Hello everyone, I am happy to be in Season 4 of Crypto Academy. Let's continue to work together to improve this community.
In this assignment, I will tell you that cryptocurrencies can be stable as well as volatile movements and I will talk about some of the reasons. I will also try to answer the other questions given. I wish you pleasant reading.
Explain why Stability is important in Digital currencies.
Do you think CBDCs would be good in the future? Weigh the pros and cons in your own understanding and state your position.
Explain in your own words how Rebase Tokens work. Give an illustration.
Go to the https://www.ampleforth.org/dashboard/. Check the necessary parameters and calculate the rebase %. What else can you find on the page?
Trade some tokens for at least $15 worth of USDT on Binance and explain your steps. (Give necessary Screenshots of the transaction).
Transfer the USDT to another wallet with the Tron Network. From the transaction, what are the pros of the stablecoin over fiat money transactions? (Give Screenshot of the transaction).
Before moving on to the importance of stability in cryptocurrencies, it is necessary to understand what stability is. Stability literally means balance. It is to move forward in an order and not to be in too many ups and downs. Stability gives confidence. For me, stability is a magnet. With its unique features, it attracts itself in the subject it is in. To put it this way, a business person wants to buy a share in a football team, but this team is doing well in one season and badly in one season and has an unstable structure, this situation does not give confidence to the business person who will invest. But a team that continues on its way steadily attracts the person who will invest, which is why I gave the example of a magnet. Yes, that unstable team could have exploded and multiplied its investor's stock value, but it could also have been the other way around. It's natural for people to want to invest their money in something they trust rather than investing in uncertainty.
Now that we have briefly summarized the stability, let's look at what it means in cryptocurrencies and emphasize its importance.
Cryptocurrencies, as such as many investment tool, carry certain risks. There is no 100% guarantee that the investor's investment will return positive to him. You know that cryptocurrencies are famous for their volatile movements and are in a constant state of fluctuation in the maker-taker balance. Although these volatile movements offer investors the opportunity to make more money, they also have a high chance of losing, as in the example I gave above. Therefore, stability in cryptocurrencies has not yet been achieved. Coins are an investment vehicle, yes, but this investment is stressful and risky. Although it is decentralized, it is open to manipulation, as most of you know. For example, Elon Musk's bad comments about Bitcoin, SEC lawsuits, FED chairman's views on cryptocurrencies, there was a great decline and investors suffered a great loss. If stability had been in question, such radical declines would not have occurred and cryptocurrencies would have been introduced as a safer investment tool. But we have not yet reached a complete conclusion on this issue.
Ensuring stability in cryptocurrencies will give confidence to investors. Safe investing will attract more investors and this market will grow and develop even more. In other words, when we look at it as a value, it would not be difficult to predict that it will be many times more than its current values. Stability will bring trust, trust will bring new people, and new people will increase the value of cryptocurrencies thanks to this trust. In this way, there will be times when cryptocurrencies, which everyone expects for decades, will come into our lives completely.
CBDC is the name given to tokens created by central banks and represented as a digital currency of the currency of the country in which it was created. Although it is similar to cryptocurrencies in many ways, it has different features.
CBDC has the same value as the legal currency of the country it represents. Cryptocurrencies are known for being decentralized, but countries' digital currencies are tied to the central bank. It is planned to be developed and controlled by these central entities. It cannot be said to be as reliable as cryptocurrencies, because although it is supported by blockchain technology, it is open to manipulations such as canceling transactions, blocking, closing accounts over the networks where transactions are made. Because it is controlled by a central authority.
So what will these CBDCs change for us? What are the pros and cons?
| Pros of CBDC | Cons of CBDC |
|---|---|
| The hours spent transacting through the bank will be eliminated thanks to CBDCs. | Having a centralized system. Cryptocurrencies by their very nature should have a decentralized system, but this system prevents people from having complete control over their assets. |
| Thanks to the CBDC, lower fees will be paid when transferring funds. This will result in savings. | Confidentiality between transfers disappears. Unfortunately, there will be no transaction confidentiality as the transfers to be made can be seen by the control mechanism. |
| Transfers will be made possible for people who do not have a bank account and have difficult access to the bank. | If each country starts issuing its own digital currency, local and global banks may face great difficulties and even come to the brink of bankruptcy. But this situation can also remain as a transitional period. Still, it's a negative situation. |
| Because transfers are susceptible to tampering, illegal uses will be detected and blocked. | Many people are not as fortunate as others in terms of access to technology. So making a digital transfer will be more difficult for them. |
| Transaction will be between the receiver and the sender only, thus ensuring privacy. |
Rebase Token is a change in supply rather than an increase or decrease in price. That is, the circulating supply in Rebase Tokens increases or decreases depending on the price change.
Unlike other coins, Rebase Tokens have a different working principle. This is because it has a recalculation mechanism. For example, if the value of a rebase token starts to increase, the recalculation mechanism increases the supply and the value of that token decreases. If its value starts to drop, this mechanism come in again and decreases the supply, which increases the value of the token.
Let's exemplify the difference between Rebase Token and other coins with numbers.
Any coin owned by an investor does not change in amount in their wallet.
- Example; An investor with 100 AVAX will still have 100 AVAX, but will have more value when the value of this coin increases from $ 59 to $ 69.
But the situation is different with Rebase Tokens.
- Example; Suppose there is an investor with 100 Rebase Tokens. The value of the token in your hand is 50 dollars. In any increase in value, 100 tokens will be 150, but the value of that token will still remain at $ 50. Suppose it drops in the same way, 50 will remain instead of 100, but the value will still remain the same. This is due to the recalculation mechanism. Due to the working principle of Rebase Tokens, if the price increases, the supply decreases, if it decreases, it increases.
Examples some of Rebase Tokens are Yam Finance, Ampleforth. These tokens aim to keep their current value at $1, thanks to the recalculation mechanism.
We learned what Rebase Token is, now I will go to https://www.ampleforth.org/dashboard/ and try to calculate the rebase percentage. The formula I will use to calculate is as in the example given by the professor;
Rebase % = {[(Oracle Rate - Price Target) / Price Target] x 100} / 10
- After learning the formula, I log in to the site.
- Oracle Rate and Price Target, which we need for the formula, appear on the first screen on the site. I will use these numbers to calculate the formula.
Oracle Rate: 1.022
Price Target: 1.061
= {[(1.022 - 1.061) / 1.061] x 100 / 10
= [(-0, 039 / 1.061) x 100 / 10
= (-0,03675 x 100) / 10
= -3,675 / 10
= -0,3675%
I want to show other parameters on the site as well.
- Next to the data we receive to calculate the formula, there is the future rebase and total supply data.
- You can access the Price and Supply data on the screen here. The data has different columns as 30, 60, 90 days and 1 year according to the time you want to examine.
- If you scroll a little further down the page, you will see the market volume of ampleforth and a short video on the right.
- Now I will convert my ZIL tokens to USDT.
- I log in to Binance and enter my spot wallet. I have 255 ZIL which is worth around $25.
- Then I come to the Exchange section and open the stock market screen to trade.
- I type ZIL/USDT in the search section and open this pair on my screen. After coming to the trade section a little below the screen, I sell the Zilliqas I have in the Market Order section to convert them to USDT.
- I've completed the transaction. When I go back to my wallet, the amount of USDT in my account appears.
I will send the USDTs in my Binance account to my FTX account via TRC-20. For this transaction, I whitelisted my USDT address in my FTX account.
- First, I go to the USDT section in my wallet and click the Withdraw option.
- I click on Adress Book, then the addresses I have added to the white list appear on the screen that appears after I click on Select from Adress Book. I choose the address that uses the TRC-20 network.
- From the Withdraw Amount section, I click the Max option and click Withdraw.
- I click Continue.
- Here you need to follow the steps that are important for security. After entering Phone Verification Code, E-mail verification Code and Google Authenticator Code, my process will be completed.
- My transaction is waiting to be completed. Thus, I sent my USDTs to another address over the Tron Network.
- Here are my USDTs in my FTX wallet after the transaction.
I realized that stablecoins are more advantageous when transferring USDT. Reasons;
- The fee I paid during the transfer was only 1 USDT. This is a very low fee compared to other fiat currencies. So it's a big advantage.
- The speed of the transfer was very good. It was credited to my account within 5 minutes. This makes it advantageous over others.
- The security measures taken during the procedure were also extremely high. It was safe because I made the transfer with the codes sent to my mail account, my phone and my authenticator code.
I didn't know about Rebase Tokens until I did this assignment. Therefore, completing this assignment has been extremely beneficial for my own development. I learned what Rebase Tokens are, their working principle and the differences between other tokens. In addition to the volatile movements in cryptocurrencies, I have examined these tokens, which provide stability with the method of fixing the price, not fluctuations. Then I converted the ZIL coin I had to USDT and transferred it to another account from the TRC-20 network. Now I know more about Rebase Tokens. Thank you @awesononso and the valuable Crypto Academy community. I will continue to pass on what I have learned to the people around me.
Thank you for reading.
CC: @awesononso