Today, tech companies like Facebook, Google, Amazon, and Apple are stronger than ever, whether measured by market cap, share of top mobile apps, or pretty much any other common measure.

These companies also control massive proprietary developer platforms. The dominant operating systems — iOS and Android — charge 30% payment fees and exert heavy influence over app distribution. The dominant social networks tightly restrict access, hindering the ability of third-party developers to scale. Startups and independent developers are increasingly competing from a disadvantaged position.

A potential way to reverse this trend are crypto tokens — a new way to design open networks that arose from the cryptocurrency movement that began with the introduction of Bitcoin in 2008 and accelerated with the introduction of Ethereum in 2014. Tokens are a breakthrough in open network design that enable: 1) the creation of open, decentralized networks that combine the best architectural properties of open and proprietary networks, and 2) new ways to incentivize open network participants, including users, developers, investors, and service providers. By enabling the development of new open networks, tokens could help reverse the centralization of the internet, thereby keeping it accessible, vibrant and fair, and resulting in greater innovation.

Bitcoin was introduced in 2008 with the publication of Satoshi Nakamoto’s landmark paper that proposed a novel, decentralized payment system built on an underlying technology now known as a blockchain. Most fans of Bitcoin (including me) mistakenly thought Bitcoin was solely a breakthrough in financial technology. (It was easy to make this mistake: Nakamoto himself called it a “p2p payment system.”)

In retrospect, Bitcoin was really two innovations: 1) a store of value for people who wanted an alternative to the existing financial system, and 2) a new way to develop open networks. Tokens unbundle the latter innovation from the former, providing a general method for designing and growing open networks.

Networks — computing networks, developer platforms, marketplaces, social networks, etc — have always been a powerful part of the promise of the internet. Tens of thousands of networks have been incubated by developers and entrepreneurs, yet only a very small percentage of those have survived, and most of those were owned and controlled by private companies. The current state of the art of network development is very crude. It often involves raising money (venture capital is a common source of funding) and then spending it on paid marketing and other channels to overcome the “bootstrap problem” — the problem that networks tend to only become useful when they reach a critical mass of users. In the rare cases where networks succeed, the financial returns tend to accrue to the relatively small number of people who own equity in the network. Tokens offer a better way.

Ethereum, introduced in 2014 and launched in 2015, was the first major non-Bitcoin token network. The lead developer, Vitalik Buterin, had previously tried to create smart contract languages on top of the Bitcoin blockchain. Eventually he realized that (by design, mostly) Bitcoin was too limited, so a new approach was needed.

Ethereum is a network that allows developers to run “smart contracts” — snippets of code submitted by developers that are executed by a distributed network of computers. Ethereum has a corresponding token called Ether that can be purchased, either to hold for financial purposes or to use by purchasing computing power (known as “gas”) on the network. Tokens are also given out to “miners” which are the computers on the decentralized network that execute smart contract code (you can think of miners as playing the role of cloud hosting services like AWS). Third-party developers can write their own applications that live on the network, and can charge Ether to generate revenue.

Ethereum is inspiring a new wave of token networks. (It also provided a simple way for new token networks to launch on top of the Ethereum network, using a standard known as ERC20). Developers are building token networks for a wide range of use cases, including distributed computing platforms, prediction and financial markets, incentivized content creation networks, and attention and advertising networks. Many more networks will be invented and launched in the coming months and years.

Below I walk through the two main benefits of the token model, the first architectural and the second involving incentives.

Proponents of open systems never had an effective way to manage and fund operating services, leading to a significant architectural disadvantage compared to their proprietary counterparts. This was particularly evident during the last internet mega-battle between open and closed networks: the social wars of the late 2000s. As Alexis Madrigal recently wrote, back in 2007 it looked like open networks would dominate going forward:

In 2007, the web people were triumphant. Sure, the dot-com boom had busted, but empires were being built out of the remnant swivel chairs and fiber optic cables and unemployed developers. Web 2.0 was not just a temporal description, but an ethos. The web would be open. A myriad of services would be built, communicating through APIs, to provide the overall internet experience.

But with the launch of the iPhone and the rise of smartphones, proprietary networks quickly won out:

As that world-historical explosion began, a platform war came with it. The Open Web lost out quickly and decisively. By 2013, Americans spent about as much of their time on their phones looking at Facebook as they did the whole rest of the open web.

Why did open social protocols get so decisively defeated by proprietary social networks? The rise of smartphones was only part of the story. Some open protocols — like email and the web — survived the transition to the mobile era. Open protocols relating to social networks were high quality and abundant (e.g. RSS, FOAF, XFN, OpenID). What the open side lacked was a mechanism for encapsulating software, databases, and protocols together into easy-to-use services.

For example, in 2007, Wired magazine ran an article in which they tried to create their own social network using open tools:

For the last couple of weeks, Wired News tried to roll its own Facebook using free web tools and widgets. We came close, but we ultimately failed. We were able to recreate maybe 90 percent of Facebook’s functionality, but not the most important part — a way to link people and declare the nature of the relationship.

Some developers proposed solving this problem by creating a database of social graphs run by a non-profit organization:

Establish a non-profit and open source software* (with copyrights held by the non-profit) which collects, merges, and redistributes the graphs from all other social network sites into one global aggregated graph. This is then made available to other sites (or users) via both public APIs (for small/casual users) and downloadable data dumps, with an update stream / APIs, to get iterative updates to the graph (for larger users).*

These open schemes required widespread coordination among standards bodies, server operators, app developers, and sponsoring organizations to mimic the functionality that proprietary services could provide all by themselves. As a result, proprietary services were able to create better user experiences and iterate much faster. This led to faster growth, which in turn led to greater investment and revenue, which then fed back into product development and further growth. Thus began a flywheel that drove the meteoric rise of proprietary social networks like Facebook and Twitter.

Had the token model for network development existed back in 2007, the playing field would have been much more level. First, tokens provide a way not only to define a protocol, but to fund the operating expenses required to host it as a service. Bitcoin and Ethereum have tens of thousands of servers around the world (“miners”) that run their networks. They cover the hosting costs with built-in mechanisms that automatically distribute token rewards to computers on the network (“mining rewards”).

Second, tokens provide a model for creating shared computing resources (including databases, compute, and file storage) while keeping the control of those resources decentralized (and without requiring an organization to maintain them). This is the blockchain technology that has been talked about so much. Blockchains would have allowed shared social graphs to be stored on a decentralized network. It would have been easy for the Wired author to create an open social network using the tools available today.

Some of the fiercest battles in tech are between complements. There were, for example, hundreds of startups that tried to build businesses on the APIs of social networks only to have the terms change later on, forcing them to pivot or shut down. Microsoft’s battles with complements like Netscape and Intuit are legendary. Battles within ecosystems are so common and drain so much energy that business books are full of frameworks for how one company can squeeze profits from adjacent businesses (e.g. Porter’s five forces model).

Token networks remove this friction by aligning network participants to work together toward a common goal— the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new token networks like Ethereum have grown along side it.

Moreover, well-designed token networks include an efficient mechanism to incentivize network participants to overcome the bootstrap problem that bedevils traditional network development. For example, Steemit is a decentralized Reddit-like token network that makes payments to users who post and upvote articles. When Steemit launched last year, the community was pleasantly surprised when they made their first significant payout to users.

This in turn led to the appreciation of Steemit tokens, which increased future payouts, leading to a virtuous cycle where more users led to more investment, and vice versa. Steemit is still a beta project and has since had mixed results, but was an interesting experiment in how to generalize the mutually reinforcing interaction between users and investors that Bitcoin and Ethereum first demonstrated.

A lot of attention has been paid to token pre-sales (so-called “ICOs”), but they are just one of multiple ways in which the token model innovates on network incentives. A well-designed token network carefully manages the distribution of tokens across all five groups of network participants (users, core developers, third-party developers, investors, service providers) to maximize the growth of the network.

One way to think about the token model is to imagine if the internet and web hadn’t been funded by governments and universities, but instead by a company that raised money by selling off domain names. People could buy domain names either to use them or as an investment (collectively, domain names are worth tens of billions of dollars today). Similarly, domain names could have been given out as rewards to service providers who agreed to run hosting services, and to third-party developers who supported the network. This would have provided an alternative way to finance and accelerate the development of the internet while also aligning the incentives of the various network participants.

The initial pre-launch beta tests have been successful and the final edits are now complete. We are very pleased to say that the XERA Exchange launch is starting.

Let’s get the party started! We have decided to create some exciting rewards in the form of a massive air drop, an awesome bounty and some really great competitions. This will be your chance to ‘bag’ some XERA tokens ahead of the exchange go live. We will be releasing details as they happen so keep an eye on our social media channels for more information.

Great news — We will be opening the XERA wallets on 20th October 2019 and full deposit plus withdrawal of BTC and ETH will become available during November 2019. We will also be integrating USDT (Tether) as a trading pair in November.

A strong community

We are building a strong community who will become an important part of the XERA machine. A community that will be heard and well supported. We want to listen to ideas for improvements and suggestions for future enhancements and we want to reward those who lead the way.

To give us the best opportunity for succeeding and to become a leading global exchange, we need to continue with developing our trading tools and to constantly check and enhance our platform security. Our amazing developers have worked non stop to deliver the project into the hands of the public but we want them to go even further, making XERA the best in terms of trading tools, analytic facilities, low fees and overall customer trading experience. Therefore, we will constantly keep adding tools and developing our platform into the future.

Great news about partnerships. Partnerships have been mentioned previously and are now a reality. During the coming months we will be partnering with great names such as DASH, IOTA, Digibyte, Credits (CS), XRP and more!

So to summarize, we have a new team, a revised White Paper, many plans for future enhancements with a new roadmap and many future targets that we aim to achieve. We now have everything in place including a strong passion to succeed. With a higher level of marketing and an amazing community behind us, we are determined to reach success.

We hope you will join our growing community as we continually develop and add more features, tools and analytic facilities to give everyone a better crypto currency trading experience. We will also be adding more currency pairs to our exchanges.

To keep up to date with all our news and announcements, be sure to follow us here:

XERA Exchange: https://xera.tech

Telegram: https://t.me/xeraexchange

Twitter: https://twitter.com/xeratech

Facebook: https://www.facebook.com/xerablockchain/

LinkedIn: https://www.linkedin.com/company/13689122

Reddit: https://www.reddit.com/r/XeraExchange/

One of the first things to consider when deciding what to invest in crypto is the type of cryptocurrency you want to invest in. The two most popular options are Bitcoin and Ethereum, both of which have proven track records and strong communities backing them.

Bitcoin, often referred to as the “gold standard” of cryptocurrency, has consistently been one of the top performing digital assets. Its decentralized nature and limited supply make it a potentially attractive investment for those looking to diversify their portfolio.

Ethereum, on the other hand, is a more flexible platform that allows for the creation and execution of smart contracts. This makes it a potentially attractive option for those interested in the potential for decentralized finance (DeFi) and other applications of blockchain technology.

Another factor to consider when investing in crypto is the underlying technology. Blockchain, the technology that powers most cryptocurrencies, has the potential to revolutionize industries ranging from finance to supply chain management. Investing in blockchain technology, either through specific projects or through broader exposure to the industry, can provide a potential avenue for growth.

As a basic DYOR, let’s consider Ethereum, the pioneering smart contracts platform. Whenever the chain gets congested, usually due to a popular NFT drop, transactions become slow and expensive. To remedy this congestion issue, the original upgrade plan was to use “Sharding”, basically fragmenting the main blockchain into several interconnected blockchains, with each having its own specialization, e.g DeFi, NFTs, identity… However, it is looking like Ethereum will rely on L2s and side-chains to scale in the foreseeable future, as upgrading Ethereum is proving to be more complicated than anticipated. Enter Polkadot, a base chain of several specialized chains that is built from the ground up to scale through sharding. There are already several parachains (or app-chains, shards…naming conventions are still being finalized) that are live and unique in their scope and aim.

Now if you do your DYOR and conclude that you want to hold some DOT, the next question is how to stake it? you can stake on chain for ~ 15 % APR (not compounded), or you can stake on a centralized exchange for varying rates that aim to incentivize staking with them instead of keeping your assets in your own wallet and using native staking. Enter liquid staking, where you can stake on a parachain, get your normal DOT rewards for staking, and receive liquid DOT tokens that represent your staked DOTs and can be used to earn extra rewards, what’s not to love?

You get the idea now, in normal POS staking, you stake your tokens by choosing a validator or similar, you start receiving your normal staking rewards, and that’s the end of the story. In liquid staking, you stake an amount of DOTs, you start receiving your rewards, BUT you also receive an amount of liquid DOTs, usually named xDOT, where the “x” is a letter that varies per platform. These xDOTs represent your staked DOTS AND can be used as seen fit, e.g. to provide liquidity in DOT-xDOT farms for extra rewards. In this article we will explore three platforms that provide liquid staking: Acala, Biforst and Parallel. We will see how to stake your DOTs, receive your liquid xDOTs, and then how to stake your xDOTs for extra rewards. Double dipping at its finest.

Let’s keep two important things in mind before we start, in Polkadot, no matter what you do, always make sure to never go below 1 DOT in your account, otherwise the account gets reaped because your funds are below the existential deposit (another DYOR item). Second, the same way you need DOT as gas fee to transact on Polkadot main chain, you also need the specific parachain’s token for gas fees, so make sure to get parachain tokens from a CEX or a DEX.

As a wallet, I will be using Talisman, a Polkadot browser extension wallet that is intuitive and has a fantastic UI. It can downloaded at https://www.talisman.xyz