Learn-to-Earn: 15 Basic “E” Concepts You Must Understand in the Crypto Space
In the previous editions of this series, some core concepts under A, B, C and D have been critically examined. This edition focuses on the E concepts and it adds to the long term goal of DPAD Finance towards educating the new entrants into the space as well as refreshing the understanding of the ancestors in the crypto industry. The 15 basic concepts are explained in essence:
Effective Proof of Stake (Harmony)
Effective Proof of Stake (EPoS) is a staking mechanism designed to eliminate the possibility of centralization in staking. To put it differently, it is Harmony’s Proof-of-Stake (PoS) staking mechanism that allows for equity and fairness among validators. EPoS enhances decentralization and ensures that the network is secured. Harmony’s EPoS staking ensures steady network uptime by penalizing elected nodes that are not available. It also slashes validators that sign transactions more than once.
Elrond Egold (EGLD)
EGLD is a cryptographic asset and a native coin of the Elrond Network. It enhances the stability and functionality of the Elrond ecosystem via developer payment models, governance, and staking.
This is a method of encoding data or information enabling only authorized parties to understand. It is a technical process that restricts and secures systems as well as information making it almost impossible for hackers to penetrate. Encryption in modern-day cryptography generally refers to the transformation of ‘plaintext’ into ciphertext.’
Enhanced Due Diligence (EDD)
EDD is part of the Know Your Customer (KYC) process meant for high-risk customers as ascertained via the KYC process. It provides a higher level of careful examination of potential business relations. EDD is more reliable as it also spots risks that would not have been detected through Customer Due Diligence (CDD). The risk factors may include high customer net worth, political exposure, large transaction amounts, geographical location, etc.
ENJ is an ERC-20 and a native token of the Enjin platform used in settling payments within the ecosystem. The Enjin platform allows developers to create and manage blockchain games. The project seeks to minimize high fees and fraud associated with the transaction of virtual goods via blockchain technology.
Enya is a company founded by Faculty and Alumni from Stanford to develop infrastructures and scaling solutions based on blockchain technology. Enya has aided the development of several blockchains and open-sourced projects. Some of them are include OMG Foundation (formerly OMG Network and OmiseGo) and Ethereum-based Layer-2 solutions — Boba Network (formerly OMGX).
EOS network is a development platform that does not take direct transaction fees for its operations like other blockchain networks. Instead, it is a smart contract and a decentralized application (dApp). Users who intend to run the dApp or carryout transactions need to obtain enough network capacity by holding the EOS token. EOS is the governance token of the EOS network used to access the capacity of the network.
Generally, an epoch is a time frame in which a particular set of innovations takes place. The Cardano blockchain, for example, uses a proof-of-Stake (PoS) algorithm known as Ouroboros Praos. This consensus algorithm divides the blockchains into various time frames or epochs which can last for about five days. These epochs are further divided into smaller fragments known as slots and their duration is about 20 seconds.
Equity Stake (Equity)
This refers to the proportion of a business that is owned by an entity or individual. Equity in the digital industry is usually held by a founding member or owner of a particular blockchain project. This is done in acknowledgment of the efforts channeled towards developing, designing, building and funding the project since its origin.
ERC-20, 1155, 223, 721, and 777 Tokenization Standard
ERC-20 is an Ethereum-based token standard with a peculiar set of technical specifications and criteria for optimal functionality. It is the most commonly used standard for creating top digital assets. ERC-20 issues tokens that are interoperable among dApps built on the Ethereum network. It supports the development of tokenized assets that can transact with other cryptos like ETH and BTC. But, it requires the deployment of a separate contract for each collection or token type.
However, ERC-1155 is an Ethereum-based multi-token standard that includes Non-Fungible Token (NFT) technology. Here, a single Smart Contract manages various types of tokens like non-fungible, semi-fungible, and fungible tokens. ERC-1155 requires separate contract deployment just like ERC-20. The result is the emergence of an excessive and redundant code on the Ethereum blockchain.
ERC-223 was proposed in 2017 to solve some challenges associated with ERC-20. This target was set by developers working on the Ethereum Classic blockchain. Although it is yet to be implemented judiciously for some reasons. The ERC-223 has a unique feature that eliminates the chances of token loss likely to occur while transferring ERC-20 tokens.
ERC-721 is another technical standard similar to ERC-1155 meant for NFTs on the Ethereum blockchain. It gives rules and outlines for all NFTs to follow. NFTs that adhere to this standard become interoperable with each other and the entire Ethereum ecosystem. The used case of ERC-721 is in art, games, digital collectibles, and luxury items.
ERC-777 is similar to ERC-20, it is an Ethereum token standard for Fungible tokens. ERC-777 enables more complex token trading interactions and aids in removing confusion from decimals, minting, and burning. It has a distinctive feature called ‘hook’, a function that is enabled by sending a token to it. Hook simplifies the interactions between contracts and accounts during token reception. With this feature, ERC-777 tokens will rarely get ‘Stuck’ in a contract. Something that has been a challenging issue with ERC-20 tokens historically.
It is a contractual agreement that permits an intermediary to receive and disburse assets or funds on behalf of the parties involved. The intermediary is usually a reliable third-party arbitrator but with blockchain technology, Escrow can be automated. This is easy via the algorithmically-enforced guidelines based on smart contracts. Escrow automation has huge implications across various industries.
Ether (ETH) is the native and governance token of the Ethereum network. It is used in settling transaction fees referred to as gas on the Ethereum blockchain. Ether also enhances the interactions between various smart contracts throughout the Ethereum ecosystem.
Ethereum and Ethereum 2.0
Ethereum is a decentralized open-source blockchain launched in 2015. It has a Smart Contract functionality, it powers other applications and allows for crypto transfers with a small fee called gas. Ethereum serves as the foundation for a network of interoperable decentralized applications (dApps) powered by token economics. Its operations are fueled by its native token Ether and it has grown to become a renowned platform for several dApps.
However, Ethereum 2.0 is an upgraded version of the Ethereum blockchain designed to improve its scalability. Officially, the multi-phased upgrade is called Serenity where the Proof-of-Stake (PoS) consensus algorithm was adopted instead of Proof-of-Work. In terms of functionality, Ethereum 2.0 is expected to be more efficient and achieve a transactional scale needed to be the supercomputer globally.
Ethereum Virtual Machine (EVM)
An EVM is a computational platform, an interface that allows developers to create decentralized applications (dApps) on the Ethereum blockchain. It’s a new software platform that stores Smart Contracts and all the Ethereum accounts. EVM provides suitable application templates, development kits, and other tools for developers. Developers do not need to buy costly hardware anymore because EVM improves accessibility and accepts all code languages.
Exchange Coin (Exchange Token)
This refers to any digital asset that is listed on an exchange through any of the crypto fundraising methods. Exchange coins or tokens are of two main types; native tokens launched by the exchange itself and coins launched by other crypto networks but make use of the token launch services and the exchange infrastructure.
The final point to make and perhaps a very good way to conclude is that it is necessary to have these concepts at your fingertips. If not for any other reason, any explorer within the crypto industry is bound to come across these concepts as they journey through the DeFi space.
About DPAD Finance
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