Hello everyone, I will be talking about stability in crypto currencies. Thanks to professor @awesononso for the lecture.
Before I continue, It’s important I firstly, list out the questions I will be answering in this task.
QUESTIONS
• Explain why stability is important in crypto currency?
• Do you think CBDCs would be good in the future? Weigh the pros and cons in your 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).
EXPLAIN WHY STABILITY IS IMPORTANT IN CRYPTO CURRENCY?
Before i answer this question, I will like to explain the meaning of stability.
Stability means the ability for something to stay still without moving.
Image source
Its an act of resisting not to change.
The first successful stable coin is Tether (USDT) which was launched in the year 2014.
Everyone that invest in crypto currency all wants to make profits. Cryptocurrency are digital currency that runs on blockchain. The volatility of crypto currency makes investing it very risky.
Stable coin was created because of this volatility in crypto. It was made to reduce the risk of investing in crypto currency.
The fact that stable coin doesn’t fluctuate in price like the other cryptocurrency made it very important to investors. It made investors not to be too scared of investing because of the fact that they can easily convert their profit or even capital to stable coin whenever that choose to.
DO YOU THINK CBDCs WOULD BE GOOD IN THE FUTURE? WEIGH THE PROS AND CONS IN YOUR UNDERSTANDING AND STATE YOUR POSITION.
CBDCs is the abbreviation for Central Bank Digital Currencies. It represents the digital currency of a particular country Example is USD which it’s digital currency in USDT.
Do you think CBDSs would be good in the future?
This will be determined by the growth of the country. They are not decentralized like other cryptocurrency. They are being affected by anything happens to the country currency.
The digital currency of a currency is affected by the value of the country currency, Example, If dollar goes down in value, USDT will also go down in value.
The pros and cons in my understanding
Below, I will make a table that will show the pros and cons in my own understanding
| PROS | CONS |
|---|---|
| The fact that it’s centralized and it’s monitored, reduced the rate of one sending money illegally. | Due to the present of the government, there is no privacy in transactions. |
| It’s helps in sending funds across countries easily and faster. | A country government have the power to restrict transactions anytime. |
| They are accepted generally as a medium for Exchange | There is geographical restriction because of the fact that CBDCs can only do transactions in the country that has them. |
| You don’t need the bank of your country before you can perform a transaction or go to the bank and stand in a queue because you want to perform a transaction. With the use of the internet, You can easily send from one wallet to another. | Due to the fact that it centralized has made investors have a limited ownership over their assets. |
My position
I don’t believe it’s good in the future. The fact that it’s being controlled by the government is not good for investors. If it was decentralized it would have be better. Also, judging from the security, and full ownership aspect, it’s really a bad idea.
EXPLAIN IN YOUR OWN WORDS HOW REBASE TOKEN WORKS. GIVE AN ILLUSTRATION.
Before I explain how rebase token works, I will firstly, explain what rebase token means.
What is rebase token?
Rebase tokens which is also called elastic supply token is a type of stable coin which with the fluctuation of their price, adjust the total number of their supply. Doing this will make them get back to their fixed price.
There are different types of rebase tokens.
Example of rebase token are; AMPL, RBASE, TIME etc.
How rebase token works?
Rebase token are like other cryptocurrencies but it’s different is that it’s rate of its supply it been adjusted. Rebase token increase in supply only when it’s price is higher that it’s stable or fixed price.
In terms of decreasing, It also decreases the supply when it’s price is lower than it’s fixed or stable price.
It’s price adjust automatically which depends of its price fluctuation.
GO TO THE https://www.ampleforth.org/dashboard/. CHECK THE NECESSARY PARAMETERS AND CALCULATE THE REBASE %. WHAT ELSE CAN YOU FIND ON THE PAGE?
Image edited by me on canva. Image source
Calculate the rebase
Using the informations on the screenshots above, I will calculate the rebase %
The formula is Rebase% = {[(oracle rate - price Target) / price Target] x 100} / 10
Oracle rate = 1.104
Price target = 1.061
Therefore, Rebase% = {[(1.104 - 1.061) / 1.061] x 100} / 10
Rebase% = [(0.043 / 1.061) x 100] / 10
Rebase% = (0.0405 x 100) /10
Rebase% = 4.05 /10
Rebase% = 0.405
Therefore, the Rebase% of AMPL is 0.405
Other things I found on the page
PRICE
Step 1 Step 2 Step 3 I Sold 1,200436 SHIB to buy 33.62421236 USDT. Step 4 Step 1 Step 2 Step 4 Step 5 Step 6 You will receive a message which says that your “withdrawal request submitted” Making transactions with stable coin are very Secured and very safe. Stable coin is a very big advantage to cryptocurrency traders because of the fact that they can easily take and keep their profits in stable coin. Stable coin are very great advantage and advancement to crypto traders.
Image edited by me on canva. Image source
SUPPLY
Image edited by me on canva. Image sourceMARKET CAP
Image edited by me on canva. Image source
Firstly, I logged into my binance
screenshot got from from my phone homepage
Then i click on “trades.”
Screenshot got from my binance app
I selected to trade on SHIB/USDT
Screenshot got from my binance app
Screenshot got from my binance app
I clicked on my trade history to see it.
Screenshot got from my binance app
Firstly, you login to your binance, and click on wallet.
screenshot got from my binance app
Click on USDT. A page will open then you click on withdraw.
screenshot got from my binance app
Put in the wallet address of the receiver, put in the amount, and select the type of network you want to use for the transaction. I selected the trc20 network as instructed in the question.
screenshot got from my binance app
Click on “confirm” to Confirm the transaction.
screenshot got from my binance app
You will need to verify your phone number and your email before you can complete your transaction. A code will be sent to your phone number and your gmail.
Then you input the codes in and click on “submit”.
screenshot got from my binance app
screenshot got from my binance app
Also, no matter how volatile the crypto market is, when you send a stable coin to another person’s wallet, the person gets the exact amount you both agreed because the coin is stable unlike other crypto currencies.
I’m grateful to professor @awesononso for this wonderful lecture. It increased my knowledge about stable coins.
Hello @sir-charles-jude,
Thank you for taking interest in this class. Your grades are as follows:
Feedback and Suggestions
Your could have done more in question 1.
There are a few grammar errors.
You explanation of rebase tokens needs work. Also you did not give an illustration.
You should edit your images better.
Thanks again as we anticipate your participation in the next class.
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