仮想通貨に関する用語集(CRYPTO GLOSSARY) E行

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Eclipse Attack

An eclipse attack is a type of P2P network threat that disrupts the operations of the network by isolating and manipulating one node.

What is an Eclipse Attack?

In an eclipse attack, a malicious actor separates a specific node within a peer-to-peer network instead of attacking the entire blockchain. The actors create an artificial environment around specific nodes to prevent them from receiving transactions or information from their peers. 

An eclipse attack is different from a Sybil attack, which creates multiple identities or nodes to upset the balance of power to take control over the entire network. Eclipse attacks may misdirect users to accept invalid or confirmed transactions, leading to a double-spend attack. Launching an eclipse attack on multiple miners could lead to a 51% attack.

How are Eclipse Attacks Executed?

Eclipse attacks in crypto arise from the inherent limitations of decentralized networks, where nodes are unable to connect with all other nodes simultaneously due to connection limits. Instead, they only create connections with a few nearby nodes. Bitcoin, for example, allows only a maximum of 125 connections. This vulnerability enables malicious actors to manipulate the information flow to specific nodes, potentially obstructing their view of legitimate transactions or blocks.

To execute an eclipse attack, the malicious actor identifies the node they intend to isolate and manipulate. The target could be a mining node, a well-connected node, or one that belongs to a specific organization or user. The attacker then creates a malicious network, known as a botnet, that consists of multiple nodes in their control. The nodes are strategically positioned to form connections with the target node. Botnets aim to monopolize all connections that the target node has, so it can control the flow of information to and from the target.

Once the botnet is in place, the malicious actor initiates a Distributed Denial-of-Service (DDoS) attack on the target node. This DDoS attack floods the target node with a large volume of fake or irrelevant network requests (or IP addresses), effectively overwhelming its resources. This forces the node to try reconnecting with the blockchain network. However, since the botnet controls most of the target node’s connections, it feeds it with false information. 

By controlling the information flow to and from the target node, the attacker can isolate it, manipulate its view of the wider network, and potentially carry out a range of attacks, including DDoS attacks, double-spend attacks, and even disrupt the miner power distribution, hampering the network’s operations.

A proposed countermeasure for such blockchain threats involves randomly selecting new connections instead of repeatedly using the same neighboring nodes. This would make it more difficult for malicious actors to attempt to attack the network.

EigenLayer

EigenLayer is a protocol on the Ethereum network that allows users to re-stake ETH.

What Is EigenLayer?

EigenLayer is an Ethereum-based restaking protocol that leverages staked Ether (ETH) to secure other protocols within the Ethereum ecosystem through restaking. To explain, restaking involves taking ETH that has already been staked on Ethereum and using it to secure other protocols to earn staking rewards. 

Put simply, EigenLayer enables startup protocols to benefit from Ethereum’s well-established proof-of-stake consensus mechanism. This allows these protocols to validate transactions without creating their own validator set, which can be very costly. 

Sreeram Kannan founded this Ethereum restaking protocol in 2021. The protocol aims to establish a restaking marketplace, where decentralized applications (dApps) and protocols within the Ethereum ecosystem can access pooled security. Not to mention, the protocol’s restaking process allows users to collect additional income while still utilizing their staked assets.

How Does EigenLayer Work?

Think of EigenLayer as a support layer between Ethereum and its users. It consists of validators selling pooled security and third-party protocols buying pooled security. It also enables users to contribute their tokens to restaking pools. When users deposit ETH or liquid staking tokens (LSTs) to EigenLayer, they receive liquid restaking tokens (LRTs) which can be converted back to ETH at any time. Much like liquid staking offers users liquidity while their ETH is staked, LRTs allow users to participate in DeFi while their ETH is restaked.

Generally speaking, EigenLayer comprises three key elements – modules, smart contracts, and restaking. 

• Modules – It introduces a modular security approach, where ETH stakers contribute their tokens to secure specific functionalities, known as modules, within the Ethereum ecosystem. For instance, a module could secure decentralized storage solutions, in-game items in gameFi protocols, or trust within DeFi protocols.
• Smart contracts – Users re-stake their locked tokens through the protocol’s smart contracts, granting the contracts the capability to add additional conditions or enforcement rights on the staked tokens. As a result, it provides a new set of validation and security services to the different modules in the network.
• Restaking – Users can restake their staked Ether in two ways – solo staking and delegation. In solo staking, the users run their own nodes and directly validate their respective module’s transactions. Conversely, users can delegate the validation duties to other network participants by contributing their staked tokens to the protocol’s restaking pools.

EIP-4844

EIP-4844 is a proposed Ethereum network upgrade intended to boost the network’s scalability while reducing costs.

What Is Ethereum’s EIP-4844 Update?

The Ethereum Improvement Proposal 4844 (EIP-4844), also known as proto-danksharding, is a  planned change to the Ethereum network that focuses on making transactions faster and cheaper. It is one of the proposed changes in Ethereum’s development roadmap, anticipated to be implemented in Q1 of 2024.

This Ethereum upgrade will be implemented as part of the Cancun-Deneb (Dencun) update, where Cancun represents the upgrade on the execution layer and Deneb is the upgrade on the consensus layer. The Dencun upgrade is expected to improve Ethereum’s efficiency, scalability, and security without compromising its decentralization.

What Is Proto-Danksharding?

Sharding is one of the ways for Ethereum to scale. It refers to splitting a network into smaller partitions called shards. Notably, the Ethereum network has altered its sharding choices from implementing full execution sharding to danksharding to a further refined proto-danksharding. Why all these changes?

In full execution sharding, the Ethereum network would have been split up into smaller parts (shards), with transactions being validated on individual shards as opposed to the entire network. While this approach would achieve its primary goal of increasing Ethereum’s throughput, it would have compromised security as each shard would have fewer validators than the entire, unsharded network. Not to mention that fully sharding Ethereum would be incredibly complex to carry out at this stage.

As a result of these challenges, as well as the emergence of blockchain rollups as one solution to Ethereum’s scalability issues, sharding was replaced in Ethereum’s roadmap by danksharding. In danksharding, shards would not process transactions but rather enable rollups to process more data.

So what about proto-danksharding? Well, proto-danksharding is intended to be a step on the way to full danksharding. Coined after Ethereum researchers Protolambda and Dankrad Feist, proto-danksharding is designed to improve the scalability of blockchain rollups. It does this by introducing a new type of transaction – blob-carrying transactions – that allows rollups to add data to blocks in a much more cost-efficient manner. Blob-carrying transactions resemble regular transactions but with extra pieces of information (blob data) attached to them. 

Consider blob data as compressed or zipped files, which are inaccessible to the Ethereum Virtual Machine (EVM). Most importantly, in contrast to blocks, which permanently reside on the blockchain, blobs self-destruct after a brief period of 1-3 months. This nature of blobs substantially reduces the data transmission and storage costs for blockchain rollups.

 

EIP-712

EIP-712 is a standard dictating how to structure and sign data on Ethereum so that it is both human-readable and machine-verifiable. 

What Is EIP-712?

Ethereum Improvement Proposal 712 (EIP-712) defines the general standard that enables Ethereum wallets to display data in a structured, human-readable, and machine-verifiable format. 

This specification improves on EIP-191, the foundational signed data scheme that concealed users’ private keys when approving transactions. It was implemented to streamline the verification of off-chain signatures within the Ethereum ecosystem, thereby enhancing the ecosystem’s security and user experience. 

Before the implementation of EIP-191, wallets displayed messages to users as hashes in unreadable hexadecimal strings. This made it challenging for users to verify the accuracy of data during transaction signing. Consequently, a malicious dApp could manipulate users into approving incorrect transaction data by sending an opaque or complex prompt. The dApp, for example, could deceive the user into paying an unnecessarily high gas fee. This vulnerability threatened the ecosystem’s general security and usability.

While EIP-191 made some progress by making messages human-readable, it presented data in an unstructured way, and thus, still difficult to use. This led to the implementation of EIP-712, which simplified the whole process of signing data. 

The specification introduced typed data – structured data consisting of type information. This enabled developers to parse data and identify its components in a message, given its known structure. Additionally, it allows users to verify the authenticity of messages before signing them, thereby enhancing security.

EIP-712 on Ledger

By introducing typed data, this specification allows crypto wallets to analyze and present messages to users in a user-friendly and secure manner. For example, Ledger devices grant developers control over the precision with which their messages are displayed on the devices.

A Ledger device technically has three levels of support for messages – blind signing, transparent signing, and clear signing.

• Blind signing – Blind signing resembles the developer asking a user to approve an unreadable and incomprehensible message or without providing the full details. That is, the developer is not utilizing the EIP-712 specification. 
• Transparent signing – The developer converts the hexadecimal string to a human-readable format by implementing this specification. However, the message contains full content, including technical information, which makes it difficult for the user to identify the key information.
• Clear signing – By leveraging the Ledger device’s capacity to parse or analyze the message’s content, the developer can define the display parameters and content. This allows users to precisely know and understand what they are signing – thereby achieving clear signing. 

 

Entropy

The entropy of a variable is the measure of the ‘unpredictability’ of that variable. In hardware wallets, entropy refers to the large random number that ensures your crypto wallet is secure.

What is Entropy?

Entropy is simply a random number your crypto wallet generates to form the basis of your secret recovery phrase. 

Isn’t the secret recovery phrase the one produced when initiating a wallet? 

The secret recovery phrase is actually a direct translation of your entropy, which is a large random number. Your entropy and secret recovery phrase basically contain the same information, just in different formats– one simpler than the other. Your secret recovery phrase starts out as this large number known as entropy. Using the BIP-39 standards, which define how recovery phrases are generated, the entropy is converted into an easy-to-read phrase.

For instance, a 256-bit entropy translates into a 24-word recovery phrase, which is a more simplified version of the extremely long number. Then a 128-bit entropy would translate into a 12-word recovery phrase. 

Since anyone with access to your entropy has access to your wallet, just like they would with its secret recovery phrase, the way it is generated is extremely important. To explain, the more random your entropy is, the more secure it is.

For example, if a bad actor can easily guess your entropy, then they can easily access your crypto wallet and digital assets.

How Does Entropy Work in Cryptocurrency Wallets?

Imagine an entropy lacking true randomness. First, it would increase the probability of more than one wallet generating the same entropy, leading to the same recovery phrase for distinct users. Secondly, a weak entropy leaves a crypto wallet vulnerable to brute-force attacks regardless of how well a user has concealed their entropy.

The quality of entropy relies on its randomness. The idea is that an external entity re-generating your entropy should be statistically impossible. Thus, the greater the randomness of that code, the less likely someone could guess it. 

In most crypto wallets, the entropy is generated by a random number generator (RNG). Simply put, the RNG generates the entropy, which is then translated into the secret recovery phrase using BIP-39. It is then used to derive unique private keys when a user is initiating a cryptocurrency wallet or creating an account.

 

ERC-1155

The ERC-1155 is a multi-token standard that allows for the creation of both fungible and non-fungible tokens within a single smart contract.

What is the Ethereum Request for Comments-1155 (ERC-1155)?

Ethereum Request for Comments-1155 (ERC-1155) is an ERC token standard that is used to create fungible and non-fungible tokens on the Ethereum network by deploying a single smart contract interface. The standard sets the rules of what a token can do, so the ERC–1155 defines the properties of certain types of tokens. 

The ERC-1155 standard features:

• A combination of functions from the ERC-20 and ERC-721 standards.
• Batch transfers: a single contract can execute multiple assets in a single transaction. This minimizes transaction costs and improves transaction security and efficiency.
• Support for fungible, non-fungible, as well as semi-fungible tokens.
• The safe transfer of tokens: if the tokens are delivered to the wrong address, they can be reclaimed easily by the issuer.
• Fewer transactions, as there is no need to approve token contracts separately.
• Lower gas fees forminting tokens, because there’s no need to use individual smart contracts.

What is the Difference Between ERC-721, ERC-20, and ERC-1155?

ERC-1155 is a hybrid token standard that combines both ERC-20 and ERC-721 token standards. 

ERC-20 is a fungible token standard. Fungible tokens are identical. Take Bitcoin as an example – one unit of Bitcoin is similar to another Bitcoin and can be interchanged with each other. Stablecoins and other tokens like the BAT (Basic Attention Token) and UNI (Uniswap) are based on the ERC-20 standard.

On the other hand, the ERC-721 token standard is used to create non–fungible tokens like NFTs. Non-fungible tokens are one-of-a-kind tokens that cannot be interchanged with other tokens. Each ERC-721 token has a unique ID, and it cannot be divided into smaller parts. This standard is commonly used for creating digital collectibles, art, and gaming assets.

Both ERC-20 and ERC-721 use individual smart contracts to create new tokens. They do not support semi-fungible tokens (SFTs) which are a combination of fungible and non-fungible tokens.

In contrast, ERC-1155 tokens are designed to be more efficient and cost-effective by allowing multiple types of tokens to be managed within a single smart contract. It allows Ethereum developers to create fungible, non-fungible, as well as semi-fungible tokens. 

 

ERC-20 Tokens

ERC-20 tokens is the technical standard for fungible digital tokens that run only on the Ethereum blockchain network. They are built on smart contracts that keep track of the tokens created on the Ethereum network.

What are ERC-20 Tokens?

ERC-20 stands for “Ethereum Request for Comments” where the number 20 signifies a unique ID that differentiates it from other ERC uses. ERC tokens are like other cryptocurrencies, such as “Bitcoin or Dogecoin,” but they are solely created for the Ethereum network. Created by Fabian Vogelstellar in 2015, these tokens are designed to pay for different functions performed on the Ethereum network. 

A common use case for ERC-20 tokens is exchanging digital assets through smart contracts. 

Characteristics of ERC-20 tokens include:

• Fungibility – ERC-20 tokens are fungible, which means that they are interchangeable, i.e., 1 unit of that token can be exchanged with another unit of that same token.
• Transferability – These tokens can be easily transferred from one wallet to another, similar to other digital currencies.
• Identified total supply – Most tokens have a fixed supply issued on the network.
• Gas fees – To complete transactions with ERC-20 tokens, users need to pay gas fees in ETH.
• Liquidity – As more projects interact with each other, ERC-20 leverages liquidity within the Ethereum ecosystem.

What is the Role of ERC-20 in a Blockchain?

ERC-20 defines a set of technical rules, known as a “standard,” that smart contracts must follow within the Ethereum blockchain network, including how they can be transferred, how transactions are approved, as well as the rules governing token creation and total supply. This standard allows developers, businesses, and other community members to create and deploy various dApps within the Ethereum network and accurately predict how those projects will integrate with the larger ecosystem.

The tokens are also used to tokenize voting rights and offer secured and speedy transactions within the Ethereum network.

ERC-721

ERC-721 is the token standard used on Ethereum to create non-fungible tokens (NFTs). Each token created using the ERC-721 standard is unique and not interchangeable.

What is an ERC-721?

ERC stands for Ethereum Request for Comments. It is a framework for programming how a token launched on Ethereum will function. ERC-721 is the standard used to create non-fungible tokens on the Ethereum network. 

Non-fungible assets are not interchangeable, good examples of this type of asset would be a vintage record, a house or a work of art: all of these derive their value from their unique features, and cannot simply be swapped with another that looks the sale. Similarly, non-fungible tokens are unique units of value that exist on the blockchain.

By contrast, tokens that use the ERC-20 standard, such as Chainlink, Aave or Shiba Inu, are known as fungible, because one token could be replaced with another from the same currency without any change in value

There are currently nine ERC standards, and ERC-721 is the standard that helps users create non-fungible tokens (NFTs). 

What makes each ERC-721 Token Unique?

Tokens created with the ERC-721 standard have a unique metadata and code that makes them distinct from all others. They are irreplaceable and indivisible. The prices of ERC-721 tokens are often influenced by factors like rarity and hype.

ERC-721 tokens contain an underlying smart-contract and exist on the Ethereum blockchain. The creator inputs the unique details of the token such as name, owner and size of the collection, into the base code (the entire body of code for the NFT saved as a file).

What are ERC-721 NFT Use Cases?

One of the most widespread uses of the ERC-721 token standard is for digital art. Publishing art, or any type of media, on the blockchain means that it can be bought, sold and traded via the underlying blockchain network.

NFTs are transforming a number of other industries, by enabling individuals to own a piece of their digital landscape: this can be seen in non-fungible gaming assets, metaverse land and asset, Web3 community memberships, and more. 

Cryptokitties, an Ethereum-based game, was the first game to use the ERC-721 token standard in 2018 to create a digital collection of unique kitties. Play-to-earn (P2E) games also use the ERC-721 standard to create gaming characters or assets for purchase inside the game, such as weapons, houses, and costumes. 

NFTs are also being used to tokenize personal documents and qualifications.

Ethereum 2.0

Ethereum 2.0 is an ongoing series of network upgrades aimed at addressing scalability, security, and accessibility.

The term “Ethereum 2.0” refers to an ongoing set of upgrades to the Ethereum network designed to tackle some of its pressing issues, including scalability, security, transaction throughput, accessibility, and transitioning to a more energy-efficient consensus proof-of-stake algorithm.

Ethereum 2.0 Explained

Like most blockchains, the Ethereum network also faces the blockchain trilemma, where achieving one design principle involves a tradeoff. Blockchain trilemma is the concept that it’s difficult for a blockchain to find a balance between its three defining factors: scalability, decentralization, and security. 

To tackle Ethereum’s scalability issues and enhance its speed, security, and accessibility, the Ethereum Foundation outlined a series of network upgrades called Ethereum 2.0 (also known as Serenity), which includes the Beacon Chain, Sharding, and Merge. The most notable upgrade made to the network was the shift from proof-of-work consensus to proof-of-stake consensus. The PoS allows Ethereum to be significantly more energy-efficient, scalable, and accessible.

The developers later renamed Ethereum 2.0 or Eth2 to Ethereum upgrades to avoid confusing users and to create staking clarity. Eth1 refers to the execution layer that handles transactions, while Eth2 is the consensus layer handling proof-of-stake consensus. 

When will Ethereum 2.0 launch?

The Ethereum network’s transition is multi-phased. These phases include:

• Phase 0: Phase 0 introduced the Beacon Chain, launched on December 1, 2020. The Beacon Chain, which existed adjacent to the mainnet and currently coordinates with the PoS Ethereum, brought staking to the network and laid the foundation for future upgrades. 
• Phase 1: Phase 1 introduced The Merge, which involved merging the Mainnet into the PoS Beacon Chain, on September 15, 2022. It also introduces sharding, where the blockchain will be divided into smaller chains called shards. Dividing Ethereum into 64 shards means that the network’s load is spread across 64 chains, expanding the network’s data storage capacity and reducing network congestion. Sharding is estimated to take effect between 2023 and 2024.
• Phase 2: Phase 2 will mark the transition to eWASM or Ethereum WebAssembly from the current Ethereum Virtual Machine (EVM). The eWASM will speed up processes within the network and make development more accessible since it is compatible with basic programming languages and compiles and executes code much faster than EVM. However, the developers are still uncertain when the upgrade will take effect.

 

Ethereum Improvement Proposal (EIP)

An Ethereum Improvement Proposal is a formal proposal to make changes or updates to the Ethereum network.

What is the Ethereum Improvement Proposal (EIP)?

Simply put, Ethereum Improvement Proposal or EIP provide a means for Ethereum community members to contribute to the development and evolution of the network by allowing them to suggest changes and engage in proposal reviews and discussions. It is also a way of documenting or monitoring the progress of design changes in the protocol.

Think of how centralized tech firms update their software. The decisions and changes are made internally by the company. In a decentralized network like Ethereum, where there is no central entity to determine which features the network will adopt, the network’s community submit potential changes in a standardized way. For instance, Ethereum users use a standard known as Ethereum Improvement Proposal to write and submit proposals.

Ethereum Improvement Proposals (EIPs) refer to the standards that specify the potential upgrades or functionalities to the Ethereum protocol. It allows developers and community members to propose new solutions, protocol specifications, modifications and features to the network. If the Ethereum community accepts the EIP proposal, the network is upgraded with the proposed changes, improvements, or new features. EIP takes inspiration from the Bitcoin Improvement Proposal (BIP) that Bitcoin uses to accept improvement suggestions from its community.

EIPs vs ERC

An ERC or Ethereum Request for Comments outlines the rules and specifications that developers must adhere to when creating new features, tokens, libraries, or smart contracts within the Ethereum blockchain. Thus, while EIPs are used to suggest improvements to the Ethereum network itself, ERCs are used to create new Ethereum-based tokens or standards, such as ERC-20 tokens and non-fungible tokens (ERC-721). Basically, ERC is a subcategory of EIP.

EIP-3675, dubbed the Merge, is the most recent Ethereum Improvement Proposal, where the blockchain shifted from the original proof-of-work algorithm to a proof-of-stake consensus mechanism. The move was designed to improve the network’s scalability and efficiency while reducing its energy consumption.

 

Ethereum Virtual Machine

The Ethereum Virtual Machine (EVM) is a software framework on the Ethereum network that allows developers to execute smart contracts and create decentralized applications.

What is Ethereum Virtual Machine?

The Ethereum Virtual Machine (EVM) is like the heart of the Ethereum blockchain. It’s what makes it possible for developers to build decentralized applications (dapps) and execute smart contracts on the network. Think of it like a giant computer that runs on thousands of different devices all around the world.

The main function of the Ethereum virtual machine is to determine the “state” of each block in the Ethereum blockchain. The “state” refers to the network’s data structure that stores information on accounts, balances, smart contracts, and machine state, all of which can change as new blocks are added to the blockchain.

Since the EVM is a virtual system, it is not limited to a particular operating system, and can be accessed by anyone from any geographical location.

How Does EVM Work?

When a smart contract is created and deployed on the Ethereum network, it is written in a high-level programming language such as Solidity. This code is then compiled into bytecode, which is a low-level machine-readable language that the EVM can understand.

The EVM executes smart contracts in a sandboxed environment, which means that they run independently of each other and cannot access resources outside of their designated environment. This ensures that each contract’s execution is secure and isolated from other contracts running on the network.

Developers utilize the Ethereum virtual machine to create various decentralized applications (DApps) including those for decentralized finance (DeFi), EVM crypto apps, games, and marketplaces. 

EVM for Smart Contracts and Decentralized Applications

The Ethereum virtual machine holds a crucial role within the Ethereum network as it is responsible for executing and deploying smart contracts. It functions as the platform where smart contracts and millions of DApps based on the Ethereum blockchain exist and thrive.

In essence, the Ethereum blockchain operates as a peer-to-peer (P2P) system of distinct individual nodes. Each node connects to the next, with each of them being responsible for ensuring the security and stability of the entire ecosystem. To achieve consensus and sustain the integrity of the Ethereum blockchain, every node employs the EVM.

To run the EVM, execute smart contracts, and to ensure that there are no errors, the Ethereum network compensates its validators with computation fees or gas fees.

EtherFi

The EtherFi protocol is a decentralized, non-custodial liquid staking platform built on the Ethereum blockchain.

What Is EtherFi?

EtherFi defines a decentralized, non-custodial delegated staking protocol that allows users to stake their ETH holdings to support validators. It facilitates the concept of native restaking by integrating with EigenLayer. This native Ethereum restaking involves reusing and repurposing the staked ETH tokens for other networks or applications– thereby compounding to realize higher yields over time. 

The liquid staking platform utilizes Ethereum’s proof of stake (PoS) consensus mechanism. This means that users can stake or lock up their ETH holdings in a smart contract. In return, the stakers receive a restaking liquid token in the form of an eETH token.

The eETH token complements the protocol’s native token, ETHFI, to allow users to directly control the staking and restaking processes. ETHFI is also used as the governance token and to reward users. And, as a governance token, it grants users the right to vote on decisions that impact the ecosystem, such as the development and operations of the platform.

What Are the Key Features of Ether.Fi?

One of Ether.Fi’s defining features is the liquid staking functionality. To clarify this, rather than staking their ETH for prolonged periods, stakers receive liquid tokens – ether.fi staked ETH (eETH), in this case – to represent their locked ETH. The liquid token can be traded or used in other decentralized applications (dApps) within the Ethereum ecosystem. 

Another distinctive feature is its capacity to create a unique non-fungible token (NFT) for every validator involved in the staking process. The NFTs typically contain the defining characteristics of every validator. In addition, they facilitate metadata storage, which is essential for future innovations in the restaking infrastructure.

The NFTs are of two distinct types – transferable NFT (T-NFT) and bound NFT (B-NFT) – that serve as proof of ownership for the locked Ether. They also symbolize the staker’s control over their staked ETH. 

For instance, the B-NFT is specifically connected to the individual holding the validator keys; that is, it is bound to the staker’s address. It also acts as an insurance against slashing penalties. Technically, B-NFT and T-NFT represent the withdrawal certificates for 2 ETH and 32 ETH, respectively.

ETP

An exchange-traded product (ETP) is a financial instrument that tracks the performance or value of an underlying asset, such as gold, a cryptocurrency token, or a commodity.

What Is a Crypto ETP?

In the context of crypto, exchange-traded products (ETPs track the price movements of an underlying cryptocurrency asset. They offer investors exposure to the underlying crypto without having to hold the crypto itself. Similar to shares and stocks, you can buy, sell, and trade cryptocurrency ETPs through brokers or traditional securities and stock exchanges.

ETP is an umbrella term, encompassing three main types of exchange-traded investment products:

• Exchange-traded funds (ETFs) – Cryptocurrency ETFs are investments that track or mirror the performance of a basket of digital assets, such as Bitcoin or Ethereum.
• Exchange-traded cryptocurrencies/commodities (ETCs) – ETCs typically provide direct exposure to cryptocurrency assets, such as Bitcoin, or physical commodities like gold and copper.
• Exchange-traded notes (ETNs) – Traditionally, ETNs are unsecured debt securities tracking stocks, bonds, and indices. They are similar to credit notes that banks issue to investors.

How do they work?

Generally speaking, ETPs aim to replicate the returns of an underlying crypto asset. To achieve this, an ETP can employ one of two main replication techniques – physical or synthetic methods.

In physical replication, the physical ETP purchases and holds the underlying cryptocurrency in a secure wallet. The performance of the physical crypto ETP then becomes intrinsically tied to the performance of the underlying cryptocurrency it tracks. Popular examples of physical crypto ETPs are the Fidelity Physical Bitcoin (FBTC) and 21Shares Bitcoin (ABTC).

On the other hand, synthetic ETPs utilize swap counterparties, typically a financial institution like a bank, to pay out the returns associated with the underlying crypto. To guarantee daily return delivery, the swap counterparty is often obligated to deposit collateral with the issuer  – especially in blue-chip assets or treasuries. In addition, the required collateral amount often fluctuates in response to the performance of the cryptocurrency being tracked.

Physical ETPs are more transparent, eliminate counterparty risks, and are relatively simple. However, while synthetic ETPs are more complex, they come in handy in certain situations, such as when the underlying asset is costly to physically replicate.

In summary, when you purchase a crypto ETP, you get exposure to a digital asset through a traditional financial instrument that functions like a bond or stock. This is more convenient for some investors, though it comes without the benefits of secure crypto self-custody.

Exit Scam

An exit scam is a fraudulent practice of malicious developers or founders disappearing with investors’ funds during or after a project has launched.

What Is an Exit Scam?

While the lack of entry barriers and gatekeepers in crypto is a feature, not a bug, it does create an environment that scammers are eager to take advantage of. One such fraudulent activity common in the crypto space is the exit scam.

A cryptocurrency exit scam is an event in which dishonest developers abscond with investors’ funds, abandoning the project entirely. It often occurs before, during, or after an initial coin offering (ICO) period. In some cases, the start-up founders disappear after operating for a brief period, resulting in a type of exit scam known as a rug pull.

How Do Cryptocurrency Exit Scams Work?

In November 2017, Confido, a blockchain start-up that promised to give traditional escrow services and transactions hell, disappeared after collecting ＄375,000 through an ICO. 

In 2021, another group of fraudulent founders exploited Netflix’s hit show, Squid Game, to create a cryptocurrency called Squid Coin. The venture lured unsuspecting investors with the prospect of engaging in an online game based on the show. However, the project only operated briefly before ultimately resulting in a rug pull, where the founders vanished with approximately ＄6.38 million. 

Typically, the scammers conceive an intriguing novel concept that promises substantial returns to lure in unwitting investors. The unscrupulous founders often enlist crypto influencers to help create a dedicated following by advertising and promoting the project on social media platforms. This creates hype and enthusiasm, appealing to investors’ fear of missing out (FOMO) on a promising project.

The investors purchase the project’s cryptocurrency tokens during the ICO sales before the project launches. However, the project often abruptly disappears or shuts down during or briefly after the ICO sales, or operates for a brief period. The developers pull a Houdini with investors’ funds, leaving them holding worthless cryptocurrency tokens.

Some of the most common red flags of a potential exit scam include a lack of independent project code audit, unrealistic return projections, aggressive marketing, a non-existent working model, uneven token distribution, and a vague or overly ambiguous whitepaper (or no whitepaper at all).

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仮想通貨取引をするとき、資産を増やすためには、仮想通貨だけでなく、FXCFD取引を行う必要性も出てきます。

仮想通貨に話題性がない時、いわゆる仮想通貨の冬の時代が続くときは、仮想通貨の時価総額が下がり、値動きがしない状態が続くからです。取引も合わせて、現物仮想通貨を保有し、しっかりと資産を増やしていきましょう。

将来、お金持ちになるには0.01BTC保有すればいいだけです。

現在10万ドル以上の資産を持つ残りの5億9000万人は、結果として大人1人あたり0.01BTCしか購入することができない。

将来はこの0.01BTCが持てるかどうかが富裕層の分かれ目となる。

0.01BTCを保有すれば、世界において13％の上位保有者に入る。法定通貨とビットコイン市場の相対的な富の集中度を比較すると、ビットコインのトップ13%の中にいることは、法定通貨での資産トップでいることと同じ価値を持つ。

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