1. CRYPTOCURRENCY (ETHEREUM V2 STAKING POOLS)
CRYPTOCURRENCY (ETHEREUM V2 STAKING POOLS)
For my first proposal I would recommend investing into the ever growing cryptocurrency market. As the market grows and becomes functional in everyday use it is important to look towards the future of the market and the direction it is going. Therefore, choosing a blockchain where it already has the capabilities grounded for expansion and adaptability is a great investment.
I purpose investing into Ethereum mainly as well as handful of DEFI tokens for the maximum returns from cryptocurrency.
WHAT IS CRYPTO CURRENCY
Bitcoin was developed originally to solve a very specific problem: how to solve the double-spending problem without a central authority acting as arbiter to each transaction. Therefore, the blockchain was created and governance coin was developed called bitcoin to act as a incentive for following the rules of the blockchain, also known s smart contracts.
• The double-spending problem is a specific case of transaction processing.
• Transactions must either happen or not. transactions must be atomic (provide the guarantee of happening before or after other transactions)
• A lack of atomicity is precisely the problem of the double-spending problem: sending money from spender A to receiver B, must happen at a specific point in time, and before and after any other transactions. If this were not the case, it would be possible to spend money more than once in separate but simultaneous transactions.
WHAT IS BLOCKCHAIN TECHNOLOGY
the main problem any transactional system applied to finance must address is “how to order transactions when there is no central authority”. Furthermore, there can be no doubts as to whether the sequence of past transactions is valid.
For a monetary system to succeed, there can be no way any parties can modify previous transactions. A vetting process for past transactions must also be in place. This is precisely what the blockchain system in Bitcoin was designed to address.
blockchain is a verifiable transaction database carrying an ordered list of all transactions that ever occurred.
• Transactions are stored in blocks.
• Each block in the network points to the previous block, effectively creating a chain.
The longer a block has been in the blockchain (the farther it is from the last block), the lesser the probability it can ever be removed from it.
Block creation is a purposely computationally intensive task. The difficulty of creation of a valid block forces anyone to spend a certain amount of work. This ensures malicious users in a big enough network cannot easily out pass honest users
WHAT IS ETHERUM
Ethereum is a global computing platform with a native currency, Ether (ETH).
• Solidity is Ethereum’s programming language and used to create smart contracts that can be deployed on the chain.
• Developers chose to build their apps on Ethereum’s blockchain because it highly decentralized.
• These peer to peer apps on Ethereum are known as decentralized apps (dApps) and are capable of providing trust less products and services.
• As the native currency on the Ethereum platform, ETH is the gas that is needed to run dApps on the platform.
Ethereum was launched in 2015 as an upgrade to the perceived weaknesses in Bitcoin. Its use cases provided more opportunities for developers to create new applications, so it eventually became a separate and competitive entity. The foundation is currently the most actively developed blockchain project in the world.
Although Ethereum brings general computations to the blockchain, it still makes use of a “coin”. Its coin is called “ether” and it is a number that can be stored into account addresses and can be spent or received as part of transactions or block generation.
Although the concept of the blockchain was born out of the research into cryptocurrencies, they are much more powerful than just that.
Furthermore, the blockchain provides a cryptographically secure way of performing these state transitions. Basically, not only the state of the blockchain can be verified by any outside party, but any state transitions initiated by blockchain users can only be performed in a secure, verifiable manner.
WHY IS ETHEREUM SO IMPORTANT
To run certain transactions, users must spend Ether. But why?
A Turing-complete language is a language that can perform any computation. (If there is an algorithm for something, it can express it).
• Ethereum scripts, called smart contracts, can thus run any computation. Computations are run as part of a transaction.
• Since computation is costly, and it is in fact rewarded by giving nodes that produce blocks ether, what better way to limit computations than by requiring ether for running them. Thus, Ethereum solves the problem of denial of service attacks through malicious (or bugged) scripts that run forever.
Every time a script is run, the user requesting the script to run must set a limit of ether to spend in it. Ether is consumed by the script as it runs.
This is ensured by the virtual machine that runs the scripts. If the script cannot complete before running out of ether, it is halted at that point. In Ethereum the ether assigned to an script as a limit is known as gas.
BITCOIN vs ETHERUM
Bitcoin was built to do one thing well (provide a way for people to anonymously transfer value from one to another without a central banker)
Ethereum built on the idea of the blockchain so it can do a lot of things. Ethereum is able to do many things well instead of just serve as a platform to give us a store of value token.
The Ethereum platform was built primarily to monetize operations of Ethereum smart contracts and dApps. Both Ethereum and Ether are so well received, however, that people have created use cases for the cryptocurrency outside of its core function.
Ethereum is such a flexible platform that some people are actually starting to hold their Bitcoin on the Ethereum chain instead of on the Bitcoin blockchain. This is known as a “tokenized bitcoin.” Ether cannot be held on the Bitcoin blockchain.
THE MAIN DIFFRENCES
• Bitcoin is a cryptocurrency. Ethereum is a platform.
• Bitcoin transactions are primarily monetary. Ethereum transactions may be executable code.
• Transactions are much faster on the Ethereum network than on Bitcoins.
• Bitcoin is primarily a store of value and medium of exchange. Ethereum is not.
WHAT IS ETHERUM V2
Ethereum 2.0 is a set of upgrades currently in progress on the Ethereum blockchain that would make the network more scalable, secure, and sustainable.
These upgrades have actually been in development since 2014 and represent a major transition for the world's second-most popular cryptocurrency.
THE PROBLEM WITH THE CURRENT NETWORK
• To recap (Ethereum is a decentralized network powered by the digital ledger blockchain technology that can be used to conduct digital payments. It differs from Bitcoin in that code can be built and programmed onto Ethereum's blockchain network to create smart contracts and decentralized apps that run constantly, and that cannot be manipulated or controlled by a third party.)
Ethereum 2.0 upgrades will attempt to greatly improve this network. As Ether and Ethereum have grown in popularity, the network has gotten more clogged by transactions. Currently, it can handle 15 to 45 transactions per second, which sounds impressive, but is proving not nearly enough to handle all of Ethereum's users from across the globe. The high demand is also driving up transaction fees
A big initiative of Ethereum 2.0 is to make the network more scalable so it can handle all of the activity on the network.
To ease some of the pressure, developers are turning to a concept called sharding that will create 64 new chains on the Ethereum network to further spread the volume.
• This will take the massive amount of data currently being stored on Ethereum nodes and break it into smaller groups that will be stored on more databases, which will ease pressure on the current system and allow for more transactions per second this will also make the network more secure and sustainable.
Ethereum 2.0 is also planning to move away from the energy-intensive mining of tokens to a process called staking. As the demand for crypto has increased, miners have had to use an incredible amount of computing power and therefore energy to mint new tokens.
Sharding will help do away with mining. Instead, Ethereum will turn to staking, a process in which Ether owners store a certain number of tokens away in a crypto wallet on their own personal device, and then use those tokens to validate and forge new Ether tokens. The transition to Ethereum 2.0 could make the network nearly 100% more energy efficient.
• If executed properly It will create a network that could potentially process 100,000 transactions per second. It will also create a much more sustainable network without the energy-intensive mining and introduce smart contracts to the broader world, increasing Ethereum's real-world utility.
WHAT IS CRYPTO POOLING/STAKING
A mining pool is a joint group of cryptocurrency holders who combine their resources to mining power
• Cryptocurrency mining pools are groups of miners who share their computational resources.
• Mining pools utilize these combined resources to strengthen the probability of finding a block or otherwise successfully mining for cryptocurrency.
• If the mining pool is successful and receives a reward, that reward is divided among participants in the pool.
HOW A MINING POOL WORKS
Individually, people contribute their processing power toward the effort of mining. If the pool is successful in these efforts, they receive a reward.
Rewards are usually divided between the individuals who contributed, according to the proportion of each individual's processing power or work relative to the whole group.
Mining is often not a profitable venture for individuals. Many cryptocurrencies have become increasingly difficult to mine in recent years as the popularity of these digital currencies has grown and the costs associated with expensive hardware necessary to be a competitive miner as well as electricity oftentimes outweigh the potential rewards.
Mining pools require less of each individual participant in terms of hardware and electricity costs and increase the chances of profitability. Whereas an individual miner might stand little chance of successfully receiving a mining reward, teaming up with others dramatically improves the success rate.
STAKING WITH STAKEWISE
StakeWise is an Ethereum 2.0 staking service that strives to achieve the highest possible yield for users. They do this by running a secure and stable banking-grade infrastructure, by enabling yield farming and theoretically also compound staking with unique tokenomics, and by charging low fees
StakeWise Pool, where your stake is pooled with other participants. Every stake in the Pool gets tokenized upon deposit, to allow each and every user to transfer or exchange their deposited and earned ETH2 for other assets whenever they feel like it.
StakeWise Pool is a network of validators created and operated by StakeWise on behalf of stakers using ETH deposited into the Pool. All rewards and penalties generated by the Pool are distributed among stakers pro-rata according to their share of the Pool. The balance of ETH deposits and rewards is reflected in sETH2 (staking ETH) and rETH2 (reward ETH) minted to stakers in a 1:1 ratio.
THE RISK vs RETURNS
The market cap of Bitcoin around the beginning of 2020 was around $150 billion. The Ether market cap is about 1/10 of that size, coming in at around $16 billion. As of May 2021, Bitcoin’s market cap is hovering around $1 trillion, and Ether’s is now 1/3 the size approaching $400 billion quickly.
Despite the drastic down spike, the coin is still in a overall upwards trend and seems to have rebounded and starting to possibly form a pennant downwards trend which could indicate a huge opportunity for investment as the price reaches all-time lows since 2017.
The returns if you invested in said given year:
YEAR INVESTED AMOUNT VALUE NOW
2015 £100,000 £132,000,000
2017 £100,000 £4,000,000
2018 £100,000 £2,000,000
2020 £100,000 £400,000
If you wore to put all £10,000,000 into ethereum right now and staked for 5 years. For 10million you would receive a total of 5,000 eth tokens at £2,000 each. Within 5 years the expected value being £9,000 per token would mean you will have a value of £45,000,000. The 6% APY for staking would also mean you have a extra £11,000,000+ at the end of the 5 year span. Resulting in a total of £54 million return on investment from the £10million stake.