Steemit Crypto Academy Season 3 Week 8 - Beginner's Course - Understanding Tokens by @fathiafatawu
Token
A token is a cryptocurrency that does not have its own blockchain. There are some blockchains like Ethereum that allow people to build decentralized applications on top. These decentralized applications often comes with their cryptocurrency which is technically called a token. Most ICOs (Initial Coin Offering) are tokens. It’s very easy to create a token. When you create the token, you don’t have to create the blockchain, write the full code or worry about how it should be validated instead you just create the token and it runs on that blockchain.
Examples of tokens and the blockchain they are each built on:
| Token | Blockchain |
|---|---|
| Aave protocol | Ethereum |
| Uniswap | Ethereum |
| Klever | Tron |
| BitTorrent | Tron |
| FTX token | Binance chain |
| Thorchain | Binance chain |
| Everipedia | EOS |
A coin and a token are two words that are tossed around a lot in crypto. They can seem interchangeable but they’re really not. They’re referred to two distinctly different types of cryptocurrency.
A coin is a cryptocurrency which operates independently of any other platform such as Bitcoin ,lightcoin , ripple among others.These are all totally independent blockchains with the their own use cases, no management. It’s built on its own blockchain .
A token on the other hand requires another platform such as Ethereum to exist and operate. Examples of tokens include, augur, omisego , golem. These are tokens that are built on ethereum.
Moreso, it’s very easy to create tokens whilst creating a coin leads to mining and designing of nodes and other much complicated mathematical methods.
Lastly coins are much valuable than tokens.
Utility tokens
Utility tokens are very important cryptocurrencies that are used for a specific purposes, like purchasing goods or services. It’s common today to store information online, by using services like google drive in order to reserve a certain amount of storage space on the servers of these companies. Utility tokens give users or holders access to specific services and products on the blockchain.
Security tokens
A security token, sometimes called a “tokenized security” or a “crypto-security,” is more than a currency. It often represents ownership in real world asset. It is possible to speed up the closing of transactions by using blockchain-based security tokens. Security tokens make it simple for customers to access multiple investments.
Equity tokens
Equity tokens operates similarly to traditional stock asset. In other words, equity token holders have some form of ownership in their investments. Their tokens represent their actual ownership proportion.Equity tokens comes in many forms such as bonds, stocks, option contracts and so on
Non-fungible token( NFT)
A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. They are unique in a way that they cant be splitted or entirely changed for some other non-fungible tokens of the same.
Features of a token
Some features of tokens may include the following below:
- They are decentralized. That is,they are uncontrollable.
- Tokens can be bought and sold. The can be traded for other tokens, coins or fiat.
- Transactions with tokens are transparent and can easily be traced.
Among the examples of tokens I listed above, I chose to make a research on Uniswap which I briefly share below:
Uniswap is a decentralized exchange protocol consisting of smart protocols running on the Ethereum blockchain. Uniswap was created in November 2, 2018 by Hayden Adams who was a former mechanical engineer. Uniswap was estimated to be the largest decentralized exchange and the fourth largest cryptocurrency exchange overall by daily trading volume.
Uniswap is a platform that allows users to swap ethereum (ETH) and most ERC20 tokens without the use of intermediaries. It also gives users the option of contributing their own assets to the system's liquidity. They are compensated with the commissions made by each trade.
Uniswap's second edition was launched in May 2020. (V2). All liquidity pools in Uniswap V1 are made up of ETH and any other ERC20 tokens. Users can trade any ERC20 for any other ERC20, but they must always go through ETH to do so. Because ETH is the most liquid asset, the platform faced less risk in its early days.
1 billion UNI token is minted at genesis and will become accessible over the course of 4 years. Currently,the uniswap token allocation is given as follows:
- 60%to Uniswap community members (users)
- 21.266% to team members and future employees
- 18.044% to investors
- 0.69% to advisors
Current Analysis on Uniswap
Uniswap(UNI) is currently ranked #11 on CoinMarketCap. Uniswap price today is $27.98 USD with a 24-hour trading volume of $489,465,700USD. A live market cap of $16,438,969,947USD. It has a circulating supply of 587,454,179.51 UNI coins and a max. supply of 1,000,000,000 UNI coins.
Features of Uniswap
- Uniswap stands apart from other cryptocurrency exchange platforms because it is totally decentralized.
- It’s built on Ethereum blockchain
- Uniswap is exchangeable. Hence can be bought and sold.
Aim of the project
Unlike other exchanges, uniswap is designed to be a public good tool for the community to trade tokens without paying platform fees or dealing with middlemen.
In a nutshell, I must say that I have really enjoyed and learned a lot from this lecture.
Hello @fathiafatawu, I’m glad you participated in the 8th week of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:
Recommendation / Feedback:
Thank you for participating in this homework task.