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xuanling11Stablecoin Crisis
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xuanling11Crypto Paycheck
Photo by Mario Gogh on UnsplashEmployees will receive their paycheck in the period as a reward for their work. However, the employer wants to pay less to employees so that they can have maximum profits. The tension between working and anti-working has increased ever since. TL;DR Nobody wants to work unless they can pay fairly. Fiat payment may not be sustainable to satisfy what workers can contribute if the employer continues paying less and gaining more from profits. Employees will want thei...
xuanling11Defi Review #4: AAVE The Defi Lending Services
AAVE is a decentralized finance lending service before decentralized finance even existed. It is an innovation lending service in crypto and one of the first kind. However, the lending service may only restrict to the crypto community and it may expand into the traditional financial field later. TL;DR AAVE is a crypto lending financial service which to provides lending services to the crypto community. They focus on security and smart contract lending may be the future of financial services. ...
xuanling11Stablecoin Crisis
Stablecoin is in the crisis mode. The most reputable stablecoin USDC is depegged. It is all triggered by the traditional bank collapse - Silicon Valley Bank or SVB collapse. Why traditional bank collapse impacts crypto stablecoin? Let's sort this out and reveal how stablecoin operates. First, why SVB collapse? The short answer is overleveraged. SVB is one of the 20 largest commercial banking in the United States. Some even estimate the bank owned half of startup assets. Bank operated in ...
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With the recent Gemini Earn program halted withdraws and Genesis Trading rumors of bankruptcy, let's explore the difference between staking and lending in crypto.
https://twitter.com/Gemini/status/1594866655489933312
Staking is a type of consensus that allows participants to enter the validation process through Proof of Stake. The staking process enables the holder of the token to validate transactions while holding the token. In some sense, holders of token is a proof of ownership and rewards of such holding status. Lending is another form of cryptocurrency reward where lenders will take their loan from a third party, who in turn will repay the loaner’s loan. Let's explore the differences between them, each with separate definitions and examples.
Staking is the process of rewarding participants to hold and validate blockchain transactions in some sense of the ownership and a reward system of holding such token.
A user creates a virtual account with a digital wallet called a “crytpo wallet.” The wallet can hold cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin. When a user wants to borrow money from a third-party, such as an online banking provider, he can use his digital account to store the required amount of coins. When the third-party walks away from the loan, the wallet contains the funds from which the loan was repaid.
Lenders use a network of centralized or decentralized lenders to make payments to borrowers. Borrowers give up their control of their own money when they agree to repay a loan with a third party. The third-party acts as lender and earns interest on the loan amount. The lender can choose which assets or payments to make, and which parties to refer to in the agreement.
Staking requires a bit more effort on the part of the holder of the digital token to maintain ownership. It is controlled by the holder, not the lender! Staking requires participants to hold token to proof of ownership. But it is more important that you "lend" token to protocol but people and earn rewards not interest rates! Lending doesn’t involve ownership, but rather a set-aside of the value of the assets (i.e., collateral) that flow through the digital account. That way, the lender will get a “free” amount that doesn’t belong to them.
You can potentially lose everything in both cases. But lending losses are more toward human errors than staking does.
Staking risks:
Market Risk
Liquidity Risk
Lockup Periods
Rewards Duration
Validator Risk
Validator Costs
Loss or Theft
Lending risks:
Margin calls
Illiquidity
Loan Counterparty Risk
Risk of Platform Insolvency
Custody & Security Concerns
Unclear Cryptocurrency Lending Regulations
Gemini Dollar or GUSD is advertised to be 1:1 backing. But Gemini Earn is a lending service without any regulations. So staking service from Gemini is also separate from Gemini Earn.
When Gemini Earn halted, there is a loan counterparty risk that Genesis is insolvent or liquidity issue while Gemini operates regularly because staking depends on the protocol.
Now that you know the differences between staking and lending, you’ll be able to protect your own assets.
Photo by Nick Fewings on Unsplash
With the recent Gemini Earn program halted withdraws and Genesis Trading rumors of bankruptcy, let's explore the difference between staking and lending in crypto.
https://twitter.com/Gemini/status/1594866655489933312
Staking is a type of consensus that allows participants to enter the validation process through Proof of Stake. The staking process enables the holder of the token to validate transactions while holding the token. In some sense, holders of token is a proof of ownership and rewards of such holding status. Lending is another form of cryptocurrency reward where lenders will take their loan from a third party, who in turn will repay the loaner’s loan. Let's explore the differences between them, each with separate definitions and examples.
Staking is the process of rewarding participants to hold and validate blockchain transactions in some sense of the ownership and a reward system of holding such token.
A user creates a virtual account with a digital wallet called a “crytpo wallet.” The wallet can hold cryptocurrencies, such as Bitcoin, Ethereum, and Litecoin. When a user wants to borrow money from a third-party, such as an online banking provider, he can use his digital account to store the required amount of coins. When the third-party walks away from the loan, the wallet contains the funds from which the loan was repaid.
Lenders use a network of centralized or decentralized lenders to make payments to borrowers. Borrowers give up their control of their own money when they agree to repay a loan with a third party. The third-party acts as lender and earns interest on the loan amount. The lender can choose which assets or payments to make, and which parties to refer to in the agreement.
Staking requires a bit more effort on the part of the holder of the digital token to maintain ownership. It is controlled by the holder, not the lender! Staking requires participants to hold token to proof of ownership. But it is more important that you "lend" token to protocol but people and earn rewards not interest rates! Lending doesn’t involve ownership, but rather a set-aside of the value of the assets (i.e., collateral) that flow through the digital account. That way, the lender will get a “free” amount that doesn’t belong to them.
You can potentially lose everything in both cases. But lending losses are more toward human errors than staking does.
Staking risks:
Market Risk
Liquidity Risk
Lockup Periods
Rewards Duration
Validator Risk
Validator Costs
Loss or Theft
Lending risks:
Margin calls
Illiquidity
Loan Counterparty Risk
Risk of Platform Insolvency
Custody & Security Concerns
Unclear Cryptocurrency Lending Regulations
Gemini Dollar or GUSD is advertised to be 1:1 backing. But Gemini Earn is a lending service without any regulations. So staking service from Gemini is also separate from Gemini Earn.
When Gemini Earn halted, there is a loan counterparty risk that Genesis is insolvent or liquidity issue while Gemini operates regularly because staking depends on the protocol.
Now that you know the differences between staking and lending, you’ll be able to protect your own assets.
Photo by Nick Fewings on Unsplash
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