A universal basic income in cryptocurrencies – A strange utopia taking shape on Ethereum

Large-scale project, or not? – The debates concerning the creation of a universal income are increasing. Tired of waiting for a state decision, the creator of Gnosis has created a universal income on Ethereum: the Circles UBI experiment.

The history of Circles UBI

On October 16, the Circles UBI (Universal Basic Income) project announced its launch on the Ethereum mainnet.

As the name suggests, Circles UBI is a universal income project on the blockchain. Thus, when a user registers, a unique cryptocurrency is created for him and distributed daily on his wallet.

“When new users join Circles, a new personal cryptocurrency is created for them on a smart contract. This currency is then regularly issued and added to their account, thus forming the basis of the universal income program. »- Documentation on the Circles UBI project

The system then relies on trust to place a value on the tokens . Because of this, users have the ability to trust the personal currencies of other users, treating it the same as the currency they hold.

“People who know each other can agree to set a fixed exchange rate between their currencies at 1: 1. They would mutually accept the existence of the other. They would form a ‚circle‘ of 2 people and, within this ‚circle‘, the 2 currencies could be considered equal. » – Publication of Consensys on the project

Ultimately, the project hopes to convince more broadly by involving businesses, cooperatives, local governments, etc.

A life-size test

For now, the project looks more like a full-scale test. Indeed, several important features, such as token transfers , are not active at the moment .

We can imagine that the first will is to bring together a maximum of members before opening transfers between them.

If you want to test it for yourself, you will need to register on the website of Circles UBI . Once registered, your account must be validated and, for this, 2 methods are available to you.

You can first get validation , a kind of sponsorship, from 3 other members already validated. This “social” validation ensures the confidence of the various actors among themselves.

Or, it is possible to override this social validation by sending xDAIs to the Circles wallet address. To do this, we recommend that you obtain a few xDAIs via a faucet , then send a minimum of 0.01 xDAI to be validated.

New index shows risks of DeFi protocols

Lendf.Me, YAM, SUSHI and Opyn: They were all the scene of serious security deficiencies in the DeFi ecosystem, with some devastating consequences for investors.

To minimize the risks for users, Gauntlet has developed a new index

What applies to the crypto market in general, applies to the still untamed DeFi market in particular: a lack of controls and no regulations. Chances of winning and the risk of loss go hand in hand; if you bet on the wrong horse, you will lose out completely.

With the Arbismart wallet and arbitrage trading platform, thousands of investors earn passive income (10.8-45% per year). The fully automated crypto arbitrage platform offers low risk, high return investments. ArbiSmart is EU licensed and regulated.

To minimize risks for investors, Gauntlet has developed a risk index for DeFi protocols. The index is according to the press release initially limited to lending protocols and is listed on the DeFi data aggregator platform Defipulse under the category „Economic Safety Grades“.

A DeFi Risk Guide

The greatest risk for investors is the illiquidity, i.e. inability to pay, of a protocol. To model this potential risk, Gauntlet brings together several key factors. The criteria mentioned are:

All of these points together contribute significantly to the risk of insolvency. Risks at the smart contract level are not captured in the model. External programmers and corresponding tools are better suited for this.

How risky the general user behavior within a protocol is can be measured by the frequency of liquidations. A critical value thus indicates that the borrowing exceeds the deposit of collateral on average. In the course of this, positions are increasingly being liquidated.

Another measure is the volatility of deposited collateral. If collaterals show a high degree of fluctuation, the risk of insolvency increases as a result. The risk score, however, can screw down if logs prevent users from taking risky positions.