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Gasless Blockchains are Faking Volume and Overdrafting Their Ecosystem

Just over half a year ago the entire cryptocurrency market entered a bear market. For public blockchains, the time leading up to the bear market was spent growing ecosystems and findings ways to distribute wealth among developers and users. Since the bear market started, a trend towards dApp games has begun.

Many developers have found solace in developing games that can produce some of the highest activity we have seen on blockchains, and likewise, users have found comfort in playing fun dApp games, many of which come with crypto incentives – not a bad way to wait out the crypto winter.

However, looking at DappRadar, if you take the number of transactions or total price volume in the past 24 hours and divide it by the number of users, through simple calculation you will uncover the abnormally high numbers per user for many of these games. Suspicious you should be, as reports by blockchain security company PeckShield in December uncovered this activity comes from a small portion of accounts, pointing to the probability of fake volume.

Fake volume mostly occurs on public blockchains without a gas fee [or with a tiny gas fee], which with false marketing can help create the misunderstanding that this volume is good for the development of the blockchain and the token. This is fake news – fake volume is an overdraft of the ecosystem in which genuine developers and users do not reap the benefits of the blockchain. However, with a gas fee, we can make blockchains which reward both developers and users for the genuine activity they create.

Gas, synonymous with utility tokens, are used in blockchains for paying transaction fees or rewarding miners, just as we see in early blockchain projects such as Bitcoin and Ethereum. As blockchains have evolved, we have seen a more advanced use of gas, such as in Ontology, NEO, Cardano, and so on, where it is used for on-chain transactions, smart contract deployment, and more.

Meanwhile, with blockchains such as EOS and TRON, the same actions require collateralizing tokens to acquire network resources. Below are the advantages and disadvantages of blockchains which use gas. Let us take a more considered decision when choosing which public blockchains to support.

 Advantages of gas

  1. Rewards miners/nodes

Whether it is Bitcoin, Ethereum, Ontology, NEO or other public blockchains, all require compensation for computing and storage.

  1. Simplified economic model

Blockchains without a gas model require case-by-case, complex fee structures for dApp developers to earn an income. With a gas model, this process is simplified and incentivizes developers to make good dApps which users actually use.

  1. Prevents malicious acts

If there is a gas fee to pay for transaction fees the likelihood of DDOS attacks is greatly reduced as they become expensive to execute.

  1. Prevents fake volume

Likewise, if there is a gas fee, the fake volume is costlier. This allows good dApps which create activity naturally be recognized.

  1. Supports growth

The gas model creates the need for users to purchase and hold tokens long-term [many tokens gradually unbind gas to holders, such as with Ontology].

Disadvantages of gas

  1. Gas price fee

If gas fee prices are not adjusted in accordance with the market, it will have negative consequences on the use of the blockchain.

  1. Complexity

Introducing a second token to a blockchain makes things a little more complex, which can make the blockchain less user-friendly if not implemented well.

Source. ambcrypto

Blockchain

Malta’s Financial Watchdog Highlights Obstacles to Security Tokens After Industry Consultation

The Malta Financial Services Authority (MFSA) has released a feedback statement, unveiling industry answers to questions regarding offerings of security tokens within the country.

In the document published Tuesday, the EU nation’s financial regulator summarized two months of feedback received from market participants over how challenges arising from security token offerings (STOs) “can be tackled in a manner that does not stifle innovation.”

Beginning in July 19, 2019, the consultation process set out to establish “legal certainty” and identify challenges for blockchain-based securities within the Maltese financial markets. Consultation ended on September 16, 2019, with the MFSA having received feedback from 18 industry participants hailing from national agencies, consultancy and law firms, as well as technology providers.

The MFSA focused on the implications of STOs within the framework of European Union legislation, including the Markets in Financial Instruments directive and the Market Abuse Regulation, among others.

The regulator notes in its conclusion that digital ledger-based settlement could provide a “workable solution.” However, it adds that a number of the respondents said, unless there are changes at the EU level relating to central securities depository (CSD) rules, there are obstacles to the introduction of the tech.

Regulations require that transferable securities listed at a trading venue must be recorded in the books of a CSD. The means that the ambitions of security token projects to remove the CSD middleman are not possible without “optimizing” the legislation for distributed ledgers, the regulator said.

It also flagged that while respondents provided much feedback on the securities part of transactions, not much was said about the cash side of settlement. “Certain issues would need to be resolved before secondary market trading for security tokens can take off,” the authority believes.

Clamping down?

Tuesday’s release of the feedback comes days after the MFSA published a statement declaring that crypto exchange Binance, which proclaimed Malta to be its new home two years ago, was not regulated or licensed to operate as an exchange in its jurisdiction.

According to Decrypt, the feedback statement came in response to an article in the Times of Malta, which said Binance was still headquartered in the nation. The exchange says it currently employs only a few customer service agents in Malta, but has been listing the jurisdiction at the top of press releases as recently as this month.

It looks likely that Malta is looking to shed its reputation as a hub for money laundering. Over the past two months, its prime minister has stepped down due to his alleged involvement in the cover-up of the murder of Maltese journalist Daphne Caruana Galizia.

Since then, the MFSA has announced the addition of new leadership, including three UK nationals “with vast experience” in banking supervision, financial crime compliance and conduct supervision.

Part of the shuffling is aimed to help Malta fall more in line with European Central Bank recommendations, according to a press release shared last week.

The MFSA has also been warned that it could be placed on the Financial Action Task Force’s “grey list,” potentially facing legal sanctions, MFSA chief officer for strategy, policy and innovation Chris Buttigieg said.

“We need to raise the bar and ensure that there are certain standards and we need to convince our peers and international institutions that we’re serious in the way we carry out our supervisory financial processes and our enforcement,” he said last week, according to MaltaToday

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“2nd Annual VIETNAM BLOCK CONFEX “ is coming to Ho Chi Minh City on 5th April!

About this Event

Over the last few years, the interest in blockchain technology has grown rapidly in Vietnam and the government has shown positive signs to promote and encourage blockchain technology by giving priority to blockchain start-ups through a new project called ‘Support a National Innovative Start-up Ecosystem by 2025’. Therefore, Vietnam Block Confex is poised in connecting the dots and bringing together vital ecosystem players in blockchain industry across the globe, to sustainably grow the blockchain industry in Vietnam.

Supper Early Bird Discounted Tickets are now on Sale

Register Now

The VBC event will be focused on: –

FinTech solutions, implementation of cryptocurrencies, tokens and data processing for sustainable development of Financial Banking, Mass production, Supply Chains, Logistics, Accounting, Administrative Data Management and Governance, New strategic business development models, future of crypto fundraising, tokenization of services and shares, smart contracts, regulation of exchanges and crowdfunding platforms. Attendees of Vietnam Block Confex will be embracing digital innovations through valuable networking, masterclasses, and training.

Case Studies: –

  • Foreign enterprises will share successful implementation cases of the DLT, AI, DAOs, and IoT abroad.
  • Investors, bankers, legal and corporate professionals will share their international experience and expectations in order to invest or cooperate with Vietnam in the digital industry.
  • The event will touch base on the Digital Development strategy of Vietnam and connect foreign industry influencers with technology projects of Vietnam Start-ups.

Our speaker Application is currently open We’re open to any engaging topic related to (Cryptocurrency, Fintech, Blockchain, DAO, Smart Mobility, Supply chain Investment, Trading) if you keep to our rule: no company / self-promotional talks.

Apply Here.

For Registration & Sponsorship kindly email your request to ([email protected] OR  https://t.me/fluxpo )

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Russian Smelting Giant Nornickel Launches Metal Tokenization Platform for Testing

Nornickel, the Russian mining and smelting giant, has taken another step toward the issuance of tokens backed by metals on Atomyze, a Hyperledger-based blockchain platform.

The platform is now launched for testing alongside a handful of Nornickel’s partners, including commodity trading company Trafigura, metal refinery firm Umicore and supply chain consultancy Traxys, according to an announcement Tuesday. (All three have been involved in early-stage trials with Nornickel since December, Bloomberg reported at the time.)

Later, a wider circle of institutional players will have access to the distributed ledger technology (DLT) platform, according to Atomyze. It’s expected to serve the companies from Switzerland and the U.S., as Nornickel CEO Vladimir Potanin told Bloomberg Tuesday morning.

Users in Russia might also be able to access Atomyze by the year’s end, but only if long-in-the-works regulations clarifying the status of digital assets have been passed by that time.

The first batch of tokens will be backed by palladium, cobalt and copper mined by Nornickel. Over the first year, Nornickel expects to tokenize up to 10 percent of its overall sales volume – a number that may rise to 20 percent in the future, the firm said.

Umicore and Traxys didn’t respond to CoinDesk’s requests for comments by press time. However, a Trafigura spokesperson said that the company is “in advanced discussions to participate” in Atomyze and “is looking forward to taking an active part in the testing phase of the platform.”

Atomyze was created by Tokentrust, a Swiss entity led by CEO Marco Grossi, a former director of Deloitte Switzerland. Tokentrust’s board includes Alexander Stoyanov, the managing director of Nornickel’s subsidiary Global Palladium Fund.

IBM was also involved, acting as the project’s lead technology partner. Big Blue “participated in the development of the platform and in the integration of the advanced BFT (Byzantine Fault Tolerant) consensus mechanism, which allows implementing a system with an open governance model when using the Hyperledger Fabric framework,” a company representative said.

Atomyze is further applying for a securities license in Switzerland that would allow it to operate an organized trading facility (OTF), Grossi said through a spokesperson. 

Atomyze is “in discussion with large institutional and professional organizations from various industries who are envisaged to participate in our DLT network by running independent nodes to ensure the right level of decentralization,” the spokesperson said.

The network will run in the IBM’s public cloud and comply with the European privacy protection law known as the General Data Protection Regulation (GDPR) and a security regulation called Cloud Computing Compliance Controls Catalog (C5), Atomyze said. 

Nornickel has been working on tokenizing its metals for a while, aiming to turn them into more liquid assets and make the sales process easier and more flexible, Nornickel CEO Vladimir Potanin said in October.

The company joined the Hyperledger enterprise DLT consortium last summer. Nornickel has been testing the solution inside a regulatory sandbox set up by Russia’s central bank. However, a lack of clarifying regulations for digital assets means it can’t go live. 

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