Disclaimer: Everything we write in "The Crypto Insider" newsletter is an x-ray of the industry as we see it, through the lens of publicly available information. We are not financial advisors.
The Stakeborg DAO Talks is the latest media project we have launched, and it is all the more important as it contributes to two major goals not only for us but also for the entire community:
Stakeborg branding outside the country
Exposing the story behind Stakeborg DAO in discussions with leaders or influencers of the industry.
The first three episodes had top guests, and the next two will be on the same level, and that's a statement of the seriousness with which we treat our community and mission. We received very good feedback from you, as well as from people who did not know about our existence until they saw the debate with Vitalik or the one with Kain. By being interesting and getting a number of views that wasn’t small (although the Kain and Nick episodes didn’t come close to the 40k+ views the Buterin episode got), we managed to raise interest, including from prominent publications such as Cointelegraph.
The point is that this is the power of a community that feels it resonates with the mission of a crypto project and hence the importance of the approach we had: first we focus on +value that attracts quality people and only after that on a concept that rhymes with the community profile.
I hope you manage to find 10-20 minutes to watch every episode of The Stakeborg DAO Talks, both for the track record of the initiative as well as for your curiosity. It's interesting to see how the minds that have created articulate products in crypto and beyond the borders of their own companies think. Besides, we will meet with a good part of them in one way or another during the Stakeborg DAO’s journey.
Vlad
========================
The first steps in crypto: Understanding Byzantine Agreement
To understand the Federated Byzantine Agreement (FBA), we must first take a look at Byzantine Fault Tolerance (BFT). Fault Tolerance is the feature that allows a system to continue to function correctly in the event of one or more failures occurring within some of its components.
The quality of the way the system operates may not decrease at all, or the decrease may be proportional to the severity of the failure. In comparison, in a system designed without this feature, even a minor failure can cause a total collapse.
When it comes to Blockchain, this refers to a network’s ability to protect itself from failures that derive from the Byzantine General’s problem and make it more challenging to achieve a consensus. For example, such failures could be network congestion or disconnection, malicious attacks, or incorrect request processing.
A Byzantine Fault Tolerant system is able to continue operating even if some of the nodes fail to communicate or engage in malicious behavior.
There are several ways to build a Byzantine-tolerant blockchain, and they are related to the different types of consensus algorithms, that is, the mechanisms through which a blockchain reaches consensus. For example, Bitcoin’s solution for Byzantine fault tolerance includes atomic broadcasting and public-key cryptography.
Many blockchains have implemented some sort of BFT. The traditional Byzantine agreement is a good example. In this case, the agreement is reached when a certain minimum number of nodes, known as a quorum, agree on the solution to a given problem. While such a consensus is fast and efficient, it sacrifices decentralization to achieve these characteristics as membership in Byzantine agreement systems is set by a central authority.
Here is where the Federated Byzantine Agreement (FBA) comes in, which is a decentralized alternative to BFT. So let’s dive deeper into what FBA entails.
What Is FBA and How Does It Work?
In a BFT system, there must be a list of recommended validators, which is defined by a central authority, typically the company behind the protocol. Even if anyone can spin up a validator, only those the authority adds to that list can participate in consensus. So, such a system features a centralized, closed membership.
In FBA, there is no such list chosen by a central authority. Instead, the nodes (validators) choose the other validators they trust, and their list of trusted nodes is known as their quorum slice. In a system of this type, several quorum slices will overlap and thus form a quorum, which is the number of nodes required to reach an agreement within the system. The system-wide agreement is reached when overlapping quorum slices communicate the transactions.
Without a central authority to decide on the recommended validator list, FBA creates an open membership network. This means anyone can run a validator and participate in the network’s consensus as long as any other participating validator adds them to their quorum slice. This further allows for decentralization as more and more nodes can be added to the network, promoting organic network growth.
The Ripple blockchain pioneered the FBA consensus mechanism, but the Stellar blockchain refined it and successfully implemented the first safe and secure FBA.
Pros and Cons of FBA
Some of the advantages of FBA include the following:
FBA ensures an open membership.
Since there is no central authority, individual nodes choose the validators they trust, and they can have several quorum slices.
Anyone can join and leave at any time, so there is a low barrier to entry.
Robustness in the face of failure - even if a node goes down, the rest of the system will keep operating and will stay intact.
Low latency as transactions can be closed in just a few seconds, which leads to high throughput and network scalability.
However, a disadvantage is that trust among participants is required. Then, some experts consider that quorum slices can actually lead to centralization, which is the opposite of what an FBA system tries to achieve.
Conclusions
To sum up, the Federated Byzantine Agreement is a decentralized alternative to the traditional Byzantine agreement. An FBA ledger can be accurate as well as up-to-date even if not all nodes agree.
The quorum formed from the choices of each node is the one that convinces the entire system of agreement. Given that there is no central authority, anyone is free to join the network. Examples of well-known cryptocurrencies that use the FBA include Stellar and Ripple.
Animation of the day: What Is Cloud Mining?
For more animations: Cryptomatics
Tania
===========
The Altcoin Pulse
1. Acala Network, an Ethereum-compatible, smart contracts platform that is focused on cross-chain DeFi, is the winning project of the first parachain auction on Polkadot.
https://cointelegraph.com/news/acala-wins-first-polkadot-parachain-auction-with-over-32m-dot-staked
2. Deloitte has announced a strategic partnership with Ava Labs to develop a platform for releasing federal funds associated with emergencies and natural disasters to local and state authorities - the platform is set to be developed on Avalanche.
3. Zcash announces its plan to move to a PoS consensus mechanism in the next three years.
https://decrypt.co/86518/zcash-price-jumps-29-after-devs-announce-shift-to-proof-of-stake
4. Oasis raises a $160m investment fund geared towards financing projects developed on its own infrastructure, including DeFi, NFT, metaverse, data tokenization, and DAO data projects.
5. Polygon is launching a proposal on Uniswap's governance platform that aims to launch Uniswap v3 on its own chain.
https://gov.uniswap.org/t/deploy-uniswap-v3-to-polygon-pos-chain/15058
6. Polemos raises $2m in funding before the release of the P2E Illuvium game. The funds will be used to stimulate early adopters.
https://cointelegraph.com/news/rpg-adventure-game-illuvium-boosted-by-2m-gaming-guild-fundraise
7. Several future token releases and listings, and other events.
==================
Interesting Headlines
1. Next level: El Salvador plans to develop Bitcoin City (0% income, property, capital gains, and payroll taxes). It also announces the possibility to issue $1bn of tokenized bonds (volcano bonds) on Liquid Network. The bonds will pay an annual interest rate of 6.5% over 10 years, and 50% of the funds will be converted into Bitcoin, while the other half will be used to develop the mining infrastructure.
2. ConstitutionDAO's bid, the DAO formed for the participation in the auction of one of the first printed copies of the American Constitution, was surpassed by that of Citadel CEO Kenneth Griffin.
https://decrypt.co/86563/constitutiondao-considers-plans-for-future-after-failure-at-sothebys
3. Square's TBD division, focused on creating a decentralized and permissionless financial services platform, has published the whitepaper for a decentralized Bitcoin exchange.
4. DeFi users lost $10.5bn in funds during 2021 due to thefts and scams.
https://decrypt.co/86503/defi-users-lost-billion-theft-fraud-2021-mostly-ethereum-report
5. Investors have reportedly approached OpenSea to conduct a funding round at a valuation of $10bn.
https://www.theblockcrypto.com/linked/124741/opensea-fields-investment-offers-10-billion
6. Snapshot Labs, the creators of the governance proposals and voting platform used by over 2,200 DAOs, has raised $4m in seed funding to continue improving its services.
7. Alameda Research and Maple Finance launched DeFi’s first on-chain pool of syndicated loans.
https://decrypt.co/86378/maple-finance-alameda-research-launch-defi-first-syndicated-loan
==================
Tweetstorm of the week:
How Yield Farming came about on a large scale in crypto:
Business book of the week: The fourth turning: An American Prophecy. It's a book that I first heard about from Raoul Pal, and later, pressured by Emil, I started reading it. I haven’t finished it, but I liked it so much that I recommend it. Crypto plays a decisive role in the fourth cycle described by the author.
Youtube clip of the week: Benjamin Cowen talking about the change of the bull market structure:
This comes quite a bit after the post was published, hehe. First of all, that's a decent overview of Byzantine Agreement. My unsolicited feedback would be to simplify technical content even more where possible. I know that there's an underlying story behind the name of the concept. Using that to explain the concept would surely land better, particularly with newbies in the space.
On another note, based on what was written above, does it mean that Solana's blockchain infrastructure is not Byzantine Fault Tolerant? We've seen on numerous occasions how the network couldn't handle to load, and was therefore taken offline for hours, even days on end. Does this make it a flawed architecture by design? How does this play into the decentralisation vs centralisation argument?