles for perpetual trading, and many other applications that can leverage the speed and scalability of Sonic. Additionally, due to the significantly reduced storage requirements, it will be far more affordable and accessible to run a node on Fantom to partake in network consensus or provide data to dApps.

Fantom launched Fantom Sonic, popularly known as Fantom 2.0 as the new tech stack to replace Opera with more benefits like increased finality, reduced storage, faster network, etc.

dApp Gas Monetization Program

To encourage developers to return to the ecosystem, Fantom introduced the concept of dApp gas monetization to reward developers with a part of the network fee.

Fantom’s Gas Monetization program offers dApps a 15% share of the gas fees they generate. This initiative is designed to create a thriving ecosystem for builders, similar to the ad-revenue model seen on traditional web platforms. By allowing dApps to earn a portion of the gas fees, which corresponds to the amount of traffic they bring to the platform, Fantom hopes to attract and retain skilled developers and ensure the long-term health of the network.

To participate in the Gas Monetization program, dApps must meet certain criteria. These include completing at least 125,000 transactions and being live on the Fantom network for at least three months. The criteria are measured against each smart contract deployed on the Fantom mainnet and are subject to change as assessed by the Fantom Foundation.

Conclusion

Fantom’s haunting history has been one of dramatic highs and harrowing lows, a rollercoaster ride that would have broken the spirit of lesser protocols. Yet, time and again, this resilient chain has proven it is harder to kill than most. Even when past storms left it battered and bruised, the foundation established by visionaries like Andre Cronje ensured Fantom’s roots ran deep, enabling it to weather the long crypto winter alone.

Now, with Fantom’s fortunes poised to rise to their former glory, the future looks brighter than ever for this determined protocol. Several innovative upgrades have already borne fruit, granting Fantom new scalability and laying the groundwork for prospective decentralized applications. With a 30-year financial runway secured and the Sonic upgrade primed to propel Fantom into the next generation of blockchain technology, this chain is equipped like never before for the road ahead.

Of course, the challenges of a fickle market remain, and Fantom’s journey is far from over. But if the protocol’s history has taught us anything, it’s that this resilient blockchain will stop at nothing to materialize its founding vision. With a committed team and a passionate community behind it, Fantom looks ready to haunt the crypto-verse for many cycles to come. Only time will tell just how bright its future fortunes may shine, but one thing is certain — Fantom’s resilient spirit will continue to captivate and inspire all who dare to bear witness to its remarkable story.

Fantom, The Rise and Fall, Then Rise Again. was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

The term “airdrop” is frequently used in crypto circles, but its meaning can be ambiguous. This article aims to provide clarity by explaining what a crypto airdrop is, delving into the primary reasons projects employ this strategy, and thoroughly exploring the seven distinct types of airdrops.

By the end, you’ll possess a comprehensive understanding of crypto airdrops, empowering you to capitalize on these opportunities as they arise.

What is an Airdrop?

An airdrop refers to when a cryptocurrency project distributes free coins or tokens to cryptocurrency wallets, usually as a way to promote their new coin. Rather than having an initial coin offering (ICO) or initial exchange offering (IEO), they choose to give away a portion of their coins for free to build an initial user base.

The 4 Motivations Behind Crypto Airdrops:

• Marketing — Giving away free coins is a clever way for a new project to get their token into as many hands as possible and generate buzz in the crypto community. It’s a cost-effective marketing strategy.
• Distribution — Airdrops allow a project to more widely distribute coins from the start rather than rely solely on exchanges for initial liquidity. This can potentially give the coin a better chance of long-term success.
• Community building — By airdropping coins, projects are essentially rewarding users who support their vision with a chance to earn some value if the project takes off. This helps cultivate brand loyalty and an initial community.
• Network effects — The more users that hold an airdropped coin from the beginning, the bigger the network effects. This makes the coin potentially more attractive to future investors and gives it a head start in terms of adoption.

Auroracoin: The First Cryptocurrency Airdrop

The first major cryptocurrency airdrop took place in 2014, distributing Auroracoin to all citizens of Iceland. In an unprecedented move, every resident of the country was able to claim a sum of the newly launched digital currency without purchase. This pioneering airdrop exposed the entire Icelandic population to cryptocurrency by giving them free Auroracoin.

While well-intentioned, the airdrop’s effects were not exactly as hoped. After initially receiving their tokens, the price of Auroracoin dropped significantly. However, the project set an important precedent as the first to employ an airdrop for token distribution on such a large scale. By introducing cryptocurrency in this novel way, Iceland served as a testbed that proved the viability of airdrops as a strategy.

Since that first nationwide airdrop, distributing tokens freely has become a popular tactic for new blockchain protocols. Projects utilize airdrops to generate buzz and attract users by giving them an instant stake. While the price action of Auroracoin post-airdrop was disappointing, it demonstrated the power of this distribution method to spread awareness. As a result, airdrops have now emerged as a common approach within the blockchain industry for gaining exposure and onboarding early supporters. Though the effects in Iceland were mixed, Auroracoin’s pioneering effort established the airdrop as a viable distribution model that continues to be widely adopted.

However, there is a lot of confusion about what exactly constitutes an airdrop and the different types that exist. Let’s now break down the seven primary categories of airdrops and how each one works.

7 Primary Categories of Airdrops

1) Hard Fork

Hardfork airdrops involve creating a new cryptocurrency through a blockchain fork, where existing holders of a specific cryptocurrency receive a proportionate amount of the new tokens.

While rare, these events hold significant importance. One notable example occurred when Ethereum underwent a hard fork following the notorious DAO hack in July 2016. After the hard fork, ETH holders found themselves with an equal amount of two distinct tokens: ETH (Ether), the native token of the forked Ethereum protocol, and ETC (Ethereum Classic), the original Ethereum token.

At first glance, a hard fork may appear advantageous as it rewards token holders with an additional asset they can hold, trade, or sell. However, it’s important to note that a hard fork can often lead to a decline in the value of the native units on the two separate blockchains. This decline arises from concerns about an ongoing division within the community.

2) Holder & Staking Airdrops

Holder & Staking airdrops exclusively reward participants for holding or staking a specific project’s token or coin.

These types of airdrops are commonly utilized within the Cosmos Ecosystem. One memorable instance occurred when the Juno blockchain airdropped 1 Juno Token for each ATOM staked on the snapshot date of February 18th, 2021.

Remarkably, Juno reached an All-Time High of $45.74 on March 3rd, 2022, making this airdrop highly profitable if sold or traded during that period.

The key takeaway from holder & staking airdrops is that the amount of cryptocurrency airdropped to participants is predetermined based on a snapshot date of your wallet addresses. If you are holding or staking the right tokens on the snapshot date, then you will likely receive an airdrop.

3) Standard Airdrops

A standard airdrop is an inclusive event that’s open to all interested participants. Typically, no specific tasks are required apart from registering for an account with the project. Registering an account can be as simple as downloading a designated wallet, which serves as the recipient of the airdropped tokens. Alternatively, it may involve signing up for a newsletter, following the project’s social media accounts, or minting a certain NFT.

Once the criteria are met, the project distributes a small amount of the new cryptocurrency to eligible wallet addresses. However, since spaces are limited, participants must act swiftly to secure their spot in a standard airdrop.​

4) Exclusive Airdrops

Exclusive airdrops are a selective form of distribution that specifically target individuals based on their relationship and contributions to a particular project. These contributions could be measured by factors such as long-term engagement, developer support offered, or involvement in non-token-related activities. The aim is to reward those closely involved with the project, whether they are early backers who actively participate in the community or individuals chosen based on criteria like time or monetary investments outside of token holdings.

A well-known example of an exclusive airdrop is when Uniswap distributed its UNI governance tokens in 2020 to any user address that had previously interacted with their protocol. This initiative was highly successful, prompting other DeFi platforms like dYdX and 1inch to adopt a similar model and airdrop governance tokens to their early supporting communities.

In addition to targeting early adopters and protocol users, exclusive airdrops can also be extended to groups that support the project in different ways. Within the Cosmos ecosystem, for instance, many projects airdrop tokens to individuals who delegate the ATOM tokens of the Cosmos Hub blockchain, recognizing their contribution to network security.

Overall, exclusive airdrops serve as a more centralized distribution approach that focuses on rewarding individuals and communities who are most integral to a given project.

5) Raffle

A raffle airdrop is a method that introduces an element of randomness into the token distribution process. It is commonly utilized by projects when the demand for an airdrop exceeds the allocated airdropped token supply.

In the raffle model, participants can earn tickets that make them eligible for entry into a drawing. Various activities, such as accruing points, holding tokens, or demonstrating interest in the project, can earn you these tickets.

Once a participant acquires a ticket, they are included in a lottery where a limited number of wallets will be randomly chosen to receive the airdrop. This ensures a fair distribution when there is a high demand for tokens but a limited supply. Raffle airdrops can also be combined with other distribution methods to add an additional layer of random selection.

By implementing a raffle system, projects create an inclusive process that allows all enthusiastic participants to receive tokens, rather than solely selecting a small group based on specific criteria.

6) Bounties/On-Chain Activities

Bounty airdrops are a method used by projects to distribute crypto tokens to users in exchange for completing specific promotional tasks.

These tasks can include activities like sharing project updates on social media, engaging in on-chain trades, providing liquidity, joining official Discord or Telegram groups, and referring friends through affiliate links.

Users earn points for each task they complete, and the number of points determines the size of the bounty airdrop they will receive. To qualify for an airdrop, users typically need to reach a specific threshold of points. For example, following the project on Twitter and joining Discord may earn a user 50 points each, with a total of 250 points required to become eligible for an airdrop.

One well-documented example of a bounty airdrop was conducted by the NFT platform OneRare, which offered a prize pool of $75,000. Participants had to complete a nine-step process, including following multiple social media accounts and watchlisting the project on CoinMarketCap, to qualify. [Source]

Promotional activities like sharing content, signing up for newsletters, and actively participating in the community are common requirements for bounty airdrops, as they help raise awareness for early-stage projects. A notable instance is Ontology’s 2018 effort, where participants received 1,000 ONT tokens simply by signing up for their mailing list before the official launch.

It’s important to note that while bounty airdrops may seem to provide “free” tokens, completing the designated promotional tasks is necessary to qualify for the distributed tokens. This balanced system benefits both participants and projects by incentivizing marketing activities during the initial growth stages.

7) Retroactive Airdrops

Retroactive airdrops are a way for projects to express gratitude to their early supporters. Instead of simply distributing tokens to current wallets, they take snapshots of the blockchain at different time points to identify past users of the dApp. This is a means of rewarding those who believed in and contributed to the project during its early stages.

A great example of a project that executed retroactive airdrops effectively is Uniswap. Rather than solely considering current users of the Uniswap protocol, they examined past transactions to identify the original users who were actively testing the platform from the beginning. This practice is often employed when releasing governance tokens, as it ensures that early supporters have a voice in shaping the project’s future. Ultimately, it’s a mutually beneficial arrangement — users receive free tokens, while the protocol acknowledges and appreciates the loyal users who played a role in its initial growth.

Retroactive airdrops are designed to reward wallet addresses that have engaged with a specific dApp in the past. These projects typically take snapshots of the blockchain at various points in time to determine eligibility for the rewards. The specifics of these airdrops are typically disclosed after the fact, allowing users to anticipate potential rewards from the dApps they interacted with.

Retroactive airdrops commonly occur when an existing protocol introduces its native token. Due to their association with established projects, retroactive airdrops tend to hold greater value when compared to the airdrops mentioned above.

The anticipation of a retroactive airdrop often leads to a significant increase in the price of both existing and new tokens associated with the project. Additionally, like standard airdrops, participants receive valuable tokens at no cost.

Conclusion

Now that you have a better understanding of what airdrops are, why crypto projects employ them, and the seven different types of airdrops, you are better prepared to take advantage of future airdrop opportunities.

Airdrops serve as an effective marketing tool for new crypto projects, allowing them to build an initial user base, foster community engagement, and distribute tokens widely from the onset. By rewarding early adopters and supporters with free tokens, airdrops generate buzz and cultivate brand loyalty.

Whether it’s through holder & staking airdrops, exclusive distributions, raffles, bounties, retroactive rewards, or standard giveaways, there are various ways to earn free crypto.

As the crypto space evolves, staying informed about upcoming airdrops and meeting the necessary criteria can present lucrative opportunities.

With your newfound knowledge, you can strategically position yourself to benefit from airdrops by holding the right tokens, engaging with promising projects, and participating in community activities. Keep an eye out for airdrop announcements, and don’t hesitate to get involved — you never know when your next airdrop windfall might arrive.

What is a Crypto Airdrop? A Comprehensive Guide. was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

The debate continues — can cryptocurrencies truly be considered money? As cryptocurrencies like Bitcoin and Ethereum gain favorability, this question becomes more pressing. While cynics view crypto as nothing more than speculative assets, proponents believe they have proved themselves as a real and useful form of digital money. Let’s explore why cryptocurrencies have carved out their own unique niche as legitimate contenders for 21st-century finance.

Traditionally, money serves three core purposes — as a store of value, unit of account, and medium of exchange.

Government-issued currencies like the US dollar fulfill these roles through the force of law and widespread acceptance. However, money is simply a social construct we use to facilitate trade. If something acts as a reliable and useful means for value transfer, it can be reasonably viewed as currency regardless of its form. And this is what cryptocurrencies have shone — as innovative digital tools for sending and receiving value.

Critics claim crypto’s price fluctuations prevent stable storage of worth, yet data shows the volatility of major cryptocurrencies like Bitcoin has lessened over time. As adoption expands, erratic prices become harder to induce artificially. Some argue crypto may match fiat stability eventually. Cryptocurrencies also clearly function as accounting units, with market prices quoted constantly online.

Most significantly, cryptocurrencies have proven remarkably effective at enabling direct exchanges. Countless companies now accept Bitcoin, Ethereum, Stablecoins, and more via partners like Bitpay. Large brands like Twitch, The American Red Cross, Shopify, and Microsoft enable native crypto transactions too. Crypto cards also make digital assets as convenient to use as traditional money virtually anywhere cards are welcomed. Their borderless nature creates advantages for digital commerce that physical currencies lack.

To be fair, cryptocurrencies experience instability compared to established national fiat currencies. However, this arises largely from crypto remaining a young economic sector. Basic economics teaches volatility decreases as marketplaces mature in size and liquidity. Proof lies in Bitcoin exhibiting less erratic swings over time as the top cryptocurrency. It is plausible that as crypto adoption spreads, fluctuations will temper to the point where it serves well as a store of value too.

Another frequent criticism claims cryptocurrencies lack intrinsic worth. However, fiat currencies also derive value solely from legal mandates rather than intrinsic qualities. Cryptocurrencies are underpinned by their effectiveness for fast, low-cost digital value transfer without political barriers — increasingly important as commerce moves online. Qualities like transparency, immutability, and programmability give crypto networks unique monetary applications beyond physical money. As long as demand exists for such attributes, crypto will remain monetarily relevant in the digital age.

In the end, it is evident that cryptocurrencies meet core money standards through real-world use. With millions using crypto and thousands of companies accepting it, along with market valuations exceeding two trillion dollars, dismissing crypto as having no practical economic purpose seems willfully ignorant. While volatility remains, it moderates as the technology and market matures. All innovative technologies experience early fluctuations — the internet itself underwent growing pains initially too. But like the internet, cryptocurrencies have endured and spread widely. As adoption grows, crypto’s legitimacy as genuine money will grow.

The Legitimacy of Cryptocurrency as Digital Money was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

A Comprehensive Analysis of Avalanche’s Tokenomics.

Avalanche is a groundbreaking, open-source blockchain that seamlessly caters to the requirements of both users and developers. With its modular and customizable design, Avalanche empowers developers to create highly scalable and high-performance smart contract blockchains. This innovation paves the way for a wide range of decentralized finance applications and enterprise blockchain solutions within a single, interconnected ecosystem.

Avalanche achieves this through the concept of Subnets, enabling the creation of personalized blockchains featuring unique virtual machines and intricate validator rulesets. These Subnets form a platform of platforms, envisioning a global marketplace called ‘The Internet of Finance,’ where thousands of public and private Subnets converge.

At the heart of the Avalanche platform lies $AVAX, its native token, which plays a vital role in securing the network. $AVAX is utilized for staking, facilitating peer-to-peer transactions, paying transaction fees, and establishing a common unit of account across multiple subnetworks created on Avalanche.

Click Here 👉 For a TLDR on Avalanche’s Tokenomics:

What Problems Does Avalanche Solve?

Avalanche aims to become the world’s first decentralized smart contract platform that can handle global finance with super-fast transaction finality. Moreover, Avalanche is focused on solving the widespread interoperability and scalability issues in the crypto space.

Older Proof-of-Work blockchain platforms, such as Bitcoin, and sluggish Proof-of-Stake Blockchains like Ethereum, can process only 7 and 25 transactions per second, respectively. When compared to some global centralized financial service providers, like Visa, which can handle up to 65,000 transactions at the same time, these platforms seem far too behind in speed and incapable of facilitating a large user base.

Another problem Layer-1 Blockchains face is the lack of interoperability. Though new blockchain ecosystems are emerging daily, each with its unique solutions to different problems, most of them can’t communicate with one another. This factor seriously limits their functionality.

Avalanche’s Solution:

Avalanche is attempting to solve both these problems through its novel multi-chain infrastructure and a unique consensus mechanism. The latter allows the Avalanche platform to currently process up to 4,500 transactions every second with a finality clock of fewer than 3 seconds. Validators secure the network through a proof-of-stake consensus protocol allowing fast and low-cost transaction processing. Developers and users of the network use the native currency, $AVAX to pay for transactions.

Similarly, the ability to facilitate a wide range of layer two public and private blockchains on its ecosystem boosts its functionality, allowing it to target all sorts of enterprises and businesses in every field, anywhere in the world. Other key objectives of Avalanche include security, flexibility, low fees, and sustainability.

In contrast to other networks, fees on Avalanche are not directed to validators but instead are burned. This increases the scarcity of $AVAX which is counterbalanced by the minting process, to assure the longevity of the network.

[Source]

This article delves into the integration of the $AVAX token into the Avalanche Protocol, how different user groups interact with the token, and the sources of its value. It aims to provide an in-depth exploration of the $AVAX token and its role within Avalanche.

Token Utility of $AVAX:

$AVAX is the native token of the Avalanche network and serves multiple functions within the ecosystem. It’s used for:

1. Staking: validators and delegators must stake $AVAX tokens to participate in securing the network and earn staking rewards denominated in the native $AVAX token. Users with at least 2,000 $AVAX tokens staked on the network can run a validator node, while the minimum staking requirement to become a delegator is 25 $AVAX. The minimum lock-up period is 14 days, and the staking rewards are around 8.5% for both parties.
2. Fees: $AVAX tokens are required to pay transaction fees and other network operations, such as smart contract execution and the creation of subnets. In contrast to other networks, 100% of the transaction fees on Avalanche are not directed to validators but instead burned. This increases the scarcity of $AVAX, which is counterbalanced by the minting process, to assure the longevity of the Avalanche network.
3. Cross-chain Transactions & Subnets: $AVAX is used to bridge between different blockchains within the Avalanche ecosystem, facilitating cross-chain communication and asset transfers.
4. Subnets & Tokens: The Avalanche platform allows developers to create custom tokens and blockchains. Non-fungible tokens (NFTs), dApps, and a lot more can be created on Avalanche, with the $AVAX token utilized for fees and subscriptions.

To create a Subnet, it requires a cost of 1 $AVAX. If you desire to utilize the security provided by Avalanche’s existing validators, you can establish your own validator by staking 2000 $AVAX. Presently, staking is exclusively accessible on Avalanche’s Primary Network. Any staking or rewards mechanism within a subnet should be managed by the subnet itself. The implementation of Subnet Validation Rewards is part of the roadmap and is currently under active discussion through Avalanche’s Community Proposals.

[Source]

The utility and demand for $AVAX tokens are intrinsically tied to the growth and adoption of the Avalanche network, with increased usage of the platform driving value for the token. As transactions increase on Avalanche, more $AVAX tokens are burned.

The same principle applies to subnets. With the creation of more Avalanche subnets, increased user interaction with the underlying Avalanche protocol results in a rise in $AVAX token burning. The maximum supply of the $AVAX token is capped at 720 million, and the burned tokens are eventually reissued. The only strict limit is the eventual 720 million $AVAX supply.

Ecosystem Participants:

Users/Investors:

First, all transactions on the Avalanche network incur a gas fee. This gas fee is paid in the $AVAX token. The platform has based the algorithms for its transaction fee structure on the Ethereum dynamic fees model, EIP-1559. However, all the $AVAX used to pay transaction fees is burned, which reduces the total market supply and boosts its price over the long run.

Delegators & Validators:

Second, the $AVAX token is used to participate in the network through staking. Users with at least 2,000 $AVAX tokens staked on the network can run a validator node, while the minimum staking requirement to become a delegator is 25 $AVAX.

The minimum lock-up period is 14 days, and the staking rewards are around 8.5% for both parties.

Protocol Components:

Avalanche’s Primary Network follows a modular architecture and comprises three built-in blockchains that each perform a different core function.

P-Chain:

The Platform Chain (P-chain) is a key component of the Avalanche Network. The P-Chain implements the Snowman consensus protocol, which is Avalanche’s consensus mechanism, it serves as the metadata blockchain within the Avalanche network and has several important roles:

1. Coordinating Validators: The P-Chain is responsible for coordinating the validators within the Avalanche network. Validators are nodes in the network that participate in the consensus protocol, helping to validate and secure transactions and blocks.
2. Staking: It manages the staking mechanism, which is important for securing and operating the Avalanche network. Users can stake their tokens to support network security and participate in the consensus process.
3. Tracking Active Subnets: Subnets in Avalanche are separate chains within the network that can have their own consensus rules and tokenized assets. The P-Chain keeps track of active/inactive subnets.
4. Creating New Subnets: The P-Chain also enables the creation of new subnets within the Avalanche network. This flexibility allows for the development of specialized subnetworks for various use cases, such as custom blockchains or token ecosystems.

[Source]

X-Chain:

The Exchange Chain (X-chain) is well-suited for applications that involve the creation and exchange of digital assets, such as decentralized finance (DeFi) platforms, non-fungible token (NFT) marketplaces, and other tokenized asset ecosystems. Its flexibility and compatibility with cross-subnet transfers make it a versatile choice for a wide range of use cases within the Avalanche network.

[Source]

C-Chain:

The Contract Chain, also known as the C-Chain, is a blockchain within the Avalanche network. Avalanche aims to provide a highly scalable and interoperable ecosystem for decentralized applications (dApps) and blockchain development. The C-Chain is one of the blockchain components in the Avalanche network, specifically designed for running smart contracts that are compatible with the Ethereum Virtual Machine (EVM).

[Source]

All three built-in chains are validated by the Avalanche Primary Network, which is a special type of subnet. The platform supports the creation of many subnets (described further in the following section). Each subnet must be a member of the Primary Network which requires staking of the native token $AVAX — effectively meaning that each validator on a subnet must also validate all three built-in chains. However, validators of an individual subnet are not required to validate other subnets (each subnet has control over its own validator set).

Subnets:

A Subnet is a sovereign network that defines its own rules regarding its membership and token economics. Subnets are independent, they specify their own execution logic, determine their own fee regime, maintain their own state, facilitate their own networking, and provide their own security. They don’t share execution thread, storage, or networking with other Subnets including the Primary Network, effectively allowing the network to scale up easily while enabling lower latency, higher transactions per second (TPS), and lower transaction costs provided by the Avalanche Consensus.

Independent Token Economics:

Subnets can have their own token economics with their own native tokens and fee markets. They can launch their own blockchains with customized virtual machines.

Compliance:

Avalanche’s Subnet architecture makes regulatory compliance manageable. As mentioned above, a Subnet may require validators to meet a set of requirements.

Some examples of requirements include:

• Validators must be located in a given country
• Validators must pass a KYC/AML checks
• Validators must hold a certain license

Subnet Ecosystem Growth and its Impact on Avalanche Stakeholders:

The expansion of the Subnet ecosystem within the Avalanche network contributes to the interests of various stakeholders in several ways. Firstly, the establishment of more subnets allows for increased block space demand on the C-Chain, providing opportunities for validators to participate in securing the network. This creates an economy for validators to build reputations and pricing power as high-quality, value-adding partners to Subnets. Additionally, as subnets require validators to stake a minimum of 2,000 $AVAX, the expansion of subnets leads to an increased demand for $AVAX staking. This can potentially drive the value of the $AVAX token, benefitting token holders and investors.

Furthermore, the expansion of the subnet ecosystem results in $AVAX being tied down for staking, gas fees, and liquidity needs in the subnets that utilize it. This reduces the circulation of $AVAX and may contribute to its scarcity in the market, potentially increasing its value.

While the growth of subnets may not directly impact the value of $AVAX if a subnet uses a different token for transaction fees, the demand for $AVAX can still be influenced by the expansion of the subnet ecosystem. As the number of subnets and validators per subnet increases, the staking rate of $AVAX can see significant growth, especially with the transition to the permissionless structure of Elastic Subnets. This growth in staking rate has the potential to impact the value of $AVAX in the long term.

Overall, the expansion of the Subnet ecosystem benefits stakeholders within the Avalanche network by providing opportunities for validators, potentially driving the value of $AVAX, and creating an economy for value-adding partners to Subnets

Value Creation:

• Avalanche is a payment network and foundation to create and secure subnets, which are sovereign blockchains on Avalanche.
• For end-users, Avalanche offers a platform with low transaction fees and quick transaction times, which can be particularly beneficial for activities like trading digital assets or participating in decentralized finance (DeFi) applications.
• Its support for interchain compatibility also makes it easier for users to interact with multiple blockchain platforms.
• The more users delegate their $AVAX to validators, the more secure the network is.
• The ecosystem gains more value with each new subnet and user.
• The more Transactions on the Avalanche network, the more $AVAX tokens are burned. This mechanism hopes to capture scarcity while offsetting inflation.

Overall Goal:

Avalanche is a high-performance, scalable, customizable, and secure blockchain platform. It targets three broad use cases:

#1) Building application-specific blockchains, spanning permissioned (private) and permissionless (public) deployments.

#2 Building arbitrarily complex digital assets with custom rules, covenants, and riders (smart assets).

#3 Building and launching highly scalable decentralized applications (dApps).

The overarching aim of Avalanche is to provide a unifying platform for the creation, transfer, and trade of digital assets.

Value Capture:

Value Accrual to Protocol:

Validating a subnet requires validating the Avalanche’s primary network. Validating a subnet requires staking a minimum of 2,000 $AVAX. As more subnets launch, more $AVAX will be staked.

The feedback loop of increased usage driving higher fees and subnet creation, requiring more validators and staking, can lead to a reduction in overall $AVAX supply availability over time. This scarcity could drive up valuation.

Value Accrual to Token:

The $AVAX token, as the native token of the Avalanche platform, accrues value in several ways:

1. Fees: $AVAX is used to pay for transaction fees on the Avalanche network. As network usage increases, the demand for $AVAX to pay for these fees also increases, potentially driving up the value of the token.
2. Staking: $AVAX is used for staking to secure the Avalanche network. Validators and delegators can earn rewards by staking their $AVAX tokens. This incentivizes holding and can reduce the circulating supply, potentially increasing the token’s value.
3. Burning: Transaction fees on the Avalanche network are burned, removing them from the circulating supply. This deflationary mechanism can also contribute to the token’s value appreciation.
4. Interoperability: $AVAX is used as a base asset in the Avalanche ecosystem and can be used across multiple subnets, increasing its utility and potentially its value.
5. Scarcity: There is a hard cap of 720 million $AVAX tokens, creating scarcity which can contribute to value appreciation.

Business Model:

As with all layer-1 blockchains, Avalanche sells “block space” — which can be thought of as accounting ledger entries that record the state of all user activity on-chain. Users pay for computation (and the recording of their state) in the $AVAX token — 100% of which is burned in the process — acting as an automatic “share buyback.”

The supply side of the network (validators who approve transactions and provide economic security) is paid via new issuance of $AVAX tokens (inflation) — which can be offset by the burned tokens, making the network deflationary during periods of high on-chain usage.

Below is a quick breakdown of the model. Please note that the inflation rate is dependent on the number of validators on the network and is subject to change per future community decisions.

Over the last year, the network did $11.5 million in user fees but paid out over $275m (token issuance/inflation) to compensate its validators. It’s common to observe crypto networks and protocols using token inflation to bootstrap the supply side of the network in the first few years after launch. With that said, the business model only works in the long run if user activity eventually compensates the supply side of the network — rather than token inflation.

Per Avalanche’s token issuance schedule, the network is currently set to issue the last of its staking rewards in 2030 — putting pressure on the team to drive developers and users to the network in the coming years so that it can economically sustain itself far into the future.

While it’s nice to see a significant drop in token incentives (network inflation), fees are down almost 90% year-to-date. For reference, Ethereum and Solana are down roughly 50%.

Compared to L2s, Arbitrum is up 130%. Optimism is up 75%. Polygon is up 25%.

Takeaway: it appears that Ethereum L2s are eating Avalanche’s market share. What does this mean for the next adoption cycle? Time will tell.

Revenue Comes From:

On Avalanche, transaction fees are paid in $AVAX. This includes transactions on the Avalanche C-Chain, where there must be sufficient $AVAX in the wallet to cover the cost of the gas for the transaction. The fees used to execute a transaction on Avalanche are 100% burned to manage inflation for $AVAX.

Revenue Goes To:

Validators who approve transactions and provide economic security, which is paid via new issuance of $AVAX tokens (inflation) — which can be offset by the burned tokens, making the network deflationary during periods of high on-chain usage.

Stakers also receive rewards in $AVAX for staking and securing the network. The percentage varies depending on the current level of staking participation but is currently around 8.5% annually.

$AVAX Demand Drivers:

The demand for $AVAX, the native token of the Avalanche platform, is driven by various factors that appeal to different parties in the Avalanche ecosystem. Let’s explore the key demand drivers and the parties likely to buy or hold the $AVAX token.

Utility Demand:

The utility of the $AVAX token is one of the key drivers of its demand. $AVAX is used as the gas token on the Avalanche platform, which means it is used to pay for transactions and smart contract executions. This creates a constant demand for $AVAX as users need it to interact with the Avalanche platform. Furthermore, any Subnet that utilizes $AVAX as the gas token will also increase scarcity as it will burn tokens, thus potentially driving up demand.

Staking Demand:

Another significant driver of $AVAX demand is staking. In the Avalanche network, more tokens will be staked on Subnet validators, thus reducing the circulating amount of tokens. This reduction in supply can lead to an increase in demand as the availability of tokens decreases.

Speculative Demand:

Speculative demand is also a significant factor in the demand for $AVAX. As the Avalanche platform continues to grow and develop, investors may buy $AVAX in anticipation of future price increases. This speculative demand can drive up the price of $AVAX, leading to further demand as investors seek to profit from price appreciation.

Institutional and Retail Investors:

Both institutional and retail investors are showing interest in tokenized assets, driving the demand for $AVAX. The realization that blockchain can enhance asset ownership, streamline processes, and open up new investment opportunities has led to a surge in interest from these investors.

Liquidity Providers:

Liquidity providers in decentralized exchanges (DEXs) and other DeFi protocols on Avalanche also contribute to the demand for $AVAX. They deposit $AVAX into liquidity pools, facilitating the exchange of $AVAX for other tokens.

The demand for $AVAX is driven by its utility within the Avalanche platform, staking incentives, speculative investments, institutional and retail interest, as well as liquidity provision in decentralized exchanges. These demand drivers attract different parties, including platform users, investors, and liquidity providers, who recognize the value and potential of $AVAX within the growing Avalanche ecosystem.

$AVAX Distribution & Unlocks:

The token distribution details can be seen below. 360 million $AVAX were minted at launch, while the other 360 million are used as staking rewards released over the next decade. Of the tokens that were minted, there are various vesting periods ranging from 1 year to 10 years, as detailed below.

Staking Rewards: 360 million tokens were minted at launch, and then the other 360 million tokens will be used as staking rewards for validators, released over decades.

Seed Sale: 2.5% of the tokens were for participants in the seed sale. The price per token was $0.33, and they had a 1-year vesting schedule where 10% of their allocation was released on mainnet launch, and then 22.5% was released every 3 months over a year.

Private Sale: 3.5% of the tokens were for participants in the private sale. The price per token was $0.50, and they had a 1-year vesting schedule where 10% of their allocation was released on mainnet launch, and then 22.5% was released every 3 months over a year.

Public Sale Option A1: 1% of the tokens were for participants in the Public Sale Option A1. The price per token was $0.50, and there was a maximum allocation per user of $25k. Tokens have a 1-year vesting schedule where 10% of their allocation was released on mainnet launch, and then 22.5% were released every 3 months over a year.

Public Sale Option A2: 8.3% of the tokens were for participants in the Public Sale Option A2. The price per token was $0.50, and there was a maximum allocation per user of $2.5 million. Tokens have a 1.5-year vesting schedule where 10% of their allocation was released on mainnet at launch, and then 15% was released every 3 months over 18 months.

Public Sale Option B: 0.67% for participants in the Public Sale Option B. The price per token was $0.85, and there was no vesting period.

Foundation: 9.26% of the tokens are allocated to the Foundation. These tokens are used for various ecosystem-building initiatives, including marketing, bounties, incentive programs, and more. These have a 10-year vesting period.

Community and Development Endowment: 7% These tokens are allocated to individuals and groups who contribute to the development of core tools and infrastructure on Avalanche, as well as those who support Avalanche through grassroots community building and marketing efforts. Examples of such recipients include Avalanche Hub, Avalanche Ambassadors, Avalanche-X grantees, and others. Grants awarded are subject to a 1-year vesting period from the date of grant allocation.

Testnet Incentive Program: 0.27% These tokens were allocated to participants in the Avalanche-incentivized testnet program. Participants got to complete challenges and earn up to 2000 $AVAX tokens. These tokens were locked for a full year.

Strategic Partners: 5% These tokens are allocated with the specific mandate of being distributed to groups, organizations, and enterprises that are building businesses using the Avalanche technology and network. For example, these may include entrepreneurs looking to build a business that does fast international remittance using Avalanche or financial institutions that are looking to tokenize assets on Avalanche through their own subnets. These have a 4-year vesting period.

Airdrop: 2.5% of the tokens These tokens are allocated with the specific mandate of being distributed to various communities to onboard more people into the Avalanche community. For example, these may include airdrops to various crypto communities, Reddit communities, developer forum communities, and even airdrops to exchange users. These have a 4-year vesting period.

Team: 10% of the tokens. are allocated to founding and non-founding members of AVA Labs. These have a vesting period of 4 years, with team members, including founders, who have vested tokens before launch and are voluntarily re-locking all tokens for four years.

The public token sale raised $42 million in under 4.5 hours (and that was with a lengthy queue system), which included participants from an Ethereum Genesis address.

What is the Supply Schedule for $AVAX?

The initial token launch date for Avalanche ($AVAX) was September 20th, 2020. The maximum supply of this token is capped at 720,000,000. The supply of $AVAX is expected to be fully vested by July 2030.

Capped Supply:

An important characteristic of a store of value is scarcity. Unlike most other staking platforms, which have an unlimited supply and continuously increase their supply at a compounded rate, Avalanche has a fixed, capped supply of 720 million, creating scarcity. 360 million tokens were minted at launch (with the vast majority locked up in vesting periods between 1 and 10 years), while the other 360 million are used for staking rewards. As with Bitcoin, reward rates will decrease over time as it gets closer to the capped supply (although at a much smoother rate rather than infrequent halving’s).

In addition to having a limited supply like with Bitcoin, it goes further by burning $AVAX tokens for fees for all sorts of operations on the network in the primary network, such as transaction fees, and subscription-style fees for creating subnets, thus increasing the scarcity of $AVAX for all token holders and creating deflationary pressure when the amount burned exceeds the minting rewards.

Feedback Loops:

If you combine the two factors driving $AVAX scarcity described above (i.e. fee burning and validating / staking), you get a feedback loop that looks like this: 👇

People use Avalanche’s C-Chain because it’s cheap, reliable, decentralized & secure →

Usage drives up C-Chain fees →

Apps migrate to subnets →

New validators lock up $AVAX, lowering supply →

C-Chain utilization drops →

C-Chain gets cheaper ->

Repeat

[Source]

Observations Regarding $AVAX Tokenomic Burn/Mint Design:

Coin Gecko reported 366,762,845 $AVAX tokens in circulation as of January 19, 2024.

$AVAX Burned: Daily Average of 3,390:

Avalanche “burns” transaction fees, taking the tokens paid by those who transact on Avalanche and eliminating them from circulation. Burned Avax tracks the overall tally, dating back to September 2020, when Avalanche went live. As of January 19, 2024, there have been 4,122,939 $AVAX tokens burned in total. That means a daily average of 3,390 $AVAX tokens have been removed from circulation in the 1,216 days since the Avalanche genesis block.

The numbers mean an average burn rate of 1,238,119 tokens each year, worth 0.337 percent of the supply as of January 2024.

Even though 100% of the transaction fees are burned, the current burn rate isn’t nearly enough to offset the high inflation. The circulating supply of $AVAX is currently only about 51% of its maximum supply cap (Data from 1/19/2024). $AVAX can dilute its supply by another 98%. Staking rewards form the basis of compensation for validators, leading to a significant increase in annual inflation.

The Burn Rate of $AVAX is Over 25 Times Lower Than the Issuance Rate:

Transaction fees are burned, but since the transaction fees tend to be minimal ($0.10), the burned amount is unnoticeable. The estimated market cap of $AVAX is 11.5 billion, while the dollar amount of $AVAX burned is around 130 million.

It is paramount for more projects to be created or migrated to Avalanche. This will result in increased transaction fees due to heightened traffic, making it possible that the burn rate will rise in the future.

However, this presents a situation where users have to make a choice.

One of the primary reasons users flocked to Avalanche was due to the high transaction fees of its main competitor, Ethereum. Avalanche had significantly lower transaction costs compared to Ethereum. Since its launch and to this day, Avalanche has remained significantly more cost-effective and faster for transactions. However, with the rapid emergence of Layer 2 protocols built on Ethereum that offer comparable transaction fees to Avalanche, there are concerns about Avalanche’s ability to maintain its former dominance over Ethereum.

Another point to consider is the potential for Avalanche to achieve massive scale and fulfill its mission of becoming the Internet of Finance, processing 500 million daily transactions. If that happens by 2030, I would likely hold $AVAX as a store of value rather than using it as a means of exchange, similar to how I hold Bitcoin. Now, $AVAX is a store of value rather than a global currency. Of course, this perspective may be irrational and does not consider potential improvement proposals that future governance may vote on to address these issues. This also does not consider how subnets may transact without using $AVAX by creating their native gas token. When evaluating the utility of the $AVAX token, particularly its burning property, we must consider all aspects thoroughly.

Summary:

While Avalanche’s modular subnet architecture provides tremendous flexibility, the report identified ways this innovative design could be enhanced to further incentivize the growth of the $AVAX token and ecosystem.

Currently, the high 2,000 $AVAX requirement to validate on the primary network discourages many from participating.

However, promising solutions are being considered. Removing the primary network validator prerequisite would allow subnet validators to focus solely on their specialized roles. Instead of requiring subnets to stake 2000 $AVAX on the primary network, perhaps subnets can leverage Avalanche’s security by reducing the stake requirement to around 500 $AVAX. This will incentivize smaller subnets to borrow the security from Avalanche validators while significantly reducing the barrier to entry.

Another alternative model where a small percentage of subnet transaction fees are converted to $AVAX and provided to the Avalanche Foundation as sustainable revenue would incentivize foundation support while giving subnets full autonomy. As a result, fees generated from subnets can be reallocated towards bringing more subnets to Avalanche. Additionally, scrapping the 2000 $AVAX requirement for subnets could attract many more developers by lowering barriers to entry.

Another solution could be combining the two solutions above. A combination of both solutions could also be considered, reducing the staking requirement for subnets to 500 $AVAX and having half of the fees go towards burning $AVAX while the other half is redistributed to other matters that help the Avalanche ecosystem grow.

If implemented, changes like these could be a game-changer by massively increasing the number of innovative applications and validators across many customized subnets. The resulting surge in ecosystem interaction and $AVAX utility has great potential to address concerns around token demand and burn rate outweighing inflation.

With the right adjustments to its tokenomics, specifically addressing the high inflation and better incentivizing builders to create subnets, Avalanche appears well-positioned to scale its vision and sustain $AVAX tokenomics long-term.

As a cohort of Reddit traders realized hedge funds overextended themselves by shorting GameStop shares, Redditors began aggressively buying shares. The price surged from $17 to $483 until Robinhood suddenly suspended buy orders while allowing hedge funds to trade freely.

GameStop soon crashed back down to $40. Why? Up to 90% of Robinhood’s revenue comes from selling customer trades to firms like Citadel Securities. Protecting their interests took priority.

The episode revealed how individual traders are discouraged from beating institutions “at their own game”. The house always wins because it makes the rules.

Decentralized finance could level the playing field. By eliminating intermediaries, it allows users to directly exchange assets through smart contracts. DeFi protocols are transparent, permissionless, and controlled by users, not corporations.

Assets locked in DeFi have exploded from $1 billion in 2020 to almost $41 billion today. The impressive growth indicates a rising need for a market that is more honest and transparent.

Decentralization shifts power from gatekeepers to users. Rather than serving institutions, DeFi builds open markets owned by the people, controlled by the people.

Directly controlling assets in DeFi’s transparent system is empowering after feeling helpless during GameStop. Our financial future can be fair, equal, and decentralized.

Robinhood’s cheery facade hid a rigged financial system that’s designed to protect the interest of the wealthy elite. When retail investors began profiting, Robinhood robbed from the poor to give to the rich.

Robinhood banned buy orders for GameStop while allowing hedge funds to trade freely. 80%+ of Robinhoods revenue comes from selling customer trades, so protecting its true paymasters took priority.

Decentralized finance offers an alternative. On exchanges like Uniswap, users directly trade crypto assets without intermediaries. Liquidity providers earn fees proportional to their share, with no skewed motives.

Everything occurs in an unbiased and transparent manner utilizing smart contracts built on top of public blockchains. Had hedge funds shorted crypto assets publicly rather than stocks, risky exposures would’ve been visible sooner.

Decentralization shifts power from gatekeepers to users. DeFi builds open markets owned by the people, not institutions enriching themselves.

After watching financial cartels put profit over people, directly controlling assets on DeFi’s transparent ledgers is empowering. The familiar exploitation of traditional finance ends here.

A more honest financial paradigm is dawning.

The Robinhood GameStop Scandal: How DeFi Prevents Similar Corrupt Practices was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

The crisis exposed the lawlessness of the traditional financial system. This led many individuals to question the stability and transparency of the financial system. In the aftermath of the crisis, there was a growing demand for alternative financial solutions that deliver more transparent, secure, and decentralized solutions. This is what Bitcoin and other cryptocurrencies provide.

2008 Financial Crisis: A look at the Numbers

• 8.8 million jobs lost
• Unemployment spiked to 10% by October 2009.
• 8 million home foreclosures.
• $19.2 trillion in household wealth evaporated.
• Home price declines of 40% on average — even steeper in some cities.
• S&P 500 declined 38.5% in 2008.
• $7.4 trillion in stock wealth lost from 2008–09, or $66,200 per household on average
• Employer-sponsored savings/retirement account balances declined 25% or more in 2008.

source: https://www.investopedia.com/news/10-years-later-lessons-financial-crisis/

Bitcoin: A Decentralized Digital Currency

The 2008 financial crisis was a major catalyst for the development of Bitcoin. The Bitcoin Whitepaper was published on October 31st, 2008 by the pseudonym Satoshi Nakamoto. The Bitcoin Whitepaper laid out the foundation for a decentralized digital currency.

At its core, Bitcoin is based on the principles of decentralization and individual sovereignty.

The Innovation of the Blockchain and Its Impact on Security and Decentralization

One of the major innovations of Bitcoin is the use of a decentralized ledger, known as the blockchain, to record and verify transactions. The blockchain is a distributed database that is maintained by a network of users, that spans all across the world. This makes it impossible for any entity to prevent or intercept transactions.

The Fixed Maximum Supply of Bitcoin and Its Impact on Inflation and Stability

In the case of Bitcoin, the issuance rules are detailed in the Bitcoin Whitepaper. The supply of new Bitcoins is tied to the mining process. In this process, users contribute their computing power to settle transactions. As a reward for processing transactions on the Bitcoin network, miners are rewarded with a fixed amount of Bitcoins. This is how the Bitcoin network will operate until 21 million coins are issued, which is the maximum supply.

Bitcoin is designed to ensure the value of its currency is not corrupted over time through inflation. By limiting the number of Bitcoins that will ever be created, the significance of Bitcoin is expected to remain fruitful.

Unlike fiat currencies, which are distributed on a whim by bureaucratic controls, the supply of Bitcoin is fixed. It can’t be inflated beyond 21 million. This means that the value of Bitcoin is not subject to the same inflationary forces as fiat currencies.

Preventing the Next Crisis: How Bitcoin and Blockchain Could Help

Decentralization:

One of the different benefits of Bitcoin and blockchain technology is that it is decentralized. This means that it is not controlled by a single person or authority. This decentralization decreases the risk associated with economic crises triggered by the failure of a single large institution. This is because no one can seize control of a decentralized system like Bitcoin.

Transparency:

The lack of transparency in the financial system was one of the major factors that contributed to the 2008 economic crisis. Trusted credit agencies misled investors by giving AAA ratings to risky mortgage-backed securities. In reality, many of these securities were backed by dangerous mortgages that were likely to default, leading to widespread losses when the housing market crashed.

✂️ "Human Failings"

In contrast, Bitcoin’s decentralized ledger, known as the blockchain, provides a transparent and immutable record of all transactions. This means that users can trust that their transactions are accurately recorded and that their money is safe and secure. Additionally, the blockchain is secured by cryptography, which makes it nearly impossible for any single entity to manipulate or censor transactions.

The use of blockchain technology could also help to increase trust in the financial system, as it provides a secure and tamper-proof record of transactions. In a traditional financial system, trust is often based on the reputation of central authorities like banks or credit agencies.

The decentralized public ledger that underlies Bitcoin and other cryptocurrencies, is a public and transparent record associated with every transaction. The open and transparent nature of the blockchain could have exposed risky financial practices, fraud, and other forms of financial misconduct before the crisis. This could have prevented the crisis and led to more accountability.

Removing Intermediaries:

Bitcoin removes the need for middlemen like banks and credit agencies. Instead, Bitcoin users can directly send and receive payments from one another. This not only reduces the cost of processing transactions but also increases the speed and efficiency of the financial system.

One of the major benefits of this is that it eliminates the need for users to trust a central authority. In the traditional financial system, users must trust banks and credit agencies to hold, manage, and record their money. However, as we learned in 2008, these centralized authorities are not always transparent or accountable. They can be prone to mistakes, fraud, and corruption.

Equal access to financial services:

One of the elements that contributed to the 2008 financial crisis was the concentration of financial power in the hands of a few large financial institutions. These institutions had significant influence over the financial system and were able to make decisions that had widespread consequences around the world.

In a decentralized financial system powered by Bitcoin and blockchain technology, access to financial services is equal. Individuals can transact directly with one another without the need for intermediaries like banks. This could reduce the concentration of power in the financial system and prevent the kind of systemic failure that occurred in 2008.

Additionally, the use of blockchain technology could allow individuals in under-banked or unbanked regions to access financial services that were previously out of reach. By providing equal access to financial services, Bitcoin and blockchain technology could help to create a more stable and inclusive financial system.

Protection Against Government Interference Through Decentralized Governance:

With Bitcoin and blockchain, the financial system would be less vulnerable to interference from governments and central authorities, reducing the risk of a crisis caused by their poor policy decisions.

Decentralized governance on a blockchain allows for a better democratic process in economic decision-making, potentially preventing risky practices from being enforced.

Conclusion:

The 2008 financial crisis was a devastating event that had far-reaching consequences. Risky financial creations, loose lending standards, and a lack of transparency in the financial system all led to the economic disaster that is still being felt today. The crisis exposed the vulnerabilities of this system and sparked a demand for more transparent, secure, and decentralized options.

Bitcoin and other cryptocurrencies have since gained significant recognition as a viable alternative, with many people using them for online payments, cross-border transactions, and as a store of value.

Overall, the idea behind Bitcoin and other cryptocurrencies has the potential to change multiple industries and have a lasting impact on the way we think about money and the role of banks in the economy.

While it is impossible to say for sure what the future will hold, it is clear that Bitcoin and blockchain technology has the potential to mitigate the impact of future financial crises. By providing a decentralized, transparent, and secure platform for conducting financial transactions, Bitcoin and blockchain technology could prevent the same type of systemic collapse that we saw in 2008.

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The 2008 Crisis and the Rise of Bitcoin: How Blockchain Technology Can Protect Us was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.