Fork that Polygon

Good morning! Welcome to The Daily Moon. You’ve heard this phrase about failing upwards, right? That’s what the 3AC founders are about to experience. The two men who ran the crypto lender (into the ground) are in the market to raise $25 million to start a brand new exchange. They plan to call their exchange GTF because G comes after F. Not kidding. This is real.

The markets recovered. Bitcoin was at ~$21,400 and Ethereum sprinted towards $1,600. Nasdaq rose in early trade. Back home, Sensex and Nifty ended higher on buying in IT, BFSI, and oil & gas stocks.

Will The Fork Work Its Magic?

Polygon’s hard fork is live. The blockchain was coded to initiate a hard fork at Block# 38,189,056. That has happened. Soon after, Polygon's MATIC token rose 2.4% and settled a little above $1. The fork is expected to minimise extreme fluctuations in the gas fee. FYI Gas fee is a transaction fee paid to the validators for their services to the network. Here, base fee is the minimum fee charged for each transaction.

What’s the trigger?Polygon has a scaling solution called Polygon POS which helps developers launch dApps. Things worked well until multiple users complained about sudden spikes in the gas fee. The Polygon community got together and decided to hard fork the network.

How will Polygon change?The hard fork has brought two changes:

1. Reduction in gas fee spike: Typically, the gas fee increases during periods of high demand. But sudden spikes are abnormal. The hard fork will reduce the spike in the base fee from the current 12.5% to 6.25%.

2. Decrease in sprint length: There are times when two nodes mine a block around the same time. In such scenarios, the longest chain is retained and the shorter one deactivated. This is called chain reorg. Too many instances of chain reorg are unwelcome because they delay transactions on the blockchain. Polygon’s hard fork will reduce the frequency of reorg and improve the network’s stability. This will be done by decreasing the sprint length. Sprint length is the number of contiguous blocks produced by validators. So far, validators produced blocks for ~128 seconds. The hard fork has reduced it to ~32 seconds by slicing the sprint length. Less reorg=Less delays.

Here’s what the upgrade looks like:

Source: Polygon

Interoperable Crypto In Future?

Picture a portable device to use crypto across blockchains. It’s still WIP but that’s what will reshape crypto. Accenture is among the many companies working on this model.

How does it work?Each crypto token is designed to be used on a specific blockchain. That means if a token’s built on Ethereum, it won’t be compatible with the Bitcoin blockchain. And for crypto to go mainstream, it needs to work seamlessly across all blockchains. Technology companies have already begun R&D on web3 and portability.

What’s its use?If this happens, customers can use their crypto assets, including tokens, smart contracts, and NFTs anywhere. Developers can then build products and services that work irrespective of whichever blockchain is used. The real change will be seen when an airdropped token or NFT can be immediately transferred to another blockchain. Whether it is a device or an auto-convert mechanism, it needs to happen soon.

Miners Can Feel The Black

They’ve been struggling for a while but there is finally light at the end of the tunnel. Bitcoin miners are finally in the black. Remarkably, January has been the least volatile month in the history of Bitcoin and the price of the token has been on a steady climb.

FYI: BTC is now edging past $21,000. It’s a positive sign, if not proof of a revival.

How does this work?To break it down for you: inflation ⬆️, prices ⬇️, difficult for miners to break even. Now, with inflation steady and prices going up, it is now easier for miners to make their money back.

Is that it?The trend in January 2022, seems to be mirroring what we saw in 2019 and that seems to be a positive direction of travel.

Good times then?We’ll be straight with you, a good, reliable model to predict Bitcoin (or any token) prices hasn’t been discovered yet. Analysts and researchers keep trying and they sometimes get it right but events such as FTX can put paid to the best laid plans.

Vauld Buys More Time

Almost broke crypto lender, Vauld, got a lifeline but not as long as it wanted. The company has been in trouble for a while and saw major cracks develop after the Terra Luna crash. It paused withdrawals and had since then been edging towards bankruptcy. The company was then looking to sell itself to a competitor but had been unable to find a buyer. A Singapore court has now given it until the end of February to resolve the situation. Vauld wanted until April.

ICYMIVauld had gotten a proposal from Nexo for an acquisition but that had been rejected after, well, Nexo’s headquarters in Bulgaria were raided. The crypto company was accused of money laundering and funding terrorist activities.

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Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.