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Significance of EIP-1559 | Part 4 | DeFi: In & Out

Understanding ERC 1559 and its significance Since its inception, the Ethereum blockchain has come a long way. However, there is no denying that some parts of this technology are still riddled with a few flaws. One such part is the Ethereum monetary policy. Current Ethereum Fee Model In simpler terms, the current fee model of Ethereum is […]

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Understanding ERC 1559 and its significance

Since its inception, the Ethereum blockchain has come a long way. However, there is no denying that some parts of this technology are still riddled with a few flaws. One such part is the Ethereum monetary policy.

Current Ethereum Fee Model

In simpler terms, the current fee model of Ethereum is nothing but a simple auction mechanism, i.e., first-price auction. In other words, if you want your transactions to be selected by the miner, just pay higher gas fees. Yes, it’s that simple.

However, if observed rigorously, this simplicity in the fee model actually leads to some very concerning as well as undesirable scenarios.

This first price auction mechanism results in a very inadequate as the miners simply filter the incoming transactions on the basis of high to low prices. This procedure technically leads to a scenario where the users end up paying excessively for their transactions

Eric Conner, who was one of the authors behind EIP 1559 shared very interesting data that clearly depicts how users grossly overpay by more than 5x to get their transactions mined.

Additionally, when it comes to wallets, for instance, Metamask, this fee model makes it incredibly troublesome for wallets to accurately anticipate the fees that should be paid for a particular transaction.

Enters EIP 1559

One can never deny that in the present era, the longevity of any technology is, more often than not, subject to the evolution and improvements of its functional and operational aspects.

EIP 1559 can be understood as one of the imperative improvement proposals that quite effectively addresses the issues in the current fee model.Before understanding the significance of EIP 1559, let’s first have a brief glance at the working mechanism of this proposal:

  • To begin with, EIP 1559 includes 2 major concepts:
    • BASE FEE.
    • Elasticity of the Block Capacity

Base Fee can simply be understood as the minimum fees that must be paid by the users to get their transaction included in the block.

Quite interestingly, this base is adjustable. It means the base fee depends on the congestion in the Ethereum network. Higher the congestion, the higher the Base Fee.

On the other hand, the elasticity of the blocks allows the miners to create further blocks with a comparatively larger capacity. For instance, changing the maximum limit of gas from 12.5M to 25M gas, in the time of high demand in the network.

Now, if the demand continues to be high, the miner would keep producing blocks with utmost capacity but also increase the Base Fee with every new block.

The subsequent increase in the base fee plays a significant role because the high price will drive away some of the users and gradually reduce the demand. Once the congestion in the network is lowered, the Base Fee goes down as well.

Qucik Question: What if the miners themselves boost the Base Fee to earn more profits?

Well, EIP 1559 solves this issue quite effectively.

In order to prevent any such scenario, the entire Base fee in this fee model is simply burnt. The miners only receive the miner tip.

Significance and Merits of EIP 1559

  1. Reduction in transaction costs: EIP 1559 quite effectively reduces the transaction costs up to 90%.
  2. Prevention from Fee Manipulation: This proposal eradicates any possibility of manipulation of the base fee since the BASE FEE IS ALWAYS BURNT and is received by NO ONE.
  3. Burning BASE FEE is Profitable for Users: In case you haven’t noticed yet, Burning the BASE FEE is actually making ETH more valuable. This is because a higher demand in the network means higher BASE FEE which ultimately leads to a higher number of ETH being burnt. This excessive burning of ETH reduces the supply of ETH, thus increasing its price or demand.
  4. Mitigation of the Wait Time: The increase in the Block capacity at the time of extreme congestion in the network technically leads to more transactions being mined. This enhances the user experience even at the time of high network demand.5.Fees can now be accurately anticipated by the Wallets: Unlike the traditional fee model of Ethereum, EIP 1559 plays a remarkable role by enabling the wallets to easily predict the fee for the users. Since the rise or fall of the block size is effectively constrained, the base fee can quite easily be calculated. It allows the wallets to predict an accurate base fee by simply observing the data received from the previous blocks.

Parts of this series:

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://blog.quillhash.com/2021/02/05/significance-of-eip-1559-part-4-defi-in-out/

Blockchain

CLS Group Posts Uptick in March FX Volumes as Markets Remain Active

FX swap demand last month even crossed the record achieved by the company in March 2020.

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CLS Group, a major foreign exchange settlement provider, reported positive growth in trading activities in March across all offered forex instruments. The company posted an average daily traded volume of $1.977 trillion for the month, which is 1.8 percent higher than February’s numbers.

The increase in the demand can be seen across forward, swap, and spot FX markets, where the company is operating. The demand for FX swaps leaped the highest last month with around a 3 percent jump to $1.377 trillion from February’s $1.353 trillion. It was even higher than what the company recorded in March 2020 when the entire financial market saw extreme volatility due to the Coronavirus breakout.

Looking Forward to Meeting You at iFX EXPO Dubai May 2021 – Making It Happen!

The forward and spot FX market also jumped higher by 2 percent each to $0.117 trillion and $0.483, respectively. However, the overall monthly figures remained lower than what the FX settlement provider reported a year ago.

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FBS Broker Updates its Trading Platform for Excellent PerformanceGo to article >>

Following the Industry Trend

“In the first quarter of 2021, we witnessed record average daily traded volumes of USD1.95 trillion, demonstrating a consistent increase of FX market activity year-on-year,” said Keith Tippell, CLS’s global head of product. “This was despite a 10% decrease in overall volumes in the month of March 2021 compared to the record highs in March 2020, driven by the extreme market volatility relating to the COVID-19 pandemic.”

Tippell further elaborated that a significant portion of the FX demand was generated by two currency pairs, USD/JPY and USD/HKD, as both recorded a monthly uptick of 15 percent and 38 percent, respectively.

Meanwhile, the company is expanding its industry footprint with more and more partnerships. In the past few months, Capitolis and BGC Group tapped CLS to enhance their FX services.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.financemagnates.com/institutional-forex/execution/cls-group-posts-uptick-in-march-fx-volumes-as-markets-remain-active/

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Blockchain

CLS Group Posts Uptick in March FX Volumes as Markets Remain Active

FX swap demand last month even crossed the record achieved by the company in March 2020.

Avatar

Published

on

CLS Group, a major foreign exchange settlement provider, reported positive growth in trading activities in March across all offered forex instruments. The company posted an average daily traded volume of $1.977 trillion for the month, which is 1.8 percent higher than February’s numbers.

The increase in the demand can be seen across forward, swap, and spot FX markets, where the company is operating. The demand for FX swaps leaped the highest last month with around a 3 percent jump to $1.377 trillion from February’s $1.353 trillion. It was even higher than what the company recorded in March 2020 when the entire financial market saw extreme volatility due to the Coronavirus breakout.

Looking Forward to Meeting You at iFX EXPO Dubai May 2021 – Making It Happen!

The forward and spot FX market also jumped higher by 2 percent each to $0.117 trillion and $0.483, respectively. However, the overall monthly figures remained lower than what the FX settlement provider reported a year ago.

Suggested articles

FBS Broker Updates its Trading Platform for Excellent PerformanceGo to article >>

Following the Industry Trend

“In the first quarter of 2021, we witnessed record average daily traded volumes of USD1.95 trillion, demonstrating a consistent increase of FX market activity year-on-year,” said Keith Tippell, CLS’s global head of product. “This was despite a 10% decrease in overall volumes in the month of March 2021 compared to the record highs in March 2020, driven by the extreme market volatility relating to the COVID-19 pandemic.”

Tippell further elaborated that a significant portion of the FX demand was generated by two currency pairs, USD/JPY and USD/HKD, as both recorded a monthly uptick of 15 percent and 38 percent, respectively.

Meanwhile, the company is expanding its industry footprint with more and more partnerships. In the past few months, Capitolis and BGC Group tapped CLS to enhance their FX services.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.financemagnates.com/institutional-forex/execution/cls-group-posts-uptick-in-march-fx-volumes-as-markets-remain-active/

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Blockchain

Chinese Police Confiscated $3.8 Million in Crypto After Arresting EOS Gambling dApp Team

$3.8 million in bitcoin and EOS seized in China from a team of developers operating a decentralized gambling platform built on the EOS blockchain.

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Chinese police officers have confiscated nearly $4 million in various cryptocurrencies after a raid against several developers that operated a decentralized gambling app built on the EOS blockchain.

$3.8 Million in Crypto Seized

After receiving tips of suspected illegal activity involving the developers of the dApp called Biggame, the Jiangsu police department opened an investigation. Ultimately, this led to the arrest of 15 people.

During the raid, the authorities found and seized 1.3 million units of EOS and BTC. Converted in fiat currencies, this amount equals 26 million yuan or $3.8 million.

According to the report, this is the first criminal case the police solved in connection with illegal online gambling inside China.

The dApp’s structure allowed it to attract players to games such as Dice and Texas Hold’em. The customers placed their bets using EOS smart contracts.


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The Chinese officials reported that in the period between June 2018 and December 2020, the group behind the dApp allegedly gained profits from the operations with crypto assets worth 60 million yuan or about $10 million.

It’s not the first time Chinese police go after fraud related to blockchain-based applications and platforms. As reported last year, the authorities arrested 109 people connected with the cryptocurrency pyramid scheme PlusToken. The well-known Ponzi scheme has defrauded investors of more than $5.7 billion.

”Internet Cleansing Movement”

The biggest economy in Asia – China – appears to be one of the leading countries regarding cryptocurrency mining and distribution but has also had tons of experience with illicit activities coming within its borders.

The arrest in Jiangsu highlights the Chinese law enforcement’s goal to neutralize any illegal online activities – from gambling and telecommunication fraud to money laundering. The mission was referred to as ”Internet cleansing movement.”

Furthermore, the end of last year saw an increasing number of court rulings in this field. According to the officials, nearly 100 individuals have been convicted for laundering money via crypto deals that involved more than $30 million worth of the most widely utilized stablecoin – Tether (USDT).

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Source: https://cryptopotato.com/chinese-police-confiscated-3-8-million-in-crypto-after-arresting-eos-gambling-dapp-team/

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Blockchain

$10 Billion in Liquidations as the Crypto Market Cap Evaporated $360B in Hours

Record-setting liquidations worth $10 billion in the past 24 hours as the entire crypto market plummeted by double-digit percentages. 

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The enhanced volatility in the past day caused nearly $10 billion in liquidations in less than a day as bitcoin, and all altcoins fell hard. Naturally, over 90% of the liquidated amount came from long positions. 

  • CryptoPotato reported earlier today the adverse price developments in the cryptocurrency market. Bitcoin fell by more than $9,000 in hours, Ethereum lost $400, and so on. With most digital assets plummeting by double-digits, the cumulative market cap lost $360 billion at one point. 
  • As it generally happens, the community speculated for possible reasons. One theory outlined rumors indicating that the US Treasury Department plans to charge numerous financial institutions for laundering money using cryptocurrencies. 
  • While the reason is still debated, the severe price drops caused pain for traders. Data from Bybt shows a whopping amount of $9.98 billion liquidated in the past 24 hours alone. Somewhat expectedly, over $9 billion were from long positions – meaning 91%.  
  • Most of the liquidations took place on Binance, which is somewhat expected as it’s the leading exchange by volume. Following were Huobi and Bybit.
  • More interestingly, the largest single liquidation order happened on Binance and it had a face value of a whopping $68.73 million.
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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/10-billion-in-liquidations-as-the-crypto-market-cap-evaporated-360b-in-hours/

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