Crypto Market Commentary
10 June 2019
Doc's Daily Commentary
Doc’s latest “Trade School” video from Friday 5/17 was about Options and is posted in the Trade School archive. Due to travels Doc will not be doing any trade schools until Mid-June.
Our most recent “ReadySetLive” session from 5/16 is listed below.
Mind Of Mav
Layer 2 Platforms & The Possibility Of Bottling Lightning: StakeNet (XSN) Reviewed
Today we’ll be looking at a project that’s looking to change how we think about staking, decentralized exchanges, the lightning network, atomic swaps, masternodes, and the questions that come once we have a fully realized layer 2 scaling solution.
Stakenet is a project looking to tackle the ‘Blockchain Trilemma’ head-on.
Coined by Ethereum founder Vitalik Buterin, the Blockchain Trilemma centralizes around one key question; how to develop blockchain technology that is scalable, decentralized, and secure, without any element being compromised.
While a lot of money has been invested into different networks to foster a decentralized and secure financial/economic system, many continue to argue about how the issue of the ‘Blockchain Trilemma’ hinders scalability and growth.
Buterin thinks it’s only possible for blockchains to achieve two of these traits at the same time.
I think a zero sum approach, as Buterin suggests, shows a certain reticence, but ultimately I feel that logic is flawed.
Scalability is not a binary. Security is not a binary. Decentralization, unless broadly referred to under the context of a spectrum with decentralized and centralized on opposite sides, is not a binary.
You could say that Bitcoin is decentralized, and you’d be right. You could also say that Bitcoin is centralized, and you’d also be right.
What I see, especially when looking at a nascent technology, is that artificially imposing limits is folly. The world I see developing is one of hybrid solutions.
And that’s what Stakenet is. A platform of hybrid solutions, interoperability, and user-oriented functionality.
From their whitepaper:
“Stakenet is a decentralized platform designed to provide a highly competitive solution over traditional banking, fiat currencies, payment gateways, and more. Stakenet provides the infrastructure for instant and virtually zero fee transactions, delivering a much more convenient way to handle your preferred store of value through an interchain ecosystem of decentralized platforms, products, and services. Stakenet aims to be the only place people ever need to go for crypto, while still being able to use their favorite cryptocurrencies’ features. Our vision is to make that as seamless as possible. The Stakenet blockchain is powered by its own native coin – XSN, which is the money that will be used as the legal tender and gas for the entire interchain ecosystem.”
Let’s unpack that.
For one, they utilize Trustless Proof of Stake (TPoS) as consensus, which is a minting Proof of Stake consensus which validates, moves, and secures a blockchain while the used coins remain offline in a cold wallet.
This allows functionality for the user while also enforcing better security standards for them, and the network at large. After all, a network will be pretty rock solid if a majority of the minted coins are quietly staking away in offline storage. Removing the need for hot wallets to be running online all the time addresses one of my chief concerns about PoS proliferation: people will either entrust that job to an exchange, or just forego the effort and negate the network benefits of staking in the first place.
Add to that the ability to do cross chain Lightning Network powered atomic swaps and suddenly you’ve really got my interest.
Atomic swaps will allow you to pay someone in a currency and for them to receive their payment in their preferred currency, whatever that is. No more centralized exchanges for converting currency.
Just seamless commerce transactions in a way we’ve never seen.
When you add that in conjunction with the capabilities of the Lightning Network, you start to transform and evolve a lot of conventional thought regarding money.
The advantages of using the Lightning Network to cross communicate between all blockchains within the Stakenet meta network can be summarized very well by using the following four criteria.
Instant payments: Lightning-fast instant payments across the entire blockchain without any limitations caused by the block confirmation times. Due to smart contracts, the security of the transactions is ensured without the need of an on-blockchain transactions, so that a payment speed of milliseconds to seconds can be achieved.
Scalability: Allows the processing of millions to billions of transactions per second across the network. This capability outperforms all previous legacy payment rails and attaches a payment per action/click is now possible without custodians or third-party services.
Low cost: Using an off-blockchain transaction setting profits in exceptionally low fees in the Lightning Network. This enables completely new use cases such as instant micropayments.
Cross blockchains: Cross blockchain transactions will be possible if both chains are connected due a compatible second layer protocol or are supporting the same cryptographic hash function on their own. Given that, it is possible to execute trustless transactions between different blockchains.
Add in a masternode network, layer 2 dapps, cross chain PoS rewards (get paid in any currency for staking your XSN), and even some hardware plans, and Stakenet is clearly an upstart and ambitious project at the forefront of crypto tech.
But, the caveat is that much of this is very, very niche. LN is still in its infancy. Layer 2 platforms are in their infancy. Blockchain interoperability is still somewhat of a question mark regarding relevance even at the early adopter stage.
Additionally, XSN trades on only a few tiny exchanges with pitiful volume.
In many ways, this is a high risk proposition only to be entertained by dreamers.
Yes, I believe that XSN has interesting ideas, and could be a major player in the future if and when layer 2 starts to become realized.
But that day is hypothetical, and much remains to be seen.
After all, this space represents more than just a binary of success or failure.
It represents seeing beyond.
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An Update Regarding Our Portfolio
We are pleased to share with you our Community Portfolio V3!
Add your own voice to our portfolio by clicking here.
We intend on this portfolio being balanced between the Three Pillars of the Token Economy & Interchain:
Crypto, STOs, and DeFi projects
We will also make a concerted effort to draw from community involvement and make this portfolio community driven.
Here’s our past portfolios for reference:
RSC Managed Portfolio (V2)
RSC Unmanaged Altcoin Portfolio (V2)
RSC Managed Portfolio (V1)