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        <title>MagicLemming</title>
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            <title><![CDATA[Speculating the first weeks of CV launch]]></title>
            <link>https://paragraph.com/@magiclemming/speculating-the-first-weeks-of-cv-launch</link>
            <guid>0q16ssLc29tggHOMdpas</guid>
            <pubDate>Wed, 11 May 2022 02:48:48 GMT</pubDate>
            <description><![CDATA[Hello everyone, I know I have been staying awfully quiet over twitter and medium space. I attempted to make another post couple week ago, then triggered reddit bot again, got pissed off and did not write for a while. It is also true that since my last post, overall space atmosphere turned bearish (I did make a reddit post about this which received some flack) and Jewel has not been doing well price wise. We have been bearing through the crypto winter with no real exciting DFK news for the pas...]]></description>
            <content:encoded><![CDATA[<p>Hello everyone,</p><p>I know I have been staying awfully quiet over twitter and medium space. I attempted to make another post couple week ago, then triggered reddit bot again, got pissed off and did not write for a while. It is also true that since my last post, overall space atmosphere turned bearish (I did make a reddit post about this which received some flack) and Jewel has not been doing well price wise. We have been bearing through the crypto winter with no real exciting DFK news for the past 2 months. No QOL updates, airdrops delayed or rewards been minuscule, but let’s not worry about it in this post.</p><p>As Spring approaches there are some signs of hope. Now we finally know the launch date for Crystalvale and has some basic information on token/farm structure. We will be revisiting what has been said on their document/medium/AMA to speculate on how the first weeks of CV will look like.</p><p>I want to remind everyone that I cannot reliably predict the price of Crystal. As we go further into discussion, it will be apparent that we should be expecting a huge volatility of the token price at launch. We will discuss some of the safer and riskier strategies later in the article.</p><p>Disclaimer: again NFA. Most of this is going to be plotting numbers and data that already exist and making some wild predictions out of them.</p><p>Farming structure</p><p>This will be the most important part of CV at launch for sure. As mentioned in their documents and roadmap, CV will not launch at the current capacity of Serendale. This means that the current Serendale features such as questing and hero trading/summoning will not be available at launch. Hero marketplace and summoning plays an important part of token usage and deflationary pressure therefore this fact should be kept in mind at all times.</p><p>The first most important part of the farming structure will be the available LPs. As for right now, we are almost certain that following options will be available at launch: Jewel single staking and Jewel-Crystal pair.</p><p>It is not clear if other pairs will be available at launch. These are native pairs with some of the core assets in the ecosystem. For Crystalvale, these should be the following: Crystal-Avax (most likely to receive dual farming reward), Crystal-stablecoin, Crystal-BTC and Crystal-ETH. There certainly is a concern with other players front running these pairs if not available at launch, therefore my guess is on the side that these should be available from the start. However, according to the docs we may see very limited options in the beginning.</p><p>Reviewing the emission rate</p><p>Another important part of understanding the DFK power tokens is the emission. You should have seen “remember the old days” DFK screenshots when the APR used to be in 6 digits. Most of DFK early success is credited towards creating a sustainable tokenomics while maintaining a degen level APR through their linear locking system. Let’s gather the numbers from the official docs.</p><p>As you can see from the screenshot, couple things stand out.</p><p>We can conclude that Crystal is more deflationary compared to Jewel for these reasons, and APR should reflect this accordingly. We could see as low as x8 less APR compared to Serendale APR, and since single staking will be heavily diluted due to its risk averse nature compared to LP, its APR should be much lower. We may not see degen level APRs like we did at Serendale launch.</p><p>Who them be dumping Crystal</p><p>The other important aspect of understanding CV tokenomics is the circulating supply at launch. This is difficult to compare to Serendale for couple reason.</p><p>We know for sure that not everyone is going to hodl their airdropped crystals. The plan for crystal airdrop announced at the beginning of the year created a huge surge in demand for Jewel which was basically got front ran during middle of January when locked Jewel trading became available (gave whales a chance to exit). Depending on the price of entry, some of us are down more than 50% for hodling Jewel through the snapshot period. I predict that there is a large demand for exiting with profits from airdropped tokens.</p><p>Predicting initial circulating supply for Crystal will be difficult. Let’s start with airdropped amount.</p><p>You can see roughly 2 millions Crystals will be airdropped, which only accounts for 1.5% of the total supply.</p><p>Let’s look at Jewel supply at launch.</p><p>We can see that 10 million was pre minted but only 2 million was provided for liquidity. 5 million is likely the payout to the team in linear fashion.</p><p>Following the similar path, some of the crystals should be pre-minted as they will be given out for questing on CV. Couple thoughts to consider</p><p>We can predict that Crystal initial circulating supply could be higher than that of Jewel, but this is at the mercy of the DFK team.</p><p>Connecting them dots</p><p>Ok, I have been talking a lot of numbers and pointers that at this point it could sound all gibberish. Let’s gather our thoughts and put them into a conclusion.</p><p>Given these points, and if they turn out to be the reality, we could see early dumping of the Crystal token. There are couple different strategies out of this.</p><p>Once again, feedbacks are appreciated. Happy farming.</p>]]></content:encoded>
            <author>magiclemming@newsletter.paragraph.com (MagicLemming)</author>
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            <title><![CDATA[Self-Directed IRAs — Investing for Retirement with Crypto and Other Alternative Assets]]></title>
            <link>https://paragraph.com/@magiclemming/self-directed-iras-investing-for-retirement-with-crypto-and-other-alternative-assets</link>
            <guid>BeAAS6pV83ee0Xu7Mz9H</guid>
            <pubDate>Thu, 05 May 2022 12:08:25 GMT</pubDate>
            <description><![CDATA[As alternative asset classes move toward greater acceptance, many people have become interested in including non-traditional investments in their retirement planning. Self-directed IRAs (sdIRAs)have been available since the passage of ERISA in 1974, but recently there seems to be much more interest in them. This is no doubt the result of the recent crypto boom and more investors looking to hold crypto assets in tax-advantaged accounts. For anyone looking to make use of a sdIRA, this will serv...]]></description>
            <content:encoded><![CDATA[<p>As alternative asset classes move toward greater acceptance, many people have become interested in including non-traditional investments in their retirement planning. Self-directed IRAs (sdIRAs)have been available since the passage of ERISA in 1974, but recently there seems to be much more interest in them. This is no doubt the result of the recent crypto boom and more investors looking to hold crypto assets in tax-advantaged accounts. For anyone looking to make use of a sdIRA, this will serve as a quick guide on the principles involved, with an eye toward the specific circumstances of crypto investors.</p><p>It really isn’t. Under §408 of the Internal Revenue Code, there is no distinction made between self-directed and other IRAs. Functionally, a sdIRA operates much the same as a traditional (or roth) IRA, with the same contribution limits, withdrawal restrictions, and income limitations.</p><p>The biggest difference is in the type of assets you are able to own with a sdIRA like:</p><p>Since the majority of the IRAs available are from major brokerages (Fidelity, Schwab, Vanguard, etc.), it is a common misconception that you are only allowed to hold traditional financial assets (stocks and bonds) in an IRA. This isn’t true, but custodians of self-directed accounts are not allowed to give advice on which investments you choose to fund with sdIRA funds, so most major brokerages don’t offer self-directed options. You will need to work with a third-party custodian or trustee to open a self-directed IRA.</p><p>Self-directed IRAs have all of the normal features of other qualified retirement plans. The key decision you need to make when setting it up is when to pay the taxes. With traditional IRAs, money put in during the year (subject to annual limits) is deductible on your current tax return, and you pay tax on distributions from the IRA at ordinary income rates in the future. With a roth IRA, there is no upfront tax deduction — money goes into the plan on an after-tax basis — but distributions are generally tax-free in retirement.</p><p>There are other differences between traditional and roth plans including income limits, required minimum distributions (RMDs), and early withdrawal penalties &amp; taxes that might make you favor one type over the other, but most people make the decision based on the timing of taxes alone.</p><p>The prohibited transaction rules in IRC §408 and §4975 apply to all qualified retirement plans, not just self-directed plans, but they become important to note in any discussion around self-directed plans because of the level of control an investor can have over the funds in his or her account. Generally, these rules prohibit any transaction involving a “disqualified person” — a term we can broadly define as any family member or service provider of the IRA account holder.</p><p>If an IRA account holder engages in a prohibited transaction, the entire account balance of the IRA will be deemed to have been distributed to you in the year in which the prohibited transaction took place. You would be liable for all taxes &amp; penalties on the distribution.</p><p>Likewise, if an IRA account holder pledges the IRA account as collateral for a loan, then the collateral amount is deemed to be distributed to the account holder. As in the prohibited transaction example above, you would be liable for taxes &amp; penalties.</p><p>In general, a sdIRA is an effective way to buy and hold crypto assets as part of your retirement strategy. However, there are a few considerations that most crypto investors should keep in mind:</p><p>Unrelated Business Income Tax — Commonly called by the acronym UBIT, this is tax owed on profits of an active business owned by a tax-exempt entity (i.e. an IRA). While common types of investment income are exempt from UBIT under IRC §512 including capital gains, interest, dividends, and certain rents, common types of crypto income are not mentioned.</p><p>Generally, for different types of crypto income, we apply the descriptor of the type of traditional income that it most closely resembles. For example, staking income is largely regarded as traditional interest income. However, this logic may not necessarily hold up in the context of UBIT.</p><p>When we discuss general income taxes, the distinction between interest income and ordinary income is rather unimportant. Both types of income are taxed at ordinary rates. So, if the IRS decides to classify staking income as ordinary income at some point in the future, nothing will change on the 1040s you’ve filed. However, that change in classification could mean that staking income is subject to UBIT.</p><p>Other types of crypto income will most certainly be subject to UBIT as well, including mining and income earned by many DeFi protocols. There are workarounds here involving the use of blocker corporations to lessen the blow of UBIT, which are advanced strategies. The general rule with crypto held in an IRA is that anything beyond general trading (i.e. buying and selling on an exchange) could be considered unrelated business income and subject to UBIT.</p><p>Collectibles — Under IRC §408(m), investments in collectibles are treated as distributions of IRA funds. This is essentially the same treatment we discussed above for prohibited transactions. The issue here, as it relates to crypto, is the definition of the term “collectible” and whether the term applies to NFTs.</p><p>There has been much talk in tax circles about whether the broad definition of a collectible as “any work of art” would capture NFTs, or whether the catch-all definition a few lines later of “any other tangible personal property” that the Treasury Secretary deems as a collectible would be too narrow, since NFTs are not tangible. At present, we don’t know.</p><p>Certainly, any of the art-based NFTs would fall under collectibles — and the majority of NFTs we see currently are art-based — but as the space evolves and more things are tokenized aside from art, this may change. However, due to the uncertainty around whether NFTs are collectibles, as defined by the Tax Code, you would do well to avoid holding NFTs in a sdIRA for now.</p><p>There is far more to discuss around self-directed retirement accounts than what was mentioned in this piece, but it should serve as a good primer for those who are curious about how they work. The ability to put crypto and other alternative assets in tax-advantaged accounts is appealing to risk-on investors, but they should be mindful of the limits on certain activities that may invalidate the tax advantages of IRAs, especially given the uncertainty of crypto’s broader place in the Tax Code.</p><p>If you would like me to write about something related to taxes, crypto, or both, then let me know here.</p>]]></content:encoded>
            <author>magiclemming@newsletter.paragraph.com (MagicLemming)</author>
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            <title><![CDATA[STARCRAZY : THE FUTURE OF GAMEFI]]></title>
            <link>https://paragraph.com/@magiclemming/starcrazy-the-future-of-gamefi</link>
            <guid>Yoy8GSxVPWBbhOCiurR7</guid>
            <pubDate>Mon, 25 Apr 2022 05:27:54 GMT</pubDate>
            <description><![CDATA[StarCrazy is a play-to-earn game that is built on the IoTex blockchain. It is a mobile-based game where players can buy character cards. These cards revolve around animated cats called stars and are NFTs. Each star has eight body parts, with a corresponding rarity for each body part. The body parts differ from each other in terms of rarity, they range from normal to ultra-rare. These stars have digging powers. and can be combined to increase digging powers used in the StarMIne. There they can...]]></description>
            <content:encoded><![CDATA[<p>StarCrazy is a play-to-earn game that is built on the IoTex blockchain. It is a mobile-based game where players can buy character cards. These cards revolve around animated cats called stars and are NFTs. Each star has eight body parts, with a corresponding rarity for each body part. The body parts differ from each other in terms of rarity, they range from normal to ultra-rare. These stars have digging powers. and can be combined to increase digging powers used in the StarMIne. There they can be used to extract native GFT tokens.</p><p>The more digging power a. Star has, the more GFT tokens that would be allocated to the player. Assign your startz to mine and earn GFT or GFS tokens. StarCrazy also has a marketplace that allows players to buy, sell, trade, and place bids on Stars. Players can start their auction to sell their Stars or participate in the official auction that generates random Stars.</p><p>Pay attention to StarCrazy as it is one of the most popular NFT games on the market today, hence people are already getting hooked on.</p><p>GFT AND GFS</p><p>GFT and GFS are the two native tokens of the StarCrazy platform. The GFS Token serves as the Governance token</p><p>GFT. serves as a reward currency for the game. As an analogy, governance tokens are a bit similar to shares of stock, with the holder of these tokens getting a say in the future direction of the game. Future decisions will lie in the hands of the GFS holders and earnings will accompany such a decentralized system as well.</p><p>To start playing this game, users have to download the ioPay mobile wallet. This is where all your GFT and GFS tokens will be stored.</p><p>CONNECTION BETWEEN IOTEX AND STARCRAZY</p><p>StarCrazy is part of the IoTeX ecosystem, one of the most exciting blockchain networks today. Not only does the IoTex platform support scores of amazing projects, but the network has significantly lower rates than networks like Ethereum. IoTeX provides an opportunity for players to engage in P2E and NFT games with affordable transaction fees (as cheap as a fraction of a penny). There are no worries about transferring in-game assets and depositing, converting, or withdrawing tokens into and out of other exchanges.</p><p>“StarCrazy uses the IoTeX blockchain which is super fast and super cheap. That is what makes it so sticky for the players. It’s fun, it’s fast and anyone can earn money” quoting Marcos Dinnerstein.. With more than 15 dapps to start with, IoTeX is steadily building a diverse dapp environment. StarCrazy is currently the third most used app on IoTeX and number one in the gaming section. Anyone can play. for minimal fees on IOTX.</p><p>BRIEF DETAILS ABOUT</p><p>IoTeX is the top blockchain and IoT platform that is building the internet of Trusted Things, a decentralized network where users can exclusively own/control their devices and data . The native utility token for IoTeX is $IOTX</p><p>FOR MORE INFORMATION ON STARCRAZY VISIT :</p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://starcrazy.com/">https://starcrazy.com/</a></p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://starcrazy.com/blog/">https://starcrazy.com/blog/</a></p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://twitter.com/StarCrazyGame">https://twitter.com/StarCrazyGame</a></p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://t.me/GameFantasyToken">https://t.me/GameFantasyToken</a></p><p>FOR MORE INFORMATION ON IOTEX VISIT :</p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://iotex.io">https://iotex.io</a></p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://twitter.com/iotex_io">https://twitter.com/iotex_io</a></p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://t.me/IoTeXGroup">https://t.me/IoTeXGroup</a></p><p><a target="_blank" rel="noopener noreferrer nofollow ugc" class="dont-break-out" href="https://iotex.medium.com/">https://iotex.medium.com/</a></p>]]></content:encoded>
            <author>magiclemming@newsletter.paragraph.com (MagicLemming)</author>
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            <title><![CDATA[You Can Use Bitcoin to Pay for Goods and Services or You Can Hold onto Them as An InvestmentCrypto, Future World Evolution & how Society could grow from it]]></title>
            <link>https://paragraph.com/@magiclemming/you-can-use-bitcoin-to-pay-for-goods-and-services-or-you-can-hold-onto-them-as-an-investmentcrypto-future-world-evolution-how-society-could-grow-from-it</link>
            <guid>hCUCT9EWfmRuGB5HslBa</guid>
            <pubDate>Tue, 19 Apr 2022 14:34:46 GMT</pubDate>
            <description><![CDATA[Bitcoin is a digital currency that can be used to pay for goods and services or it can also be an investment.So the world is in an upheaval, every paradigm we grew up with is coming under stress, or being completely destroyed. Every assumption I had of where it would be today has been weirdly compromised. But that being said, a lot of things have evolved from the forces of “for every action there is an opposite and equal reaction”, seems to be happening as well. Orwell’s 1984 novel had entert...]]></description>
            <content:encoded><![CDATA[<p>Bitcoin is a digital currency that can be used to pay for goods and services or it can also be an investment.So the world is in an upheaval, every paradigm we grew up with is coming under stress, or being completely destroyed. Every assumption I had of where it would be today has been weirdly compromised. But that being said, a lot of things have evolved from the forces of “for every action there is an opposite and equal reaction”, seems to be happening as well. Orwell’s 1984 novel had entertained some directions that have come to pass, but again, reactions to them are showing up. The premise of dictatorial and overreaching governments that have the ability to snoop on everyone’s private stuff are happening, but with the advancement of social media, and the ability for individuals to hide on them, has allowed for every politician and government to be monitored for any perceived missteps, and it to be made public around the world. Thus the populations now have some control on overreach. But of course there is more backlash from governments as they ramp up their oversight on everybody. It’s interesting to note how quite a few individuals think they can push the boundaries of society, do a “live &amp; in person”, create a fiasco, record &amp; post it on the internet and expect no repercussions.</p><p>Trying to get a handle on the future directions of stuff can be a bit confusing, I have to put it through my own ingrained society filter and see if anything makes sense on the other end. I think I’ll start from the bottom, “meat &amp; potatoes” approach. Everybody needs to survive, therefore sustenance &amp; a roof over our heads to live. Once that has happened, the next thing is survival of the herd. We have tried many types of population discipline, from despotic, socialistic, democratic and capitalism and multiple mixtures of them all. None seems to create long term satisfaction to the masses, as aberrations develop in all of them over time, because unfortunately, they are run by humans, and we know how badly they handle things.</p><p>Up till now, all things were dealt with starting from a local platform, that being village, city, state, and country, then finally reaching the world. At each level, usually the amount of care or interest put out by individuals is lessened by how much impact those groups have on them, and only if it impacts them personally, do they actually react to it.</p><p>The interesting thing, is now that the World Wide Web, and social media has made the world a lot smaller, so has the overreach of multiple governments messing in the affairs of other countries, sometimes with both good and bad consequences. I see the need but not the methodology used. We now have a quasi sort-of world governance system in place with the United Nations, that creates penalties against countries that don’t play by their rules.(not that some of the rules are not fair!) and even have a standing military to backup the more malicious infractions that occur. The unfortunate thing is that individuals in a country of any UN partner have little say in how it is operated, and the process to remove politicians that promote certain values that get put up the chain to create UN laws is so complex and almost impossible to do. Therefore individuals really don’t have much control over the larger picture that occurs around them.</p><p>But the paradigms have been shifting so quickly these days, that a quick snapshot of it doesn’t tell us much. other than confusing us. What I suspect may be happening is large rifts are starting to appear between alt left, right, and the “just leave me alone to run my life” personas. More and more people are getting tired of all levels of governments trying to control every aspect of the population and tax the hell out of them. From the 17th century, Louis XIV’s finance minister, Jean-Baptiste Colbert, famously declared that “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”</p><p>The Governments of the world have had a lot of time to learn how to pluck us, unfortunately it’s getting pretty cold out there without any feathers, thank God for global warming… So where do we go from here?</p><p>I think that the world wide web, and digital &amp; Crypto Currencies have opened the genie’s bottle, and I don’t think it will ever be put back. They are trying, and all the governments are either coming out with competing versions or will try to outlaw or legislate complete NYC laws for them, which negates the whole point of why they were developed in the first place. But… there will always be outlier’s against them, as there has always been an underground economy since the beginning of time.</p><p>On another note… G7 countries are suggesting minimum corporate taxes</p><p>But there are companies that have a valuation bigger than some governments and with the advent of some of them adding crypto to their purchasing mechanisms, is it possible that they are thinking of competing with governments themselves</p><p>So, just throwing it out there, what if some major company bought a large Island or a piece of land, not in control of any country and started their own Corporate Kingdom, and ran it on Crypto Currency, in fact if the property was big enough, they could invite like minded corporate companies to join them.</p><p>In the Nevada desert, Blockchains LLC aims to be its own municipal government</p><p>Is this a test of the system? So what would be the upside to doing this? If a Company bought an Island, how about no taxes to the population that resides there? therefore they wouldn’t need to pay as much to them. If the company was large enough, the whole economy of that place could be handled by the profits they make from income on world sales. if you look at remote corporate micro economies like mining camps, large fishing vessels and cruise ships, there is no tax charged by the company (other than from the governments of the countries they reside in) to the people working there. It’s run on the profits they make selling their product, so the model is there for it to work. Not only that, the whole point of Governments around the world keeping tabs on their populations, is only for tax collection. take that away and the need is greatly diminished.</p><p>Toss in sales and paid income done in Crypto Currency, and the ability to have your income kept private, there might be an exodus of people from high tax locations to get a job and move to a location like that. Also have the company’s stock on the block chain, and everyone that works there gets a piece, that could grow as they advance their careers. Talking about that, how about voting on the block chain on things the company wishes to promote, with smart contracts for privacy and that any monies used by the company above a certain amount need to be voted on by every one.</p><p>I realize that it’s not a perfect concept, and that there are rebels that would resent such an idea, But there will always be people that spray paint buildings and kids that get drunk at night at the park, puke, and throw their beer cans everywhere.</p><p>Initially I would expect resistance from a lot of governments, specifically with their own digital currencies, and trying to block Crypto, but if the model as I suggest works, I could see some governments competing to attract globally mobile investment by offering increasingly generous corporate tax rates and provisions.</p><p>But I also think that governments with different ideological leanings that might use more forceful methodologies to push their agendas. These are my ponderings, as misguided as they might be, The Future is the only one that knows and hasn’t been speaking to me lately, I think I’ll have a Scotch, and see if she drops by…</p><p>visit my website</p><p>But there are risks involved with owning bitcoins, such as the fact that they’re not regulated by any government. And while the long-term prospects of this digital currency look good, there’s still plenty of danger in getting involved with bitcoin.</p><p>This blog post will help you understand how to invest in bitcoin without risking too much money and what to do if you already own some bitcoins but want more safety when investing your money.</p><p>Hi, The Crypto Cell is an education organization that helps newcomers learn about cryptocurrency investing so they can invest and trade responsibly and safely with our expert advice on diversifying your portfolio, buying low, selling high, and avoiding scams.</p><p>Bitcoin is a cryptocurrency that was created in 2009. It can be used as an alternative to cash and credit cards when paying for goods or services, or it can also be held as an investment. However, Bitcoin is not currently regulated by any government, which means there are risks involved with owning them. And while the long-term prospects for this digital currency look good, there’s still plenty of danger in getting involved with Bitcoin. In this blog post, we’ll explore the pros and cons of using Bitcoin as a payment method and as an investment vehicle.</p><p>Bitcoin is a new and popular form of currency. You can use it to buy goods or services, but if you’re not merchant-friendly then there’s also the option to hold onto your bitcoin as an investment instead!</p><p>Bitcoin was the first decentralized cryptocurrency, meaning it’s not controlled by any one person or company. This means no matter where you are in possession of your bitcoin nobody can take away YOUR freedom to transact with this form of wealth!</p><p>Bitcoins are mined using computers solving complex math problems</p><p>One of the most important things in today’s world is digital currency. Bitcoins were created as an alternative to traditional fiat money, which has many drawbacks such as restrictions on circulation and control by central authorities; however, there have been some concerns over whether or not this type of cryptocurrency can truly replace our current monetary system because it lacks stability due its high degree uncertainty regarding valuation mechanisms (whether prices go up or down).</p><p>Think about it this way, bitcoin is an electronic form of money that’s not issued by any central bank or authority. It only exists because people are using their computing power to secure and record transactions on the blockchain in order for them all verified through cryptography!</p><p>Bitcoin has pros and cons like any other form of currency. However, because it is not regulated by any government, there are risks involved with owning them. While the long-term prospects for this digital currency look good, there’s still plenty of danger in getting involved with Bitcoin. In this blog post, we’ve explored the pros and cons of using Bitcoin as a payment method and as an investment vehicle. So what do you think? Is bitcoin something you’re interested in? Let us know in the comments below!</p>]]></content:encoded>
            <author>magiclemming@newsletter.paragraph.com (MagicLemming)</author>
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            <title><![CDATA[Understanding Token Economics]]></title>
            <link>https://paragraph.com/@magiclemming/understanding-token-economics</link>
            <guid>IE6UCZyrhG1BZWJLWIKJ</guid>
            <pubDate>Mon, 11 Apr 2022 16:14:11 GMT</pubDate>
            <description><![CDATA[Token Economics or “Tokenomics” is the topic of understanding a cryptocurrency’s supply and demand characteristics. First, it is valuable to evaluate the following simple concepts in our traditional economic system to understand how these forces act at play. Usually used interchangeably, yet both have different meanings and interpretations. Money supply refers to all the currency and other liquid instruments in a country’s economy. This directly affects the percentage of interest rates in an ...]]></description>
            <content:encoded><![CDATA[<p>Token Economics or “Tokenomics” is the topic of understanding a cryptocurrency’s supply and demand characteristics.</p><p>First, it is valuable to evaluate the following simple concepts in our traditional economic system to understand how these forces act at play.</p><p>Usually used interchangeably, yet both have different meanings and interpretations.</p><p>Money supply refers to all the currency and other liquid instruments in a country’s economy. This directly affects the percentage of interest rates in an economy. Change in the money supply is considered a critical factor in driving economic changes in the market. Monetary policy is used to control inflation, price levels, and business cycles. However, governments and private institutions solely determine the incentives to increase or decrease the money supply. This is a worrying prerogative, as the general public has little influence on money circulation. As of now, cryptocurrency is not considered part of the money supply. There are many reasons why this is not the case. Still, understanding that cryptocurrency is decentralized at its core makes it difficult for a government to pinpoint how much crypto its citizens hold.</p><p>Governments utilize measures of money to catalog the current monetary supply of a given country based on its liquidity. Each country has different ways to catalog these metrics, ranging from M0 to M5.</p><p>Reserve Money M0 =Monetary base of a country’s economy. High-Powered Money</p><p>Narrow Measure M1 = Includes all currency (like cash, no cryptocurrencies) in circulation, traveler’s checks, and checkable deposits.</p><p>Intermediate Measure M2 = Includes everything in M1 plus all savings deposits, time deposits below 100k USD, and retail money market funds balances.</p><p>Broad Measure M3 = Includes everything in M2 and time deposits larger than 100k USD, balances in institutional money market funds, and term repurchase agreements.</p><p>The United States Federal Reserve currently publishes the values of Narrow Measure of Money (M1) and Intermediate Measure of Money (M2).</p><p>Central banks are in charge of pumping money into the economy. This is done through monetary policy, which influences interest rates, sets bank reserve requirements, and influences open markets. Yet, the intrinsic value of this money is solely attached to a nation’s economic well-being measured by the Gross Domestic Product (GDP).</p><p>The value of money is determined by its demand. The same way goods and services are affected by how eager someone is to pay for something.</p><p>Money gets its value from three determinants:</p><p>Now that we better understand how our traditional economy works, drawing parallels between both ecosystems should be more intuitive. Overall we can make a significant distinction between traditional economics and token economics.</p><p>Also called non-feedback and feedback systems are terms usually used in engineering to denote how a system behaves. In economics, you will find externalities at the core of any process. These are unintended outcomes derived from some change. They can be positive or negative. Good examples for negative externalities are inflation from printing more money or air pollution from building a factory.</p><p>The traditional economy uses what is called an open-loop system. There is no space for state feedback. The desired outcome — or output, is independent of its input. This means that all monetary policy is created with the current state of the economy as a basis. Yet, the reaction produced in the economy is outside the scope of the policymaker. New policies will have to be drafted to address the problems of a new economic state.</p><p>On the other hand, Token economies are a closed-loop system. This means it can be dynamically changed through state feedback. The output is entirely dependent on the input. The input can be altered thanks to feedback and user participation. Here, there is greater control over the desired outcomes of economic policy, which can significantly improve stability long term.</p><p>Feedback can be submitted through official channels, by participating in the protocol’s decisions, or even through Decentralized Autonomous Organizations (DAOs)</p><p>Now that we can draw a parallel between traditional and token economics, we can start digging deeper into the basic concepts that define how the cryptocurrency ecosystem might be structured. It is essential to define the key factors that drive a cryptocurrency ecosystem.</p><p>These terms are both used interchangeably. Yet, some clear distinctions can be made. We must understand why these terms hold different meanings.</p><p>This is important as it helps us better understand the value generated in a token ecosystem. A blockchain creates value by including a mechanism aiming to solve a problem. A token generates value by using the existing technology and applying it to different use cases.</p><p>Similar to traditional economics, the supply of a cryptocurrency has a direct effect on its price. It is helpful to distinguish three different types of cryptocurrency supply:</p><p>Total Supply: Total amount of coins issued, regardless of where they are.</p><p>Max Supply: Maximum amount of coins that can ever exist within the ecosystem.</p><p>Circulating Supply: The number of coins currently in the market and owned by people.</p><p>As in traditional economics, changes in these supply subsets will directly affect the behavior of the markets where the coins reside. At the same time, we realize that the rules for these factors are much more flexible than in traditional finance. It is difficult to think about the maximum supply of the dollar. No defined set of dollars can ever exist in the economy. Yet, cryptocurrencies have the opportunity to decide for themselves if their supply would be unlimited — like fiat, or they want to cap it at a certain number — like bitcoin.</p><p>The power to manage supply resides on the mechanisms for distributing the cryptocurrency in question. Bitcoin, for example, uses proof-of-work to mint new coins. Which serves as a distribution and governance mechanism. Other protocols might use decentralized governing bodies to make these decisions democratically or simply leave it to the issuer’s own discretion.</p><p>The benefit is straightforward; with thousands of different cryptocurrencies, you find thousands of different mechanisms that can affect its supply. Each has pros and cons, but most are geared towards bringing a solution to traditional finance by utilizing decentralization at its core.</p><p>A token can derive its value from different things, but its primary function is to capture economic value from its own ecosystem. They do this by providing incentives and punishments that drive specific behaviors within the system. Tokens all have a shared goal. It can be world remittances like the Stellar blockchain (XLM), becoming a lending and borrowing entity like in Compound (COMP), or creating a storage network like with Filecoin (FIL). In the end, cryptocurrencies get their value from their utility. However, not all tokens are made with utility in mind.</p><p>There are many types of tokens and uses cases for them, but we will focus on only these three to have an overall idea of their use cases.</p><p>Utility Tokens: Utility tokens are integral for the ecosystem it was built for. These can be used to access features of a specific blockchain or even apps built on top of the blockchain — DAPPs.</p><p>Governance Tokens: These are utilized to drive decisions within an organization. A governance token can represent a vote or the stake of a person’s decision-making power within a decentralized entity.</p><p>Security Tokens: These are usually created with backing in traditional finance. They act as a more secure investment channel as they represent assets from the real world.</p><p>A consensus mechanism — or protocol, allows distributed systems to work together and stay secure. These mechanisms conceal a great deal of the logic utilized behind a blockchain; they are key concepts to understand how supply and demand works, and they set up the rules of an ecosystem. Among the most popular consensus we can find:</p><p>Proof-of-Work (PoW): In this protocol, a miner in the blockchain competes with others to create new blocks of information by solving a complex mathematical puzzle. The one that solves it the fastest is rewarded with a freshly minted native token. Then the block is shared in the network to publish transactions or smart contracts. This protocol takes a lot of energy to function, and decision power is in the hands of miners.</p><p>Proof-of-Stake (PoS): In PoS, the integrity of the network is maintained by allocating a share of this responsibility to a participant node holding tokens in it. This protocol is much more cost-effective than PoW, but it incentivizes holding tokens long-term to accrue more power within the system.</p><p>As of 2022, we can find many more consensus mechanisms available. Each of them tries to solve complex problems or improve consensus protocols already built. There is not an answer on what consensus is best, but understanding the ones where we participate is key to making sure you are safe and sound while participating in a token economy.</p><p>We can understand tokenomics as the set of mechanisms and characteristics that define a token-based economic system’s incentives, punishments, and behaviors. These are driven by many factors such as supply, demand, consensus mechanisms, and more.</p><p>Our traditional economy is vastly more complex than we can imagine. The forces controlling and shaping them give the everyday citizen little to no power over how its future is shaped. Cryptocurrency, and tokenomics as a practical study, is an opportunity for people to understand the power behind these complex economic ecosystems and participate in them. Like everything new, there are pitfalls in the crypto sphere, but having a basic understanding of what makes a token behave the way it does, will help you distinguish a solid crypto project vs. the next meme coin. Education and cooperation drive us a step closer to financial autonomy, creativity, and overall growth. The economy is changing. Will you?</p>]]></content:encoded>
            <author>magiclemming@newsletter.paragraph.com (MagicLemming)</author>
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