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Blockchain

BitMax.io Launches Staking Support to Solve the Liquidity Dilemma for Staked Assets

Introduction BitMax.io (BTMX.com), a Singapore registered digital asset trading platform, has launched a new staking product on April 2, with initial support for Cosmos (ATOM) and Tezos (XTZ) befor

The post BitMax.io Launches Staking Support to Solve the Liquidity Dilemma for Staked Assets appeared first on AMBCrypto.

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Introduction

BitMax.io (BTMX.com), a Singapore registered digital asset trading platform, has launched a new staking product on April 2, with initial support for Cosmos (ATOM) and Tezos (XTZ) before expanding coverage to other digital assets.

The BitMax.io team announced its staking product will utilize an innovative design to address liquidity challenges associated with traditional staking. As a part of this design, users will have the flexibility to trade and transfer staked assets while still receiving block rewards. The new staking product also seeks to promote more secure blockchain networks for supported projects by encouraging higher stake ratios.

Liquidity Dilemma: To Stake, or not to Stake?

Proof-of-Stake (“PoS”) blockchain networks rely on token holders to stake assets in order to participate in various consensus mechanisms, thus promoting network security and resilience. In return for their contribution, these token holders, or “validators,” earn block rewards – generally in the form of the network’s native digital asset.

In this regard, staking allows token holders the opportunity to generate returns by simply “locking” assets for a set period. However, an inherent shortcoming of staking is that “unlocking” assets require a lengthy unbonding period during which a token holder can neither trade or transfer the asset nor is eligible to receive any staking rewards.

Tradeoffs between accessibility and staking rewards present a critical “liquidity dilemma”, for token holders when deciding whether to stake, or not to stake various digital assets operating on PoS networks. Some of the most troubling consequences of this liquidity dilemma are as follows:

  1. 1. Low Stake Ratio 1 :
    The inherently volatile nature of digital asset markets is sufficient to deter many token holders from staking because staked assets cannot be traded to hedge risk effectively. A low stake ratio results in low network security for the blockchain project.
  2. 2. Extreme Network Inflation:
    To incentivize token holders to participate in various consensus mechanisms, many PoS projects issue large block rewards to be distributed amongst delegators, resulting in a rapidly expanding token supply. An inflationary supply with no additional capital inflow will likely result in token price depreciation.
  3. 3. Significant Hash Rate Volatility:
    Price action on secondary markets may catalyze large portions of the staked network to be “unbonded” as token holders flock to undelegate and sell – either to take profit following price appreciation or stop losses following price depreciation – resulting in dramatic swings in network hash rate. A volatile hash rate results in network instability.

A Novel Approach to Solve the Liquidity Dilemma for Staked Assets

In response to the liquidity dilemma facing token holders and PoS projects, BitMax.io has designed a staking product which grants users the flexibility to trade and transfer staked assets without unbonding them from the network. Ultimately, the platform’s novel staking product will allow users to receive more attractive returns without sacrificing liquidity; therefore, encouraging higher more
resilient stake ratios for blockchain networks. BitMax.io’s novel staking product will have three key features:

1. Immediate Access to Staked Assets:
To enhance users’ staking experience, BitMax.io will maintain a pool of assets for immediate access after an asset is unstaked. “Instant Unbonding” will allow users to manage staked assets at their discretion even when delegating to a network with a lengthy unbonding period.

2. Margin Trading for Staked Assets:
To further promote marketplace efficiency, BitMax.io will create a synthetic version of each staked asset to be used as margin collateral, thus allowing users to go long or short to hedge exposure while continuing to earn rewards.

3. Maximized Staking Returns:
To maximize returns on behalf of users, BitMax.io will automatically redelegate staking rewards to staking pools, thus allowing users to further enhance yield from their token holdings. With regards to BitMax.io’s new staking product, BitMax co-founder and CEO, George Cao stated:

“Product innovation has always been a core aspect of our business. We designed this product to improve upon lots of the shortcomings associated with other platforms’ staking offerings. By offerings a solution to the ‘liquidity dilemma,’ we are giving our users the best staking experience while also providing value to the projects we support.”

Platforms such as Kucoin and Binance have adopted an approach known as “Soft-Staking” wherein each exchange can stake on its users’ behalf without active acknowledgment from the token holders. In contrast, BitMax.io has opted for a more traditional “principal-agent” relationship with its users which requires each token holder to opt-in as a delegator to the relevant blockchain network. In furtherance of this strategic decision, George Cao, notes:

“We will never stake customer assets nor use customer assets to vote or decide anything without approval. BitMax.io only aggregates staking interest from platform users as a single counterparty and then delegates to trusted
validators of choice, while at the same time taking care of reward distribution tasks and reinvestment of reward on behalf of users.”

Maximized Staking Rewards for Platform Users

As of April 2, 10:00 a.m. EDT, all BitMax.io customers can stake Cosmos (ATOM) and Tezos (XTZ) and collect staking rewards immediately. This is yet another point of differentiation between BitMax.io and competing platforms which delay reward distribution. For example, Binance distributes rewards on a once-monthly basis to users holding assets on Binance.

Seamless and efficient distribution of staking rewards should allow BitMax.io users to maximize returns from token holding via compounding interest. BitMax.io has confirmed that the platform will expand staking support to other emerging and high potential PoS protocols in the near future. BitMax.io was previously announced as one of the validators of KAVA (KAVA) and was also reported as building infrastructure to support Harmony (ONE) staking pending the project’s strategic roadmap.

Disclaimer: This a paid post, and should not be treated as news/advice.

Source: https://ambcrypto.com/bitmax-io-launches-staking-support-to-solve-the-liquidity-dilemma-for-staked-assets

Blockchain

Members of WallStreetBets Forum Alleged in Telegram Crypto Scam Stealing $2M in BNB and ETH

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Members of the popular WallStreetBets Reddit forum were suspected of a presumable cryptocurrency fraud that could have caused losses of no less than $2 million. By creating a designated Telegram group, they duped investors by guaranteeing remarkable returns through capitalizing on the recent crypto market rally.

The Core of the Hoax

Per a report by Bloomberg, alleged members of the WallStreetBets Reddit Forum used the Telegram messaging service to execute a blatant scam. A particular account by the name of ”WallStreetBets – Crypto Pumps” presented users the chance to purchase a new token certified as WSB Finance before it was listed on crypto exchanges. The operation is known as a pre-mine sale.

The essence of the fraud was connected to the recent cryptocurrency boom as bitcoin and most altcoins skyrocketed in value lately. With some of the digital assets reaching 1,000% gains, the targeted WSB members conned investors into sending money without asking questions and with the potential of netting huge profits.

The notorious account also urged users to transfer popular cryptocurrencies such as Binance Coin (BNB) and Ethereum (ETH) to a designated crypto wallet and then to reach its ”token bot” to gain WSB Finance coins.

However, the perpetrators never dispatched those coins. Furthermore, another message on Telegram revealed that the people who had already issued a payment had to send an equivalent amount again or they would risk losing their initial investment.


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The Aftermath

After executing the hoax, more than 3,451 Binance Coins were withdrawn on Tuesday (May, 4th) from the wallet inside the Crypto Pumps messages.

Since the price of BNB at that point was approximately $625, the fraud caused losses of more than $2.1 million. Following the scam, thousands of people expressed their frustration and tried to expose the individuals behind the account. Moreover, the quantity of the other cryptocurrency – ether – still remains a mystery.

Two weeks ago WSB admins warned about offers that might try to take advantage of the forum’s name in order to allure the crypto audience. The ”WallStreetBets – Crypto Pumps” account has been removed from Telegram but whoever managed it left a message that might stun the affected victims:

”Buying Lambo now.”

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Source: https://cryptopotato.com/members-of-wallstreetbets-forum-alleged-in-telegram-crypto-scam-stealing-2m-in-bnb-and-eth/

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Blockchain

South Korean Crypto Exchange Accused Of $1.5 Billion Scam

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The South Korean cryptocurrency exchange platform V Global was accused of luring 40,000 people into illicit multi-level deceit. The entire scheme amounts to more than 1.7 million won, which equals $1.5 billion.

The Investigation

As reported by the Korean officials, the police raided many places in the country related to a virtual cryptocurrency exchange, and its notorious CEO – known as LEE – alleged to fundraising without regulatory permission. The authorities blocked the exchange’s cash deposits as a part of the investigation.

In total, the Gyeonggy Nambu Police Agency reported that it searched the exchange’s headquarters in southern Seoul along with 21 other places and froze more than $214 million left in the account.

Another report from today shed more light on the developments. According to Yonhap News, the name of the organization is V Global. The Korean police are examining the accusations against them for fraud under the Certain Economic Crimes Weighted Penalty Act, the Similar Receiving Act, and the door-to-door sales business.

The main accusation against the exchange is gaining a deposit of 1.7 trillion won ($1.5 billion) from 40,000 members in the period between August 2020 and January 2021. The announcement revealed that most of the people were elderly or housewives with no experience in cryptocurrency trading.


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Too Good To Be True

The investigation revealed that the exchange urged investors to entrust their funds to an account and lured the members that the expected return would be three times higher than the initial investment. According to the authorities, there was a pyramid element in the scam as the exchange promised to grant an introduction fee of 1.2 million won ($1,065) for every newly recruited member.

The report affirmed that the trading venue paid some members in the form of a block. Therefore, people who signed up earlier received funds from individuals who entered the exchange later.

Moreover, the Korean police seem confident to deal with the fraud case as it revealed its intention to confiscate 240 billion won ($214 million) left in the V Global account as of the 15th last month, even before the prosecution process.

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Source: https://cryptopotato.com/south-korean-crypto-exchange-accused-of-1-5-billion-scam/

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Blockchain

Georgia’s central bank is exploring ‘Digital Gel’ CBDC

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The National Bank of Georgia said that it is considering launching a central bank digital currency.

In an announcement today, the central bank hinted at the issuance of a central bank digital currency, or CBDC, in an effort “to enhance efficiencies of the domestic payment system and financial inclusion.” The National Bank of Georgia, or NBG, said it would be inviting fintech firms and other financial institutions to participate in the project, named Digital Gel after the symbol for the country’s fiat currency, the lari.

“CBDC holds the promise to unlock the tremendous value of innovative business models for the benefit of society,” said the announcement. “The introduction of CBDC could increase financial intermediation efficiency, help introduce new financial technologies, facilitate financial inclusion, and reach previously unbanked populations.”

However, the bank mentioned the possibility of risks in the launch of a CBDC in the Republic of Georgia given the “new and potentially disruptive technology.” The NBG said it may conduct extensive testing of the CBDC in a controlled environment to ensure a smooth rollout, but did not provide any details regarding a timeline for launch.

With a population of roughly 4 million and a gross domestic product of approximately $15 billion, a nation like Georgia falls at the smaller end of countries exploring CBDCs. The Bahamas officially rolled out its Sand Dollar central bank digital currency in October, while China has been piloting its digital yuan in select cities prior to a full-scale launch. In the United States, Fortune 500 company Accenture announced this week it would be partnering with the Digital Dollar Foundation to conduct CBDC trials.

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Source: https://cointelegraph.com/news/georgia-s-central-bank-is-exploring-digital-gel-cbdc

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