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Last updated 7 months ago

Avalanche

➡️ Avalanche (AVAX) is a cryptocurrency and blockchain platform that rivals Ethereum and is known for its speed and scalability. Avalanche's Smart Contracts platform supports both decentralised applications and autonomous blockchains.

What is Avalanche?

Avalanche (AVAX) is a cryptocurrency and blockchain platform that rivals Ethereum. AVAX is the native token of the Avalanche blockchain, which—like Ethereum—uses smart contracts to support various blockchain projects. The Avalanche blockchain can provide near-instant transaction finality. AVAX is used to pay transaction processing fees, secure the Avalanche network, and act as a basic unit of account among blockchains in the Avalanche network. The Avalanche blockchain reportedly can process 4,500 transactions per second. Launched in 2020, Avalanche aims to be fast, versatile, secure, affordable, and accessible. Also, Avalanche is an open-source project, meaning anyone can view and contribute to the platform's code.

Understanding Avalanche

Avalanche's Smart Contracts platform supports decentralized applications (dApps) and autonomous blockchains. Here are some features that make Avalanche unique:

Coin creation rate: The maximum supply of AVAX is capped at 720 million tokens, but AVAX users govern how fast new coins are minted. AVAX holders can control the rate of new coin creation by voting to adjust the amount of AVAX paid as a reward for adding a new block to the Avalanche blockchain.
Transaction fee structure: Transaction processing costs vary depending on the type of transaction and Avalanche's network congestion. All fees are burned—removed from circulation—to enable AVAX to become scarcer over time. Avalanche users vote to decide the Avalanche transaction fee, making AVAX fees subject to change.
Consensus mechanism: Transactions on the Avalanche blockchain are confirmed using a unique method that requires many small, random subsets of network participants to verify transactions before the transactions are finalized.
Participation incentives: High uptime and fast response times can boost the amount of AVAX rewards that a network participant can earn for processing AVAX transactions.

Avalanche is generally governed by the proof-of-stake mechanism. AVAX holders are required to stake—agree not to trade or sell—AVAX in exchange for the right to validate AVAX transactions. AVAX holders with the most staked and actively participated as validators are the most likely to be chosen for new Avalanche blocks. Holding AVAX tokens is also required to vote on Avalanche governance proposals.

Is the Avalanche Blockchain safe?

Avalanche can be considered secure because of the randomized nature of its consensus mechanism. Avalanche claims its platform supports more robust safety measures that make the blockchain less vulnerable to 51% attacks than other blockchains.

Third-party risk to Trendespresso

Since we use Circle's native USDC token and not the one bridged from Ethereum known as USDC.e our risk of depegging is much reduced.

Furthermore, we can easily migrate or expand to any EVM blockchain since our entire smart contract ecosystem is EVM compatible.

0x

What is 0x?

0x is a decentralized exchange for trading ERC-20 tokens. It is among the most high-profile examples of decentralized cryptocurrency exchanges. Buyers and sellers are connected directly in this form of trading.

Understanding 0x

0x is a peer-to-peer exchange of Ethereum-based tokens. It is often referred to as a decentralized exchange. 0x uses common Smart Contracts over a shared infrastructure. Its technology combines two strategies—state channels and automated market makers (AMMs)—that have already been suggested to overcome these problems. 0x often refers to its solution as the “Craigslist for cryptocurrencies,” in that any developer can build their cryptocurrency exchange and post it online. 0x's own Ethereum token (ZRX) is used to pay trading fees to relayers, which are used to connect makers with takers.

History of 0x

Will Warren and Amir Bandeali co-founded 0x in October 2016. Their initial intention was to provide a standard method of trading for any Ethereum token on the blockchain. Their vision was a world where each asset, from fiat currencies and stocks to gold and digital gaming items, could be represented as a token on the Ethereum blockchain. The two quickly recognized the large usability gap and instead turned the project into a decentralized exchange. 0x raised $24 million in an initial coin offering (ICO) for its ZRX token. With this new protocol, decentralized exchanges improved dramatically in terms of usability. That's because 0x allowed Ethereum tokens to be exchanged over any decentralized exchange using the protocol. Since its inception, several decentralized exchanges have been built on top of 0x, including Nuo, Zerion, DeFi Saver, and Radar Relay.

Concerns about 0x

The biggest concern about 0x's long-term sustainability is its intense competition from other functional decentralized exchanges. Additionally, 0x doesn't interact with fiat currency, meaning users must own Ethereum to use the exchange. Moreover, 0x faces many of the same criticisms common to decentralized exchanges, including inconsistent liquidity and slow transaction times relative to a centralized business.

Future of 0x

The 0x protocol is one of the most widely-used decentralized protocols in the industry. While questions remain about its sustainability, chances are that users will only place more and more emphasis on decentralization and security going forward. Because of that, 0x provides significant long-term potential.

How is 0x different from a regular Trading Model?

Most cryptocurrency exchanges follow the established centralized trading model. In this paradigm, they are gatekeepers providing the infrastructure and acting as connecting agents to clear and facilitate trade between parties. North America’s largest cryptocurrency exchange, Coinbase, is the best example of this approach. This model requires customers to trust their funds with exchanges. While the model has worked for equity markets, an increasing number of hacks at exchanges has put its future in cryptocurrency markets under a cloud. Decentralized trading seeks to address that.

Third-party risk to Trendespresso

If 0x goes offline we would be unable to make swaps of large position size without incurring some loss due to slippage. Since 0x's API is necessarily fully-centralized, the 0x project could terminate at any moment. In such an event, we'd either exit its current trade using TraderJoeXYZ's liquidity pool(s) or encourage all Individual mode OWNER's to call directWithdraw() to release any assets directly without any further swapping, thereby bypassing both 0x and TraderJoeXYZ. New instances of Trendespresso would need to be deployed incorporating a new liquidity provider in place of 0x.

0x and Trendespresso are fully EVM compatible, allowing us to use 0x on the Avalanche blockchain instead of on the Ethereum blockchain.

AAVE

What is AAVE?

One of several emerging DeFi cryptocurrencies, Aave is a decentralized lending system that allows users to lend, borrow and earn interest on crypto assets, all without middlemen. Running on the Ethereum blockchain, Aave is a system of smart contracts that enables these assets to be managed by a distributed network of computers running its software. This means Aave users do not need to trust a particular institution or person to manage their funds. They need only trust that their code will execute as written. At its core, the Aave software enables the creation of lending pools that will allow users to lend or borrow 17 different cryptocurrencies, including ETH, BAT, and MANA.

Like other decentralized lending systems on Ethereum, Aave borrowers must post collateral before they can borrow. Further, they can only borrow up to the value of the collateral they post. Borrowers receive funds in the form of a unique token known as aToken, which is pegged to the value of another asset. This token is then encoded, so lenders receive interest on deposits. A borrower may post collateral in DAI, for example, and borrow in ETH. This allows a borrower to gain exposure to different cryptocurrencies without owning them outright. Aave can also introduce additional features, such as instant loans and other forms of issuing debt and credit, that take advantage of the unique design properties of blockchains.

How does AAVE work?

Aave is perhaps best described as a system of lending pools.

Participants deposit funds they wish to lend, which are then collected into a liquidity pool. Borrowers may then draw from those pools when they take out a loan. These tokens can be traded or transferred as a lender wishes. To facilitate this activity, Aave issues two types of tokens: aTokens, issued to lenders so they can collect interest on deposits, and AAVE tokens, which are the native token of Aave. The AAVE cryptocurrency offers holders several advantages. For instance, AAVE borrowers don’t get charged a fee if they take out loans denominated in the token. Also, borrowers who use AAVE as collateral get a discount on fees. AAVE owners can further look at loans before they are released to the general public if they pay a fee in AAVE. Borrowers who post AAVE as collateral can also borrow slightly more.

Flash Loans

Aave allows certain “flash loans” to be instantly issued and settled. These loans require no upfront collateral and happen almost immediately. Flash loans take advantage of a feature of all blockchains, which is that transactions are only finalized when a new bundle of transactions, known as a block, is accepted by the network. Adding each new block takes time. On Bitcoin, that interval is roughly 10 minutes. On Ethereum, it’s 13 seconds. An Aave flash loan, therefore, takes place in those 13 seconds. The flash loan works like this: A borrower can request funds from Aave, but they must pay back those funds, and a 0.09% fee, within the same block. If the borrower doesn’t do this, the entire transaction is canceled so that no funds were ever borrowed. As a result, Aave doesn’t take a risk nor the borrower. A borrower may wish to use a flash loan to take advantage of trading opportunities or maximize profits from other systems built on Ethereum. It’s possible to swap different cryptocurrencies intuitively using flash loans to generate trading profits.

Who created AAVE?

Aave is a for-profit company founded in 2017 by Stani Kulechov and based in Switzerland. Kulechov was trained in law in Helsinki and started Aave while still a student. The firm, named ETHLend initially, raised $16.2 million in an initial coin offering (ICO) in 2017, during which time it sold 1 billion units of its AAVE cryptocurrency - originally named LEND.

The LEND cryptocurrency migrated to AAVE at a rate of 100 LEND tokens to 1 AAVE, dropping the total supply of its cryptocurrency to 18 million AAVE. ETHLend was different from Aave in that, instead of pooling funds, it tried to match lenders and borrowers in a peer-to-peer fashion. In 2018 ETHLend was renamed Aave, which means “ghost” in Finnish. ETHLend became a subsidiary of Aave.

Other products and services announced then included a trading desk to handle large trades, a game studio focused on blockchain games, and a system to handle payments.

Why does AAVE have value?

AAVE plays a central role in the management of the Aave software, allowing users to vote on changes to its rules and policies to improve its software. The Aave team also launched a Safety Module (SM), where participants can stake their AAVE to act as insurance in case of a liquidity deficit. Doing so will earn stakes more AAVE tokens, along with a percentage of the protocol fees. Aside from this utility, AAVE derives value from its finite supply and the fact that it uses revenue from fees to buy AAVE and remove the cryptocurrency from circulation.

Why use AAVE?

AAVE may interest traders or investors who believe decentralized lending will continue to grow in popularity. As of July 2020, the Aave system is among the most active decentralized lending systems on Ethereum and has garnered $158 million in total deposits. Competing lending platforms include Compound and Maker, which have over $600 million in deposits. You may also want to use AAVE if you wish to have a say over the rules that govern the Aave system, voting on how fees collected from lending are distributed to AAVE token holders.

Third-party risk to Trendespresso

If AAVE were to become insolvent then all of our smart contract positions could potentially be at risk of liquidiation or insolvency. Should we be unable to withdraw our collateral then irreparable losses may occur. All estimated losses would be sustained in equal weight amongst all users; the percentage lost would be equal for each user.

If the borrowed asset is at break-even price from the time of borrowing, the estimated loss would be -20%.

If the borrowed asset fell to $0.00 (absolute zero; no liquidity anywhere), then the estimated loss would be -88%.

If the borrowed asset has appreciated +29.5% from the time of borrowing, the estimated loss would be ±0%.

In conclusion, if AAVE were to have a significant issue such as freezing their loans, collateral, or become otherwise insolvent, then Trendespresso members have a real risk of similarly realising losses.

Note: Flash loans have been combined to execute attacks on lending systems built on Ethereum, sometimes successfully stealing hundreds of thousands of dollars worth of deposits.

AAVE and Trendespresso are fully EVM-compatible; this allows us to use AAVE on the Avalanche Network instead of Ethereum.

Chainlink

Chainlink has solved what was known as the “oracle problem.” The oracle problem originates from an issue with smart contracts on blockchain networks and how they are completely isolated from the outside world. The smart contracts typically obtain their external data from “Oracles” (data points, APIs) – where the problem lies. Smart contracts are only as “smart” as the information delivered to them by the oracles. If a smart contract is provided with malicious code or inaccurate data, the contract will still process it anyway because it is just code – and what comes out would be unpredictable, wrong, or worse.

Chainlink completely solved the oracle problem when the team discovered how to retrieve and share information from oracles without putting the security of the blockchain the smart contracts are running on at risk.

This was done by creating a decentralised network that acts as a bridge between the oracles and the smart contracts. This system is built from a nexus of individual nodes, each acting as smart contracts in their own right, gathering information and providing it as needed. Now, instead of blindly trusting a source, smart contracts run through the Chainlink network have unfettered access to resources like data feeds, traditional bank account payments, and web APIs.

What is Chainlink?

Chainlink is a decentralized oracle network. The external data providers that share the work on the network are called “oracles.” These oracles allow Chainlink smart contracts to receive accurate data from external (non-blockchain) sources, such as any kind of API and other external data feeds. LINK is an ERC-20 token used to pay for and ensure the accuracy of this oracle service on the Chainlink network.

Bitcoin's (BTC) value is relative to its usefulness as a general-purpose currency. Chainlink value is set in quite a different way.

Chainlink takes the capabilities of smart contracts to the next level by enabling access to real-world data, events, payments, and more without sacrificing the security and reliability inherent to blockchain technology.

Part of LINK’s value in the marketplace is Ethereum (ETH) value because Chainlink runs on the Ethereum blockchain and relies on Ethereum smart contracts to earn money.

First created in 2017, the Chainlink team has so far been able to deliver on its vision of providing accurate external data to blockchains. Though originating on Ethereum, Chainlink has been designed to work across any blockchain with smart contract functionality. Chainlink does not operate its blockchain – instead, it is interoperable and runs on many different blockchains simultaneously.

How does Chainlink work?

To allow communication between the blockchain-based smart contracts it services and external data sources, Chainlink follows an innovative three-step process:

Oracle Selection: a Chainlink user drafts a Service Level Agreement (SLA) specifying a particular set of data requirements. The Chainlink software then uses this SLA to match the user with the most appropriate oracles that can provide the data. Once the parameters are set, the user submits the SLA and deposits their Chainlink (LINK) cryptocurrency in an Order-Matching contract, which accepts bids from oracles.
Data Reporting: this step is where the oracles connect with the external data sources to obtain the real-world data requested in the Chainlink SLA. The data is then processed by the oracles and sent back to the contracts utilizing the Chainlink service.
Result Aggregation: the final step of the process is to tally the results of the data collected by the oracles and return it to what’s known as an Aggregation contract. The Aggregation contract takes the data points, assesses the validity of each and returns a weighted score, using the sum of all the data received, to the user (smart contract).

What makes this process especially powerful is how it enables Chainlink to validate data from multiple different sources. Thanks to its internal reputation system, Chainlink can determine with a relatively high accuracy which sources are trustworthy – significantly increasing the accuracy of the results and protecting smart contracts from various malicious attacks.

What part does LINK play in all of this? The smart contracts that request the data pay Chainlink node operators in LINK for their service. The prices are set by the node operators based on the market conditions and demand for that data.

Node operators also stake LINK to ensure long-term commitment to the project. Similarly to a Proof of Stake (PoS) consensus mechanism, Chainlink operators are incentivized with LINK rewards to encourage acting in a trustworthy manner rather than being malicious.

Who are the Founders of Chainlink?

Chainlink is the product of a blockchain-focused technology startup called SmartContract. Founded in 2014, the company aims to harness blockchain technology – specifically smart contracts – to make contractual agreements that can be used by all participants in the industry, regardless of their skill level and expertise.

Backed by San Francisco-based investment group Data Collective, Smart Contract is set about making its vision a reality with a team of industry-leading innovators.

Sergey Nazarov is the CEO and co-founder of the company. Before SmartContract and Chainlink, Sergey had a history in the space as the founder of Secure Asset Exchange, a cryptocurrency exchange. He also founded a completely decentralized email service dubbed CryptoMail.

Steve Ellis is the CTO and co-founder of the company. Ellis worked with Nazarov before, on the Secure Asset Exchange platform, before joining this venture. He is also an experienced software engineer, having worked at Pivotal Labs before joining the blockchain sector.

Another essential founding member of the Chainlink team is Ari Juels, who, along with Nazarov and Ellis, wrote Chainlink’s whitepaper. A computer science professor at Cornell Tech and the director of IC3, Juels is currently an advisor to the Chainlink team.

As you can see, Chainlink is fully international. The value of the LINK cryptocurrency does not arise from its worldwide use alone, however. LINK value comes from what the token does – it provides oracle services for blockchain apps. Its valuation is like Ripple's (XRP) value: In both cases, the valuation comes from what coins and blockchains empower users to do.

Chainlink held an Initial Coin Offering (ICO) in September 2017, raising $32 million, with a total supply of 1 billion LINK tokens. Following the Chainlink ICO, 35% of LINK tokens were sent to node operators to jump-start the incentivization of this decentralized oracle network, and 30% stayed with the Chainlink team to fund future development.

What makes Chainlink unique?

There are many unique aspects to the Chainlink project.

One of the most interesting of these unique aspects is Chainlink’s off-chain architecture. The ChainLink network is a part of this architecture, which connects all nodes. Each node is then connected to reserves via APIs to gather responses for every contract using the Chainlink service. Chainlink nodes may also have external adaptors, helping to extend their connections to nearly any 3rd party API endpoint.

All off-chain data is translated via the ChainLink Core software. It is done so that it can also be read on-chain, with no translation needed. The sub-tasks of the SLAs are also processed by this software, meaning that the entire operation can take place either on-chain or off. The external adaptors mentioned above are critical in making this kind of architecture possible.

These external adaptors allow interaction with 3rd party API endpoints, bridging the gap between blockchain and real-world applications. All adaptors are written in Chainlink’s schema, ensuring complete interoperability.

What gives Chainlink value?

Chainlink node operators can stake LINK as a way to offer a bid to the intended buyer of the data. The node operator must then provide the information to the contract making the request. Every payout for operators happens in the form of LINK tokens.

This approach incentivizes node operators to keep accumulating LINK. Why? Owning more tokens means access to bigger and more rewarding data contracts. If an operator decides to break the rules, they’ll have their LINK tokens removed.

As we can see, the LINK token helps pay operators on the network. The value and the demand for these LINK tokens primarily depend on the number of operators that work to secure the network. Still, the token also derives its value from the other various use cases of the decentralized oracle network. The more use cases the Chainlink platform can be put to, the more valuable the LINK token will be.

This is quite different from the Bitcoin price, based on its utility as a general-purpose currency. And from the Ethereum price, which is based on the coin’s role in supporting the Ethereum blockchain, which is essential to decentralized applications and NFTs. The XRP price is supported by the usefulness of the underlying XRP Ledger blockchain, which is tuned to support international person-to-person and bank-to-bank fund transfers.

How is the Chainlink Network secured?

The Chainlink network is secured by a similar concept to Proof of Stake (PoS), where its validator nodes stake LINK to obtain data contracts and are rewarded by the network. The incentivized rewards system dissuades network nodes against malicious or unscrupulous behavior, as does the risk of losing the LINK they have staked.

The Chainlink decentralized oracle network is powered and secured by three types of custom-designed smart contracts as well:

Aggregation Contract: this is what collects the data from oracles and matches the most accurate results with the smart contract that needs them.
Order-Matching Contract: these contracts are in charge of matching the best possible oracle with the smart contract’s service level agreement (SLA) needs.
Reputation Contract: verifies the integrity of an oracle by checking its statistics, including the total number of completed requests, average response time, and amount of LINK tokens staked by the oracle.

Third-party risk to Trendespresso

We may have difficulty closing out Short positions and allowing Individual mode members to withdraw immediately. Otherwise, Chainlink presents no direct threat.

Chainlink and Trendespresso are fully EVM compatible, allowing us to use Chainlink on the Avalanche blockchain instead of the Ethereum blockchain.

Trader Joe

Third-party risk to Trendespresso

TraderJoeXYZ is purely a fallback liquidity provider in case 0x liquidity is unavailable. Only where TraderJoeXYZ and 0x go down would there be any cause for concern.

TradingView

TradingView is a charting platform and social network used by 30M+ traders and investors worldwide to spot opportunities across global markets. PineScript™ is TradingView’s programming language. It allows traders to create trading tools and execute strategies directly from the TradingView website. PineScript™ is a lightweight, yet powerful, language for developing indicators and strategies that can be executed in realtime or backtested.

Third-party risk to Trendespresso

We're currently running some of our strategies using logic hosted on TradingView via PineScript Alerts. Should TradingView go offline, we'd need to recode our signal applications into another environment/language/framework, such as Python or NodeJS. Long term, we may eventually move our in-house signal logic off TradingView and execute it in a standalone environment on our dedicated server.

Last updated 7 months ago