Will 1-click swap-sends be a future feature of DEXs? 👇 

When you send a token to someone, the amount you enter is what the payer receives (you pay gas on top).

When you use a DEX, the amount you enter is not what you receive - this amount includes fees/slippage.

If you want to pay someone in a token you don't have, the current process would be to perform the swap first then send the tokens after.

It would be more convenient if you were able to swap-send, especially if you don't want tiny bits of the swapped token lying around.

How would you implement a 1-click swap-send so that you enter the amount you want the payee to receive in the required token? 🤔 

Does this feature already exist on a DEX?

Will 1-click swap-sends be a future feature of DEXs?

"How do you interact directly with an Ethereum smart contract?"

Step-by-step example below 👇 

⚠️Ability to read code is required⚠️ 

#JeremyAnswers #solidity #blockend

There are a few ways to do this but I'll go over the one which doesn't require any setup.

Note: This method only works if the contract you want to interact with has verified it's source code on Etherscan.

Get Remix IDE ready, open it up via:
https://remix.ethereum.org/

Find the contract on etherscan.io, to do this you'll need to know it's address.

I'll be using the following contract in my example:

https://rinkeby.etherscan.io/address/0xA37e936eeA4fF11497260b64Ce15EFf268208F2c

Click on the "Contract" button to reveal the source code.

If you can't find the verified source code, this method isn't going to work.

You might find several different files, if this is the case you'll have to locate the "main" source file.

Look for a file that matches the name of the contract.

The file's class type should be "contract". It should not contain the words "abstract", "interface" or "library".

Copy the code in the "main" source file to a new file in Remix IDE.

Ensure the name of your file in Remix matches the file name in Etherscan.

Check to see if the "main" source file has any non-external dependencies, copy these over if so.

If you're not sure, just proceed. Remix IDE will tell you if you're missing a dependency when you try to compile.

In Remix IDE, click on the compile tab (3rd one from to top on the very left).

Make sure you have the right compiler version selected and hit "Compile".

If you get an error message like this, you've missed a dependency.

Go back to Etherscan, look for the file and copy the contents of that file over to a new file in Remix IDE.

Remember to match the name of your file in Remix with the one in Etherscan.

You should have successfully compiled the file by now.

(If you're following my example, ignore the warning)

If you're still getting errors, keep trying or call a friend who knows how to code to give you a hand.

Click on the "Deploy & Run Transactions" tab.

Under "Environment", click on "Injected Web3" and connect your wallet.

Ensure your wallet is connected to the correct network (for my example use Rinkeby).

If you don't have a wallet, set one up and get ETH from a Rinkeby faucet (Google for instructions).

Select the "main" source file in the "Contract" dropdown.

In this case Vendor.sol.

At the very bottom you'll see a box which has a button that says "At Address".

Paste the address of the contract in the box and hit "At Address".

Expand the contact which appeared under "Deployed Contracts".

You should see something like this 👇 

Now you're ready to call the functions of the contract.

In order to know what each function does, you'll need to read it's code.

Example, let's use the "buyTokens" function.

In the code we can see that 100 tokens costs 1 ETH.

Let's say we want to buy 1 token, that will cost 0.01 ETH or 0.01x10^9 Gwei.

To send ETH to the contract (while calling the function), you will need to fill out the "Value" box.

Enter 10000000 and change the units to Gwei.

Tada 🎉 

If you followed along and want to check your token balance, go here:

https://stimulating-chin.surge.sh/

If you scroll to the bottom you should be able to see a list of buy and sell transactions.

Want to get into Ethereum development?

I recommend going through the challenges at speedrunethereum.com!

How do you interact directly with an Ethereum smart contract?

"What is tâtonnement and how does it relate to Ethereum gas prices?"

#JeremyAnswers #web3 #web3dev

"Tâtonnement" is an economics term which describes an iterative auction process that aims to maintain a state of equilibrium with respect to trades.

The word is borrowed from French where it can mean "groping" or "trial and error".

Ethereum's London Upgrade introduced variable block sizes. 

Each block has a target size of 15 million gas which the protocol tries to maintain via tâtonnement. It does this by changing the base gas fee for the next block.

If the current block size == 15M gas, the next block's base fee will stay the same.

If the current block size > 15M gas, the next block's base fee will be increased.

If the current block size < 15M gas, the next block's base fee will be decreased.

If you want to a demo of how base fees are calculated, I created a gist on Github:

https://gist.github.com/jeremysik/b18f912f540aa7e2474b4d0019751f99


For further reading, check out the following links:

Official docs on gas and fees
https://ethereum.org/en/developers/docs/gas/

EIP-2718: Transaction pricing mechanism proposal
https://github.com/ethereum/EIPs/blob/master/EIPS/eip-1559.md

What is tâtonnement and how does it relate to Ethereum gas prices?

"How does the Ethereum Virtual Machine (EVM) store smart contract data?"

#JeremyAnswers

Each smart contract has it's own permanent storage. The storage is a one impossibly large array.

The array is 2^256 elements in length and each element is 32 bytes wide.

You may have already guessed, but this array is completely virtual.

Each element in the storage array is referred to as a "slot".

The default value for a slot is 0, this does not take up any space.

Cool to know:
If a slot contains a non-zero value and it is set to 0, storage is freed and gas will be refunded for the action.

Variables are assigned to storage slots at compile time.

The order which variables appear in the contract is the order which they are allocated in the storage array.

Multiple variables can be stored in a single slot if the total size of the variables is less than 32 bytes.

Example:

uint256 a;
uint256[2] b;
uint16 c;
uint32 d;
uint16 e;
address f;
uint256 g;

a -> slot 0
b -> slot 1, 2
c -> slot 3
d -> slot 3
e -> slot 3
f -> slot 3
g -> slot 4

The total size of...
c + d + e + f = 16 + 32 + 16 + 160 = 224 bits
...so it is stored in 1 slot.

Variables that aren't fixed in size (e.g. mappings, dynamic arrays) are stored differently.

In this case the slot address of an element is determined using the hashing function keccak256.

The exact formula for determining the slot is different for dynamic arrays and mappings.

Dynamic Arrays

The slot address of the first element is:
keccak256(arraySlotAddress)

The slot address of the n-th element is:
keccak256(arraySlotAddress) + n

Mappings

The slot address for an element with key "k" is:
keccak256(k + mappingSlotAddress)

Creating a demo really helped my understanding of this.

If you want to play around with my demo project, I put it up on Github:

https://github.com/jeremysik/ethereum-storage-test

I found this blog really useful when looking into this question:

https://programtheblockchain.com/posts/2018/03/09/understanding-ethereum-smart-contract-storage/

How does the Ethereum Virtual Machine (EVM) store smart contract data?

"What is the difference between collateralized stable coins USDT, USDC and DAI?"

#JeremyAnswers

USDT is issued by Tether, a HK based company. It has the highest market cap and the most trading pairs out of the 3.

In the past, USDT was involved in some controversy regarding the transparency of it's reserves. This no longer appears to be an issue:
https://tether.to/en/transparency/#reports

USDC is a joint venture between Circle and Coinbase. It is the most regulator friendly coin out of the 3 and is slowly gaining in market cap vs USDT.

Unlike USDT, USDC is fully pegged 1:1 with real US dollars.

In the past, USDC has frozen funds:
https://www.coindesk.com/markets/2020/07/08/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request/

DAI was created by MakerDAO. It is the only coin out of the 3 which is fully decentralized and is therefore the most resistant to tampering.

To mint DAI you must deposit collateral, many forms are accepted including ETH.

As the value of your collateral can fluctuate, you must deposit it at a ratio >= 150%.

If the value of your collateral falls below 150%, it is liquidated to pay off your loan.

It is common to deposit at a ratio > 300% to protect your assets.

What is the difference between collateralized stable coins USDT, USDC and DAI?

"What is arbitrage trading in crypto?"

The following thread is not financial advice.

#JeremyAnswers

It's a relatively low-risk trade where you buy a token in one place and immediately sell it somewhere else for a small profit.

The profit you make from this kind of trade comes from the price discrepancy between the place you bought the token and where you sold it. 

A simple example would be:
- A CEX (Centralised Exchange) sells ETH for USD$1000
- A DEX (Decentralised Exchange) swaps 1 ETH for 1005 USDT
- You buy the ETH off the CEX and sell it on the DEX for a 5 USDT profit

Don't forget about the fees.

In the example above (3), you will have to pay the following fees:
- Buying the token on CEX
- Withdrawing the token off CEX
- Selling the token on DEX

These fees eat away at your profits and could reduce your margin to 0.

An example of an arbitrage trade that is highly relevant today involves UST.

UST is an algorithmic stable coin that has a mechanic which improves stability by incentivising arbitrage when it de-pegs from USD.

Not sure what UST is? 👇 

https://twitter.com/JeremySik/status/1524212693816602624?s=20&t=2wj21UxSn2MpdSsyGVjPwQ

UST's stability mechanic allows 1 UST to be swapped for $1 worth of LUNA no matter what UST's price is:
- Buy UST when it's less than $1
- Swap UST for LUNA at a rate of $1
- Sell LUNA

If you buy UST at 80c, your profit will be 20c on the dollar (minus fees).

Btw, if you're wondering how to take advantage of UST de-pegging by performing an arbitrage trade, don't bother. The mechanic I mentioned above has been broken since UST de-pegged.

For more details 👇 

https://isitlegit.substack.com/p/the-ust-de-peg?r=18n6pb&s=w&utm_campaign=post&utm_medium=web

Arbitrage trading for the retail investor is tricky for a few reasons 👇 

You need to sell ASAP after you buy.

If you take to long to make your trades, the price gap will close and you will lose out.

Moving tokens around takes time. In some cases platforms may even suspend transfers (e.g. Binance right now).

You need to trade large volumes to make good gains.

This is because the profit margins on arbitrage trades are usually small.

You're competing against bots.

They can analyse faster than you, make trades faster than you and have WAY more stamina than you do.

If you want more detail on arbitrage trading, CoinDesk has a decent article here 👇 

https://www.coindesk.com/learn/crypto-arbitrage-trading-how-to-make-low-risk-gains/

What is arbitrage trading in crypto?

"What is the difference between an algorithmic stable coin and a collateralized one?"

#JeremyAnswers

Background:

A stable coin is a type of cryptocurrency which attempts to keep it's value equal to the value of another asset, this is known as "pegging".

Stable coins are most commonly pegged to fiat currency, e.g. UST, USDT, DAI, BUSD, AUDT etc.

A collateralized stable coin's pegging mechanism works by adjusting token supply depending on the value of assets in a reserve. Tokens are minted when assets are deposited and vice versa.

USDT is a collateralized stable coin pegged to USD. It's reserves look like:

Algorithmic stable coins don't hold collateral. They use algorithms to peg the value of the token to an asset instead.

A simple example:
- Increase token supply when token value too high.
- Decrease token supply when token value too low.

Stability is the most important factor of a stable coin.

De-pegging leads to lost confidence, which leads to sell-offs, which introduces more instability, which further exacerbates de-pegging.

When it starts to spiral it gets harder and harder to correct.

UST is an algorithmic stable coin that is in a lot of trouble right now. It de-pegged on the 8th May and has been struggling to re-peg ever since.

UST's mechanism which improves stability by incentivising arbitrage isn't working.

Blog post 👇 

https://isitlegit.substack.com/p/the-ust-de-peg?r=18n6pb&s=w&utm_campaign=post&utm_medium=web

What is the difference between an algorithmic stable coin and a collateralized one?

When making a trade, slippage is the expected difference between the quote and execution price. It is expressed as a percentage.

Example:
Quoted price - $10
Slippage - 10%
Maximum expected price - $10 * 1.1 = $11

Most swap-protocols allow you to set the maximum amount of slippage you are willing to tolerate before the transaction is cancelled, this is normally called the "Slippage Tolerance".

What is slippage?

The Future of Privacy and Identity:

I think it's important to be able to decouple the various faces of your real life identity. I assume most of us do it on a near daily basis (e.g. How you behave around friends vs your boss).

If you weren't able to keep certain parts of your life private, it could end up being detrimental for your overall health.

E.g. An addict not being able to get help anonymously or disclose certain details to their doctor in fear they might get fired/arrested.

Over time, social networks have pushed us towards a single online identity (and forced us to link it to our real names).

The intentions may have been good (e.g. national security, reducing spam/bots, increasing trust), but it's stripped us of our online privacy and anonymity.

We are moving towards a future where the line between your physical and online lives is increasingly blurred.

If we don't re-invent online privacy and identity, people could make mistakes they can't recover from (and people need second chances).

It's a hard problem to solve.

I think we need the ability to create online identities the way we see fit.

You should be able to choose if you want to have a single doxxed identity or multiple anonymous identities which interact with different communities.

If people could easily create online identities, trust becomes a big problem.

This is unlike real life where you gain a certain amount of trust by physically meeting a person (even if you choose remain semi-anonymous and not disclose your name or details about your life).

This is why some sort of online reputation system is needed to make this work.

It will be easy to create a new identity, but it will take time to build a strong reputation which people are willing to trust.

In theory, this reputation system will deter people from acting in bad faith.

The sunk cost of the time it took to build a good reputation should outweigh the short term gains of cheating other people + burning your identity. 

In this thread I've talked about personal identities, but I think some of these ideas could apply to financial identities too.

Nefarious applications aside, there could be good upsides to having multiple, decoupled financial identities.

Let's imagine a person with 2 financial identities:

The first is diligent at saving and only spends money on necessities.

The second has an erratic balance because of their love of Poker.

Shouldn't it possible for the first identity to get a loan or mortgage?

Traditional finance doesn't allow us to have multiple identities, they only allow us to build reputation for one.

Web3 (more specifically DeFi) could very well change this.

The Future of Privacy and Identity

Protocols built to farm other protocols. Parasitic leeches? or is a symbiotic relationship possible?

This behaviour isn't limited to protocols, I think a system or collective whose sole purpose is to farm another system counts too.

Examples? 
- REDACTED -> Convex -> Curve
- P2E game academies/universities
- Mining pools to a certain extent

This kind of behaviour seems common in web3.

I wonder if this is bad for the host system? I suppose it could help by aiding growth.

If it is bad, surely there is a system which has attempted to implement anti-competitive mechanics right?

Sunday ponderings 🤔