***

Introduction

Passive income refers to earnings derived from activities in which the earner is not actively involved on an ongoing basis. Unlike traditional employment, where income is directly tied to the amount of time and effort invested, passive income streams generate revenue with minimal ongoing effort once they are set up. Common examples include rental income, dividend payments, interest from savings or bonds, and royalties from intellectual property. The primary allure of passive income lies in its potential to provide financial stability and time freedom, allowing individuals to earn money without the constraints of a conventional job.

One increasingly popular method of generating passive income in crypto-industry is crypto lending. This involves lending out cryptocurrency to borrowers in exchange for interest payments. Crypto lending platforms connect lenders with borrowers, offering competitive interest rates and the potential for significant passive income. The interest earned can vary based on the platform, the type of cryptocurrency lent, and market conditions. Crypto lending leverages the high volatility and growth potential of the crypto market, providing an innovative way to earn passive income.

This item continues a series of articles “cryptocurrencies for beginners”. Or it’s better to say, “cryptocurrencies for regular people, not crypto geeks”. In particular, this article is a development of the idea of how an ordinary retail investor can solve the problem of protecting savings from inflation with minimal risks. You can refresh your memory about previous articles at the following links:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/31JrlixV5wiynuScrWCwLB8OIosxXaiaRE98EMZoTsQ

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/9_tmYb_xO92PAXaZxqT6aYFw9L-Wo8_sHHufzdMnfe8

n this article, we will continue to look at these opportunities. But this time for a new blockchain.

Solana has emerged as a leading blockchain platform for crypto lending due to its high speed, scalability, and low transaction fees. Unlike other blockchain networks, Solana can process thousands of transactions per second with minimal costs, making it an attractive option for both lenders and borrowers. The Solana ecosystem boasts a robust infrastructure and a vibrant community, continuously driving innovation and expanding its use cases. For individuals looking to diversify their income streams and capitalize on the burgeoning crypto market, Solana offers a compelling and efficient platform for crypto lending.

How Crypto Lending Generates Passive Income

Crypto lending generates passive income for lenders through interest payments. When a lender deposits their cryptocurrency into a lending platform, they agree to lend their assets for a specified period. In return, they receive regular interest payments, typically paid in the same cryptocurrency. This interest accumulates over time, providing a steady stream of passive income without the lender needing to manage or actively trade their assets. The key benefit is that lenders can earn a return on their crypto holdings, which might otherwise remain idle in their wallets.

Comparison with Traditional Lending Systems

Traditional lending systems involve banks or financial institutions providing loans to borrowers, often requiring a lengthy approval process and significant collateral. Interest rates in traditional systems are influenced by central banks and are generally lower than those in crypto lending.

In contrast, crypto lending is decentralized, leveraging blockchain technology to facilitate peer-to-peer transactions without intermediaries. This results in faster approval times, lower fees, and higher interest rates for lenders. Additionally, the use of smart contracts in crypto lending enhances security and transparency, as terms are automatically enforced by code, reducing the risk of default and fraud.

Overall, crypto lending offers a modern and innovative approach to earning passive income, combining the advantages of decentralized finance with the growth potential of the cryptocurrency market.

Finding appropriate options on Solana.

Based on the requirement to minimize risk in favor of the respect of the stable though modest growth, we need a stable blockchain platform with a developed ecosystem of decentralized applications. And also, we should consider blockchains with an average transaction fee of no more than $0.1

SOLANA matches these requirements perfectly.

Expectations to have APR, which is significantly higher than the inflation rate valued in US dollars, are matched by a financial instrument “stablecoin lending”.

Now we need DeFi protocols that provide such an instrument.

Leading DeFi applications that provide stablecoin lendings on the Solana platform can be viewed here:

https://defillama.com/protocols/Lending/Solana

To avoid unnecessary risks, it is better to focus on large players with a significant amount of TVL. These currently on the Solana platform include:

KAMINO FINANCE (https://app.kamino.finance)

MarginFI (https://app.marginfi.com)

Save FINANCE, ex-Solend (https://save.finance )

Kamino Finance is a DeFi protocol that integrates lending, liquidity provision, and leverage. It offers users the ability to engage in one-click, auto-compounding liquidity strategies, use concentrated liquidity positions as collateral, and build automated liquidity strategies.

Marginfi is a decentralized portfolio margining protocol for trading on Solana. The protocol gives traders a unified account to access margin, compose a portfolio, and improve capital efficiency across underlying trading protocols.

Save FINANCE is a DeFi protocol for lending and borrowing on the Solana blockchain. Think Aave or Compound on Solana. It is ex-Solend. Solend has rebranded to Save and relaunched its platform at save.finance.

Thus, today a retail investor on the Solana platform will be able to place his conditional $300 on the following conditions, which meet his base need (these rates were relevant at the time of writing this article and may change significantly at the time of reading):

Here we see quite interesting rates, that allow us to gain high passive income, as well as protecting savings from inflation.

I suggest you make your own comparison of the proposed lending options on presented above platforms with low transaction fees, using the links in my articles.

Conclusion

In conclusion, the integration of crypto lending into your financial strategy can be a highly effective way to generate passive income, particularly on a platform as robust and efficient as Solana. By leveraging Solana’s high-speed transactions, scalability, and low fees, retail investors can optimize their earnings with minimal risk. The decentralized nature of crypto lending, enhanced by smart contracts, ensures a transparent and secure process, making it an appealing alternative to traditional lending systems. With platforms like Kamino Finance, MarginFI, and Save FINANCE offering diverse and reliable lending options, investors have multiple avenues to explore stablecoin lending and other strategies to protect their savings from inflation. As the crypto market continues to evolve, staying informed and adaptable will be key to maximizing the benefits of crypto lending. Whether you’re new to the crypto space or a seasoned participant, the potential for significant passive income on Solana is a compelling opportunity worth considering.

***

HOWEVER, please keep in mind that the content of this article is meant purely for entertainment and informational purposes only, and should not be relied upon as financial, investment or any other professional or other advice. Please, mind that the content and information herein is given not to induce or to attempt to induce anyone to buy, sell or hold any cryptocurrency or carry out any other transactions with cryptocurrencies.

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Today, services and platforms using Generative AI models for Music Generation are gaining popularity. For example, let’s look at the platforms Beatoven.ai, AIVA (Artificial Intelligence Virtual Artist), Soundraw. Below is a comparative table of their features.

Each of these platforms has its strengths, making them suitable for different user needs and levels of expertise in music composition. However, their generalized functionality can be represented as follows.

Generalized functionality review (functional requirements):

Generating music using artificial intelligence.

The service uses artificial intelligence to create music tracks based on user settings such as genre, mood and duration.

users can select different genres (e.g., classical, jazz, electronic) and specify a mood (e.g., upbeat, soothing, dramatic).

the neural network generates visual covers for compositions

Free generation of up to N works;

By default, the service reserves the rights to the works; to obtain the rights to the works, you need to upgrade to a paid subscription.

If you have ever wondered what the architecture of such a system is, how to develop such a platform, what specialists are needed and how much time it will take, the article below reveals these points.

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Requirements Gathering

Typically a project starts with a Requirements Gathering and with Definition of detailed product requirements and features. An important task is Gather input from stakeholders and potential users.

Let’s assume that as functional requirements (at the top level) we will focus on what was proposed above. And in addition to the functional requirements, it is also worth considering in the implementation of the system attention to non-functional requirements

Non-functional requirements:

1. Reliability

Availability of redundant and fault-tolerant solutions in the system architecture to ensure high availability and minimize downtime.

2 Availability

Distributed, load-balanced architecture to handle high traffic and ensure uninterrupted service.

Have a monitoring system in place to quickly detect and respond to system failures or performance bottlenecks.

3 Scalability

We use cloud infrastructure to scale the solution horizontally.

We use caching mechanisms to improve performance and reduce the load on server components.

***

Platform Architecture Design

After the functional and non-functional requirements are gathered and approved, the Platform Architecture is developed.

In the article format, let’s give an overview of the top-level architecture, without going into detail.

High-level Design (HLD)

1. User interface.

The user interface should be responsive, efficient to use, and visually appealing. It should provide easy navigation. This is the interface where users interact with the app to specify music options (genre, mood, duration), view created tracks, and manage their account. At the MVP stage, only the web version of the application is implemented.

2. Database

User Data: Stores user profiles, preferences, history, analytics, and account information.

Generated Music Metadata: Metadata about the generated music tracks (e.g. genre, mood, duration).

3. Music generation mechanism using artificial intelligence

Generative models: include artificial intelligence algorithms and models trained to generate music based on user data (genre, mood, etc.).

4. Audio storage

Storage system for efficient processing of large volumes of audio data. Dynamically expandable cloud-based big data storage solutions are used.

5. Processing and rendering

Audio Processing: Converts generated music data into playable audio formats (e.g. MP3, WAV). Renders music tracks in real time based on user interaction.

6. Content delivery and streaming

Uses a Content Delivery Network (CDN) to distribute audio worldwide and reduce network transmission latency. We use adaptive streaming protocols (such as HTTP (DASH) or HTTP Live Streaming (HLS)) to deliver audio depending on the users’ network conditions.

7. Recommendation mechanism

A recommendation system that offers users personalized audio content based on their preferences, browsing history and user behavior. Machine learning algorithms are used to analyze user data, audio metadata, and user interactions to make appropriate recommendations.

8. Analytics and reporting

Monitoring tools to track system performance, usage metrics, and user experience.

Usage Analytics: Tracks user behavior, preferences, and usage patterns to improve recommendations and user experience.

Reporting Dashboard: Provides platform usage information and collected statistics. Administrators have access to analytics and insights into performance, engagement, and monetization. Allows you to generate reports on user demographics, traffic sources, and content trends to help developers tailor the app to meet user needs.

9. Integration with external services

Royalty Free Music Database: Integrate with royalty free music databases or libraries for additional options or fallbacks.

Payment Gateway: Integration to process subscription payments or pay-as-you-go transactions.

10. Safety and compliance with legal requirements

Data Encryption: Provides encryption of sensitive user data and transactions in transit and at rest.

Access Control: Implements role-based access control (RBAC) to restrict access to sensitive operations and data.

Compliance: Complies with relevant data protection regulations and industry standards (e.g. GDPR, CCPA).

The top-level architecture of the audio content generation service is presented in the diagram:

***

Technology stack selection

Now that we have the architecture of the future service, we can select suitable technologies and solutions that will be used at the development stage. The list of technologies is presented in the table below.

This technology stack ensures a robust, scalable, and secure platform for AI-driven music generation, catering to the needs of users while providing flexibility for future enhancements.

***

Team build-up

Having an understanding of the top-level requirements, system architecture and technologies used, we are able to map the competencies that we will need to implement this service. The list of specialists we will engage to implement the music content creation service is shown in the following table.

***

Implementation Timeline

And ultimately, we draw up a schedule for development and testing and set the release date.

This timeline plan provides a structured approach to developing a complex AI-driven music generation platform. Adjustments may be needed based on project specifics, team size, and other factors. Regular check-ins and iterative development practices can help ensure the project stays on track and meets its goals.

***

Conclusion

In conclusion, the burgeoning field of generative AI for music composition offers immense potential, with platforms like Beatoven.ai, AIVA, and Soundraw leading the charge. Each platform brings unique features and capabilities, catering to various user needs and expertise levels. By leveraging advanced AI technologies, these platforms allow users to generate customized music tracks, providing a creative and efficient solution for music production.

To develop a robust AI-driven music generation platform, it is crucial to meticulously gather both functional and non-functional requirements, ensuring the system’s reliability, availability, and scalability. The high-level architecture encompasses a responsive user interface, secure and scalable databases, sophisticated music generation algorithms, efficient audio processing and storage, seamless content delivery, and personalized recommendation systems.

Implementing such a platform necessitates a comprehensive technology stack and a multidisciplinary team, including roles from product management to machine learning engineers, and from audio engineers to marketing specialists. This collaborative effort, guided by a well-defined implementation timeline, ensures the successful development, testing, and launch of the platform.

By adhering to this structured approach, we can build a scalable, secure, and user-friendly music generation platform that not only meets the current demands of users but also paves the way for future innovations in the realm of AI-driven music creation.

***

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Below is presented the Latest analytics on Solana blockchain for June 2024.

Visit blockchainmetrics.online for more analytical materials.

***

Solana (SOL) — based on the results of June 2024 Solana takes 7 place in the ranking of leading blockchain platforms, based on the sum of key indicators.

These key indicators are presented below.

(1) dApps ecosystem TVL.
This metric indicates how developed the ecosystem of decentralized applications on this blockchain is and how valuable this ecosystem expressed in fiat money. And although, of course, changes in the metric are still in most cases a reflection of speculative sentiments, stable growth over a long period of this metric indicates the growing broad adoption of the blockchain.During the last month, the total value locked (TVL) in decentralized applications (dApps) on the Solana blockchain has decreased by -6.97% to $212.6b. This development is noteworthy. This reflects the general trend of the entire crypto industry for June.This is a negative signal, for which Solana in June 2024 receives -1 points of the platform development dynamics index.

(2) Average number of daily active wallets.
This is an absolute customer metric. This metric directly indicates whether more and more people are using the platform or, conversely, whether the platform is experiencing an outflow of real active users.In terms of the metric of average daily active wallets on the Solana blockchain, June saw an increase of 11.36% compared to May. This suggests that the number of unique wallets interacting with the network is on the rise, indicating potential growth and interest in the Solana ecosystem. We can also assume that the Solana network is gaining traction and attracting more users, which is a positive sign for its continued development and adoption. This could also mean an influx of investors expecting the price to skyrocket in July.This is a positive signal, for which Solana in June 2024 receives +1 points of the platform development dynamics index.

(3) Transaction volume.
This is another customer activity metric. This metric shows how actively existing users are utilizing the platform. Which is also an indicator that speaks about the current model of use of the platform, how often on average one active wallet makes transactions. An increase in transaction activity is always good, but a decrease indicates negative trends.During the last month, there has been a -18.08% change in the total number of transactions on the Solana blockchain. While this decrease is notable, it does not represent a significant deviation from the average transaction volume over the past few months. This suggests that the current decrease in transaction volume may be a temporary trend. Especially if you pay attention to the significant influx of active wallets in June. It is important to monitor the behavior of the network closely to better understand the underlying causes of this change.This is a negative signal, for which Solana in June 2024 receives -1 points of the platform development dynamics index.

(4) Fees & average transaction fee, in native token
For every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. On the one hand, high fees hinder user activity. On the other hand, high fees secures high income for the platform and high rewards for validators. This fosters the development of the platform. The total fees & avg transaction fee, in native token, metrics are tightly related. They may differ in value, but always have the same direction. If the average fee in native tokens increases, then the total volume of platform fees also increases. And vice versa. If fees in native tokens increase, this is a good signal for the development of the platform. These are direct incomes of the platform and platform validators. The higher this value, the more interesting it is for the community to develop this platform. It is important for you, as a consumer of the services of this blockchain (whether it is the active use of decentralized applications or simply investing in a blockchain token), to see that income is growing. However, it is important to maintain a balance so that the growth of fees remains within reasonable limits.It is not hard to note that the total fees on the Solana network have increased by 22.16% in June compared to the previous month. This increase in fees can be attributed to several factors. Yet, against the backdrop of a decline in transaction volume, this growth looks artificial. Moreover, it is likely associated with increased transaction costs. Which is not good for Solana. Because it has already lost its competitive advantage in transaction costs. But while this change in fees may be concerning for some observers, it is important to note that it is still relatively low.Anyway, the growth of revenue is still a positive signal, for which Solana in June 2024 receives +1 points of the platform development dynamics index.

(5) Average transaction fee, USD
As we noted above, for every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. And we also noted that the fees growth in native tokens is good, because it fosters incentive of the community and validators to participate in the development of the platform. But from the point of view of the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.The average transaction fee in US dollars on the Solana network has experienced a noteworthy increase of 39.63 percent compared to the previous month, underscoring the volatility of blockchain transaction costs. This change is worth noting for users and network participants, as it could affect their transactional activity and overall network usage. It can also be assumed that this is a conscious change in the fees policy of this blockchain.This is a negative signal, and unfortunately, for this metric, Solana gets -1 points of platform development dynamics index.

(6) Number of validators
The more validators, the more decentralized the blockchain is. An increase in the number of validators foster the reliability and stability of the platform. Moreover, Overall, while increasing the number of network validators may not directly correlate with transaction costs, it has the potential to impact network dynamics in ways that the increase of validators might alleviate pricing pressures due to high demand on block space and improve overall network performance. Therefore, it is extremely important for ordinary users to see that the number of blockchain validators is growing steadily.It is not hard to note that the metric of active validators on the Solana network has changed by -1.31% in June. While the decrease in active validators may not have a direct impact on the network’s performance, it is still important to monitor this metric to ensure the health and stability of the network.And although the size of deviation looks well within the measurement error, this is a negative signal, for which Solana in June 2024 receives -1 points of the platform development dynamics index.

(7) Number of decentralized applications
The more developed a blockchain has an ecosystem of decentralized applications that offers users a wide range of opportunities that go beyond simple peer-to-peer transactions or currency exchange, the more users make daily transactions on this blockchain. This in turn increases the income of the blockchain and validators and contributes to the further development of the blockchain. Therefore, from the point of view For an outside observer, seeing that the number of decentralized applications is constantly increasing is a positive signal, suggesting an inevitable increase in active wallets and transaction volume.

Solana is actively developing its ecosystem of decentralized applications. This is an indisputable fact. The metric ‘Number of decentralized applications’ for the Solana blockchain has been growning significantly over the last three months. In June, the metric increased by 6.49%, in May by 11.13%, and in April by 20.05%. These changes indicate a clear upward trend, which is promising for the future of the network. This development is a result of a variety of factors, including the increasing popularity of Solana, as well as the development of new projects and initiatives on the blockchain. The upward trend is encouraging, as it suggests that the Solana ecosystem is growing and evolving, attracting more attention from developers and users. It also highlights the potential of the Solana network as a platform for building decentralized applications and services. And this also means that in the near future there should be an increase in the value of the token. And the increase in the number of active wallets is clearly not a temporary phenomenon. Among the leading decentralized applications, the following projects are worth noting:

1. Raydium — more than doubled active users and transactions. Possibly awaiting for pump.

2. Pump.fun — active phase of project promotion, active marketing is being involved.

3. MomoAI(MetaOasis) — decreased interest in the project, likely decreased marketing efforts. This is a strong positive signal, for which Solana in June 2024 receives +2 points of the platform development dynamics index.

(8) Diversity of decentralized applications.
It is no secret that the DeFi sector currently dominates the blockchain industry. A developed ecosystem of decentralized applications, not limited to just one DeFi sector, with a high degree of diversity attracts users with diverse interests. If applications from other categories appear among the leading decentralized applications by metrics for the month, this indicates that the platform is finding other niches and attracting not only traders. In current realities, this is an important indicator of blockchain development. Among leading dApps on Solana, only dApps of the DeFi category dominate. These applications offer a wide range of decentralized financial services, including lending, borrowing, trading and yield farming, among others. But it is worth mention that lack of diversity in use cases can limit the long-term growth and sustainability of the platform. To date, Solana has done little to diversify its dApps ecosystem. So, no points for this metric Solana receives. 0 points.

(9) Unexplained anomalies.
Sometimes when watching over at the metrics and statistics of blockchains and dApps, you come across the fact that a particular indicator may inexplicably experience a sharp increase, and then an equally sharp and illogical drop to the previous level. An example of such a situation is a multiple increase in active wallets without a noticeable increase in transaction activity within a single month. This indicates manipulation with indicators. This means that something is not going as expected with blockchain. The purpose of such manipulations is different, but this is a bad signal for ordinary users. No unexplained manipulations with metrics were recorded on the Solana blockchain in June 2024. Therefore, Solana blockchain does not receive a penalty point for this metric. 0 points.

Summary chart
The maximum possible score for a blockchain can be 7 * 2 + 1 = 15 points The minimum possible score for a blockchain can be 7 * (- 2) — 1 = — 15 points Total platform development dynamics index for Solana in June 2024 is 0.

To sum everything up, from all these observations, several positive and negative signals can be identified for all those interested regarding the evolving track of the Solana blockchain:

Positive signals:

1. Increased Average Number of Daily Active Wallets

The average number of daily active wallets on the Solana blockchain increased by 11.36% in June 2024 compared to May. This positive trend indicates that more users are engaging with the Solana network, which can lead to a more vibrant and dynamic ecosystem. The growing user base can also attract more developers to create innovative dApps, further enhancing the user experience and value of the network.

Negative signals:

1. Decreased Transaction Volume

The total number of transactions on the Solana blockchain decreased by 18.08% in June 2024. This negative trend suggests that despite an increase in active wallets, the overall transaction activity has declined. For end users, this could imply a potential slowdown in the network’s utility and adoption in practical terms. It might indicate less frequent use of dApps and other services on the platform, possibly due to higher transaction fees or decreased user engagement. This reduction in transaction volume could also affect the overall liquidity and efficiency of the blockchain, making it less attractive for new and existing users. Moreover, this is likely evidence of a further decline in the value of the platform token, which will continue in July.

***

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This article is a continuation of the ideas presented in the previous work.

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/4nhbOhAHPBrxxFeKopWVIzk3Fc9bXuFR7xKsa8GX92U

Let us remind you that from this document you could gather for yourself that By monitoring listed above key indicators, you can assess a platform’s development dynamics — how well it’s progressing in the current period. This comprehensive analysis, available at Blockchainmetrics, ensures you stay informed and make savvy investment decisions. If you haven’t read this article, I highly recommend checking it out.

In this material, let’s look at a specific example of how regular and thoughtful analysis helps protect against unscrupulous market manipulators for profit. In the context of health, growth and adoption of a blockchain network, it is fundamentally important to gain insights into wallet activity, transaction volume and other on-chain metrics. This practice is called On-Chain Analysis. And when it comes to long-term blockchain investments, it is not replaceable Because in a long term perspective, these metrics are less influenceable by market sentiments and speculators pressure. In the blockchain world On-Chain metrics are a kind of real sector of the economy. From this perspective, if this real sector grows, then the economy of the blockchain project will grow. It has sense, hasn’t it?

Today we will try to figure out with assistance of On-Chain Metrics provided by https://blockchainmetrics.online how you can avoid falling into the trap of manipulating price increases.

This chart shows the ATOM token price chart from the beginning of the year. This chart also shows schematically the results of on-chain analytics for several months.

Or the same thing but in a table view:

What can be seen from this analytics:

1) improvement in the on-chain metric of the blockchain precedes an increase in price.
It’s easy to explain. The activity of speculators increases, who impacts to surge the price. The maneuver procedure begins.

2) deterioration of the blockchain’s on-chain metrics precedes a price decrease.
the poor “economics” of blockchain suggests that the price increase is due solely to speculative and manipulative factors. Most likely, at the same time, a series of messages about how attractive this crypto-project is and what fantastic prospects it has, will be promoted on social networks . Not necessarily immediately, but after some period of time the price will inevitably fall to the level from which the “acceleration” began.

3) CosmosHub is a bad option for long-term investing, despite the fact that they offer a good staking yeid.

***

And now, as a bonus, similar analytics for the BNB token.

Here is the same graph of price fluctuations since the beginning of the year. This chart also shows schematically the results of on-chain analytics over the past few months.

And this is what we observe:

What can be seen from this table:

for several months now, the BNB token has had deteriorating on-chain metrics

Despite this, the price of the token made a sharp jump in June, reaching ATH. However, everything suggests that such growth is in no way supported by the “real sector” of the operational indicators of the blockchain platform.

We will not make any forecasts on expected prices within the framework of public materials here.

We invite readers to draw their own deductions.

***

Conclusions.

The article emphasizes the critical role of On-Chain Analysis in assessing blockchain investments. On-chain metrics are presented as real indicators of a blockchain platform’s performance, offering a clear picture of its health, growth, and adoption. By skillfully analyzing these metrics, investors can avoid the pitfalls of market manipulation by professional speculators.

The example of the CosmosHub blockchain token illustrates that despite its good staking yields, it should not be considered a viable long-term investment due to its poor on-chain metrics. Similarly, the current significant increase in the BNB token price is shown to be unsupported by strong on-chain metrics, suggesting speculative manipulation rather than genuine growth.

Overall, the article underscores that comprehensive analysis, such as that provided by BlockchainMetrics, equips investors with the knowledge to make informed and savvy investment decisions, steering clear of speculative traps and focusing on long-term potential based on robust on-chain data.

***

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Below is presented the Latest analytics on Solana blockchain for May 2024.

Visit  blockchainmetrics.online  for more analytical materials.

***

Solana (SOL) — based on the results of May 2024 Solana takes 5 place in the ranking of leading blockchain platforms, based on the sum of key indicators.

These key indicators are presented below.

(1) dApps ecosystem TVL.
This metric indicates how developed the ecosystem of decentralized applications on this blockchain is and how valuable this ecosystem expressed in fiat money. And although, of course, changes in the metric are still in most cases a reflection of speculative sentiments, stable growth over a long period of this metric indicates the growing broad adoption of the blockchain.

We are observing a significant increase in the total value locked (TVL) in decentralized applications (dApps) on the Solana blockchain. In May, the metric rose by 14.18% compared to the previous month, indicating the growing popularity and adoption of this blockchain ecosystem. This development highlights the increasing interest in Solana and its dApps, which could have implications for the future of the blockchain industry.This is a positive signal, for which Solana in May 2024 receives +1 points of the platform development dynamics index

(2) Average number of daily active wallets.
This is an absolute customer metric. This metric directly indicates whether more and more people are using the platform or, conversely, whether the platform is experiencing an outflow of real active users.We are observing an increase in average daily active wallets on the Solana network. This is a promising sign for the health and growth of the network, as it indicates increased user engagement and interest in the ecosystem.

The increase of 0.6% represents a relatively modest change, but it is nonetheless significant considering that it is the result of a sustained trend over the course of the month. This indicates that the network continues to attract and retain users, which is a positive sign for the long-term health of the blockchain. We will continue to monitor this metric closely to gain a deeper understanding of the dynamics of user engagement on the network.This is a positive signal, for which Solana in May 2024 receives +1 points of the platform development dynamics index.

(3) Transaction volume.
This is another customer activity metric. This metric shows how actively existing users are utilizing the platform. Which is also an indicator that speaks about the current model of use of the platform, how often on average one active wallet makes transactions. An increase in transaction activity is always good, but a decrease indicates negative trends.

In terms of the total transactions metric, the Solana blockchain experienced a decrease of -5.41% in May. This change may indicate that the network’s activity has decreased compared to previous months. The decrease in transaction activity is likely due to the fact that the number of failed transactions in the network is still very high. During April, this figure was around 65%, and in May it dropped to 57.9%.This is a negative signal, for which Solana in May 2024 receives -1 points of the platform development dynamics index

(4) Fees & average transaction fee, in native token
For every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. On the one hand, high fees hinder user activity. On the other hand, high fees secures high income for the platform and high rewards for validators. This fosters the development of the platform. The total fees & avg transaction fee, in native token, metrics are tightly related. They may differ in value, but always have the same direction. If the average fee in native tokens increases, then the total volume of platform fees also increases. And vice versa. If fees in native tokens increase, this is a good signal for the development of the platform. These are direct incomes of the platform and platform validators. The higher this value, the more interesting it is for the community to develop this platform. It is important for you, as a consumer of the services of this blockchain (whether it is the active use of decentralized applications or simply investing in a blockchain token), to see that income is growing. However, it is important to maintain a balance so that the growth of fees remains within reasonable limits.

We are observing a decrease in total fees on the Solana network in May compared to the previous month. The total fees have dropped by -3.74% compared to March. It seems quite logical that, given the decline in transaction volumes, the volume of fees would also decline.This is a negative signal, for which Solana in May 2024 receives -1 points of the platform development dynamics index

(5) Average transaction fee, USD
As we noted above, for every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. And we also noted that the fees growth in native tokens is good, because it fosters incentive of the community and validators to participate in the development of the platform. But from the point of view of the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.

During the last month, there has been a change in the average fee in USD on the Solana network. The average fee increased by 4.98% to $0.045, which is a notable increase compared to the previous month. This change is likely due to several factors, but, undoubtedly, one of these factors is the increase of price of the Solana token. Which has grown by about the close amount. It is important to note that the average fee remains relatively low compared to other blockchains.This is a negative signal, and unfortunately, for this metric, Solana gets -1 points of platform development dynamics index.

(6) Number of validators
The more validators, the more decentralized the blockchain is. An increase in the number of validators foster the reliability and stability of the platform. Moreover, Overall, while increasing the number of network validators may not directly correlate with transaction costs, it has the potential to impact network dynamics in ways that the increase of validators might alleviate pricing pressures due to high demand on block space and improve overall network performance. Therefore, it is extremely important for ordinary users to see that the number of blockchain validators is growing steadily.

During the last month, there have been changes to the ‘active validators’ metric on the Solana blockchain, with a decline of -12.57% compared to the previous month. This represents a notable decrease in the metric, underscoring the volatility and fluctuations in the network’s active validator count. These changes are significant enough to warrant attention and further analysis by the community and stakeholders.This is a negative signal, for which Solana in May 2024 receives -1 points of the platform development dynamics index

(7) Number of decentralized applications
The more developed a blockchain has an ecosystem of decentralized applications that offers users a wide range of opportunities that go beyond simple peer-to-peer transactions or currency exchange, the more users make daily transactions on this blockchain. This in turn increases the income of the blockchain and validators and contributes to the further development of the blockchain. Therefore, from the point of view For an outside observer, seeing that the number of decentralized applications is constantly increasing is a positive signal, suggesting an inevitable increase in active wallets and transaction volume.

In May, there was an increase of 11.13% in the ‘ranked projects’ metric on the Solana blockchain, while in April there was a growth of 20.05%, and in March — of 28.66%. These changes are part of a clear upward trend, which indicates the continued development and adoption of the Solana platform. The Solana blockchain has been gaining popularity among developers and projects due to its high throughput, low transaction fees, and scalability. Among decentralized applications in May, it is worth paying attention to Raydium, which showed a growth of 27.03% in the number of active wallets. And also Jupiter Exchange, which showed a growth of 32.53% in the number of transactions in the past month. The increasing number of ranked projects on the Solana network demonstrates the platform’s ability to support a diverse range of applications and services. This is a positive sign for the future growth of the Solana ecosystem, as it suggests that more developers are interested in building on the blockchain.This is a strong positive signal, for which Solana in May 2024 receives +2 points of the platform development dynamics index

(8) Diversity of decentralized applications
It is no secret that the DeFi sector currently dominates the blockchain industry. A developed ecosystem of decentralized applications, not limited to just one DeFi sector, with a high degree of diversity attracts users with diverse interests. If applications from other categories appear among the leading decentralized applications by metrics for the month, this indicates that the platform is finding other niches and attracting not only traders. In current realities, this is an important indicator of blockchain development.

Among leading dApps on Solana, only dApps of the DeFi category dominate. These applications offer a wide range of decentralized financial services, including lending, borrowing, trading and yield farming, among others. But it is worth mention that lack of diversity in use cases can limit the long-term growth and sustainability of the platform. To date, Solana has done little to diversify its dApps ecosystem. So, no points for this metric Solana receives. 0 points.

(9) Unexplained anomalies
Sometimes when watching over at the metrics and statistics of blockchains and dApps, you come across the fact that a particular indicator may inexplicably experience a sharp increase, and then an equally sharp and illogical drop to the previous level. An example of such a situation is a multiple increase in active wallets without a noticeable increase in transaction activity within a single month. This indicates manipulation with indicators. This means that something is not going as expected with blockchain. The purpose of such manipulations is different, but this is a bad signal for ordinary users.No unexplained manipulations with metrics were recorded on the Solana blockchain in May 2024. Therefore, Solana blockchain does not receive a penalty point for this metric. 0 points.

Summary chart

The maximum possible score for a blockchain can be 7 * 2 + 1 = 15 points
The minimum possible score for a blockchain can be 7 * (- 2) — 1 = — 15 points
Total platform development dynamics index for Solana in May 2024 is 0.

To sum everything up, from all these observations, several positive and negative signals can be identified for all those interested regarding the evolving track of the Solana blockchain:

Positive signals:

1. Increase in Number of Decentralized Applications (dApps)

The growth in the number of decentralized applications (dApps) on the Solana blockchain is a positive signal. In May 2024, there was an increase of 11.13% in this metric, following similar growth trends in previous months. This consistent upward trend highlights the continued development and adoption of the Solana platform, making it more attractive to developers and users. A diverse and expanding dApp ecosystem indicates long-term potential and resilience, ensuring that Solana can support a wide range of applications and services, thereby enhancing its appeal to end-users.

Negative signals:

1. Decline in the number of active validators

The decline in the number of active validators on the Solana blockchain is a negative signal. There was a notable decrease of -12.57% in the number of active validators in May 2024 compared to the previous month. This reduction can affect the decentralization, reliability, and stability of the platform, potentially making it less secure and resilient. Especially, it was meaningful shift amid of the continuously high number of failed transactions, which still is more than 50%.

***

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Unleashing Blockchain’s Potential for Retail enthusiasts

As we’ve often highlighted, the world of blockchain offers vast opportunities for retail investors. For those who are thoughtful and proactive, cryptocurrencies unlock incredible possibilities across various domains — financial services (investments, trading, loans, passive income), access to capital (crowdfunding platforms, ICOs, and token sales), tokenization of gaming, social networks, real-world assets, and the formation of decentralized self-governing organizations.

Even by the most conservative estimates, there are over 100 million active cryptocurrency users worldwide. The trend indicates a continual rise in retail investors globally.

However, a beginner’s first encounter with investing is often an overwhelming deluge of enthusiastic articles about specific tokens and confident predictions from various analysts about the future prices of certain cryptocurrencies.

This hype serves a single purpose: to extract money from private investors in exchange for worthless tokens, or “shitcoins,” whose value is essentially zero.

Unmasking the Hype: The Typical Manipulation Scheme

A marketing frenzy is created around a crypto project on social media. Money is pumped into the token, creating artificial demand, leading to rapid growth by tens or even hundreds of percent. Due to the low trading volume of such fleeting tokens, this can be done without significant investment. Retail investors, mesmerized by the social media buzz and forecasts from “successful millionaire crypto traders,” start investing in the next shitcoin. Once enough money is amassed from retail investors, the organizers sell off their tokens, secure their profits, and drain liquidity from those who fell for the hype. This is the fate of most meme-coins and, regrettably, many cryptocurrencies.

A Smart Strategy for Savvy Investors

As we discussed in our previous article, a prudent private investor should follow a simple strategy to avoid such traps. Conducting thorough research is crucial. Please review these guidelines here:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/CjRXICYO6K1g3vqNkqlwHIbBVpKskqvneY_Cmp_TpNA

Use reliable tools like BlockchainMetrics.online to gain insights into wallet activity, transaction volume, and other on-chain metrics. Blockchainmetrics provides comprehensive analysis and interpretations, saving you significant time in data collection and analysis, ensuring you make informed investment decisions based on accurate and up-to-date information.

Key On-Chain Metrics to Watch

Let’s look at what indicators and why you should pay attention when analyzing on-chain blockchain metrics in order to determine its current potential and sustainability.

(1) dApps ecosystem TVL.

This metric serves as a vibrant barometer for the maturity and monetary worth of a blockchain’s decentralized application ecosystem, expressed in fiat currency. While fluctuations in this metric often mirror speculative moods, a steady rise over an extended period signals a blossoming acceptance and widespread adoption of the blockchain.

(2) Average number of daily active wallets.

This is a definitive customer metric, serving as a clear indicator of user engagement. It reveals whether the platform is attracting a growing number of active users each day or, conversely, facing a decline and losing its real, active user base.

(3) Transaction volume.

This metric serves as a dynamic gauge of user activity, reflecting how energetically existing users engage with the platform. It reveals the current usage patterns, indicating how frequently an active wallet performs transactions on average. A rise in transaction activity signals positive momentum, while a dip highlights concerning trends.

(4) Fees & average transaction fee in native token.

Whenever a user performs any operation on the blockchain — be it transferring cryptocurrency between wallets, making online purchases, or exchanging cryptocurrencies — the blockchain charges fees in its native tokens. High fees can discourage user activity, but they also generate substantial revenue for the platform and offer attractive rewards for validators, thus fostering the platform’s development. The metrics for total fees and average transaction fee in native tokens are closely connected. While their values might differ, they always trend in the same direction: if the average fee in native tokens rises, the total volume of platform fees increases, and vice versa. An increase in fees signals robust platform growth, benefiting both the platform and its validators by providing direct income. This higher value attracts community interest in developing the platform further. For consumers — whether actively using decentralized applications or investing in the blockchain token — rising income is a positive sign. However, it is crucial to maintain a balance to ensure that fee growth remains within reasonable limits.

(5) Average transaction fee, USD

As previously mentioned, every user operation on the blockchain — whether it’s transferring cryptocurrency, making an online purchase, or exchanging cryptocurrencies — incurs fees in the blockchain’s native tokens. While rising fees in native tokens incentivize community engagement and validator participation, from the average user’s perspective, high fees in USD can be a deterrent. Users are disinclined to pay increased fees in fiat currency. Excessive transaction fees in USD can stifle the growth and development of any blockchain platform.

(6) Number of validators

A higher number of validators enhances the decentralization of the blockchain. More validators contribute to the platform’s reliability and stability. While an increase in validators might not directly reduce transaction costs, it can positively influence network dynamics by alleviating pricing pressures from high demand on block space and boosting overall network performance. Thus, it’s crucial for ordinary users to observe a steady growth in the number of blockchain validators, as this indicates a healthier, more resilient network.

(7) Diversity of decentralized applications.

It’s well known that the DeFi sector currently reigns supreme in the blockchain industry. However, a thriving ecosystem brimming with diverse decentralized applications, beyond just DeFi, appeals to users with a wide range of interests. When applications from various categories start ranking high among the top decentralized apps, it signals that the platform is branching out into new niches and attracting a broader audience, not just traders. In today’s landscape, this diversity is a crucial indicator of blockchain long-term growth and evolution.

(8) Unexplained anomalies.

Occasionally, while monitoring the metrics and statistics of blockchains and dApps, you may encounter sudden, inexplicable spikes in a particular indicator, followed by equally abrupt and illogical drops back to previous levels. For instance, you might see a sudden surge in active wallets without a corresponding increase in transaction activity within the same month with following return to the previous trend line of this metric. Such anomalies suggest manipulation of the metrics, indicating that something is amiss with the blockchain. These manipulations can have various motives, but they always serve as a warning sign for retail investors and end-users.

Conclusion

By monitoring listed above key indicators, you can assess a platform’s development dynamics — how well it’s progressing in the current period. This comprehensive analysis, available at Blockchainmetrics, ensures you stay informed and make savvy investment decisions.

***

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1. The Rise of Retail Investors in Cryptocurrencies: Opportunities and Risks

It turns out there are quite a lot of people who are already involved in the world of cryptocurrencies. According to the most conservative estimates, there are more than 100 million active users of cryptocurrencies over the world. What is important for us here is not the number, but the fact that the open world of cryptocurrencies has generated a huge number of retail investors in cryptocurrencies. To enter this cryptocurrency ecosystem and begin to actively interact with it, you do not need to present documents, go through KYC procedures, sign agreements with banks or a broker, pay regular commissions to the broker, etc. The entry level turned out to be lower than ever, both in terms of bureaucratic delays and in terms of financial resources with which ordinaries can start investing in cryptocurrencies. And the trend suggests that the number of retail investors from all over the world will only grow.

From the point of view of a conservative observer, all these people look at least naive, because for most ordinary people, cryptocurrencies are strongly associated with two things:

1. scam,

2. high volatility.

And these people are not far from the truth, in fact.

The lack of regulation of the cryptocurrency sector of economic relations by government agencies, as well as the inherent anonymity and decentralized nature of cryptocurrencies have made them attractive to scammers and fraudsters. There have been numerous cases of cryptocurrency-related scams, including Ponzi schemes, phishing attacks, and fraudulent initial coin offerings (ICOs). These incidents have tarnished the reputation of cryptocurrency in the eyes of the public.

Even those instruments that are not formally pure scam are essentially gambling for the retail investor: either they will bring winnings or they will not. At best, it’s 50/50. We are talking about DeFi tools such as Liquid Pools, Yield-farming, Leverage Lending, and others. And as you know, only the Casino wins, i.e. in the case of cryptocurrencies, DeFi protocols.

If we are talking about investing in cryptocurrency, then such a scheme is common here. To begin with, a marketing buzz is created on social networks around a certain crypto-project. The token of this crypto project is then pumped with money, creating artificial demand. The token is showing rapid growth, by tens or even hundreds of percent. Due to the small trading volume of such one-day tokens, this is quite easy to do even without serious investments. Retail investors, hypnotized by the hype on social networks and the forecasts of various “successful millionaire crypto traders,” are starting to invest their money in the next shit coin. After some time, when the organizers see that enough money has already been raised from retail investors, they begin to sell off their tokens, fixing their profits and at the same time taking away liquidity from those who fell for the hype. This is exactly what all meme-coins are. And unfortunately most cryptocurrencies.

And of course, the huge volatility of any cryptocurrency today is a deterrent. This is due to the immaturity of this market. Compared to traditional financial markets, cryptocurrency markets are relatively small and less liquid. This means that even a relatively small amount of buying or selling activity caused, for example, by a negative or positive news background, speculation, general market sentiments, news about exploited security vulnerabilities, etc. can have a significant impact on prices. Among other things, regular market manipulations by big participants cause such price jumps.

However, behind all these scams, hype and bias for thinking and proactive people, cryptocurrencies open up great opportunities in the areas of financial services (investments, trading, loans, passive income), access to capital (crowdfunding platforms, initial coin offerings (ICOs) and token sales), in tokenization of the game industry/social networks/real-world assets, and in terms of establishing decentralized self-governing organizations. It’s not for nothing that there is a common expression that the higher the risk, the higher the reward.

2. Strategy to minimize losses.

So what should a retail investor do? How to minimize risks when investing in cryptocurrencies?

That’s the strategy:

(1) Refrain from the fear of missing out to suddenly get rich with skyrocketing tokens, speculative meme coins, or any hype. Steer clear of anything that appears overly promising, of assets promising effortless profits. 1% / day? or 100% APY? — Invariably scam! Invariably, such propositions are deceptive.

(2) If you want to test the statement from the point 1 and play with DeFi-instruments that promise high and quick profits, go-ahead, try it. But use rational thinking. Bet how much you don’t mind losing and see how many times this DeFi-instrument will actually bring you the promised profit.

(3) After you have played enough with “highly profitable” DeFi-instruments that offer hyped shitcoins in exchange for your real money, pay attention to conservative DeFi-instruments:

• stablecoins lending and

• investment in leading blockchain platforms.

(4) Do Your Own Research (DOYR) & Stay Updated.

2.1. Stablecoins lending

Stablecoins are a type of cryptocurrency designed to maintain a stable value relative to a reference asset, typically a fiat currency like the US dollar or a commodity like gold. Tether (USDT) and USD Coin (USDC) are popular examples. In this case, each issued stablecoin is backed by one US dollar held in a bank account held by a central entity.

Currently, this DeFi tool (stablecoins lending) offers more interesting rates than banks. You can read more about this topic here:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/31JrlixV5wiynuScrWCwLB8OIosxXaiaRE98EMZoTsQ

and here:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/9_tmYb_xO92PAXaZxqT6aYFw9L-Wo8_sHHufzdMnfe8

2.2 Investment in leading blockchain platforms.

Among the variety of cryptocurrencies, tokens of leading blockchain platforms are the optimal choice for long-term investment in cryptocurrency and swing trading, based on a number of factors:

• Leading blockchain platforms like have well-established technologies and networks. These platforms have been around for several years, proving their stability and reliability.

• Platforms like Ethereum support a wide range of use cases beyond simple currency transactions. They enable the creation of smart contracts, decentralized applications (DApps), decentralized finance (DeFi) protocols, non-fungible tokens (NFTs), and more. This diversification of use cases increases the utility and value of the platform’s native token. In a word, they provide the very environment on which decentralized applications run.

• Tokens of leading blockchain platforms typically have high liquidity, meaning they can be easily bought or sold on various exchanges. High liquidity reduces price volatility and allows investors to enter or exit positions without significant slippage.

• Tokens of leading blockchain platforms are a good choice for long-term cryptocurrency investing because they provide volatility hedging mechanisms in the form of staking. Staking rewards typically offer stable and predictable returns compared to other forms of cryptocurrency investment. Staking allows cryptocurrency holders to earn passive income by participating in the network’s consensus mechanism. Instead of relying solely on price appreciation, stakers earn rewards for helping to secure the network.

2.3 Do Your Own Research (DOYR) & Stay Updated

We must not forget about the trivial Sturgeon’s law (or Sturgeon’s revelation). In accordance with this law, most existing and launched blockchain platforms today, even well-known and having stable client base, will lose the battle for the audience and cease to exist. There will be literally a few leading blockchain platforms that have proven their unique usefulness over time.

Therefore, it is very important not to succumb to marketing pressure, the frequency of mentions of cryptocurrency on social networks, the mind-blowing increase in the price of the token, and the like. Before making a long-term investment decision, it is important to monitor the dynamics of the “health” of the blockchain platform.

In this context, it is fundamentally important to gain insights into wallet activity, transaction volume and other on-chain metrics. This practice is called On-Chain Analysis. And when it comes to long-term blockchain investments, it seems to be more suitable than other techniques. Because in long term perspective, these metrics are less influenceable by market sentiments and speculators pressure. In the blockchain world, On-Chain metrics are a kind of real sector of the economy. From this perspective, if this real sector grows, then the economy of the blockchain project will grow. It has sense, hasn’t it?

Stay Updated.

Cryptocurrency markets and projects evolve rapidly. Stay updated with the latest news, developments, statistics and updates related to the project you’re interested in. Regularly review project announcements, roadmaps, and progress reports to assess its ongoing development and trajectory.

How long does such research take?

Simple answer. A lot of. The thing is that by its nature, blockchain is open and accessible to all interested people. There is a huge amount of data available for analysis in open sources, large analytical platforms like TokenTerminal, Dune, BitQuery, DappRadar, Coinmarketcap, blockchain-scanners and others.

You can collect and build on your own any data slices you are interested in for any blockchain. This is a fascinating activity in a certain context. But this takes hours, if not days, of your precious time to collect and process the results.

Is there a way to minimize the time spent on blockchain analytics?

It would be simply wonderful if someone had already collected all the necessary metrics and interpreted them, and provided me with the results of such an analysis, you say.

In secret, there are such resources on the Internet.

Blockchainmetrics (https://blockchainmetrics.online),

Messari (https://messari.io)

Nansen (https://www.nansen.ai) ,

Of course, such services are not free. But this is already a question of your priorities.

Conclusion

To minimize risks when investing in cryptocurrencies, avoid hype-driven investments and overly promising returns. Experiment cautiously with high-yield DeFi instruments using money you can afford to lose. Focus on stablecoin lending and investing in leading blockchain platforms like Ethereum for long-term stability.

Conducting thorough research is crucial. Use reliable tools like Blockchainmetrics to gain insights into wallet activity, transaction volume, and other on-chain metrics. Blockchainmetrics provides comprehensive analysis and interpretations, saving you significant time in data collection and analysis, ensuring you make informed investment decisions based on accurate and up-to-date information.

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This article is a continuation of the work described in the previous article.

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/ZnAV9cifqvhFkezbUy-x5PDOYwuCuGe1XdCSRVyZ76w

At that work we explored the process of connecting a web3 application frontend made with nextJS framework using RainbowKit and Wagmi to a test private blockchain network.

As of this material, we will learn how to retrieve wallet balances in ERC20 tokens and how to make token transfers between wallets.

Before we begin, let’s take a look at the building primitives we’re going to use.

This example will use the following technology stack.

TypeScript — is a free and open-source high-level programming language developed by Microsoft that adds static typing with optional type annotations to JavaScript. TypeScript is a language extension that adds features to ECMAScript 6. It helps developers to make code more readable and maintainable.

ReactJS — is an open-source front-end JavaScript library for building user interfaces based on components. It is maintained by Meta (formerly Facebook) and a community of individual developers and companies. Currently, according to the official documentation, it is not recommended to start new projects on pure React.js without React-powered frameworks.

NextJS — is an open-source a flexible framework on a top of ReactJS with server-side rendering and static website generation. Official React documentation mentions Next.js as the first among “Recommended frameworks”

Wagmi — is a library, consisting of a collection of 40+ React Hooks. It provides developers with intuitive building blocks to build their web3 ReactJS apps and significantly simplifies implementation of app logic related with typical operations with wallets, transactions, smart-contracts, etc.

Viem — is full-featured lightweight library for interacting with EVM chains. It is a TypeScript Interface that provides low-level stateless primitives for interacting with EVM-based blockchains. It is an alternative to ethers.js and web3.js with a focus on reliability, efficiency, and excellent developer experience.

RainbowKit — is a React library that makes it easy to add wallet connection to your dApp. Aside from handling the connection and disconnection of wallets, RainbowKit supports numerous wallets, swaps connection chains, resolves address to ENS, displays balance and much more!

***

Great! Let’s get started. First, let’s create a skeleton of our application based on NextJS. To do this you need to run the command:

npx create-next-app@latest

This starts installer.

After creation of an empty application skeleton, let’s clean up a bit of the code that created the installation package for us.

To do this, go-ahead, following the recommendations on the main page to edit the file app/page.tsx. You should remove everything inside the Home function so that the Home function returns the following content:

export default function Home() {
return (
<main className="flex min-h-screen flex-col items-center justify-between p-24">
NextJS Web3 application
</main>
);
}

Build a project for just in case and check that these edits did not break anything…

Next we need to install the rainbowkit/wagmi/viem packages.

To do this, go to the RainbowKit website https://www.rainbowkit.com/docs/installation and in the Manual Installation section, copy the installation command:

npm install @rainbow-me/rainbowkit wagmi viem@2.x @tanstack/react-query

After successfully installing these libraries, you will also need to adjust next.config.js, following the recommendations from here https://github.com/rainbow-me/rainbowkit/blob/main/examples/with-next-app/next.config.js. Resulting content of next.config.js:

/** @type {import('next').NextConfig} */
const nextConfig = {
reactStrictMode: true,
webpack: config => {
config.externals.push('pino-pretty', 'lokijs', 'encoding');
return config;
},
};
export default nextConfig;

Now let’s create a file app/providers.tsx with the following content:

'use client';

import * as React from 'react';
import {
WalletList,
getDefaultConfig,
Chain,
} from '@rainbow-me/rainbowkit';

import { metaMaskWallet, trustWallet, uniswapWallet, walletConnectWallet } from '@rainbow-me/rainbowkit/wallets';
import { WagmiProvider } from 'wagmi';
import {
polygon,
} from 'wagmi/chains';

import { QueryClientProvider, QueryClient, } from "@tanstack/react-query";

const queryClient = new QueryClient();

const _walletList: WalletList = [
{
groupName: 'Recommended',
wallets: [metaMaskWallet, trustWallet, uniswapWallet, walletConnectWallet],
},
];

const _chains: readonly [Chain, ...Chain[]] = [polygon];

const config = getDefaultConfig({
appName: 'nextjsweb3paymentapp',
projectId: 'YOUR_PROJECT_ID',
wallets: _walletList,
chains: _chains,
ssr: false,
});
export function Providers({ children }: { children: React.ReactNode }) {
return (
<WagmiProvider config={config}>
<QueryClientProvider client={queryClient}>
{children}
</QueryClientProvider>
</WagmiProvider>
);
}

This file is a global configuration for connecting Wagmi to the application. And note that the provider for RainbowKit is not included here. This was done intentionally to show that it is quite possible to make the code responsible for the crypto wallet connection only the local part of the application.

Then you need to make this configuration visible to the entire application. To do this, change the contents of the app/layout.tsx file as follows:

import type { Metadata } from "next";

import { Inter } from "next/font/google";
import { Providers } from './providers';

import "./globals.css";
import '@rainbow-me/rainbowkit/styles.css';

const inter = Inter({ subsets: ["latin"] });

export const metadata: Metadata = {
title: "NextJS web3 App",
description: "",
};

export default function RootLayout({
children,
}: Readonly<{
children: React.ReactNode;
}>) {
return (
<html lang="en">
<body className={inter.className}>
<Providers>
{children}
</Providers>
</body>
</html>
);
}

Check that the changes did not break the project and, if all is well, let’s continue to make changes.

Now we need to make our own private blockchain network and add this custom network to the configuration. How to create a private blockchain network for testing and debugging is written in the article:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/CW22PBY6IAsd9_RKvQSLlOvtNZqC8h6-S9VqgSSXf_E

Just like the last time, let’s create a private blockchain network based on Polygon. After successfully creating a private network for our test application, we need to get the configuration to connect this network to our application (this is done using the “</>Snippets” button in BuildBear Dashboard) and add this configuration in the app/providers.tsx file:

const bbtestnet = {
id: 17524,
name: "yucky-daredevil-xxxxxxx", 
nativeCurrency: {
decimals: 18,
name: "Native Token",
symbol: "Native Token",
},
rpcUrls: {
public: { http: ["https://rpc.buildbear.io/yucky-daredevil-xxxxxxx"] },
default: { http: ["https://rpc.buildbear.io/yucky-daredevil-xxxxxx"] },
},
blockExplorers: {
etherscan: {
name: "BBExplorer",
url: "https://explorer.buildbear.io/yucky-daredevil-xxxxxx",
},
default: {
name: "BBExplorer",
url: "https://explorer.buildbear.io/yucky-daredevil-xxxxxxx",
},
},
} as const satisfies Chain;

Also, we need to add this network to the list of networks with which we will work:

const _chains: readonly [Chain, ...Chain[]] = [polygon, bbtestnet];

Now let’s add a button to connect a crypto wallet using RainbowKit to the main page.

Make the following changes to the app/page.tsx file:

'use client'

import {
ConnectButton,
RainbowKitProvider,
} from '@rainbow-me/rainbowkit';

export default function Home() {
return (
<main className="flex min-h-screen flex-col items-center justify-center p-24">
<RainbowKitProvider>
<h1 className='text-center text-3xl font-extrabold'>NextJS Web3 application</h1><br />
<div className='flex flex-row justify-center items-center'>
<ConnectButton />
</div>
</RainbowKitProvider>

</main>
);
}

Now, the main page should have the following appearance with the ability to select a blockchain network from two options:

Now let’s add components to transfer USDT ERC20 tokens to a given crypto wallet, and also implement the UI logic. You need to write code for UI that ensures the following logic:

• display the wallet address where the transfer is made,

• display the address of the wallet from which the transfer is made,

• display a field to specify the transfer amount,

• display the button to execute transfer,

• message to display transaction status,

• message that a Receipt of inclusion to a block is expected from the blockchain,

• message that a Receipt has been received displaying transaction hash.

The final page layout will look something like this:

I don’t provide the entire code here, since these are standard React/NextJS components and are not related to the topic of our article. The full app/page.tsx code will be available for self-study on GitHub.

Then you need to top up the test wallet from which payments will be made. This is done through the BuildBear Faucet. We will not describe this in detail here either. It is assumed that the reader is already familiar with this. If necessary, you can see the instructions in the previous article.

The key question of our work today is how to get a wallet balance for a given ERC20 token, and based on the event of clicking on the “Go!” button initiate a transfer from one wallet to another?

To get a wallet balance for a ERC20 token, let’s define the following Wagmi hook in the app/page.tsx file:

const useBalanceResult = useBalance({
address: address as Address,
token: '0xc2132D05D31c914a87C6611C10748AEb04B58e8F' as Address, /// USDT contract address
})

Now you can obtain balance whenever corresponding hook triggers, as something like this:

useEffect(() => {
if (useBalanceResult) {
console.log(useBalanceResult.data);
if (useBalanceResult.data?.value)
setcurrentUSDTbalance(Number(formatUnits(useBalanceResult.data?.value!, 6)));
}
}, [useBalanceResult]);

The next point is to make crypto transfer. To do this, in the app/page.tsx file we define the function const FunctionSend = async () => {…}

Within this function,

a) define ABI:

const abi = [{type: 'function',name: 'approve',stateMutability: 'nonpayable',inputs: [{ name: 'spender', type: 'address' },{ name: 'amount', type: 'uint256' },],
outputs: [{ type: 'bool' }],
},
{
type: 'function',
name: 'transferFrom',
stateMutability: 'nonpayable',
inputs: [
{ name: '_from', type: 'address' },
{ name: '_to', type: 'address' },
{ name: 'amount', type: 'uint256' },
],
outputs: [{ type: 'bool' }],
},
]

This is a description of the input parameters and names of functions of the smart-contract of ERC20 token. These functions we will call.

b) Call the ‘approve’ function of smart-contract of ERC20 token to obtain the consent of the wallet owner to make a transaction for the specified amount:

let trxId = await writeContractAsync({
abi,
address: '0xc2132D05D31c914a87C6611C10748AEb04B58e8F', /// USDT contract address 
functionName: 'approve',
args: [
address,
parseUnits(selectedAmount, 6),],
chainId: chainId,
});

The point is that you cannot immediately call the transfer function. Preliminary, you need to obtain explicit approval from the sender to debit a given number of tokens. Without receiving such an approval to debit tokens, the transaction will fail with an error.

c) Call the function ‘transferFrom’ of smart-contract of ERC20 token to make the transfer

trxId = await writeContractAsync({
abi,
address: '0xc2132D05D31c914a87C6611C10748AEb04B58e8F', /// USDT contract address 
functionName: 'transferFrom',
args: [
address as Address, // => address FROM,
process.env.RECEPIENT_ADDRESS, // => address TO,
parseUnits(selectedAmount, 6),],
chainId: chainId,
});

d) And after that, we need to wait until the transaction is successfully included in the next block. To do this, we use two hooks:

const TransactionReceipt = useWaitForTransactionReceipt({
hash: paymentTrxnId as Address,
})

This hook waits for a receipt, which will be received only when the transaction is included in the block. Or when an error occurs that prevents this event from happening. The logic runs every time the state of the paymentTrxnId variable changes. This variable stores the ID of the transaction that was initiated by the ‘transferFrom’ function call. In other words, when we receive the payment transaction ID as a result of calling the ‘transferFrom’ function.

It will take some time, after changing the payment transaction ID, before the “useWaitForTransactionReceipt” hook returns a response. Therefore, another hook is required to track when the response is returned and execute the actions we need on this event (for example, display the transaction result to the user):

// This useEffect triggers only when TransactionReceipt changes value
useEffect(() => {
console.log('TransactionReceipt is');
console.log(TransactionReceipt);

if (TransactionReceipt) {
if (TransactionReceipt.data && (TransactionReceipt.status === 'success')) {
if (TransactionReceipt.data.transactionHash === (paymentTrxnId as Address)) {
console.log('Transaction ' + paymentTrxnId + ' was successfull');

// clear triggering transaction_id. 
setpaymentTrxnId('');

}
}
}
}, [TransactionReceipt])

That’s literally all. This logic will allow you to programmatically transfer a given amount of ERC20 tokens from one crypto wallet to another using the Wagmi API.

The code for this project is available here on GitHub:

https://github.com/HarmonyMind/nextjscryptopaymentapp?source=post_page-----b592c9fffe39--------------------------------

***

Conclusion

In conclusion, this article extends the prior discussion on integrating a web3 application frontend built with NextJS, RainbowKit, and Wagmi with a test private blockchain network. It provides a comprehensive guide on how to retrieve wallet balances in ERC20 tokens and facilitate token transfers between wallets.

Starting with an introduction to the essential technologies, the article walks through setting up a basic NextJS application and configuring it with RainbowKit, Wagmi, and Viem for blockchain interactions. Detailed steps include installing necessary packages, setting up a global provider for configuration, and creating a private blockchain network using BuildBear.

The article proceeds to implement a user interface for connecting a crypto wallet, displaying wallet information, and initiating ERC20 token transfers. It emphasizes using Wagmi hooks for managing wallet balances and transaction states, showcasing the practical application of TypeScript and React components to handle asynchronous blockchain operations.

By following this guide, developers can build a functional web3 application capable of managing ERC20 tokens, highlighting the seamless integration of modern web development frameworks with blockchain technology.

The project code is available on GitHub for reference and further exploration.

***

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Introduction

Today, web3 provides retail investors with ample opportunities to invest in cryptocurrency with an eye to receiving a substantial reward due to the growth in the value of this cryptocurrency.

Among the variety of cryptocurrencies, tokens of leading blockchain platforms are the optimal choice for long-term investment in cryptocurrency, based on a number of factors:

• Leading blockchain platforms like have well-established technologies and networks. These platforms have been around for several years, proving their stability and reliability.

• Platforms like Ethereum support a wide range of use cases beyond simple currency transactions. They enable the creation of smart contracts, decentralized applications (DApps), decentralized finance (DeFi) protocols, non-fungible tokens (NFTs), and more. This diversification of use cases increases the utility and value of the platform’s native token. In a word, they provide the very environment on which decentralized applications run.

• Tokens of leading blockchain platforms typically have high liquidity, meaning they can be easily bought or sold on various exchanges. High liquidity reduces price volatility and allows investors to enter or exit positions without significant slippage.

• Tokens of leading blockchain platforms are a good choice for long-term cryptocurrency investing because they provide volatility hedging mechanisms in the form of staking. Staking rewards typically offer stable and predictable returns compared to other forms of cryptocurrency investment. Staking allows cryptocurrency holders to earn passive income by participating in the network’s consensus mechanism. Instead of relying solely on price appreciation, stakers earn rewards for helping to secure the network.

However, we must not forget about the trivial Sturgeon’s law (or Sturgeon’s revelation). In accordance with this law,

most existing and launched blockchain platforms today will lose the battle for the audience and cease to exist.

There will be literally a few leading blockchain platforms that have proven their unique usefulness over time.

Therefore, it is very important not to succumb to marketing pressure, the frequency of mentions of cryptocurrency on social networks, the mind-blowing increase in the price of the token, and the like. Before making a long-term investment decision, it is important to monitor the dynamics of the “health” of the blockchain platform.

In this context, it is fundamentally important to gain insights into wallet activity, transaction volume and other on-chain metrics. This practice is called On-Chain Analysis. And when it comes to long-term blockchain investments, it seems to be more suitable than other techniques. Because in long term perspective, these metrics are less influenceable by market sentiments and speculators pressure. In the blockchain world, On-Chain metrics are a kind of real sector of the economy. From this perspective, if this real sector grows, then the economy of the blockchain project will grow. It has sense, hasn’t it?

Today we will try to figure out with assistance of On-Chain Metrics provided by https://blockchainmetrics.online which token from pair ARB and MATIC currently looks more attractive from the point of view of the long-term blockchain investment.

Arbitrum and Polygon are two leading L2 scaling-solution blockchains for Ethereum, undisputed authority in the industry. Based on observation, other L2 scaling-solutions for Ethereum are still lagging behind in the race for adoption and influence.

Both platforms host a rich ecosystem of decentralized applications.

In addition, thanks to the latest Dencun upgrade on Ethereum, transaction costs for conducting transactions have decreased globally on both platforms. Judging by the latest statistics (for May), the average transaction fee on both Arbitrum and Polygon is already noticeably lower than that of Solana, which has been the leader in this indicator for a very long time. This change in April significantly increased the accessibility of these platforms specifically for retail investors, giving a powerful impetus to the development of these blockchains.

Taking into account the ongoing price adjustment in the crypto market after the bullrun at the beginning of the year, it’s time to take a closer look at promising blockchain platforms. And Arbitrum with Polygon is just such a case.

Brief overview of Arbitrum (ARB) and Polygon (MATIC) tokens.

ARB
Arbitrum is L2 expansion rollup (Optimistic Rollup) for Ethereum blockchain. It is a Layer 2 solution for the Ethereum blockchain, designed to improve the speed of transactions, increase scalability, and boost the network’s privacy. It allows users to perform transactions off the main network and has them verified and batched before being committed back to the main chain.
Whitepaper:https://github.com/OffchainLabs/nitro/blob/master/docs/Nitro-whitepaper.pdf
Consensus: Optimistic Rollup L2
Offifcal site: https://arbitrum.io
Scanners: https://arbiscan.io
GitHub: https://github.com/OffchainLabs/arbitrum

MATIC
Polygon is a Layer 2 scaling solution platform for Ethereum scaling and infrastructure development. Its core component is Polygon SDK, a modular, flexible framework that supports building multiple types of applications. Polygon allows developers to each launch their own custom Ethereum-compatible blockchain in a single click. Using Polygon, one can create optimistic rollup chains, ZK rollup chains, standalone chains or any other kind of infra required by the developer. Polygon’s mission is to leverage the Polygon network in order to create infrastructure that can handle the mass adoption of Ethereum.
Whitepaper: https://polygon.technology/papers/pol-whitepaper
Consensus: roof-of-stake (PoS), Plasma PoS
Offifcal site: https://polygon.technology
Scanners: https://polygonscan.com
GitHub: https://github.com/maticnetwork

Active Wallets Trend

Let’s begin from assessment of active wallets trend.

ARB
According to our data, the number of active wallets has increased by 43.66% in April compared to 31.19% in March and 0.33% in February. This indicates a clear upward trend. The total growth within 3 months from 161904 to current 305145 has 88.47%

Current value = 305 145 DAW / month
Growth within three months = 88.47%

MATIC
The average daily active wallets on the Polygon network have continued their upward trajectory, increasing by 43.66% in April. This trend suggests that the network continues to gain popularity among users, and it remains to be seen whether this will continue in the coming months.

Current value = 1 084 910 DAW / month
Growth within three months = 32.82%

From the point of view of the user base in absolute numbers, Polygon certainly looks more solid. Over one million active wallets per day is an impressive achievement. However, from the point of view of the dynamics of development of the user base, Arbitrum is superior to Polygon. Almost three times. Our goal is precisely to identify a more promising platform in terms of development dynamics at the current time.

Transaction volume trend

ARB
The April total transactions metric on the Arbitrum network increased by 44.4% compared to the previous month. This indicates a positive trend in the activity on the network and suggests that the Arbitrum platform continues to gain popularity among users. And if we consider a three-month horizon, then since February this figure has increased from 22886306 to the current 50195659 transactions per month. This is an increase of 119.32%.

Current value = 5 0195 659 / month
Growth within three months = 119.32%

MATIC
April saw a decrease of 8.95% in the total transactions on the Polygon network. This may be a result of various factors. And over three months, the growth of this indicator amounted to a symbolic 4.6%. However, this does not mean that the network is underperforming. We should keep an eye on this metric as it may provide valuable insights into the network’s health and performance.

Current value = 125 276 570 / month
Growth within three months = 4.6%

Undoubtedly, the growth dynamics of transaction volumes in this period on the Arbitrum blockchain are significantly better than the growth dynamics on the Polygon blockchain.

Transactions total fees trend

ARB
During the last month, total fees on the Arbitrum network have increased by 27.87%. The total change over the past three months is 58.52%. This is a notable trend that merits attention and further investigation. It is related to the increasing popularity of Arbitrum and the broader adoption of DeFi ecosystem.

Current value = 7382.5279 ETH / month
Growth within three months = 107.1%

MATIC
In terms of the “total fees” metric for the Polygon network, the latest data shows an increase of 10.34% in April compared to March, when there was a significant 37.2% increase. In February, the metric increased by 20.13% compared to the previous month. This demonstrates a clear upward trend in total fees over the last three months.

Current value = 3277724.7653 MATIC / month
Growth within three months = 51.38%

According to the “total fees” metric, Arbitrum is twice as superior as Polygon. The dynamics of development of the “total fees” metric in the current period of time is fascinating.

Cost per transaction trend, in fiat

Fees growth in native tokens is good, because it fosters incentive of the community and validators to participate in the development of the platform. But from the point of view of the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.

ARB
Over the past month, the average transaction cost on the Arbitrum platform in fiat was $0.4747. And this is 2.53% less than in the previous period. However, in February this figure was $0.438. Taking this into account, so far we have observed extremely negative dynamics in terms of transaction costs for end users.

Current value = $0.4747
Growth within three months = 8.37%

MATIC
In April, Polygon experienced a 12.83% decrease in average fee in USD. It is likely that it was influenced by several factors, such as changes in the market, and improvements in the scalability of the network. But in is worth noting that in February this indicator was $0.0167 only. Which means that during three months period end user of the platforms had to experience growth of transaction expenditures by 20.95%.

Current value = $0.0202
Growth within three months = 20.95%

Of course, from the point of view of absolute values, it may seem that Polygon has surpassed Arbitrum in this metric. Indeed, it is better to pay $0.0202 per transaction than $0.4747. But if we evaluate the change in the additional load on platform users, then Arbitrum users began to pay more by 8.37% over three months, while Polygon users by almost 21%. And here it is already clear that in this indicator too, the development dynamics of Arbitrum looks preferable.

dApps ecosystem

ARB
We are observing a decrease in the total value locked (TVL) in dApps on the Arbitrum network for the month of April. The decrease is approximately -5.06% compared to the previous month. However, if to evaluate the three months horizon, that Arbitrum can even showcase a modest growth of 0.4%.

Current value = $188b
Growth within three months = 0.4%

MATIC
The TVL of the Arbitrum platform application ecosystem at the end of April was $37 770 240 667 and this is -27.49% worse than the value a month earlier. And in three months the figure completely decreased from $49 721 082 470, that is, by 24%.

Current value = $37.7bGrowth within three months = -24%

Currently, a serious drawback of the Arbitrum platform is the limited focus of the leading decentralized applications on this platform exclusively on the DeFi sector. In this regard, Polygon developers are paying much more attention to the development of a diverse landscape of decentralized applications. However, from the point of view of both absolute numbers and development dynamics for a specific period, the development dynamics of the Arbitrum application ecosystem are better.

Conclusion

Summary of key findings from the comparison of ARB and MATIC tokens.

The diagram clearly shows that from the point of view of on-chain metrics, the latest dynamics of development of the Arbitrum blockchain platform look much more preferable than the Polygon platform. Of course, this does not mean at the same time that Polygon’s development dynamics are bad. Or that the Polygon platform has poor prospects. The main conclusion from this analysis that a thoughtful observer should take away is that the Arbitrum developers competently manage the development of this blockchain, and it is no coincidence that it is currently the leader among other L2 solutions for Ethereum, as well as the fact that in the near future Arbitrum does not intend to lose its current high positions in the ranking of top dApps blockchains.

***

Implications of the analysis for investors considering investment in either token.

I further recommend thoughtful readers to conduct additional research on the ARB token using Technical Analysis, Sentiment Analysis or Economic Indicators analysis in order to assess the potential growth range of the ARB token and possible strategies. HOWEVER, please keep in mind that the content of this article is meant purely for entertainment and informational purposes only, and should not be relied upon as financial, investment or any other professional or other advice. Please, mind that the content and information herein is given not to induce or to attempt to induce anyone to buy, sell or hold any token.

***

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Below is presented the Latest analytics on Solana blockchain for April 2024.

Visit blockchainmetrics.online for more analytical materials.

***

Solana (SOL) — based on the results of April 2024 Solana takes 4 place in the ranking of leading blockchain platforms, based on the sum of key indicators. These key indicators are presented below.

These key indicators are presented in the infographic:

(1) dApps ecosystem TVL.

This metric indicates how developed the ecosystem of decentralized applications on this blockchain is and how valuable this ecosystem expressed in fiat money. And although, of course, changes in the metric are still in most cases a reflection of speculative sentiments, stable growth over a long period of this metric indicates the growing broad adoption of the blockchain.

We are observing a decline in the total value locked (TVL) in decentralized applications (dApps) on the Solana network as of April. This decline is -14.8% compared to the previous month. This may be a result of various factors, such as market conditions, technological advancements, or regulatory changes. It is important to monitor the situation and gather data to better understand the cause of the change.

This is a negative signal, for which Solana in April 2024 has gained -1 points of the platform development dynamics index.

(2) Average number of daily active wallets.

This is an absolute customer metric. This metric directly indicates whether more and more people are using the platform or, conversely, whether the platform is experiencing an outflow of real active users.

Speaking of the change in the average daily active wallets metric for the Solana blockchain, it is worth noting that in April of this year, there was a decrease of -9.22% compared to the previous month. It is important to keep an eye on this metric as it can be a sign of market trends or changes in user behavior. We will continue to closely monitor this metric and provide updates.This is a negative signal, for which Solana in April 2024 receives -1 points of the platform development dynamics index.

(3) Transaction volume.

This is another customer activity metric. This metric shows how actively existing users are utilizing the platform. Which is also an indicator that speaks about the current model of use of the platform, how often on average one active wallet makes transactions. An increase in transaction activity is always good, but a decrease indicates negative trends.

During the last month, the total transactions on the Solana network have increased by 4.32% compared to the previous month. This upward trend is a positive indicator for the health and activity of the network. It indicates that the Solana blockchain is experiencing growth and development. However, it is important to note that this metric is influenced by various factors, and its interpretation requires careful analysis.

This is a positive signal, for which Solana in April 2024 receives +1 points of the platform development dynamics index

(4) Fees & average transaction fee, in native token

For every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. On the one hand, high fees hinder user activity. On the other hand, high fees secures high income for the platform and high rewards for validators. This fosters the development of the platform. The total fees & avg transaction fee, in native token, metrics are tightly related. They may differ in value, but always have the same direction. If the average fee in native tokens increases, then the total volume of platform fees also increases. And vice versa. If fees in native tokens increase, this is a good signal for the development of the platform. These are direct incomes of the platform and platform validators. The higher this value, the more interesting it is for the community to develop this platform. It is important for you, as a consumer of the services of this blockchain (whether it is the active use of decentralized applications or simply investing in a blockchain token), to see that income is growing. However, it is important to maintain a balance so that the growth of fees remains within reasonable limits.

Unlikely that the recent 24.79% decrease in total fees on the Solana network is a one-off event. This drop in fees could be an indicator of a more significant shift in the network’s dynamics, and it warrants further investigation. It is important for the community to monitor the situation and potentially explore potential solutions to address any underlying issues that may be causing this shift.

This is a negative signal, for which Solana in April 2024 receives -1 points of the platform development dynamics index.

(5) Average transaction fee, USD

As we noted above, for every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. And we also noted that the fees growth in native tokens is good, because it fosters incentive of the community and validators to participate in the development of the platform. But from the point of view of the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.

For Solana blockchain, this month turns out to be quite unusual. According to the latest reports, the average fee in USD has dropped by 33.75% compared to the previous month. This change is certainly worth noting and evaluating. It is clear that the dynamics of the network activity and the market conditions have played a significant role.This is a good incentive for the platform’s daily users. And here, we can assign Solana 1 points of platform development dynamics index in April 2024.

(6) Number of validators

The more validators, the more decentralized the blockchain is. An increase in the number of validators foster the reliability and stability of the platform. Moreover, Overall, while increasing the number of network validators may not directly correlate with transaction costs, it has the potential to impact network dynamics in ways that the increase of validators might alleviate pricing pressures due to high demand on block space and improve overall network performance. Therefore, it is extremely important for ordinary users to see that the number of blockchain validators is growing steadily.

In April, the active validators metric for the Solana blockchain changed by 1.63% compared to the previous month. This indicates a healthy network activity and suggests that the validator count remains stable. It is reassuring to see that the network continues to function as expected.

This is a positive signal, for which Solana in April 2024 receives +1 points of the platform development dynamics index.

(7) Number of decentralized applications

The more developed a blockchain has an ecosystem of decentralized applications that offers users a wide range of opportunities that go beyond simple peer-to-peer transactions or currency exchange, the more users make daily transactions on this blockchain. This in turn increases the income of the blockchain and validators and contributes to the further development of the blockchain. Therefore, from the point of view For an outside observer, seeing that the number of decentralized applications is constantly increasing is a positive signal, suggesting an inevitable increase in active wallets and transaction volume.

As we can see in the picture, the number of valuable dApps on the platform during April, 2024 increased by 20.05%:

We are observing a positive trend in the dApps ecosystem development on the Solana blockchain over the last three months. This metric has increased by 28.66% in March, 46.71% in February, and 40.31% in April compared to January. This indicates a steady growth in the popularity and performance of projects on this blockchain network. It is encouraging to see that the ecosystem is developing and attracting more attention from developers and users alike..This is a strong positive signal, for which Solana in April 2024 receives +2 points of the platform development dynamics index.

(8) Diversity of decentralized applications

It is no secret that the DeFi sector currently dominates the blockchain industry.

A developed ecosystem of decentralized applications, not limited to just one DeFi sector, with a high degree of diversity attracts users with diverse interests. If applications from other categories appear among the leading decentralized applications by metrics for the month, this indicates that the platform is finding other niches and attracting not only traders. In current realities, this is an important indicator of blockchain development.

Among leading dApps on Solana, only dApps of the DeFi category dominate. These applications offer a wide range of decentralized financial services, including lending, borrowing, trading and yield farming, among others. But it is worth mention that lack of diversity in use cases can limit the long-term growth and sustainability of the platform. To date, Solana has done little to diversify its dApps ecosystem. So, no points for this metric Solana receives. 0 points.

(9) Unexplained anomalies

Sometimes when watching over at the metrics and statistics of blockchains and dApps, you come across the fact that a particular indicator may inexplicably experience a sharp increase, and then an equally sharp and illogical drop to the previous level. An example of such a situation is a multiple increase in active wallets without a noticeable increase in transaction activity within a single month.

This indicates manipulation with indicators. This means that something is not going as expected with blockchain. The purpose of such manipulations is different, but this is a bad signal for ordinary users.

No unexplained manipulations with metrics were recorded on the Solana blockchain in April 2024. Therefore, Solana blockchain does not receive a penalty point for this metric. 0 points.

Summary report

The maximum possible score for a blockchain can be 7 * 2 + 1 = 15 pointsThe minimum possible score for a blockchain can be 7 * (- 2) — 1 = — 15 points

Total platform development dynamics index for Solana in April 2024 is 2.

To sum everything up, from all these observations, several positive and negative signals can be identified for all those interested regarding the evolving track of the Solana blockchain:

Positive signals:

1. Increase in Number of Decentralized Applications (dApps)

The number of valuable dApps on the Solana platform increased by 20.05% in April 2024. A growing number of dApps indicates a vibrant ecosystem, offering users various opportunities and services. This diversity attracts more users and increases overall platform activity. Users can expect more choices and functionalities within the Solana ecosystem, enhancing their experience and encouraging more usage.

Negative signals:

1. Drop in Transaction Fees (in native token)

Total fees in native tokens decreased by 24.79% in April 2024. While lower transaction fees benefit users directly, a significant drop might indicate underlying issues in the platform’s economics or user activity. It could potentially affect the platform’s revenue and sustainability.

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Introduction

This material is a continuation of the work done within the article

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/CW22PBY6IAsd9_RKvQSLlOvtNZqC8h6-S9VqgSSXf_E

Let remind you that within that item, we explored the challenges of testing decentralized applications (DApps) on blockchain platforms and introduced BuildBear as a solution. We discussed the complexities involved in interacting with blockchain networks, managing data, smart contracts, and test wallets. BuildBear offers streamlined solutions such as fast cloud Sandbox creation, scalable resources, and easy test wallet management. With an intuitive interface and free access, BuildBear simplifies the testing process for developers.

During this article we will use the results of the settings made the last time and see how easy it is to connect your web3 application frontend to work with a test private blockchain network.

Before we begin, let’s take a look at the building primitives we’re going to use.

This example will use the following technology stack.

TypeScript — is a free and open-source high-level programming language developed by Microsoft that adds static typing with optional type annotations to JavaScript. TypeScript is a language extension that adds features to ECMAScript 6. It helps developers to make code more readable and maintainable.

ReactJS — is an open-source front-end JavaScript library for building user interfaces based on components. It is maintained by Meta (formerly Facebook) and a community of individual developers and companies. Currently, according to the official documentation, it is not recommended to start new projects on pure React.js without React-powered frameworks.

NextJS — is an open-source a flexible framework on a top of ReactJS with server-side rendering and static website generation. Official React documentation mentions Next.js as the first among “Recommended frameworks”

Wagmi — is a library, consisting of a collection of 40+ React Hooks. It provides developers with intuitive building blocks to build their web3 ReactJS apps and significantly simplifies implementation of app logic related with typical operations with wallets, transactions, smart-contracts, etc.

Viem — is full-featured lightweight library for interacting with EVM chains. It is a TypeScript Interface that provides low-level stateless primitives for interacting with EVM-based blockchains. It is an alternative to ethers.js and web3.js with a focus on reliability, efficiency, and excellent developer experience.

RainbowKit — is a React library that makes it easy to add wallet connection to your dApp. Aside from handling the connection and disconnection of wallets, RainbowKit supports numerous wallets, swaps connection chains, resolves address to ENS, displays balance and much more!

***

Great! Let’s get started. First, let’s create a skeleton of our application based on NextJS. To do this you need to run the command:

npx create-next-app@latest

This starts installer.

We don’t need ESLint, TailwindCSS for this example. So disable them for this example. This is how you need to answer the installer’s questions:

After creating the application skeleton, go to the folder of the created project:

cd nextjsweb3app

And launch the application:

npm run dev

If you open the link http://localhost:3000/ in the browser, the default nextJS welcome page should be displayed.

Now let’s clean up a bit of the code that created the installation package for us.

To do this, go-ahead, following the recommendations on the main page to edit the file app/page.tsx. You should remove everything inside the Home function so that the Home function returns the following content:

export default function Home() {
  return (
    <main className={styles.main}>
        <div className={styles.center}>
             NextJS Web3 application
       </div>
   </main>   
  );

Build a project for just in case and check that these edits did not break anything…

Next we need to install the rainbowkit/wagmi/viem packages.

To do this, go to the RainbowKit website https://www.rainbowkit.com/docs/installation and in the Manual Installation section, copy the installation command:

npm install @rainbow-me/rainbowkit wagmi viem @tanstack/react-query

Please note that RainbowKit has a command to create a project from scratch based on its own application template, but it seems that a more frequent and relevant case is when rainbowkit/wagmi/viem is connected to an existing project. Therefore, we will not use this option.

It is also worth noting that React/nodeJS are known for their regular issues with installing libraries due to dependency version conflicts. Since we are working with several frameworks at once (nextJS, rainbowkit, wagmi..) that use the same dependent libraries, there is a high probability that some version conflict may appear, so it is recommended to install with the legacy-peer-deps flag. And that’s exactly why a certain version of RainbowKit is used for this example. The RainbowKit API changes quite dynamically and, for other versions, the code presented here may simply not be compiled. You can try it in respect of your own curious.

Execute the command to install the libraries rainbowkit/wagmi/viem in the project’s folder:

npm install @rainbow-me/rainbowkit@2.0.5 wagmi viem@2.x @tanstack/react-query --legacy-peer-deps.

Before you start changing the code, you need to follow the recommendations from here https://github.com/rainbow-me/rainbowkit/blob/main/examples/with-next-app/next.config.js, and change next.config.js:

/** @type {import('next').NextConfig} */
const nextConfig = {
reactStrictMode: true,
webpack: config => {
config.externals.push('pino-pretty', 'lokijs', 'encoding');
return config;
},
};

export default nextConfig;

Now, after the necessary libraries are installed, we can proceed to writing the code that connects the crypto-wallet to our nextJS application.

In the app/page.tsx file, you MUST specify that this is client code and rendering must occur in the browser (by default, NextJS component rendering occurs on the server):

'use client'

After that, add the dependencies we need:

import '@rainbow-me/rainbowkit/styles.css';

import {
WalletList,
RainbowKitProvider,
getDefaultConfig,
Chain,
ConnectButton,
} from '@rainbow-me/rainbowkit';


import { metaMaskWallet, trustWallet, uniswapWallet, walletConnectWallet } from '@rainbow-me/rainbowkit/wallets';
import { WagmiProvider } from 'wagmi';
import {
polygon,
polygonAmoy,
} from 'wagmi/chains';

import { QueryClientProvider, QueryClient, } from "@tanstack/react-query";

Define a client object to be passed to the QueryClientProvider component:

const queryClient = new QueryClient();

Now let’s define the parameters of our private test blockchain network in the configuration in order to work with this network in our web3 application. This can be done by simply copying them from Dashboad BuildBear. For this, return to the Dashboad page of our private Cloud Sandbox on BuildBear.io, created in the last article, click on the “</> Snippets” button, select the Wagmi section and copy the contents:

Paste the code into the page.tsx file

The only thing that is not required is this block of code, which BuildBear generates by default (at least at the time of writing this instruction):

const { chains, publicClient, webSocketPublicClient } = configureChains(
[bbtestnet],
[
jsonRpcProvider({
rpc: (chain) => (
http: "https://rpc.buildbear.io/mushy-quicksilver-xxxxxxxx",
}),
}),
]
);

It needs to be removed. Most likely the thing is that the rainbowkit/wagmi/viem library is developing too fast and, most likely, BuildBear simply did not catch up to adjust the template yet.

We are going also slightly improve the visual presentation of our custom network in the crypto wallet by adding an icon:

const bbtestnet = {
id: 16898,
name: "mushy-quicksilver-хххххххх",
//network: "bbtestnet", !!! it is not needed 
iconUrl: 'https://blockchainmetrics.online/img/block-chain.svg', // add network icon
iconBackground: '#fff', // add icon background

…
}

Next, we will define a list of crypto wallets that we will support in our web3 application:

const _walletList: WalletList = [
{
groupName: 'Recommended',
wallets: [metaMaskWallet, trustWallet, uniswapWallet, walletConnectWallet],
},
];

Let’s set a list of blockchain networks that our web3 application will support. For now it will be a set of our test network, Polygon Mainnet and Polygon Amoy test chain:

const _chains: readonly [Chain, ...Chain[]] = [bbtestnet, polygon, polygonAmoy,];

After this, let’s create a configuration object for Wagmi:

const config = getDefaultConfig({
appName: 'nexnjsweb3app',
projectId: 'YOUR_PROJECT_ID',
wallets: _walletList,
chains: _chains,
ssr: false,
});

Now all that remains is to add to the home page of our application crypto wallet connect button. To do this, change the Home function in the app/page.tsx file as follows:

export default function Home() {
return (
<WagmiProvider config={config}>
<QueryClientProvider client={queryClient}>
<RainbowKitProvider>
<main className={styles.main}>
<div className={styles.center}>
<ConnectButton />
</div>
</main>
</RainbowKitProvider>
</QueryClientProvider>
</WagmiProvider>
);
}

That’s all. Now build and start the project again.

Please note that when selecting a network, our test private blockchain is displayed with the icon we specified in the configuration:

Confirm in Metamask the connection of the local application and changing the network to our test network and, as a result, you should see something like the following on the home page of our test NextJS web3 application:

Congratulations!

We have just made a web3 application, connecting it to the blockchain, from a regular nextJS application in a few lines of code. Your personal test cloud blockchain, forked from Polygon mainnet, created previously, is used as the blockchain. Isn’t it all very easy and fast? Absolutely nothing complicated. The only piece where you can lose a lot of time when connecting a crypto-wallet to your nextJS application using RainbowKit is dealing with node package dependencies, that is, due to various errors caused by version conflicts.

But that’s not all. The resulting code is intended only to demonstrate the necessary code and settings necessary to connect rainbowkit/wagmi/viem to a nextJS application and, therefore, the resulting test application is not very correct from the point of view of the recommended layout of nextJS components. In the next articles in this series about testing web3 applications on the BuildBear cloud infrastructure, we will reorganize our code and work out the following issues:

• how to get the wallet balance in native tokens,

• how to get the wallet balance for a given ERC20 token,

• how to transfer ERC20 tokens from one wallet to another.

And all these manipulations with wallets will occur from the web3 nextJS application on your cloud private blockchain network. You will be able to see the transaction results for your network directly in the BuildBear block explorer;

The code for this project is available here on GitHub:

https://github.com/HarmonyMind/nextjsweb3app

***

Conclusion

In this article, we explored the process of connecting a web3 application frontend to a test private blockchain network using RainbowKit, Wagmi, and Viem within a Next.js application. We began by setting up a Next.js project and installing necessary libraries, focusing on RainbowKit, Wagmi, and Viem.

We demonstrated how to configure RainbowKit to connect to a custom blockchain network, leveraging settings from a BuildBear Cloud Sandbox. By integrating RainbowKit’s wallet connection features, we enabled users to connect their preferred crypto wallets to the web3 application easily.

Our example project showcased a basic implementation, but we acknowledged its limitations in terms of code structure and functionality. Future articles in this series will delve deeper into optimizing the codebase and implementing additional features. We plan to cover retrieving wallet balances, handling ERC20 tokens, and facilitating token transfers between wallets, all within the context of our web3 Next.js application running on a private blockchain network.

The project code is available on GitHub for reference and further exploration.

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***

Introduction:

Web3 testing process or testing decentralized applications (Dapps) on blockchain platforms is a challenging endeavor, often entangled with complexities arising from the decentralized nature of these applications and the underlying blockchain technology. One of the primary challenges is interacting with the blockchain network itself. Deploying a DApp directly onto the mainnet can be costly, both in terms of resources and finances. On the other hand, setting up a local blockchain network for testing purposes can lead to headaches due to computational limitations and intricate configurations.

In this introductory guide, we’ll explore this unique challenges and how BuildBear, a DevTool designed for blockchain projects, offers a solution to simplify this process significantly.

***

Challenges in Testing DApps

Testing decentralized applications (DApps) on blockchain platforms presents several unique challenges due to the decentralized nature of these applications and the underlying blockchain technology. Firstly and mainly, testing DApps requires interacting with the blockchain network. You hardly decide to roll-out your dApp at a mainnet at once due to the high costs in all senses of this action. To launch network locally in the same time could end up with real headache because of the lack of computational power in conjunction with a complexity of the required settings.

Let’s overview some issues you can stumble upon with easy.

(1). For instance, blockchain applications often involve managing large amounts of data stored on the blockchain. Testing data-intensive operations such as querying, updating, or deleting data can be challenging, especially considering the immutability and transparency of blockchain data. Especially, when your locally deployed blockchain network suffers congestion.

(2). Further, DApps interact with one or multiple smart contracts. The complexity of smart contract logic, the intricacy of interaction procedures with them and the lack of traditional debugging tools can make this challenging. Especially, when your locally deployed blockchain doesn’t contain related smart-contracts, which your dApp needs. These smart-contracts do present on the mainnet, however were not copied for some reason.

(3). And of course, you will need a set of test wallets to simulate the interaction of different users with your decentralized application. But it’s not a trivial task. Each blockchain platform has its own procedures and tools for topping up test wallets. Faucets (a faucet, in the context of blockchain technology, is a service that provides users with small amounts of test tokens for free on blockchain testnets) often impose limits on the number of test tokens a user can request within a certain time frame to prevent abuse. Testers often need to try multiple faucets or wait for tokens to become available. All these add to the complexity of the process.

In essence, testing dApps is the process is less predictable and more confusing compared to traditional testing environments.

***

Introducing BuildBear: Streamlining DApp Testing

And here we can leverage from https://www.buildbear.io to ease this painful process.

BuildBear is a Cloud DevTool designed to ensure minimization of efforts, needed your blockchain based project becomes a production-ready. BuildBear offers a comprehensive solution to address the challenges encountered in testing Dapps.

This DevTool simplifies the process by:

1. Fast Creation of Cloud Sandbox: BuildBear enables quick creation of cloud Sandboxes, eliminating the need for complex local network setups. You can easily fork your testnet from major blockchain networks with just a few clicks.

2. Scalable Resources: BuildBear automatically scales computational resources to match your DApp’s requirements, ensuring optimal performance without the hassle of manual adjustments.

3. Test Wallet Management: BuildBear allows painless creation of multiple test accounts with sufficient balances, because BuildBear doesn’t restrict in any way distribution of Native or ERC20 tokens.

But let’s discover on the own, how easy to start using this DevTool for testing purposes.

***

Getting Started with BuildBear

To begin, you need just a Google account. The registration process takes literally a few seconds.

And now you can create your first sandbox.

We choose Polygon to fork from:

Then choose that we make fork from Mainnet:

Then, at the next screen, just confirm your selection and go-ahead. That’s all.

Now we can see at Dashboard our new personal test network forked from Polygon Mainnet:

It usually takes short to go alive state. And it is ready for usage.

The next task in setting up a local testing environment is to teach Metamask to work with this network. Just in case, a note about the fact that many prefer to use Metamask rather than other crypto wallets for debugging process, because Metamask is by far the most developed wallet in terms of working with test networks. Other crypto wallets have less weak support for both custom blockchain networks and custom ERC20 tokens on these networks, so with them testing and debugging, which are already difficult, become an almost impossible task.

After the network becomes active, you should see the following button on your Dashboard:

You have to click on it. After this, it will take a noticeable time (several long seconds) for the Metamask window to open, requesting a confirmation the addition of a new chain. Perhaps, it is worth mention that the wallet with which you log in to Metamask must exist on the Polygon mainnet (or blockchain on which you just created your private test network).

Confirm. Again, it takes some time to confirm adding the network to the wallet, but everything should end successfully.

If you had Matic (or another native token in a case of other chain) on this wallet on Polygon mainnet, then you should see these tokens on the balance of the wallet on the newly created test network.

Great! We have just connected Metamask to our private test chain, forked from Polygon, and now we need to top up our wallet balance. BuildBear has an Open Faucet button for this (on the main Dashboard screen). Click on it, and you will be taken to the token distribution form. Here we need to either manually enter the address of the wallet we want to top up in the input field or connect Metamask, and it will substitute the value:

Then we simply specify the amounts (in reasonable ranges, of course) and top up the wallet.

BuildBear warns nobly that MetaMask may not immediately display your updated balance. In any case, we should see our Native Tokens on the balance of the specified address wallet.

However, MetaMask does not display ERC20 tokens on test chains by default.

They must be set manually. And here’s how we’ll do it.

You need to click on the Import Tokens link in Metamask:

Then copy paste the contract address from the BuildBear Faucet screen into the Token contract address field:

And on the following screens, simply confirm the action.

As a result of these settings, you can now see on your test wallet balance the assets just credited from BuildBear Faucet that are available exclusively on your private test network:

Congratulations!

We have just, in a few simple steps, deployed our own private blockchain network based on the current state of Polygon mainnet, then connected this network to the Metamask crypto wallet and top-upped it with the required number of test Native and ERC20 tokens. Now we are fully ready to start interacting with our decentralized application on our test chain.

Isn’t it all very easy and fast? And what’s very attractive about this solution is that you don’t have to mess around with the intricacy of configuration files, because everything is done through an intuitive user interface. And besides, the big advantage of this solution is that you can start using it absolutely free. Isn’t it remarkable how BuildBear simplifies the otherwise intricate process of testing decentralized applications?

But that is not the all. In the next article we will use the results of the settings made and see how easy it is to connect your web3 application frontend to work with a test private blockchain network.

Conclusion

In summary, this article explored the challenges of testing decentralized applications (DApps) on blockchain platforms and introduced BuildBear as a solution. We discussed the complexities involved in interacting with blockchain networks, managing data, smart contracts, and test wallets. BuildBear offers streamlined solutions such as fast cloud Sandbox creation, scalable resources, and easy test wallet management. With an intuitive interface and free access, BuildBear simplifies the testing process for developers. In the next article, we’ll further explore how to leverage BuildBear for web3 application development.

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***

Introduction

This item continues a series of articles “cryptocurrencies for beginners”. Or it’s better to say, “cryptocurrencies for regular people, not crypto geeks”. In particular, this article is a development of the idea of how an ordinary retail investor can solve the problem of protecting savings from inflation with minimal risks(in context of the risks for the crypto industry). The first article covering this issue was published some time ago, and in it we looked at what instruments are available to solve this problem on the Arbitrum platform. You can refresh your memory about this article at the following link:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/31JrlixV5wiynuScrWCwLB8OIosxXaiaRE98EMZoTsQ

In this article, we will continue to look at this problem. But this time for a different blockchain. Some of the materials from the first article will be duplicated in this one. This is done in order not to lose the perception of the completeness of the whole picture. First, let’s start from the thesis that not all of the current crypto investors can and want to be active traders or actively manage a portfolio of cryptocurrencies (although I will assume that now the majority are exactly active participants).

And as before, I will try to tell you how a regular person can solve the following trending issues using cryptocurrency financial instruments:

• protect yourself from inflation,
• keep savings and
• make passive income.

But this time we consider Polygon (MATIC) blockchain.

Let’s get started…

***

The portrait of a retail investor I’ll start the document the same way as in the previous article with a description of the portrait of a regular retail investor

What unites us all?

1. We don’t want to spend a lot of time on crypto.

Oh, my Lord, this is not a hobby or a job. It’s just savings. He/She deposited and forgot about it. Well, maybe once a month He/She takes a look at how much interest had accrued and switched to another product where more interest accrues at a moment… It’s just that there is no enthusiasm to comprehend in details what Yield farming, Staking, Liquid pools, Liquid staking, Leverage lending, Synthetics, Yield aggregators are … I don’t want to study technical indicators of blockchains, know what consensus mechanisms exist, analyze on-chain metrics and spend a lot of time analyzing literally thousands of DeFi proposals. Why do I need to know all this? I am not going to be an active cryptocurrency portfolio manager.

1. We operate with small amounts.

Firstly, we understand that cryptocurrencies carry a fairly high degree of risk. And these risks are primarily due to unclear counties governments policies towards the crypto industry and the lack of legislative and legal practice in this sector around the world. Therefore, no one will definitely invest their last savings in cryptocurrency.

Secondly, we simply do not possess significant financial resources. Our cryptocurrency investment budget is limited to amounts ranging from several hundred to several thousand US dollars.

1. We want a stable level of passive income that exceeds the inflation rate

My initial issue is that I want to deposit my several hundred to several thousand US dollars in some financial product and then forget about it for a while. The purpose of this step is at least to keep my savings and protect myself from inflation, at most to earn extra money passively. An ordinary person simply needs a stable level of income that exceeds the level of inflation, without significant volatility of the financial instrument used, and so that at any time he can withdraw his funds as if from a bank and convert them back into fiat currency.

These are the simple requirements from us, ordinary retail investors.

***

Finding appropriate options to meet these requirements on Polygon.

Let’s remember that we need to start the journey by choosing the blockchain that suits us.

Based on the requirement to minimize risk in favor of the respect of the stable though modest growth, we need a stable blockchain platform with a developed ecosystem of decentralized applications. And also, we should consider blockchains with an average transaction fee of no more than $0.1:

Currently, 6 blockchain platforms meet our requirements. They are highlighted in green. But this time let’s focus on the Polygon blockchain.

Our requirements regarding the absence of volatility and APR, which is significantly higher than the inflation rate expressed in US dollars, are met by a financial instrument “stablecoin lending”.

Now we need DeFi applications that provide such an instrument.

Leading DeFi applications that provide stablecoin lendings on the Polygon platform can be viewed here:

https://defillama.com/protocols/Lending/Polygon

To avoid unnecessary risks, it is better to focus on large players operating on several blockchains with a significant amount of TVL. These currently on the Polygon platform include:

AAVE (https://app.aave.com)

COMPOUND (https://app.compound.finance)

TimeSwap (https://app.timeswap.io/markets)

The Compound and AAVE protocols are already familiar to us from the previous review of passive income opportunities on the Arbitrum platform. TimeSwap is new. We did not consider TimeSwap last time, although it is also presented on the Arbitrum platform. However, this protocol unfortunately does not provide to clients to place funds in stablecoin pools or stablecoins lending options on Polygon platform. So, in our zone of interest this protocol doesn’t get.

Thus, today a retail investor on the Polygon platform will be able to place his conditional $300 on the following conditions, which meet his base need (these rates were relevant at the time of writing this article and may change significantly at the time of reading):

One glance at this table is enough to understand that the Polygon platform provides much less choice and much less tasty rates than the DeFi ecosystem on the Arbitrum platform. Nevertheless, here we see quite interesting rates as well, that allow us to solve the issue of passive income (albeit, of course, modest), as well as protecting savings from inflation.

I suggest you make your own comparison of the proposed lending options on both platforms, using the links from both of my articles.

Let me also remind you that another cryptocurrency instrument that meets the initial requirements of an ordinary retail investor who is looking for ways to protect their savings from inflation is stablecoins liquidity pools. However, the level of knowledge required to start investing in this product is already significantly higher than the knowledge required to invest in stablecoin lendings. Firstly, you need to understand how liquidity pools work and what conversion range to set for specific cryptocurrencies for a specific period of time. If the settings for the liquidity pool are set incorrectly, you simply will not earn anything, you will only lose on transactions fees. However, in a case of stablecoins liquidity pools, you definitely won’t lose due to significant fluctuations in the cryptocurrency rates.

Again, solely for the purpose of comparing rates with landing rates, let’s see what the leading on the Polygon platform decentralized crypto exchange Quickswap DEX (https://quickswap.exchange) offers in terms of stablecoins liquidity pools to deposit funds. At the time of writing this article, the estimated yield on stablecoins liquidity pools is as follows (these yield rates were relevant at the time of writing this article and may change significantly at the time of reading):

Despite the fact that the number of interesting options for placing free funds in stablecoins liquidity pools here is much less than in the case of Uniswap on the Arbitrum platform, we again see quite attractive conditions that meet our needs as retail investors looking for stable, non-volatile saving instruments.

Conclusion

In conclusion, let’s recap, that in this article was examined:

1. The profile of a retail investor, emphasizing their preference for simplicity, minimal time commitment, and limited investment amounts.

2. The criteria for choosing a blockchain platform, focusing on stability, developed ecosystems, and low transaction fees.

3. The availability of stablecoin lending options on the Polygon blockchain, including protocols like AAVE and Compound.

To summarize, for retail investors seeking to protect their savings from inflation with minimal risk exposure in the crypto industry, the Polygon (MATIC) blockchain offers practival options. Despite a more limited selection compared to Arbitrum, Polygon provides opportunities for passive income and stable savings as well. Stablecoin lending through protocols like AAVE and COMPOUND, along with stablecoin liquidity pools on Quickswap DEX, meet the basic requirements of stability and growth. To determine the most suitable option, investors are encouraged to compare rates between platforms using provided links and consider their risk tolerance and investment goals.

HOWEVER, please keep in mind that the content of this article is meant purely for entertainment and informational purposes only, and should not be relied upon as financial, investment or any other professional or other advice. Please, mind that the content and information herein is given not to induce or to attempt to induce anyone to buy, sell or hold any cryptocurrency or carry out any other transactions with cryptocurrencies.

***

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Below is presented the Latest analytics on Avalanche blockchain for March 2024. Visit blockchainmetrics.online for more analytical materials.

***

Avalanche (AVAX) — Based on the results of March 2024 Avalanche continues to take third place in the ranking of leading blockchain platforms (based on the sum of key indicators)

These key indicators are presented on the infografic:

(1) dApps ecosystem TVL.

This metric indicates how developed the ecosystem of decentralized applications on this blockchain is and how valuable this ecosystem expressed in fiat money. And although, of course, changes in the metric are still in most cases a reflection of speculative sentiments, stable growth over a long period of this metric indicates the growing broad adoption of the blockchain.

In March, TVL of the Avalanche blockchain decentralized application ecosystem increased by 5.19%. And over the past three months, that is, in the first quarter of 2024, the overall growth was 13.7%. Thus, we see clear and sustainable growth.

For this Avalanche for March 2024 gets 2 points of platform development dynamics index.

(2) Average number of daily active wallets.

This is an absolute customer metric. This metric directly indicates whether more and more people are using the platform or, conversely, whether the platform is experiencing an outflow of real active users.

March 2024 was marked for Avalanche by an increase in wallet activity by as much as 37%. This is a significant change.

For March 2024 Avalanche has gained 1 points of platform development dynamics index for this metric.

(3) Transaction volume.

This is another customer activity metric. This metric shows how actively existing users are utilizing the platform. Which is also an indicator that speaks about the current model of use of the platform, how often on average one active wallet makes transactions. An increase in transaction activity is always good, but a decrease indicates negative trends.

Quite a surprising fact, but with a significant increase in the daily activity of wallets, we record in March 2024 a reduction in transaction activity by a quarter of the February figure.

This means that for this metric, Avalanche receives -1 point of platform development dynamics index.

(4) Fees & average transaction fee, in native token

For every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. On the one hand, high fees hinder user activity. On the other hand, high fees secures high income for the platform and high rewards for validators. This fosters the development of the platform. The total fees & avg transaction fee, in native token, metrics are tightly related. They may differ in value, but always have the same direction. If the average fee in native tokens increases, then the total volume of platform fees also increases. And vice versa. If fees in native tokens increase, this is a good signal for the development of the platform. These are direct incomes of the platform and platform validators. The higher this value, the more interesting it is for the community to develop this platform. It is important for you, as a consumer of the services of this blockchain (whether it is the active use of decentralized applications or simply investing in a blockchain token), to see that income is growing. However, it is important to maintain a balance so that the growth of fees remains within reasonable limits.

In terms of the total volume of transaction fees, as well as the average transaction fee, valued in native tokens of the platform, Avalanche is doing great in March 2024. Total fees increased by 8%, while average transaction fee jumped by 45%. This is a good incentive for the platform's community and developers.

Here, we can assign Avalanche with 1 points of platform development dynamics index.

(5) Average transaction fee, USD

As we noted above, for every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. And we also noted that the fees growth in native tokens is good, because it fosters incentive of the community and validators to participate in the development of the platform. But from the point of view of the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.

The downside of a significant increase in total transaction fees a painful blow to the wallets of regular platform users. In March 2024, the average transaction fee jumped to almost double what it was in February 2024. If in February active users of the Avalanche platform paid an average of $0.14 per transaction, then in March they already had to pay an average of $0.27. This is a very large increase and a very large cost in absolute terms in respect of present market landscape. With such transaction fees, Avalanche risks being left behind in the race for retail customers. It remains to be seen whether the platform developers will take any measures in April aimed at easing the commission burden on consumers of platform services.

Unfortunately, for this metric, Avalanche receives -1 points of platform development dynamics index.

(6) Number of validators

The more validators, the more decentralized the blockchain is. An increase in the number of validators foster the reliability and stability of the platform. Moreover, Overall, while increasing the number of network validators may not directly correlate with transaction costs, it has the potential to impact network dynamics in ways that the increase of validators might alleviate pricing pressures due to high demand on block space and improve overall network performance. Therefore, it is extremely important for ordinary users to see that the number of blockchain validators is growing steadily.

It’s quite strange, against the backdrop of a noticeable increase in blockchain's fees, but the number of active validators has decreased over the past period. By almost 7%. Quite serious at that. And this be hardly explained by inaccuracy.

Maintaining a node on a blockchain network requires technical expertise, resources, and infrastructure. If the technical barriers or costs associated with running a validator node are not compensated by income revenue over time, it could deter validators from continue operating. Additionally, if alternative blockchain networks offer better incentives, lower costs, or improved technology, validators may migrate to those networks, leading to a decrease in the number of validators on the original blockchain. Apparently, we are witnessing something from this area.

Thus, this indicator as well does not characterize the Avalanche platform in the best way during this March.

Avalanche gains a score of -1 points of platform development dynamics index for this metric in March 2024.

(7) Number of decentralized applications

The more developed a blockchain has an ecosystem of decentralized applications that offers users a wide range of opportunities that go beyond simple peer-to-peer transactions or currency exchange, the more users make daily transactions on this blockchain. This in turn increases the income of the blockchain and validators and contributes to the further development of the blockchain. Therefore, from the point of view For an outside observer, seeing that the number of decentralized applications is constantly increasing is a positive signal, suggesting an inevitable increase in active wallets and transaction volume.

As we can see in the picture, the number of dApps on the platform during March increased inessential. However, from the general picture, we can see slow yet stable growth with this quarter from 288 quoted dApp tokens on Avalanche ecosystem in January to current 296. Not the best indicator over the market, but in fact is trend to growth.

This is a positive signal, for which Avalanche in March 2024 receives 2 points of the platform development dynamics index.

(8) Diversity of decentralized applications

It is no secret that the DeFi sector currently dominates the blockchain industry.

A developed ecosystem of decentralized applications, not limited to just one DeFi sector, with a high degree of diversity attracts users with diverse interests. If applications from other categories appear among the leading decentralized applications by metrics for the month, this indicates that the platform is finding other niches and attracting not only traders. In current realities, this is an important indicator of blockchain development.

As you can see in the picture above, from the list of leading decentralized apps on the Avalanche platform, only Galxy project stands out. The remaining leading decentralized applications (Trader Joe, Stargate, MoveStake, GMX) on the Avalanche platform fall into the decentralized finance category. Therefore, there is no need to talk about the true variety of services on the platform. We see a strong bias towards exclusively financial services. In this context, it is worth mention that due to high transaction costs, Avalanche is difficult to compete in this category with such platforms as Arbitrum, Solana, Polygon. And thus, the whole situation puts Avalanche in disadvantage. For sustainability prospects, Avalanche needs to invest significant efforts in either diversifying the decentralized application ecosystem or in a significant reduce the average transaction fee.

So, no points for this metric Avalanche receives. 0 points.

(9) Unexplained anomalies

Sometimes when watching over at the metrics and statistics of blockchains and dApps, you come across the fact that a particular indicator may inexplicably experience a sharp increase, and then an equally sharp and illogical drop to the previous level. An example of such a situation is a multiple increase in active wallets without a noticeable increase in transaction activity within a single month.

This indicates manipulation with indicators. This means that something is not going as expected with blockchain. The purpose of such manipulations is different, but this is a bad signal for ordinary users.

Though, some suspicion can rise based on the situation with active validators, no unexplained manipulations with metrics were recorded on the Avalanche blockchain in March 2024. Therefore, Avalanche blockchain does not receive a penalty point for this metric. 0 points.

Summary report

The maximum possible score for a blockchain can be 7 * 2 + 1 = 15 points

The minimum possible score for a blockchain can be 7 * (- 2) - 1 = - 15 points

Total platform development dynamics index for Avalanche for March 2024 is only 3.

To sum everything up, from all these observations, several positive and negative signals can be identified for all those interested regarding the evolving track of the Avalanche blockchain:

Positive signals:

(1) Number of Decentralized Applications. Despite a modest increase, the overall trend shows slow yet stable growth in the number of decentralized applications on the Avalanche platform. This indicates expanding options for end users, potentially leading to increased activity and transaction volume.

Negative signals:

(1) High Average Transaction Fee in USD. The average transaction fee nearly doubled from February to March 2024, reaching a significant cost for users. High transaction fees in USD value can discourage user activity and hinder the platform's competitiveness, posing a disadvantage compared to other blockchain networks with lower fees. Perhaps, this is the reason of Decrease in Transaction Activity.

(2) Decrease in Transaction Activity. Despite a significant increase in daily active wallets, Avalanche experienced a reduction in transaction activity in March 2024. This suggests that while more users are engaging with the platform, they are not utilizing it as actively as before, potentially indicating dissatisfaction or barriers to usage. And this appears to be more serious, then reduction of active validators.

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***

Introduction

A fascinating story is unfolding before our eyes. The story is about how an innovative blockchain product offering its users unique characteristics and a very competitive value proposition faces the challenges of explosive growth. Following the unprecedented influx of active users, Solana began experiencing operational difficulties due to the fact that the current technological solution could not withstand such a huge load. How is this expressed in terms of end users and what this situation could lead to if the developers fail to improve the current state of affairs, let’s try to understand this article.

Let’s get started…

***

Performance challenges

Solana was designed to handle high throughput with fast transaction speeds. It uses a unique consensus mechanism called Proof of History (PoH) in combination with Proof of Stake (PoS) to achieve this. PoH timestamps transactions before they are confirmed by the network, enabling parallel transaction processing and reducing latency.

One of Solana’s main selling points is expected to be its scalability. By utilizing a combination of innovative technologies, Solana claims to be able to support thousands of transactions per second (TPS). You can familiarize yourself with the design parameters of Solana blockchain in the whitepaper (https://solana.com/solana-whitepaper.pdf)

But design parameters and marketing are one thing, the actual load on the system is another matter. This is where difficulties usually arise.

The platform’s onchain metrics (transactions per second (TPS) and average transaction fee) were so attractive compared to the Ethereum blockchains ecosystem that there was an explosive influx of customers. In our latest analytical items, we highlighted a trend towards an explosive growth in the number of active wallets on the Solana blockchain and a concomitant increase in transaction activity. This trend began last year and since then Solana has experienced an unprecedented influx of active wallets. To visualize the state of affairs with active wallets, a graph for the last six months from the TokenTerminal analytical platform:

Over the past three months, the figure has increased from 411,582 in January to 922,611 in March, i.e. by 224%. We see a clear, powerful trend towards expanding the consumer base of platform services. This activity is mainly associated with the memcoin trading boom and decentralized finance services.

For those interested in the general dynamics of the platform’s on-chain indicators, a detailed analysis of Solana blockchain metrics based on the results of March 2024 can be found at the link:

https://blockchainmetrics.online/sol_20244.html

On the other hand, during the same period of time, problems with network throughput began. Which led to a shortage of space in blocks and, as a consequence, to an increase in the cost of transactions, which is killer for Solana’s competitiveness.

For reference, In November 2023, the transaction fee was $0.0007, while in March 2024 this value skyrocketed to $0.0283. The growth is more than 4000% in half-year!!!!

And we noted this earlier too.

But as the course of events showed, this depressing situation with the transactions fees turned out to be not the worst problem faced by users and developers of the platform. It turned out that the very ability of the platform to process such a large volume of transactions casts doubt already.

To illustrate this point, let’s look at the following interesting statistics.

Here are the statistics of successful and failed transactions for the week from 04/07/2024 to 04/14/2024:

The total percentage of successful and failed transactions for the same period:

We clearly observe that every day most transactions on the Solana blockchain fail. And in total, failed transactions account for almost 60% of the total number of transactions during this period.

For comparison, let’s look at the statistics of successful and failed transactions for the same period last year:

As well as the percentage of successful and failed transactions for the same period last year:

Thus, we are seeing a degradation of the Solana blockchain’s fault tolerance almost three (!!!) times: if last year in April ~22% of transactions were failed for one reason or another, now this value has grown to 60%.

Let’s see how the volume of transactions changed over this period.

Of course, this metric has grown significantly over the year. If last year 240,997,927 were recorded for the weekly period, then this year for the same period there were already 581,994,195. Here are the comparative graphs:

That is, the number of transactions increased by 240% when comparing the same periods in April this and last year.

Also, to visualize the scale of the problem that the Solana development team is currently struggling with, here are comparative graphs of the average transaction fee, expressed in USD, a year ago and now:

So, let’s firm it.

As of April 2024, Solana blockchain must solve the following growth issues:

Numerous of failed transactions caused by an increase in the volume of transactions by 240% compared to the last year,
Large-scale and continuous increase in transaction fees for end users;

***

What to expect?

Let’s look at what potential consequences this situation could have if the Solana developers fail to properly resolve these issues.

(a) For starters, Solana must face declining user engagement.

Users become frustrated with the high rate of transaction failures and delays, leading to reduced engagement with the platform. If transactions cannot be processed reliably and in a timely manner, users will dramatically reduce their participation in activities such as trading, investing, or interacting with decentralized applications (dApps) on Solana. Besides, transaction failures and delays are resulting in increased transaction costs for users, as they need to repeatedly attempt transactions or pay higher fees to ensure their transactions are processed successfully. This also leads to deter them from utilizing the Solana blockchain.

(b) Memecoin trading activity on the Solana platform may be significantly affected.

If trades are not executed as intended due to network congestion or delays, failed transactions could result in lost opportunities, missed trades, or financial losses. As the result, traders hesitate to provide liquidity or participate in market-making activities, because they anticipate further challenges in executing trades or withdrawing funds from exchanges due to network congestion or reliability issues. If they keep experiencing repeated difficulties in executing transactions or encounter issues with order execution, traders may become wary of relying on Solana for their trading activities. In one terms, transaction failures and delays could affect liquidity in the memecoin markets on Solana. As the logical step to mitigate these risks, traders and projects involved in memecoin trading may explore migrating to other blockchain platforms with more robust infrastructure and scalability solutions if Solana’s performance does not improve. This could result in a shift in trading activity and liquidity away from Solana to other networks.

© In the market medium-term negative sentiment will appear.

The challenges faced by the Solana network could contribute to increased volatility in the prices of assets and tokens of blockchain projects (dApps) hosted on the platform. Uncertainty regarding transaction processing and network reliability must lead to negative, high fluctuations in trading volumes and prices. General market sentiment to Solana ecosystem may become extremely bearish. All leading Solana ecosystem tokens, not only SOL, can lose in price significantly. I advise you to be more careful with investments in tokens of the Solana ecosystem, in particular in DeFi (Magic Eden, Margin.Fi, Raydium, Jupiter Exchange…)

(d) Ultimately, Solana may face a loss of credibility.

The increase in transaction failures, from 20% to 60% of the total transaction volume, is concerning and indicates challenges with the network’s capacity to handle the growing demand transaction failures can erode confidence in the platform’s ability to handle increased demand. Trust in the reliability and stability of the Solana network may diminish among users and developers of dApps and memecoins. Lack of trust and confidence in the capacity of Solana platform to handle large transaction volume may lead users to seek alternative blockchain solutions with better performance and scalability.

(e) Potential loss of projects.

If Solana’s performance issues persist or worsen, DeFi projects and protocols operating on Solana may start considering their options of migrating to other blockchain platforms. This could result in a loss of projects and liquidity from Solana’s DeFi ecosystem, impacting its overall vibrancy and competitiveness. Sustainable growth and success in the DeFi space require reliable infrastructure, scalability, and user confidence, which may be compromised if Solana continues to experience transaction processing difficulties, and it could raise concerns about the platform’s long-term viability as a prominent DeFi hub.

In addition, it can be assumed that the current challenges of the Solana blockchain should benefit primarily blockchain platforms with low transaction fees and a fairly developed DeFi ecosystem in comparison with Solana. As of April 2024, this is a smart contract of the blockchain platform Arbitrum and Polygon.

***

Conclusion

As a conclusion, it’s worth noting that the current situation with performance degradation on the Solana blockchain is not the first time. The last officially recorded incident occurred in May 2022. And then the development team successfully localized and fixed the problem.

Here you can find a list of all officially recorded incidents.

https://status.solana.com/

In addition, Solana has already released a patch regarding the current situation:

Let’s hope that it will bring tangible result in terms of fix following challenges:

• Numerous failed transactions,

• Large-scale and continuous increase in transaction fees for end users;

Moreover, it’s important to recognize that challenges are an inherent part of technological innovation, and overcoming them often leads to stronger, more resilient systems. And Solana’s community of developers, validators, and users is deeply invested in the platform’s success.

So it looks like despite the recent challenges facing the Solana blockchain, there’s still ample room for optimism and confidence in its potential. While there have been concerns about the platform’s ability to process a large volume of transactions, the team’s efforts to optimize the protocol and enhance scalability solutions demonstrate their commitment to overcoming these obstacles. While there are challenges to overcome, the Solana blockchain remains a promising platform with significant potential for growth and innovation in the decentralized finance space.

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***

Introduction

This item continues a series of articles “cryptocurrencies for beginners”. Or it’s better to say, “cryptocurrencies for regular people, not crypto geeks”. You can recall content of previous articles here:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/x6nJQoq-mNtHpzNGKXwGwu0JvQjkcKrWjhJ3m2ETXpU

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/-gBrrwqD839JM9pMg-cHF8bkjKx1Fvf6c5_bTWmDgRA

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/u7rjIMd6aHPd3SWjzmhsJEN45_ViF-yFkklBHxq3d1Q

So, we now have an idea of what cryptocurrencies are, what cryptocurrencies generally exist, and what are the ways to use them in everyday life at the moment.

And it turns out there are quite a lot of people who are already involved in the world of cryptocurrencies. That is, those who have the listed knowledge. According to the most conservative estimates, there are more than 100 million active users of cryptocurrencies over the world. What is important for us here is not the number, but the fact that the open world of cryptocurrencies has generated a huge number of retail investors in cryptocurrencies. To enter this cryptocurrency ecosystem and begin to actively interact with it, you do not need to present documents, go through KYC procedures, sign agreements with banks or a broker, pay regular commissions to the broker, etc. The entry level turned out to be lower than ever, both in terms of bureaucratic delays and in terms of financial resources with which ordinaries can start investing in cryptocurrencies. And the trend suggests that the number of retail investors from all over the world will only grow.

But not all of these crypto investors can and want to be active traders or actively manage a portfolio of cryptocurrencies (although I will assume that now the majority are active participants).

Below in the text, I will try to tell you how an ordinary person can solve the following trending issues using cryptocurrency financial instruments:

• protect yourself from inflation,

• keep savings and

• make passive income.

Let's get started...

***

The portrait of a retail investor

So, I’m addressing you as the retail investor. As you can see, there are many of us, and there will be even more. What unites us all?

1. We don’t want to spend a lot of time on crypto.

Oh, my Lord, this is not a hobby or a job. It’s just savings. He/She deposited and forgot about it. Well, maybe once a month He/She takes a look at how much interest had accrued and switched to another product where more interest accrues at a moment… It’s just that there is no enthusiasm to comprehend in details what Yield farming, Staking, Liquid pools, Liquid staking, Leverage lending, Synthetics, Yield aggregators are … I don’t want to study technical indicators of blockchains, know what consensus mechanisms exist, analyze on-chain metrics and spend a lot of time analyzing literally thousands of DeFi proposals. Why do I need to know all this? I am not going to be an active cryptocurrency portfolio manager.

1. We operate with small amounts.

Firstly, we understand that cryptocurrencies carry a fairly high degree of risk. And these risks are primarily due to unclear counties governments policies towards the crypto industry and the lack of legislative and legal practice in this sector around the world. Therefore, no one will definitely invest their last savings in cryptocurrency.

Secondly, we simply do not possess significant financial resources. Our cryptocurrency investment budget is limited to amounts ranging from several hundred to several thousand US dollars.

1. We want a stable level of passive income that exceeds the inflation rate

My initial issue is that I want to deposit my several hundred to several thousand US dollars in some financial product and then forget about it for a while. The purpose of this step is at least to keep my savings and protect myself from inflation, at most to earn extra money passively. An ordinary person simply needs a stable level of income that exceeds the level of inflation, without significant volatility of the financial instrument used, and so that at any time he can withdraw his funds as if from a bank and convert them back into fiat currency.

These are the simple requirements from us, ordinary retail investors.

***

How to meet these requirements with cryptocurrencies?

Before we start investing, we need to choose the blockchain on which we will operate. We need a stable blockchain platform with a developed ecosystem of decentralized applications.

You can use the following resources to analyze and select the appropriate blockchain platform.

https://defillama.com/chains

https://blockchainmetrics.online/

Next is some fun arithmetic.

It is known that for every transaction you carry out (be it a transfer of funds between wallets, exchange of cryptocurrencies, deposit funds in a financial product, etc.), the blockchain takes a certain fee from you, the size of which varies dynamically. And we said above that we would like to be able to move funds between different financial products once a month. Since the average retail investor operates with small amounts (say, from $300), transaction costs should at least not exceed the income received per month.

If we are talking about the 9% APR of a financial product, then per month at this rate the investor will receive income to $2.25. Let’s assume that losing up to 10% of this amount of income on transactions is acceptable. Those, we are talking about the fact that the cost of the operation “deposit funds — withdraw funds” should not exceed $0.22.

Thus, we should consider blockchains with an average transaction fee of no more than $0.1

If we consider the leading smart-contract blockchain platforms that provide users with DeFi application services, then over the last week the rating looks like this:

As can be seen from this rating, the most attractive blockchain platform for retail investors in terms of the size of transaction fees today are Arbitrum, Fantom and Polygon.

Let’s start research of investments options with Arbitrum blockchain.

Our requirements regarding the absence of volatility and APR, which is significantly higher than the inflation rate expressed in US dollars, are met by a financial instrument “stablecoin lending”.

Now we need DeFi applications that provide such an instrument.

Leading DeFi applications that provide stablecoin lendings on the Arbitrum platform can be viewed here:

https://defillama.com/protocols/Lending/Arbitrum

It is better to choose those protocols that operate on various blockchain platforms. These today include the following:

AAVE (https://app.aave.com)

COMPOUND (https://app.compound.finance)

RADIANT (https://app.radiant.capital)

UNITUS (https://app.unitus.finance)

Thus, today a retail investor on the Arbitrum platform will be able to place his conditional $300 on the following conditions, which meet his base needs (these rates were relevant at the time of writing this article and may change significantly at the time of reading):

Another cryptocurrency instrument that meets the initial requirements of an ordinary retail investor who is looking for ways to protect their savings from inflation is stablecoins liquidity pools.

However, the level of knowledge required to start investing in this product is already significantly higher than the knowledge required to invest in stablecoin lendings. Firstly, you need to understand how liquidity pools work and what conversion range to set for specific cryptocurrencies for a specific period of time. If the settings for the liquidity pool are set incorrectly, you simply will not earn anything, you will only lose on transactions fees. However, in a case of stablecoins liquidity pools, you definitely won’t lose due to significant fluctuations in the cryptocurrency rates. I present this information here solely to compare the possible profitability of this instrument and the stablecoin lendings instrument. Today, the leading protocol on the Arbitrum blockchain that provides the service for placing funds in stablecoins liquidity pools is the decentralized application UNISWAP (https://app.uniswap.org). At the time of writing this article, the estimated yield on stablecoins liquidity pools is as follows (these yield rates were relevant at the time of writing this article and may change significantly at the time of reading):

Somehow like this….

Conclusion

As we conclude, it’s evident that the landscape of stable passive income with cryptocurrencies is evolving rapidly, providing accessible avenues for individuals to safeguard their savings, beat inflation, and potentially generate passive income. In essence, cryptocurrencies have democratized finance, empowering ordinary individuals to take control of their financial resilience.

For the retail investor, the opportunity of cryptocurrencies lies not in the complexities of blockchain technologies or the intricacies of trading strategies, but rather in the ease of access and the potential for steady returns. In these terms, for the retail investor with small amount is crucial to leverage stable blockchains with inconsiderable fees, not exceeding $0.1 for a transaction. And today by leveraging such platforms like Arbitrum retail investors already are able to navigate through various leading DeFi protocols such as AAVE, COMPOUND, RADIANT, and UNITUS to secure favorable terms for their investments.

Retail investors should prioritize exploring financial instruments like stablecoin lending and providing liquidity to decentralized exchanges due to their potential to offer stable returns and mitigate risks associated with volatility in traditional cryptocurrency markets.

HOWEVER, please keep in mind that the content of this article is meant purely for entertainment and informational purposes only, and should not be relied upon as financial, investment or any other professional or other advice. Please, mind that the content and information herein is given not to induce or to attempt to induce anyone to buy, sell or hold any cryptocurrency or carry out any other transactions with cryptocurrencies.

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Below is presented the Latest analytics on Solana blockchain for March 2024.

Visit blockchainmetrics.online for more analytical materials.

***

Solana (SOL) — Based on the results of March 2024 Solana continues to take third place in the ranking of leading blockchain platforms (based on the sum of key indicators)

These key indicators are presented in the infographic:

(1) dApps ecosystem TVL.

This metric indicates how developed the ecosystem of decentralized applications on this blockchain is and how valuable this ecosystem expressed in fiat money. And although, of course, changes in the metric are still in most cases a reflection of speculative sentiments, stable growth over a long period of this metric indicates the growing broad adoption of the blockchain.

In March, TVL of the Solana blockchain decentralized application ecosystem soared 23.5%. And the month before that by 19.35%. And in January by another 8.5%. We see a strong upward trend.

For this Solana for March 2024 gets 2 points of platform development dynamics index.

(2) Average number of daily active wallets.

This is an absolute customer metric. This metric directly indicates whether more and more people are using the platform or, conversely, whether the platform is experiencing an outflow of real active users.

Solana has experienced an unprecedented influx of active wallets in recent months. Over the past three months, the figure has increased from 411,582 in January to 922,611 in March, i.e. by 224%. We see a clear, powerful trend towards expanding the consumer base of platform services.

Therefore, without a doubt, for March 2024 Solana has gained 2 points of platform development dynamics index for this metric.

(3) Transaction volume.

This is another customer activity metric. This metric shows how actively existing users are utilizing the platform. Which is also an indicator that speaks about the current model of use of the platform, how often on average one active wallet makes transactions. An increase in transaction activity is always good, but a decrease indicates negative trends.

The level of transaction activity on Solana blockchain during the last period remained almost at the level of February 2024. The other circumstance is a bit curious. That was since January transaction activity has increased by only 20%. At the same time, as noted above, the number of active wallets more than doubled. It turns out that these wallets came not so much to make regular transactions as in anticipation of something.

However, for March 2024, Solana receives 1 point of platform development dynamics index for this metric.

(4) Fees & average transaction fee, in native token

For every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. On the one hand, high fees hinder user activity. On the other hand, high fees secures high income for the platform and high rewards for validators. This fosters the development of the platform. The total fees & avg transaction fee, in native token, metrics are tightly related. They may differ in value, but always have the same direction. If the average fee in native tokens increases, then the total volume of platform fees also increases. And vice versa. If fees in native tokens increase, this is a good signal for the development of the platform. These are direct incomes of the platform and platform validators. The higher this value, the more interesting it is for the community to develop this platform. It is important for you, as a consumer of the services of this blockchain (whether it is the active use of decentralized applications or simply investing in a blockchain token), to see that income is growing. However, it is important to maintain a balance so that the growth of fees remains within reasonable limits.

Following a decline in these figures in February, fees and average transaction fees in native tokens saw a phenomenal surge in March. Both metrics jumped almost threefold.

For this metric, Solana in March 2024 receives 1 points of platform development dynamics index.

(5) Average transaction fee, USD

As we noted above, for every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. And we also noted that the fees growth in native tokens is good, because it fosters incentive of the community and validators to participate in the development of the platform. But from the point of view of the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.

The most important competitive advantage of the Solana blockchain has always been extremely low, almost invisible commissions. But much to the chagrin of users of decentralized applications on this platform, this advantage has been melting before our eyes.

An interesting and distressing statistic. In November 2023, the transaction fee was $0.0007, while in March 2024 this value skyrocketed to $0.0283. This is more than 4000%!!!!

We are seeing a strong trend toward higher prices for Solana services. And now, among the leading smart contract blockchains, Polygon can successfully compete with Solana in terms of transaction costs.

For this metric, Ethereum has earned -2 points of platform development dynamics index.

(6) Number of validators

The more validators, the more decentralized the blockchain is. An increase in the number of validators foster the reliability and stability of the platform. Moreover, Overall, while increasing the number of network validators may not directly correlate with transaction costs, it has the potential to impact network dynamics in ways that the increase of validators might alleviate pricing pressures due to high demand on block space and improve overall network performance. Therefore, it is extremely important for ordinary users to see that the number of blockchain validators is growing steadily.

In February 2024, according to this metric, Solana reached its lowest level in recent times and, in March 2024, the number of validators increased by 4.3%

It is worth noting that the number of validators began to decline simultaneously with the beginning of the growth of active wallets and the growth of the ecosystem TVL (tokens prices).

Does the fact of a reverse movement in the direction of growth in the number of validators indicate that the TVL level is expected to decrease in the near future?

Or is this a logical reaction to a significant increase in the volume of platform commissions from transaction activity?

However, Solana receives a score of 1 point for this metric in March 2024.

(7) Number of decentralized applications

The more developed a blockchain has an ecosystem of decentralized applications that offers users a wide range of opportunities that go beyond simple peer-to-peer transactions or currency exchange, the more users make daily transactions on this blockchain. This in turn increases the income of the blockchain and validators and contributes to the further development of the blockchain. Therefore, from the point of view For an outside observer, seeing that the number of decentralized applications is constantly increasing is a positive signal, suggesting an inevitable increase in active wallets and transaction volume.

As we can see in the picture, the number of dApps on the platform during March increased by 28.66%

And this is generally a continuation of the strong growth of active dApps on the Solana platform. Over three months the growth was 39.8%. The number of active decentralized applications has increased by this percentage since the beginning of 2024.

This is a positive signal, for which Solana in March 2024 receives 2 points of the platform development dynamics index.

(8) Diversity of decentralized applications

It is no secret that the DeFi sector currently dominates the blockchain industry.

A developed ecosystem of decentralized applications, not limited to just one DeFi sector, with a high degree of diversity attracts users with diverse interests. If applications from other categories appear among the leading decentralized applications by metrics for the month, this indicates that the platform is finding other niches and attracting not only traders. In current realities, this is an important indicator of blockchain development.

If we evaluate the current situation with the diversification of decentralized applications on the Solana platform, then we need to get started with the fact that the QnA3 project moved to this platform in March 2024. Back in March 2024 yet, it was powerfully promoted on the BSC platform (https://medium.com/@BlockmetricsVM/unlocking-binance-smart-chain-bnb-potential-insights-into-growth-and-trends-march-2024-dfd19b904d51

), and now it is at the top of the dApps rating on the Solana platform. For reference, QnA3 — AI Q&A service to comprehend user queries about web3 industry in general and DeFi in particular, AI trading assistant.

Overall, it is clear that platform’s developers are making significant efforts to diversify the ecosystem of decentralized applications. And nowadays among the most popular applications are applications from various categories, not just DeFi. As in the case of the Binance-Smart-Chain platform, the expansion of use cases for using the platform leads to a significant increase in the number of active wallets.

Therefore, according to this metrics, for March 2024 Solana earns 1 point of the platform development dynamics index.

(9) Unexplained anomalies

Sometimes when watching over at the metrics and statistics of blockchains and dApps, you come across the fact that a particular indicator may inexplicably experience a sharp increase, and then an equally sharp and illogical drop to the previous level. An example of such a situation is a multiple increase in active wallets without a noticeable increase in transaction activity within a single month.

This indicates manipulation with indicators. This means that something is not going as expected with blockchain. The purpose of such manipulations is different, but this is a bad signal for ordinary users.

No unexplained manipulations with metrics were recorded on the Solana platform in March 2024. Therefore, Solana blockchain does not receive a penalty point for this metric. 0 points.

Summary report

The maximum possible score for a blockchain can be 7 * 2 + 1 = 15 points

The minimum possible score for a blockchain can be 7 * (- 2) — 1 = — 15 points

Total platform development dynamics index for Solana 2024 in March is 8.

To sum everything up, from all these observations, several positive and negative signals can be identified for all those interested regarding the evolving track of the Solana blockchain:

Positive signals:

1. Growing dApps & Ecosystem TVL. Solana’s decentralized application ecosystem’s in terms of Total Value Locked (TVL) and quantity and diversity of dApps has been consistently increasing over the past few months, indicating strong adoption and value creation within the ecosystem.

2. Increase in Daily Active Wallets. Solana has experienced a significant increase in the number of daily active wallets, indicating a growing user base and adoption of platform services.

Negative signals:

1. Surge in Transaction Fees in USD Value. Despite the platform’s strengths, the transaction fees in USD value have seen a dramatic increase, rising by over 4000% from November 2023 to March 2024. This surge in fees have already wiped out the competitive advantage of the platform and could potentially launch the process of deterring users from engaging in transactions on the platform, impacting its development negatively.

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Below is presented the Latest analytics on Ethereum blockchain for March 2024.

Visit blockchainmetrics.online for more analytical materials.

***

Ethereum (ETH) — Based on the results of March 2024 Ethereum continues to take second place in the ranking of leading blockchain platforms (based on the sum of key indicators)

These key indicators are presented in the infographic:

(1) dApps ecosystem TVL.

This metric indicates how developed the ecosystem of decentralized applications on this blockchain is and how valuable this ecosystem expressed in fiat money. And although, of course, changes in the metric are still in most cases a reflection of speculative sentiments, stable growth over a long period of this metric indicates the growing broad adoption of the blockchain.

Based on the results of March 2024, this figure increased by almost 5% and reached almost $487b

For this metric Ethereum gains 1 point of platform development dynamics index.

(2) Average number of daily active wallets.

This is an absolute customer metric. This metric directly indicates whether more and more people are using the platform or, conversely, whether the platform is experiencing an outflow of real active users.

Average number of daily active wallets during March 2024 surged by 18.52%. And this continued a general tendency, started in December 2023, of the growth of active wallets. Over the past three months, this figure has increased by about 25%.

Therefore, in March 2024, Ethereum receives 2 points of platform development dynamics index for this metric.

(3) Transaction volume.

This is another customer activity metric. This metric shows how actively existing users are utilizing the platform. Which is also an indicator that speaks about the current model of use of the platform, how often on average one active wallet makes transactions. An increase in transaction activity is always good, but a decrease indicates negative trends.

In our last report for March 2024, we noted that transaction volumes have remained roughly stable in recent months. No deviations are visible. However, in March, as expected, the platform’s transaction activity jumped sharply. The growth was 12.86%

Therefore, in March 2024, Ethereum receives 1 points of platform development dynamics index for this metric.

(4) Fees & average transaction fee, in native token

For every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. On the one hand, high fees hinder user activity. On the other hand, high fees secures high income for the platform and high rewards for validators. This fosters to the development of the platform. The total fees & avg transaction fee, in native token, metrics are tightly related. They may differ in value, but always have the same direction. If the average fee in native tokens increases, then the total volume of platform fees also increases. And vice versa. If fees in native tokens increase, this is a good signal for the development of the platform. These are direct incomes of the platform and platform validators. The higher this value, the more interesting it is for the community to develop this platform. It is important for you, as a consumer of the services of this blockchain (whether it is the active use of decentralized applications or simply investing in a blockchain token), to see that income is growing. However, it is important to maintain a balance so that the growth of fees remains within reasonable limits.

For both metrics, we have recorded growth in March. By ~16% and 2.67%, respectively.

It is interesting to note that in March these indicators also increased significantly.

For this metric, Ethereum in March 2024 receives 1 points of platform development dynamics index.

(5) Average transaction fee, USD

As we noted above, for every operation performed by a user on the blockchain, be it a transfer of cryptocurrency from one wallet to another, a purchase on the Internet or an exchange of cryptocurrencies, the blockchain takes fees in the native tokens of this blockchain. And we also noted that the fees growth in native tokens is good, because it fosters to incentive of the community and validators to participate in the development of the platform. But from the point of view for the average user, high fees in USD hinder activity. Users are not interested in increasing fees expressed in fiat currency. High transaction fees in USD value can stunt the development of any blockchain.

Unfortunately, this is exactly what is happening on the Ethereum blockchain. Especially in February and March of this year. Just imagine that during this period the average cost per transaction increased from approximately $6 to $15.1 (~251%)

In March 2024 alone, the average commission increased by 32.96%.

This makes the platform less attractive.

For this metric, Ethereum gains -2 points.

(6) Number of validators

The more validators, the more decentralized the blockchain is. An increase in the number of validators foster the reliability and stability of the platform. Moreover, Overall, while increasing the number of network validators may not directly correlate with transaction costs, it has the potential to impact network dynamics in ways that the increase of validators might alleviate pricing pressures due to high demand on block space and improve overall network performance. Therefore, it is extremely important for ordinary users to see that the number of blockchain validators is growing steadily.

In this context, Ethereum is an attractive platform. It has shown a steady increase in the number of network validators over many months. Over the past three months alone, this figure has increased by 6.8%

And in March 2024, the metric increased to 979,367 validators. And it will continue to grow.

This is certainly not surprising given the high platform fees for transactions, but nevertheless, the stable trend towards increasing the number of validators brings Ethereum 2 points of the platform development dynamics index in March.

(7) Number of decentralized applications

The more developed a blockchain has an ecosystem of decentralized applications that offers users a wide range of opportunities that go beyond simple peer-to-peer transactions or currency exchange, the more users make daily transactions on this blockchain. This in turn increases the income of the blockchain and validators and contributes to the further development of the blockchain. Therefore, from the point of view For an outside observer, seeing that the number of decentralized applications is constantly increasing is a positive signal, suggesting an inevitable increase in active wallets and transaction volume.

As we can see in the picture, the number of dApps on the platform increased by 7.95%

And for your information, this is a continuation of the trend. Over the past three months, the number of active dApps on the Ethereum platform has grown by 17.17%.

This is a positive signal, for which Ethereum in March 2024 receives 2 points of the platform development dynamics index.

(8) Diversity of decentralized applications

It is no secret that the DeFi sector currently dominates the blockchain industry.

A developed ecosystem of decentralized applications, not limited to just one DeFi sector, with a high degree of diversity attracts users with diverse interests. if applications from other categories appear among the leading decentralized applications by metrics for the month, this indicates that the platform is finding other niches and attracting not only traders. In current realities, this is an important indicator of blockchain development.

Among leading dApps on Ethereum, only dApps of the DeFi category dominate (UniSwap, 0x, MetaMask). These applications offer a wide range of decentralized financial services, including lending, borrowing, trading and yield farming, among others. But it is worth mention that lack of diversity in use cases can limit the long-term growth and sustainability of the platform. To date, Ethereum has done little to diversify its dApps ecosystem.

So, no points for this metric Ethereum receives. 0 points.

(9) Unexplained anomalies

Sometimes when watching over at the metrics and statistics of blockchains and dApps, you come across the fact that a particular indicator may inexplicably experience a sharp increase, and then an equally sharp and illogical drop to the previous level. An example of such a situation is a multiple increase in active wallets without a noticeable increase in transaction activity within a single month.

This indicates manipulation with indicators. This means that something is not going as expected with blockchain. The purpose of such manipulations is different, but this is a bad signal for ordinary users.

Nothing like this was recorded with Ethereum in March. Therefore, Ethereum also does not receive a penalty point for this metric. 0 points.

Summary report

The maximum possible score for a blockchain can be 7 * 2 + 1 = 15 points

The minimum possible score for a blockchain can be 7 * (- 2) — 1 = — 15 points

Total platform development dynamics index for Ethereum 2024 in March is 7.

From all this information, several positive and negative signals can be identified regarding the development of the Ethereum platform in the coming months:

Positive signals:

1. Growing interest and distribution. Significant growth in the number of active daily wallets, indicating increasing user adoption and platform utilization. This positive trend, with an 18.52% surge in March and a consistent growth pattern over the past few months, contributes positively to Ethereum’s platform development dynamics index.

2. Increasing the number of validators. The notable increase in the number of network validators reflects Ethereum’s ongoing transition to increase the security and decentralization of the platform, supporting its long-term prospects and viability. In addition, this should in the future reduce the cost of commissions and make the platform more accessible to ordinary users.

3. Advanced DeFi: The dominance of decentralized financial (DeFi) applications on Ethereum highlights the development of the platform as a leading tool for innovative financial technologies, thereby guaranteeing financial prosperity for investors.

Negative signals:

1. High Transaction Costs. In February and March, the average cost per transaction rose dramatically, reaching approximately $15.1 in March alone, marking a 32.96% increase from the previous month. High transaction fees in USD can deter user activity and hinder the platform’s attractiveness, thus impacting Ethereum’s platform development dynamics index negatively.

2. Lack of variety of use cases. Over-emphasis on one DeFi sector could lead to vulnerabilities if that sector faces challenges or disruptive regulatory scrutiny. Lack of diversity in use cases can limit the long-term growth and sustainability of the platform. To date, Ethereum has done little to diversify its dApps ecosystem.

****

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Introduction

This chapter continues a series of articles “cryptocurrencies for dummies”. You can recap content of previous articles here:

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/x6nJQoq-mNtHpzNGKXwGwu0JvQjkcKrWjhJ3m2ETXpU

https://mirror.xyz/0xf8D3e3d2D680AA44CD201A5F3befe23F58023bCb/-gBrrwqD839JM9pMg-cHF8bkjKx1Fvf6c5_bTWmDgRA

And today we will take a glance from a distant stance of a non-technical ordinary human-being what use-cases of blockchain and cryptocurrencies already exist.

I am sure that this is a very important topical issue because now there is a huge amount of hype and materials on the net promoting various blockchain projects and platforms. People hype keywords, attracting traffic to their sites, drawing attention to their projects. This is all logical. For example, now the buzz word is RWA (real world assets) tokenization, there is a lot of noise about this topic. But from the point of view of applying this in everyday life, such a use case (RWA tokenization) does not exist for ordinary people so far. I think that such hype, when attention is drawn to something that cannot now be used in everyday life, only hinders the adoption of cryptocurrencies and blockchain in our lives. Therefore, let’s try to objectively look at the situation with the use of these revolutionary technologies. And make sure that this is not just hype and scam.

So, today we will try to figure out in questions

How to use cryptocurrencies?
How to use blockchain?

by ordinary people in everyday life.

Let’s get started…

***

How can I use cryptocurrencies right now?

Let’s get acquainted with seven key applications that are shaping the landscape of cryptocurrency adoption for everyday people.

Digital Payments

Of course, I would like to start with the fact that cryptocurrencies are already a very real means of payment on a parity with traditional bank cards. Cryptocurrencies provide a fast, secure, and borderless means of conducting transactions. Platforms like Coinbase, Binance, ByBit and PayPal now allow users to buy, sell, and store cryptocurrencies with ease. There are many merchants and businesses across various industries, that accept cryptocurrency payments. You can legally buy almost anything with cryptocurrency. From food and clothes to real-estate and Ferrari. Retail, Travel and Hospitality, Food and Beverage, Tech Products and Services, E-commerce, Entertainment and Gaming, Real Estate, Art and Collectibles — in all these industries there are already global and well-known companies that accept payments in cryptocurrency. There are many reviews on this topic on the Internet. For example, the following websites provide a list of enterprises that accept payments in cryptocurrency.

https://bitpay.com/directory
https://crypto.com/bitcoin/who-accepts-bitcoin-payments-in-2024

In fact, payments in cryptocurrency are even more convenient for ordinary people when shopping online than payments with a traditional bank card. Assess these arguments:

Privacy

Cryptocurrency transactions offer a higher level of privacy and security compared to traditional bank card payments. Because each bank card has your personal ID info associated with it, but no such vulnerability cryptocurrency wallet.

Low fees and fast

Cryptocurrencies removes the need for intermediaries like banks or payment processors, like VISA or MasterCard. Cryptocurrency transactions are not bound by geographical borders or currency exchange rates. So, Cryptocurrency transactions often have lower fees and faster compared to traditional bank card payments.

Financial freedom

And of course, it is important to emphasize that with cryptocurrencies, anyone with internet access can participate in the global economy and engage in online transactions without the need for a bank account or credit history in a specific state. Due to the decentralized nature of cryptocurrencies, single points of failure and censorship are eliminated, providing users with greater control over their funds and financial freedom.

Ease of payment operations

And ease of use should be added as well. Cryptocurrency payments are usually made by several clicks and accepting payment transaction, without the need to enter bank card requisites, which is necessary with bank card payments.

Long-term investments & passive income

The next use of cryptocurrencies, which is already available to everyone, is the purchase of a certain cryptocurrency as a means of passive income by increasing the value of the asset over time.

Cryptocurrencies have historically demonstrated the potential for significant price appreciation over time. Of course, we are not talking about all cryptocurrencies. We are talking about key blockchain projects and prominent sectors players, shaping the future of this industry. For instance, Bitcoin and Ethereum.

There is one simple explanation why these projects have huge potential for growth. Because we are only at the beginning of the period when cryptocurrencies enter our daily lives. Over time, more and more people will use blockchain technology and cryptocurrencies in their daily lives, and therefore the demand for the cryptocurrency of these leading blockchain projects will grow, these blockchain projects will generate more and more income for the owners of their cryptocurrencies.

Why this strategy might be better than traditional financial instruments?

Higher yields

Cryptocurrencies offer various innovative passive income opportunities, such as staking, liquidity provision, and lending, which may provide higher yields compared to traditional fixed-income instruments like savings accounts or bonds. The fact is, the most reliable and conservative tool for passive income in cryptocurrency — lending in stablecoins like USDC or DAI, — offers higher returns than traditional bank savings accounts or deposits in pegged currency (USD). Much higher.

Lower initial capital to entry

Investing in cryptocurrencies often has lower barriers to entry compared to traditional financial instruments. Individuals can start investing in cryptocurrencies with small amounts of capital (say, $10 or $100), whereas traditional investment vehicles may require larger initial investments and more extensive regulatory compliance.

Financial freedom

As like in previous paragraph. Anyone with internet access can leverage this global decentralized financial market. No more need for intermediaries like banks and regulators, often putting restrictions and prohibition on the access to certain tools. Users gains greater control over their funds and financial freedom.

Here are some resources and projects where you can start your own journey into the world of long-term investment in cryptocurrencies:

https://defillama.com,
https://aave.com,
https://lido.fi,
https://compound.finance

Before allocating capital to cryptocurrency as long-term investment, you should carefully assess the subject of potential investment in terms of risk management strategies, technical and economic metrics of a cryptocurrency. It’s essential to conduct thorough research and understand the picture in general associated with each opportunity before participating. This is a big topic for an independent article, far beyond the current one. I will tell you how to conduct such research separately.

Cryptocurrency active trading

If you go beyond simple passive waiting for big percentages, then cryptocurrencies provide practically unlimited opportunities for traders. Primarily due to the next key factors:

Volatility

Cryptocurrency markets are renowned for their high volatility, meaning that prices can fluctuate significantly over short periods. While volatility presents risks, it also creates opportunities for traders to profit from price movements. Whereas in traditional financial markets, such as stocks and bonds, volatility is often lower, making it challenging to generate substantial returns over short periods.

Accessibility

Cryptocurrency markets are highly accessible to traders worldwide, offering a level playing field for participants regardless of geographical location or financial background. Unlike traditional financial markets, which may have barriers to entry such as high capital requirements, complex regulatory frameworks, and limited trading hours, cryptocurrency markets operate 24/7 and can be accessed with minimal capital and paperwork. This accessibility democratizes trading and allows individuals from diverse backgrounds to participate in the global financial system actively.

Unlimited options

The decentralized finance (DeFi) sector offers a virtually unlimited range of financial instruments for active traders. Decentralized exchanges (DEX) and centralized exchanges (CEX), liquidity pools, lending and leverage lending, borrowing, leverage trading, derivatives trading, synthetic assets, options, futures, prediction markets, NFT and meme-coin trading, arbitrage, trading-bots and algorithmic trading. Experienced and skilled traders with high technical awareness and competent risk management strategy can skillfully combine all these opportunities to receive truly unprecedented rewards for trading in 24/7 mode.

You can conduct your own research on DeFi projects that interest you as a trader using as the entry point the

https://defillama.com/yields/projects

Cross-Border Payments and Remittances

Separately from digital payments, I would like to highlight cross-border payments and remittances. Precisely because Cryptocurrencies removes the need for intermediaries like banks or payment processors, like VISA or MasterCard or national regulators, issuing licenses for this activity, while conducting cross-border payments and remittances. All this makes the process easier and cheaper for end users, you and me.

You can use stablecoins like USDC and Tether (USDT) to enable seamless remittances and international transfers, particularly beneficial for individuals in regions with limited access to traditional banking services.

But mind, this is truly a monumentally huge market. Therefore, I think that States, traditional banks and payment systems will not give up so easily. And it is precisely in this part that cryptocurrencies will remain outlaw for a long time. However, this does not prevent you from using it in everyday life and transferring funds to your partners or family abroad right today.

Play-to-earn

Isn’t it cool to play and earn money at the same time? Play-to-earn gaming models leverages blockchain technology and cryptocurrencies to reward players for their time and skills. Games like Axie Infinity and Decentraland allow users to earn cryptocurrency by participating in gameplay, trading virtual assets, and contributing to the ecosystem.

If you are interested in this topic, then you can begin your independent immersion with the ratings of projects that deal with this. It seems better to start the study with the leaders. They set the trend and determine the direction of development.

Check out the following lists:

https://coinmarketcap.com/view/play-to-earn
https://chainplay.gg
https://www.playtoearn.online

And you can start earning your crypto by playing online games already tomorrow.

Participate in DAO.

Decentralized autonomous organizations (DAOs) are community-governed organizations that allow members to collectively make decisions and manage resources. DAO is a collective of anonymous individuals who choose participation and contributing to a blockchain project by means of owning tokens (cryptocurrency) of this project. In other words, it is an online organization of individuals united around some idea, without a single point of control. They stick to a specific protocol defining rules of a given DAO. DAOs are fully autonomous and transparent. Smart contracts of a DAO initially carry the foundational rules of this organization, ensure a governance mechanism that allows individuals to vote, execute the agreed upon decisions, coordinate action through resources’ allocation to deliver a goal of a DAO. Due to the open-source nature of transactions and smart-contracts at any point, proposals, voting and decisions can be publicly audited. DAO differentiates powers of token holders based on a contribution level. DAOs can operate across borders without difficulty, bringing members together across geographic boundaries. Decentralized governance makes them more resilient to risks coming from central points of failure. Individuals who wish to participate in the DAO purchase the required amount of DAO cryptocurrency and entitle to actively participate in this community. Active participation is expressed in the ability to vote on proposed changes or receive income in the form of commissions from the general income of this DAO.

A notable example is UniswapDAO (https://gov.uniswap.org) and this news

https://blockworks.co/news/uniswap-token-pumps-fee-switch-proposal

UNI token holders are rewarded now by protocol fees.

If you are interested in becoming an active participant in the DAO, then again, you can start by narrowing the overall ratings. Where to find the community closest to your spirit and interests.

Here is a list of resources for finding your dream DAO.

https://coinmarketcap.com/view/dao
https://deepdao.io/organizations

Of course, you can set up your own DAO according to your goals and vision and invite your friends and everyone to it. So, with the help of cryptocurrencies, you will be able to become part of the innovatory community tomorrow and make your contribution to the development of the blockchain industry, and even in some cases receive a money reward for this.

Creating your own businesses. Make your own cryptocurrency.

Yes. Exactly. One of the options for using cryptocurrency today for regular people is to launch your own project in the field of blockchain technology and mint your own cryptocurrency. This industry is a huge niche of unsolved problems. If we are talking about creating your own business in the crypto industry, then today there are a great many of the most pressing and unresolved problems, where possible to put efforts. This is simply an endless field for the activities of creative and energetic entrepreneurs.

Let’s highlight some of these compelling issues.

Regulatory Compliance

Regulatory uncertainty and compliance requirements vary widely across jurisdictions, posing challenges for businesses operating in the crypto space. Startups that navigate regulatory complexities effectively, implement compliance measures, and engage with regulators proactively can mitigate legal risks and foster trust with users and investors.

Education and Awareness

Despite the increasing interest in cryptocurrencies, many people still lack a basic understanding of blockchain technology and its potential applications. Businesses that provide educational resources, training programs, and community outreach initiatives can play a vital role in raising awareness, fostering adoption, and empowering individuals to participate in the crypto economy.

Tokenization of real world assets (RWA)

Traditional asset classes, such as real estate, stocks, and commodities, can be illiquid and inaccessible to retail investors. Businesses that leverage blockchain technology to tokenize assets, enabling fractional ownership and trading of otherwise illiquid assets, can democratize access to investment opportunities and unlock new markets.

***

As a summary

Here is a visualization of the content of this article:

In conclusion, the journey through the use cases of blockchain and cryptocurrencies undertaken in this article reveals a landscape rich with opportunities for ordinary individuals. From facilitating digital payments to enabling long-term investments and passive income streams, cryptocurrencies are reshaping the way people interact with financial systems. The advantages of privacy, low fees, and financial freedom inherent in cryptocurrencies offer compelling reasons for individuals to embrace this emerging technology. Moreover, the innovative concepts of play-to-earn gaming, participation in decentralized autonomous organizations (DAOs), and even creating one’s own.

***

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Introduction

In the last review (Cryptocurrencies for dummies) we remembered that #Blockchain, in simple terms without rigid technical details, is a distributed and decentralized database in which there is no single owner of the system, unlike traditional systems.

Today there are already tens of thousands of crypto projects built on blockchain technology with their own cryptocurrency.

We also defined that #Cryptocurrency is any token (entry in the blockchain) of any project built on the basis of blockchain technology, which has sufficient value for people to be a mean of exchange for other resources in the virtual space.

In this review, let’s try to figure out what cryptocurrencies there are. This is necessary to find the answer to the logically following ones: How to estimate cryptocurrency? How to earn with cryptocurrency?

Let’s get started…

***

Why is it important for you to understand what cryptocurrencies there are?

Understanding cryptocurrency classifications is important for several reasons:

General education and awareness. As blockchain and cryptocurrencies continue to evolve and gain mainstream attention, a good understanding of this topic will allow you to become part of this technological revolution faster and more effectively than 99% of people. Figuratively speaking, while others continue to count on their abacus, you are already starting to use a personal computer.

Identifying use cases. Knowing what types of cryptocurrencies there are helps you identify cryptocurrencies that suit your personal interests and use cases. Without knowing what types of cryptocurrencies there are, you may simply not be aware of the existence of a certain type of crypto-project, although this application option may solve your immediate problem and correspond to your specific tasks.

Investment and Trading. Different types of cryptocurrencies may exhibit distinct price trends, volatility levels, and provide diverse financial tools. By understanding classifications, investors and traders can make more informed decisions about which cryptocurrencies to invest in or trade based on their goals, risk tolerance, and market conditions. By spreading investments across different types of cryptocurrencies, investors can reduce risk exposure and potentially enhance returns by capitalizing on diverse market opportunities. If you are going or already invested in crypto-trading, you MUST gain a solid awareness of types of cryptocurrencies.

***

Well, what cryptocurrencies are there?

Unfortunately, there is no strict limit on the number of ways to classify cryptocurrencies, since they can be grouped and classified in different ways based on different criteria. But the most commonly met categories of cryptocurrencies are:

• Altcoins.

• Stablecoins.

• Smart-contract platforms.

• Proof of Work (PoW) coins.

• Proof of Stake (PoS) coins.

• dApp coins.

• Decentralized Finance (DeFi) coins.

• Privacy Coins.

There are many more ways to classify cryptocurrencies, each providing a unique insight into the diverse characteristics and functions of blockchain technologies. Moreover, each cryptocurrency can belong to several categories at once. For the reason that classification is carried out both according to technological characteristics and functional purpose and there is no single standard.

It is worth noting that such a variety of classifications tells us about the wide range of applications and use cases for cryptocurrencies.

Next, we will go through the designated classes of cryptocurrencies with a simple explanation of what they are.

Altcoins:

“Altcoins” is a term used to refer to all cryptocurrencies other than Bitcoin. The name is derived from “alternative coins.” Altcoins encompass a wide range of digital currencies, each with its own unique purposes, and underlying technologies.

Examples include Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Solana (SOL) and many others.

Stablecoins:

These cryptocurrencies are designed to maintain a stable value by pegging their price to a fiat currency (like the US dollar), a commodity, or a basket of assets. For example, Tether (USDT) and USD Coin (USDC) are backed 1:1 by US dollars held in reserve. It is worth noting that stablecoins are a de facto private currency and are highly dependent on the financial stability of the organization providing its reserves. For example, Tether (USDT) is issued by Tether Limited, and the stability of USDT depends on the company’s ability to maintain sufficient reserves of US dollars.

Another example of stablecoin. DAI cryptocurrency are backed by reserves in other cryptocurrencies, maintains close 1:1 exchange rate with US dollar.

Smart Contract Platforms:

“Smart contract platforms” refer to blockchain networks that support the creation and execution of smart contracts. Smart contracts automatically execute in a blockchain environment the terms of the contract when predefined conditions are met, without the need for intermediaries.

Moreover, not all blockchains support smart contracts by default.

The first and most famous #Bitcoin blockchain was launched back in 2009. However, the idea of when predetermined logic is executed based on certain predetermined rules was brought to life by the creators of #Ethereum in 2015.

Currently, the most used smart contract platforms are Ethereum (ETH), Solana (SOL), Binance Smart Chain (BNB), Arbitrum (ARB).

Proof of Work (PoW) Coins:

This classification is carried out on the basis of the technology that ensures consensus in the blockchain. And these are cryptocurrencies, like Bitcoin (BTC), which rely on the PoW consensus mechanism, where miners compete to solve complex mathematical puzzles to validate transactions and create new blocks of entries on the blockchain.

Proof of Stake (PoS) Coins:

This is one more classification which is carried out on the basis of the technology that ensures consensus in the blockchain. In contrast to PoW, PoS cryptocurrencies validate transactions and create new blocks based on the amount of coins participants hold and are willing to “stake” as collateral. Examples include Ethereum (ETH) and Solana (SOL). These days, majority of blockchain use this technology for securing consensus.

dApp coins:

“DApp coins” or decentralized application coins, refer to cryptocurrencies or tokens native to specific decentralized applications (DApps) built on smart contract platforms. These coins are often used as utility tokens within their respective DApps, providing access to features, services, or governance rights within the application ecosystem.

Examples of popular dApps coins today: Uniswap (UNI), Aave (AAVE), Compound (COMP), Galxe (GAL) and many others.

Decentralized Finance (DeFi) coins:

Decentralized finance (DeFi) coins, also known as DeFi tokens, are cryptocurrencies of dApp projects specializing in decentralized finance services (DeFi) such as decentralized exchange, lending, borrowing, yield farming, staking, leverage lending, liquid pools, derivatives and so on…. Examples of popular DeFi coins include Uniswap (UNI), Aave (AAVE), Compound (COMP), Maker (MKR).

Privacy Coins:

Cryptocurrencies focused on providing enhanced privacy and anonymity for transactions, appealing to users who prioritize confidentiality. As an example Monero (XMR) coin. Monero (XMR) operates on its own blockchain. Monero prioritizes privacy and anonymity, obscuring transaction amounts, sender addresses, and receiver addresses using cryptographic techniques such as ring signatures, stealth addresses, and confidential transactions.

***

Where else can I find knowledge about cryptocurrencies ?

For further independent study of the topic of cryptocurrencies, I recommend the following resources.

https://www.investopedia.com/terms/c/cryptocurrency.asp

Offers beginner-friendly guides, tutorials, and educational articles on cryptocurrencies and blockchain.

https://cointelegraph.com

Offers news, market analysis, and educational content on cryptocurrencies and blockchain.

https://coinmarketcap.com

one of the most popular and widely used cryptocurrency data websites, providing a wide range of information and metrics related to cryptocurrencies and digital assets.

https://dappradar.com

leading web-resource for analyzing and tracking decentralized applications (dApps) built on various blockchain platforms.

https://blockchainmetrics.online

offers insights about leading smart-contract platforms, ranking them, striving to enlighten real valuable, reliable and prospective platforms (This project is under development, please be understanding)

***

As a summary.

Cryptocurrencies come in various types, including altcoins, stablecoins, smart contract platforms, PoW coins, PoS coins, dApp coins, DeFi coins, and privacy coins. Understanding these classifications is crucial for education, investment decisions, and identifying use cases. Each type serves different purposes, from facilitating transactions to supporting decentralized applications and providing privacy features. Resources like DappRadar, Investopedia, CoinTelegraph, CoinMarketCap, and BlockchainMetricsOnline offer valuable insights and tools for learning about cryptocurrencies.

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