Steemit Crypto Academy Season 3 Week 8 - Beginner's Course | Understanding Tokens by @lukman1
Hello fellow steemians, it's been another wonderful week and a great pleasure to attend this week's lecture. All thanks goes to the Almighty Allah and also a big thanks goes to Professor @reminiscence01 who took his time and make sure to digest this lecture to our understanding. This lecture was really helpful as I learned a lot from it.
Below is my homework post submission.
Tokens in cryptocurrency generally refers to an outstanding virtual currency which are tradable and they reside on blockchains which are already in existence. These special tokens are used to represent exchangeable and marketable assets that dwell on the blockchains of their own.
Because these tokens are tradable, they can be used as an alternative for other assets. These tokens(crypto tokens) are usually used in raising funds for sales in public. After the creation of a token, they are normally disseminated, traded and distributed through the ICO process. The acronym ICO stands for Initial Coin Offering and it's a process which has to do with raising funds in order to fund the development of a project.
In the crypto world, tokens are of different types and categories. So it's wrong to think that all tokens are created for a common purpose although they are all tradable. The different types of tokens are listed below:
Equity tokens
Non-fungible tokens(NFT)
Reward tokens
Security tokens
Utility tokens
As I stated earlier, tokens are built on existing blockchains because of the difficulty in creating a new block. So because of that, different tokens are build on different blockchains and I will be giving you various examples of tokens and the blockchain they are built on.
The table below illustrates various tokens as well as the blockchain they are built on.
Tokens and coins are mostly used by investors and traders interchangeable. They think they are the same but on the real, they are not.
The table below shows the difference between a coin and a token.
Utility tokens
Security tokens
Equity tokens
Non-fungible token (NFT)
Utility tokens are tokens that are built by blockchain users in the chain. They build this tokens with the expectation of improving and expanding the project on the blockchain.
Users are able get access to special benefits with the help of utility tokens. Not only that, they also helps the users to have access to special and distinct products on the blockchain they found themselves in. An example is that, a user on the Ethereum blockchain can easily make a deposit of Ether for a smart contact to be carried out on the Ethereum blockchain.
Some examples of Utility tokens are Timicoin, Basic Attention Token, Funfair and Brickblock.
Security tokens are tokens that are considered to be the digital modification of ancestral or traditional assets on the blockchain. Security tokens creates a link between digital tokens and traditional tokens, and connecting them together in the process.
Security token holders have the right to profit from blockchain projects, and they also own property rights just like traditional commodities and stocks.
The difference between equity tokens and security tokens are very minute, this is simply because both types of token almost share exact protocols. Equity tokens are also traditional traditional assets which makes it to be the same as security tokens.
The main reason for the creation of the equity token was to function as a share in the digital world. Equity token holders also have ownership rights and have the right to profit from the project.
A non-fungible token(NFT) is a type of token that is use to authorize or certify a digital asset to be distinct. The NFT is a unit of data that is stored on a blockchain, and it cannot be interchange. The reason why it cannot be interchange is because of the uniqueness of the value of each item.
The non-fungible tokens are special items which can be used to depict other items like audios, photos, videos and different kinds of digital assets. All users who hold NFT have ownership rights of the project and they also have the right to benefit from the project.
- Tokens are used for commercial purposes such as making purchases of goods and services.
- Tokens are decentralized and it's not control by the government.
- Tokens are so used to hold value at the same time storing it.
Among the tokens I listed in question 1, I will be writing on the Uniswap token.
The Uniswap token is a token that was created in the year 2018 by a man called Hayden Adams. Hayden Adams was the same man who developed the Ethereum blockchain. Just like all tokens, Uniswap is also a decentralized system which resides on the Ethereum blockchain.
The Uniswap platform has its native token called the UNI. The UNI is an ERC-20 token which functions through Ethereum. When the Uniswap platform was first created, it was referred to as by then time as Unipeg.
The Uniswap platform plays a major role in trading with automated token. It has gained a lot of recognition and popularity due to this bigger role it plays. The problems and issues of liquidity is catered for by this automated protocol.
One thing that attracted many users and investors was when the Uniswap platform started to create its own token. They also started to award it's users with their own token which is the UNI. They began with this token creation in the year September, 2020.
We can find the UNISWAP token on almost all the major exchanges we can think about. We can find the token on Coinbase pro exchange, Binance exchange, CoinGecko exchange etc. We can also carry out trades using uniswap on all the exchanges mentioned above.
Uniswap operates on two major smart contracts which are the Factory smart contract and the Exchange smart contract.
- Factory Contract: The main function of the uniswap factory contract is that, it is used in creating exchange contracts for any token which is an ERC-20 token that do not have one already. The uniswap factory contract also registers the ERC-20 tokens which are recently put in to the system as well as the exchange with which they associates themselves with.
- Exchange Contract: The exchange contract is a smart contract that's used to swap tokens from uniswap to other assets. Even the word "exchange" gives us a clue to what this smart contract is used for.
First of all, you need to visit the coinmarketcap.com
Click on the search icon located at the topside of the page as indicated below.
- Search for uniswap using the search box and click on uniswap as highlighted in the screenshot below.
- On the coinmarketcap, uniswap currently ranks on #11 and on 372,993 watchlists.
- The price of uniswap at the time of this analysis was $28.07 at the time I took the screenshot below, within the last 24hrs, the price of Uniswap has a high of $28.46 and a low of $25.65.
- It's marketcap currently stands at $16,451,347,624. The token has a circulating supply of 587,453,779.51 UNI. Uniswap token has a total and maximum supply of 1,000,000,000 with a transaction volume of $496,273,483 within the last 24hours.
- The uniswap token operates on two major smart contracts which are the factory contract and the exchange contract.
- The uniswap token was created and developed on the Ethereum blockchain implying that it solely depends on Ethereum for survival.
- This token can be traded(can be bought and sold) as well be swapped with other assets.
- The uniswap is a decentralized platform because it's created and developed on a blockchain(Ethereum blockchain).
- Another feature of the uniswap token is that, it uses an automated protocol in it's operation which helps to curb liquidity problems.
- The main aim or target of the uniswap platform is to grow it's community in the possible shortest period of time.
- The uniswap platform also aims in becoming an independent platform without depending on other projects to function. It wants to sustain it's users and investors by itself without issues or problems.
- As I already stated above, it aims in curbing liquidity problems and it does so through its operation using the automated protocol.
Understanding tokens as the topic implies is really helpful. I was one user who used to interchange tokens and coins thinking that they are the same. But this lecture has made me to understand that I was wrong in using them interchangeable.
I will give a lot of thanks to Professor @reminiscence01 for making me to understand that tokens and coins are two different things altogether.
Thank you.
Good job
Thanks big bro
Hello @lukman1 , 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 completing your homework task.
Thank you so much for the feedback Prof. I really appreciate