CRYPTO ACADEMY SEASON3 WEEK1 ASSIGNMENT POST FOR @imagen BY @jimah1k
DESIGNED THIS MYSELF
Hello guys
It’s another seasons of steemit’s crypto academy. This weeks lesson is all about staking I must say I enjoyed the lesson thank you professor @imagen for this wonderful lecture. After reading the lecture notes and doing my own research I present my assignment post for this weeks task.
QUESTION 1
RESEARCH AND CHOOSE 2 PLATFORMS WHERE YOU CAN DO STAKING, EXPLAIN THEM, COMPARE THEM AND INDICATE WHICH ONE IS MORE PROFITABLE ACCORDING TO YOUR OPINION.(BINACE IS NOT ALLOWED)
Before I tackle this question let me explain what staking is. Staking is simply locking your assets or cryptocurrencies so that you can gain rewards it’s just like mining. Staking of coins utilizes the proof of stake algorithm. A lot of crypto currency’s can be staked you can stake Cosmos (ATOM), Tezos (XTZ), Algorand (ALGO) and many more all this coins can be stakes in either Binance, coin base, kraken, cu coin.
The two platforms I will be choosing for where we can do staking will be Kraken and Coin base.
Kraken is a crypto currency exchange platform which was established in the year 2011 by Jesse Powell. The main idea of the establishment of kraken is to facilitate crypto currency’s to fiat trading later on in 2019, the company introduced staking into their platform. Currently kraken offers up to 70 currency’s to trade with some of them include BTC, ETH, DOT, ADA, DOGE
Now let’s take a look at currencies you can stake in kraken and your yearly rewards.
| Crypto currency | Yearly rewards % |
|---|---|
| Polcadot(DOT) | 12% |
| Kusama (KSM) | 12% |
| Cardano | 4%-6% |
| Flow(FLOW) | 4.6% |
| Ethereum (ETH 2) | 5%-7% |
| Solana | 6.5% |
| Cosmos(ATOM) | 7% |
| Tezos(XTZ) | 5.5% |
| Kava(KAVA) | 20% |
Make sure you create your account you can do so with this LINK.
Deposit the assets you want to stake
After depositing click on the asset in your spot wallet and select stake.
You can choose to stake all select and confirm.
Staking successful.
Rewards can be easily moved or transferred to your wallet.
Kraken has high rewards annually as compared to other exchange you can look at the table to confirm.
You will receive your rewards two times a week from your staked currency.
Coin base is an exchange platform that was established in the year 2012 by Brian Armstrong and Fred Ehrasam. Where you can exchange your currency for fiat and other assets. Coin base is a user friendly interface very simple to use.
Let’s look at some currencies that can be staked in coin base and their APY%
| Crypto currency | APY % |
|---|---|
| Ethereum (ETH 2) | 5% |
| Cosmos | 5% |
| Dai | 2% |
| Tezos | 4.63% |
| Algorand | 4% |
HOW TO STAKE IN COIN BASE
visit their official website using this LINK
Register an account
Deposit the asset to be staked.
To be able to stake you must verify your account first. Coin base will automatically opt you in, you can choose to opt out by Go to Settings on the apple or Android and select Financial Services. From there you can choose to opt out.
Now looking at the two staking platforms kraken has a lot of assets you can stake with whiles coin base has limited assets you can stake with. And also if you take into consideration of the yearly rewards you will reap you can see that kraken has more rewards when you stake as compared to that of coin base.
Again the fees on kraken are very low as compared to coin base let’s look at the trading fees of both exchanges. The trading fees charged by kraken is 0% to 0.26% but in coin base it is 0.5% and also the maximum trading amount of coin base is smaller than that of Kraken, $2,500 and $100,000 respectively.
There is no doubt the kraken is more profitable than coin base looking at all these factors I mentioned above low transaction fees, high maximum trading amount, high rewards by staking and plenty assets to stake with.
QUESTION 2
WHAT IS IMPERMANENT LOSS
Impermanent loss as the name suggests is the temporary loss funds this happens when providing a liquidity. It can also be the difference in holding the assets compared to providing the liquidity. Impermanent loss is mostly observed in standard liquidity pools where the LP(liquidity provider) has to provide 2 assets in the correct form let’s say 50:50 if one of the assets is volatile than the other an impermanent loss is set to happen. An example let’s say in a uniswap of two assets and then the price of one goes high and the LP withdraws his liquidity pool the loss becomes irreversible therefore making it permanent.
Now in other to avoid impermanent losses it is advised that the LP should provide liquidity to stable coins. To avoid fluctuations of the assets prices.
Also the LP should no withdraw his liquidity in the case of when one assets price go up he should wait until it reaches the initial amount in other to avoid permanent loss
IMPERMANENT LOSS ESTIMATION COMPARED TO HOLDING
SUMMARY OF GRAPH
- 1.25x price change = 0.6% loss
- 1.50x price change = 2.0% loss
- 1.75x price change = 3.8% loss
- 2x price change = 5.7% loss
- 3x price change = 13.4% loss
- 4x price change = 20.0% loss
- 5x price change = 25.5% loss
Source
QUESTION 3
WHAT IS DELEGATED PROOF OF STAKE
Delegated proof of stake is an algorithm which was established in the year 2014 by Daniel Larimer. Delegate proof of stake grants the users of the particular network an example is steemit ecosystem to vote for witnesses or delegates. These delegates are going to be in charge of validating transactions, on the network. The voting power of the user is determined by the number of coins the user has in simple terms this means the higher the coins you have the higher voting power you have. Every witness has his own proposal when he is asking for your votes some times when the witness collects the rewards he shares it with his voters.
Delegated proof of stake varies differently from proof of stake transaction made on delegated proof of stake is faster than that of proof of stake. The witness in other to be voted they must be entirely honest and efficient or else they won’t be voted.
ADVANTAGES OF DELEGATED PROOF OF STAKE
In terms of hardware you don’t need any complex or expensive machine a regular laptop will do.
Faster transactions unlike the proof of stake.
the energy consumption in delegated proof of stake is at minimum as compared to proof of work.
inefficient delegates or dishonest delegates are voted out.
In this lecture I have learnt that you can earn rewards by staking them and also during my research I found out that kraken exchange is the best platform to stake your coins because it has low transactions cost, high rewards at the end of the year. And many more also my understanding of delegated proof of stake has broaden making me understand that the higher your tokens the more voting power you have. This has been a great lecture thank you professor.
Hello @jimah1k. Thank you for participating in Season 3 of the Steemit Crypto Academy.
I congratulate you, you did a good job and demonstrate a good command of the topics requested in the assignment.
I hope to continue correcting your next assignments.
Grade: 9.0
Thank you professor. It’s an honor to be lectured by you.