Manuscripts of Citizen Cosmos
- Tune your anthenas here humanoids!
- Episodes (Transcript\Articles\Listen): | Ep.47 Federico Kunze, tokenomics & Berkley | Ep.59 Willy Ogorzaly, values, DAO's & the best day ever | Ep.61 EpicenterTv | Ep.63 Microtick | Ep.65 Kadena | Ep.66 Matt Hawkins, cloud, sustainability & impact | Ep.71 Notional Dao
Validating networks Updates: Cosmos/Evmos/Cyber
Articles : Our validator news | Hackatom2022 | Evmos Momentum Hackathon | Who are you? |
Guides : Microtick guide
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Entry I, 09th of September 2020, Earth time. A new website for humanoids
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Entry II, 09th of October 2020, Earth time. Launched a validator on the planet
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Entry III, 10th of November 2020, Earth time. We have recruited humans
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Entry IV, 11th of February 2021, Earth time. Comparing ecosystems for humanoids, ep1 - RETRACTED
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Entry V, 3rd of December 2021, Earth time. EVMOS, rule 'em all
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Entry VI, 10th of January 2022, Earth time. Changes to the Citizen Cosmos team
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Entry VII, 11th of January 2022, Earth time. Should we trust trends and dogmas blindly
Hey Cosmonauts!
Meet the new Citizen Cosmos website. Yes... it took us longer than usual to come to this, but as they say 'Rome was not built in a day' (just for the record: it might have been, the hosts don't know this for sure).
We know, you're super curious as to why it took us that long to achieve this. And here is the 101: at first we were building our own website from scratch. Small correction: Sergey was pretending to be a web designer, but that really didn't work out as planned. Joking aside, the idea with having a website built from scratch is great, though it requires a lot of initial input, design and a thorough up keeping. The latter was the trigger decision against it.
Just when we thought that all was lost, we stumbled upon Fireside and so far we really like it. The cost-quality and time-consumption overweight all the cons. The biggest con, of course, not being 100% in charge of the content, it can be blocked, etc. For this we are planning to host some kind of a simple 'mirror' on IPFS in the (not-so near) future for the blog posts and a content menu. And, we already publish each of our episodes to IPFS, using cyber.page.
In reality a lot more is planned in that direction, and we decided start somewhere, rather than to endlessly feature-w$$k over the future.
Feedback and comments are most welcome! The best place to leave comments is here. If the issue is already closed, feel free to open a new one. We like issues.
Dear Citizens of Cosmos,
Citizen Cosmos is pleased to announce the taking over and the rebranding of the 'fuckgoogle' Cosmos hub validator into the Citizen Cosmos validator! In a recent post the team of the 'fuckgoogle' validator announced the start of the migration process. We would like to confirm this from our side.
What will happen and what can be expected?
Recently the validator got a delegation of 425,000 ATOMs from the Tendermint team. After talks with Tendermint, they have agreed to upkeep the delegation in the light of recognizing the work that Citizen Cosmos does for the Cosmos hub.
This work includes:
- The Citizen Cosmos podcast
- Managing of the @cosmos_rus Twitter page
- Managing the Cosmos Moscow meetup group (so far we helped to organize and manage 2 educational events)
- Managing the RU-based Cosmos news channel on Telegram
- Ongoing help with translating and spreading the RU version of Today in Cosmos (@cosmos_rus)
- Active involvement in the community of Cosmos
What can be expected: A complete rebranding of the validator after the migration process is finished. Sergey has already launched another validator on the Cyber network, which will also undergo a rebranding to the Citizen Cosmos brand, and in the future might act as a relayer bridge between the 2 networks, once IBC is up.
We have a lot of plans for the validator, specifically in the light of the work we are prepared to do within Cosmos hub and are pleased that things have turned out this way. The journey won't be easy, but we will defiantly get there and have a lot planned!
Please keep up with our announcements, as we hope to publish the roadmap, for the newly created Citizen Cosmos brand in the next few weeks.
May the code be with us =)
The branding of Citizen Cosmos that was announced a few weeks ago, has been gradually progressing. The branding included the revamping of the Citizen Cosmos podcast into a web3 brand. With the kick-off of its own validator and the re-organization the public work we do with Cosmos Moscow, public docs, etc.
This included migrations, infrastructure set up, planning of tasks and, of course expanding the Citizen Cosmos greater team. Without any more ado... We are proud to share with the public, that our team has doubled and 2 more people have joined our team.
@mrlp4 is helping us as a DevOps and @nj is the Citizen Cosmos community advocate. We are over the moon with these updates and are very excited to carry on building the community around Citizen Cosmos.
RETRACTED
Evmos, short for “EVM-on-Cosmos,” will allow Ethereum contracts to communicate with the Cosmos ecosystem. From the creators of the protocol:
Evmos is a scalable, high-throughput Proof-of-Stake blockchain that is fully compatible and interoperable with Ethereum.
Evmos is a sovereign blockchain built with the help of the ‘Cosmos / Tendermitn’ stack, which means it has the superpowers of IBC, the communication protocol allowing all connected to it, Cosmos chains to exchange data, contracts, tokens or in ither words - communicate.
Apart from that Cosmos-SDK is a super powerful building tool, allowing to, already today, to launch blockchains with their own DEX’s, AMM’s and many other useful modules built by first class developers around the Cosmos ecosystem.
To put all this into a different perspective - Evmos is set to become somewhat of a communication zone (let's use the already existing analogy in the Cosmos community - port) between 2 of the biggest ecosystems in the crypto world - Ethereum and Cosmos.
Cosmos, which bills itself as the internet of blockchains, is a decentralized network of independent yet interoperable blockchains that are able to exchange information and tokens between each other permissionlessly.
Cosmos aims to address some of the issues faced by other blockchains — such as scalability, usability and governance — by providing the tools to help developers quickly build independent blockchains for a variety of use cases and enabling blockchains in the network to communicate with each other.
Blockchains such as Bitcoin traditionally exist as if in silos and are unable to communicate or interact with each other. Older blockchains also tend to be difficult to build on and can handle only a few transactions per second. On the other hand, Cosmos enables independent blockchains to exchange information and tokens with each other.
But, otherwise, Cosmos does have some weak sides, such as:
- It's not such a widely used smart contract platform, like Ethereum
- It’s yet to prove itself as a fully functioning, DeFi ecosystem
Ethereum is a blockchain for apps and the core of the existing DeFi ecosystem in crypto. It's a network that securely executes and verifies application code, called smart contracts. It is also, probably, the biggest source of innovation and R&D in the crypto world.
Ethereum offers an extremely flexible platform on top of which one can build decentralized applications using the native Solidity scripting language and Ethereum’s Virtual Machine. Dapp developers that deploy smart contracts on Ethereum benefit from a rich ecosystem of developer tooling and established best practices that have come with the maturity of the protocol.
In practice, it means that everyone can deploy apps on Ethereum. Around 70% of all TVL is secured by the Ethereum ecosystem, its total domination. But, it also carries such risks, as:
- Usually high load of the network (L1)
- High comissions (L1)
- Slower TX finality then maybe required for certain economic tools
- A combination of the 2, means a full interoperable system, that has a benefit for the end user that needs to transfer their fund without a middleman (such as a CEX) -Ethereum users gain access to a variety of new services (and a whole new ecosystem) that doesn`t require such high fees
- And if you are a Cosmos fan, you will gain to over 1400+ dApps that were are already on Ethereum
Both Cosmos and Ethereum are provably functioning L1 ecosystems, however Evmos can provide wider features, due to its combination of 2 blockchain ecosystems.
Imagine having a double citizenship, but rather than biengd doble taxed and robbed by both nations, you are actually benefiting from the services, tools and products that both offer as a passport holder of both.
Let's list the key features of Evmos, that were implemented thanks to the might of Cosmos:
- High throughput via Tendermint Core. Implementing Tendermint Core's Application Blockchain Interface (ABCI) to manage the blockchain
- Leveraging modules and other mechanisms implemented by the Cosmos SDK
- Utilizing geth as a library to avoid code reuse and improve maintainability
- Horizontal scalability via IBC
- Fast transaction finality
And, of course, the might of Ethereum:
- EVM compatibility
- Exposing a fully compatible Web3 JSON-RPC layer for interacting with existing Ethereum clients and tooling (Metamask, Remix, Truffle, etc)
- Access to the global DeFi ecosystem and a great variety of battle tested dapps
The Cosmos vision of being a network of blockchains is achieved thanks to the use of open source tools, such as, the Tendermint consensus engine and a BFT consensus algorithm, Cosmos software development kit, and the Inter-Blockchain Communication Protocol, which is like the TCP/IP for blockchains, allowing blockchains to connect to each other and exchange data and value.
When we combine it with Ethereum’s "Global computer and ecosystem for apps" we get the benefits of both worlds and minimize the disadvantages of each other.
- The Evmos blockchain provides Ethereum developers to deploy their smart contracts to the Evmos EVM and get the benefits of a fast-finality Proof-of-Stake (PoS) chain. Developers will also benefit from highly-reliable testnet clients that can be used to test and deploy their contracts
- Evmos will offer built-in interoperability functionalities with other Cosmos and BFT chains by using IBC. Developers can also benefit from using a bridge network to enable interoperability between mainnet Ethereum and Evmos. Either option above will allow for fast finality, using a PoS / BFT consensus engine.
As of today, the blockchain world is still living in the reality of separate silos that can benefit a lot from being able to communicate one to another. In a world where UX is going towards minimalism, we need to start expreminting and making blockchains a more efficient and a friendlier place to exist and to work in. By connecting such strong, independent silos, we start to minimize UX for future usage, starting from a point of real usability (working blockchains), thus allowing for a future stronger, minimalistic UX where one can fully operate with different types of values and gain the benefit of both.
Evmos helps to exchange value between the two main blockchain ecosystems ETH & Cosmos. For the end user this means the ability to benefit from both worlds and even solve certain security issues alng the way.
When we can have such a powerfull computing platform, such as Ethereum on one hand, and Cosmos with it’s scalability and cross chain communication powers, on the other - we gainn nearly limitless possibilities for applications and reduce the cost of transactions between the 2 networks.
We believe that blockchain has a future of interchain projects. Very soon we will see the benefits of collaboration between these ecosystems, which together occupy 90% of the DeFi market.
Everything changes, including Citizen Cosmos.
With a very sad smile, yet with the warmest wishes on her future journey, Citizen Cosmos is saying goodbye to one of its founders and hosts, Anna. Anna was an important, and a founding, member of the project. Most importantly, she was an inspiration for many of the ideas that Citizen Cosmos has achieved. We thank Anna for her input and ideas. Without them, we wouldn't be here today.
Here is a short letter Anna passed us to share:
Hey everyone, Anna here.
I never thought that I would write this, but I have decided to leave Citizen Cosmos. To be a founder and the host of Citizen Cosmos was a very powerful expirience for me. I am very grateful to everyone who listened to my voice and joined me on this curiocity-driven path.
serejandmyself will carry on bieng the life of the party and the sole founder of Citizen Cosmos.
It’s time for me to say an emotional goodbey to everyone and walk out into the future. Thank you and bye!
We would like to note, that Citizen Cosmos will carry on functioning as planned, including producing and releasing content, validating networks and helping to build ecosystems.
May the code be with us!
Regardless of the market situation, the crypto industry is growing rapidly. We can witness blockchain technology being implemented in ways, which no one could consider 10 years ago.
In our opinion, there are certain points, which might prove useful for the thorough understanding of the current and future situation of the crypto industry.
A white paper can be the brain of a crypto project, but the heart of it - are the people. Everything that was or will be invented, was made by people (even AI algos that wrote books and code, did it with the help of people that wrote them). It is thanks to people that projects become successful or fail. There are plenty of examples in history: Henry Ford, Thomas Edison, Elon Musk, etc. Why is it so important to remember this?
We believe there is huge significance to understanding the people championing a project you follow. When we do, we start to comprehend the set of targets, goals and moral values, which the founders correspond with. It becomes easier to decide whether to support its implementation and further development.
This can be done in various ways, for instance: watch a conference featuring the founding team, listen to a podcast, like Citizen Cosmos, or follow them on social networks and see what they say / promote.
We can see what groups are capable of when they have a clear target (Wall Street Bets, Doge/Shiba followers, US Constitution auction, NFT communities, etc.). When people unite around a common goal, there aren't that many things that will prevent them from doing whatever it is they set out to do. We may see these examples in nature and animals. Hurricane winds. Ant trails. A volcano spewing lava, etc.
Unfortunately, certain ideas do not prove to be as great as a volcano spewing lava or not as determined as ants marching towards a sugar cube. Some ideas gather shape after they have been publicly discussed and improved. We think it is vital for ideas and thoughts to be delivered to their communities, as together and untied, these evolve and become an unstoppable force.
With strong communities - nothing is impossible!
If we are to stay open-minded and not trust everything that shines blindly, then there is a huge chance to strike more opportunities around us. Not that long ago, all we thought about, in terms of blockchain development, was TPS. And nothing but Bitcoin had a matter for most of us.
Then, there was Ethereum and the separation of the application layer. Alas, few people understood its potential for the development of the whole crypto ecosystem. Today, with IBC, Cosmos and other interchain protocols starting to conquer the crypto world - we once again see a lot of skepticism in the future of these ideas. But it is only when you remain open to the fresh and the new - then you are able to see the evolution.
The world has already changed. May the code (and the community) be with you.
This is a lengthy guide since we cover the reasons why we picked crypto investments in current macroeconomic conditions. We also cover 3 different investment strategies in detail.
This guide is written by Andrea Kovačić for Citizen Cosmos. We are a web3 ecosystem developer, helping to support, grow, build public, decentralized and open blockchain networks by providing reliable infrastructure, producing educational content and helping digital nations to grow.
In the last two years, a lot has changed. Uncertainty and volatility have risen in all asset classes. Being a saver is no longer an option as inflation is higher than the interest rates paid by the banks. This macroeconomic situation can be tricky, but there are ways to profit from this.
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Avoiding making unnecessary or impulsive spending should always be on top of everyone’s mind
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Changing your diet towards food that is less prone to inflation than other foods, or start growing your veggies if you have the land
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Fewer savings, more investments
Investments are maybe the most crucial part every person needs besides work to live their desired life. Money parked in your bank account will slowly bleed your wealth away, or it can happen overnight as it did in Russia as the conflict between Russia and Ukraine started. This stance risks individuals’ finances as people think cash is always the right solution. Inflation, government confiscation of wealth, centralization of power are all things that can hurt the population and their pockets if they don’t pay attention.
Commodities like gold, oil, agricultural products tend to increase in price in inflationary periods; for this reason, they are called hedges. Remember that these assets do not guarantee to protect you from inflation; they are more of a mid to long-term solution.
Stocks, real estate, and Treasury Inflation-Protected Securities (TIPS) can also be used for protection in times of monetary expansion. However, stocks can get hit quite heavily during inflation spikes (CPI readings). Real estate and TIPS are for mature and experienced investors. The cryptocurrency sector has stablecoins that track the price of fiat currencies 1:1. Stablecoins are an excellent tool for periods when investors don’t want exposure to crypto volatility. Note that stablecoins are risky even though their peg rarely moves, but you are still subject to inflation like a regular fiat currency. We will cover cryptocurrency investment strategies to offset inflation forces, protect your wealth and grow your purchasing power.
Remember that you should continuously diversify your portfolio in various assets and non-correlated industries. You can always go back to cash, but remember that some asset classes are less liquid than others. It’s way harder to sell a house than a stock.
Over the last 3–4 years, the crypto universe has expanded in all possible directions. Decentralized Finance is home to many new investors and traders. NFTs kickstarted interest and possibilities for artists and people that enjoy art and collectibles. The metaverse needs to be built differently from our current infrastructure to prevent known issues with the centralization of power. And with all the censorship happening in the world today, financially excluded people or even nations, we see that crypto has to be part of our collective future. It holds the answer for the inflation problem. It’s important to emphasize how much crypto is vital in a world where sanctions are constantly introduced left and right, intermediaries apply high fees for sending money abroad, and governments monitor all your transactions. This guide will explore a few different ways to protect yourself from inflation.
Suppose you live in an underbanked country or a heavily under censorship country. You will find a way to earn some extra income using staking, liquidity providing, and even a strategy like traditional savings. Now let’s get into it.
Millennials and the younger generations might not be familiar with inflation so let’s cover this first. The definition of inflation is that the money supply is increasing. If goods production stays the same, those goods will increase in value since there is a larger pool of money chasing the same amount of goods. Like all other things, money has its “price.” If there is more money circulating from one hand to another and if money is cheap to borrow (interest rates on loans), it will be less valuable, making all other things more expensive.
Monetary or fiat inflation is an example of Negative impact inflation. It enriches the people who get the injection of freshly created credit first while diluting the general population and the savers. Every new loan a consumer takes is new money introduced into the economy.
In Cryptocurrency, a mechanism allows you to secure the network while earning interest from the process. This process is called staking, the rewards are coming from inflation, but all savers are rewarded for securing the network this time. This way, people that are diluted are crypto traders and the ones that hold the asset without staking. In this system, inflation is used to incentivize and reward savers; this is an example of positive impact inflation.
Before answering how to use this positive impact inflation, ask yourself how much risk you are willing to take. Cryptocurrencies are not guaranteed investments or regulated and are high-risk investments. This guide is focused on entertainment and educational purposes.
We can say that Bitcoin has earned the title Store of Value (SoV) after the turmoil of the Corona crisis and since the era of quantitative easing. An allocation of your portfolio in BTC can be seen as a good practice even if you are not part of the cryptocurrency ecosystem. But earning a passive income on your BTC is another story (just as trusting that BTC will not go to 0 one day). You can deposit it on Celsius or another platform and earn some interest, but you are giving away the ownership of your assets. Wrapped BTC is another possibility, but there is third-party custody for the real BTC involved in most cases, adding another layer of risk on top. Our opinion is that holding BTC in cold storage is the only right way. There are safer, easier, and more lucrative options while adding a degree of diversification in the mix for generating yields on your assets.
Most new cryptocurrencies are not based on PoW anymore, PoS chains are easier to start, and you don’t need to find miners to secure and produce blocks. There is a good reason behind this. Proof-of-Stake chains have incentives for security to remain high, governance is more accessible to execute than Proof-of-Work, and Proof-of-Stake chains can also support smart contracts. The speed of transaction finality is generally higher than its counterpart Proof-of-Work.
Proof-of-Stake chains reward for staking ranges from; 5% to 100%+ depending on the chain you’re using. Staking rewards fluctuate as more or fewer people stake the token, but in most cases, the rewards are well worth the risk of price fluctuation of the underlying token. Staking is considered the easiest way of making a return from your tokens, and everyone should consider doing it if they plan on holding the tokens for more than six months. We recommend listening to our episode about staking and staking rewards to get a more in-depth view from someone whos working on PoS chains for a living:
https://www.citizencosmos.space/stakingrewards
Staked tokens are often locked for some time once staked, so you should start the unbounding process in advance if you want to sell or exchange your tokens. Besides staking, there are other ways to earn yields through Decentralized Finance (DeFi). Combining the two strategies will enhance your returns; we will cover these later in the guide.
Example 1
Cosmos Hub $ATOM offers 15.58% per year and the possibility of being eligible for future airdrops. ATOM will be locked for 21 days after you unstake them, and they will not reward you for the duration. ATOM can be acquired on all major centralized exchanges and then sent over to Keplr wallet, the preferred wallet in Cosmos. Your ATOM is safe on Keplr, and you can use this wallet to interact with all kinds of protocols, from DeFi to NFTs.
By pressing stake, the validator list opens up, where you can choose your validators. If you want future guides like this one, stake with Citizen Cosmos and support us in the mission of bridging communities in an Interchain world.
Once staked, your coins will earn you rewards. That is what we categorize as Positive impact inflation.
Example 2
Osmosis $OSMO offers 68% per year and, like $ATOM, the possibility to be eligible for future airdrops. OSMO tokens will lock for 14 days after unstaking. OSMO can only be acquired on the Decentralised exchange Osmosis.zone. You will need Keplr and some ATOM to exchange them into OSMO. Note that the OSMO token is highly inflationary in the first years; these rewards will decrease. Still, for now, this is an excellent opportunity to capitalize on some juicy rewards.
Liquidity providing/mining is a DeFi method in which participants contribute a portion of their crypto assets to various liquidity pools in exchange for tokens and fees. Liquidity mining has become popular because it generates passive income, i.e., you can profit from crypto liquidity mining without active investing decisions. Your benefits are determined by how much of a liquidity pool you own. Other DEX users then use this liquidity to swap assets.
Over the last three years, many cryptocurrency users have been using DeFi for earning yields, and as the trading volumes are rising, so is the need for new DEXes in the space. The market cap of Decentralized exchanges has grown over $100 billion in less than three years.
Osmosis is a decentralized blockchain project built on Cosmos that features an automated market maker (AMM). Users can pool liquidity and trade tokens of the Cosmos ecosystem with IBC enabled (Inter-Blockchain Communication protocol). You can listen to the mastermind and co-founder of Osmosis explaining himself: Sunny Aggarwal.
Requirements to provide liquidity on Osmosis: Kepler wallet and some ATOM (purchasable from a centralized exchange like Binance, FTX, Coinbase, etc..)
Step 1
You need to do an IBC transfer. To deposit ATOM on Osmosis, you must transfer ATOM from his home blockchain to the Osmosis blockchain for liquidity or swapping. Look at this like that ATOM has to be a guest on the Osmosis blockchain so that he could be used in this Decentralized application; otherwise, we wouldn't be able to use those ATOMs on Osmosis.
When connected to Osmosis with Keplr you need to visit the assets tab.
From there, you need to bridge/deposit ATOM. Insert the amount you want to transfer, but leave some ATOM for future transactions.
Step 2
After ATOM is visible in your osmosis, you can head over to the pools tab. And decide on what pools you want to provide liquidity. Incentivized pools will reward you with the APR on the left of that pool. Choose a pool in which you want to participate.
Click on the pool and look at what the pool catalyst percent is. Most pools operate on 50–50%, but some are different, like the following one we will cover.
If you want to provide $100 in this pool, you will need to keep $30 in ATOM, and $70 will need to be swapped to DVPN tokens. For 50–50% pools mentioned before, exchange half the amount and proceed normally on the next step.
Step 3
Swapping is performed in the trade tab. Swap into the coins you want to provide.
Step 4
When you have the coins needed to provide liquidity, go back to the pools tab to enter the pool you are trying to join. And select Add/remove liquidity.
We want to add liquidity; by pressing MAX onto one asset, the other asset will be added automatically. Confirm the transaction with Keplr. This process can be described as bounding together those two tokens. Still, they are not earning us interest for now.
Step 5
Now we take the bounded amount of tokens and select Start earning. The tokens you added as liquidity before will be displayed above this button. Press Start Earning, select the max button, and then choose the unbounding period. Tokens will remain in the pool indefinitely if you don’t remove the liquidity manually. Days unbounding means that your tokens will stay in the pool for that duration after you start the removing period, but they will still earn you rewards until they get unbounded. Higher the unbounding days, higher the interest paid. Confirm the transaction with keplr. And that’s it.
Rewards are paid out daily in OSMO tokens, and you can see the clock under the pools tab.
The rewards can be compounded with staking, or you can swap them in half and provide more liquidity in the same or other pools.
There is another option which we will cover below.
Depending on the risk you’re willing to take, it would be good to have a percentage of your assets in a stablecoin. Stablecoins can be used for buying the dip in a coin you’re interested in or in case you need some quick cash to withdraw. Do you know what is better than a stablecoin? A stable coin that is passively making you money.
Terra station is needed for interacting with Anchor protocol. Install the extension before moving on to the next step. Download the extensions from the official source. Save your seed phrases on a piece of paper, and then proceed.
Anchor protocol is a lending and borrowing protocol offering up to 19.5% yield on stablecoin deposits. We can swap a portion of our OSMO rewards into UST, send it to Anchor, and start earning the yield without locking our funds.
Step 1. You will need to Swap OSMO or any other coin to UST on Osmosis.
Step 2. Go to the Terra bridge and select Osmosis → Terra. Under the Asset category, select UST. The destination address is your Terra station address from the extension you installed before. Copy and paste it into the destination address.
Confirm the transaction, and in about a minute or less, UST should be on Terra blockchain.
Step 3. Go to the Anchor protocol earn tab and click deposit.
Enter the amount you want, but leave a couple of dollars for future transaction fees. Anchor will auto-compound your rewards. You can extract them at any time without waiting.
With Anchor, we conclude this guide. We hope this will help you better understand crypto and lead you forward in the world of personal finance.
If you want to see more guides like this one or if you have any kind of suggestions, please join our discord server and share your experience with us.
Also, if you want to support us in continuing our work, you can delegate with us.
List of networks we currently support.
One final thing: all those strategies are risky. You should never invest more than you are willing to lose.
This guide is written by Andrea Kovačić for Citizen Cosmos and is sponsored by the Citizen Cosmos validator. Citizen Cosmos is a web3 ecosystem developer, helping to support, grow, build public, decentralized and open blockchain networks by providing reliable infrastructure, producing educational content and helping digital nations to further grow.
You would think that cryptocurrencies don’t need a place to be stored* since they are digital, but they do. If you’re new to cryptocurrencies, wallets give you the ability to own your coins in the word's true meaning. There are two types of wallets; software or hot wallets and hardware or cold wallets.
Cold wallets are the most secure place to store crypto assets/your keys. Why are they called cold? They are not actively connected to the internet (it doesn't mean they can be called air-gapped), making them difficult to access by malicious third parties. Many crypto holders decide to keep their tokens on hot wallets even though some wallets are a bit hotter than others (in essence, a hot wallet is a hot wallet, though some wallets do provide more functionality to the end-user while being a bit less centralized).
Let’s discuss the differences between wallets.
- It's worth noting that technically tokens never really leave the blockchain and
gointo a wallet. Your wallet is a piece of software that allows you to interact with the blockchain, and, with the use of some magic and cryptography, your signature, of course - helps everyone verify thatthese tokensbelong to you.
Wallets are recovered with private keys, meaning the holder can restore their wallets if their computers or phones get compromised and regain control of the number of coins they can spend. On the other side, the nature of custodial wallets implies that clients' funds are not under their complete control. If an exchange has tens of thousands of clients, it's not feasible to have a wallet for all clients.
Holding tokens on exchanges might seem like a good deal for new people in crypto or people that don’t want the responsibility of storing the secret keys themselves. Still, exchanges do get hacked over time and, in some cases, leave the users hanging.
Apart from exchange hacks, some exchanges pull exit scams, so try always to use trusted exchanges that prove their legitimacy, but do not hold your coins long term there if you care about your cryptos.
You will often hear people saying: not your keys, not your coins. This quote explains why you should always store your coins under the belt of your keys.
Remember, exchanges are like stores. You should only use them when you need to buy or sell something. You do not use them as your house.
Non-custodial wallets saved and will save a lot of people on their crypto journey a lot of pain.
As mentioned, non-custodial wallets come in 2 flavors, hot/software wallets and Cold/hard wallets.
Hot/software wallets: they can be further divided into three subclasses:
- Web wallets:- are used through web browsers such as Google Chrome, Mozilla, Brave, etc. Metamask, Kepler, and Terrastation are a few examples of web/extension wallets. We encourage you to listen to a veteran in the non-custodial wallets space, co-creator of the keplr wallet here.
2.Mobile wallets:- are great for people always on the run. Most of them support QR codes scanners, which is excellent for fast transferring funds. I bet that we will see more and more of them in the coming years; with better UI and UX, they will be vital for the mass adoption of new crypto users.
- Desktop wallets:- are installed on your PC. They are more or less the same as the Mobile version but less secure because we download everything on our PCs. Check out this great video by Andreas Antonopoulos.
Upon installing those wallets, you will be directed to write down your secret seeds or words, do that on multiple papers, save them in more safe places and never share them with anyone. That is the most critical advice you will hear in the crypto space.
We highly suggest never, ever store your seed (encrypted or not) digitally. Computers get hacked. It's impossible to hack a paper through a computer, right? There are many ways to improve storing a seed. For example, several special steel plates (one of them here) allow you to store them more securely, but breaking the seeds into more pieces and keeping them in several places is the safest. Of course, there are also multi-signature wallets, which is the same as when you and the bank have two keys (or more) needed to access the safe. Corporations commonly use multi-signature wallets to eliminate the risk of one party running away with the funds and to ensure funds are safu.
Cold/hardware wallets: can be divided into a few subclasses, but in this post, we will talk about hardware/ device wallets. The wallet is used for storing cryptocurrencies in an offline way. With cold storage, the digital wallet is stored on a platform that is not connected to the internet, protecting the wallet from unauthorized access. Hardware wallets are always recommended, especially if the amount of the crypto you want to hold is bigger than the price of the device. Hardware wallets can interact with DeFi applications like other software wallets, it is somewhat slower to do so, but this is the price of more extensive security. It is possible to use a web wallet, such as Keplr or Metamask, as a layer between applications and your hardware wallet to make the setting a bit more secure.
The most commonly used hardware wallets are Ledger (Nano S and nano X) and Trezor hardware wallets. Ledger is not entirely open-source, although it is more comfortable to use. We encourage you to explore but stick to audited and open-source hardware.
The same advice for storing your seed phrases applies here. Keep them on a piece of paper or steel plate.
Besides security, non-custodial wallets can interact with decentralized applications (dApps). Web3 brings us the possibility to connect with our wallets. Non-custodial wallets are used to sign transactions on all kinds of dApps.
We want to cover the basics here, and everyone should know about staking in Proof-of-Stake chains.
When you stake your tokens, you increase the network's security, and in return, you get a portion of the inflation.
For example, let's explore the most commonly used wallet in the Cosmos ecosystem, the Keplr wallet.
ATOM is the most widely known coin in the Cosmos and is listed on major cryptocurrency exchanges.
Now let’s see how to stake your ATOM when you withdraw it from the centralized exchange.
Step 1. Click stake:
Step 2: You find a validator and click Manage:
Step 3: You enter the amount you want to delegate, and click Delegate. As a good practice you should leave some tokens for future fees:
Step 4: Approve the transaction with keplr:
And that’s the whole story. You are now earning staking rewards for securing the network all while being safe from centralized exchange hacks.
We can't stress enough how important it is to move your funds away from centralized exchanges if you don't plan to trade your crypto frequently. It's always hard to lose something in our lives. If we can protect or prevent something from happening, we should always do so.
As in investing, we should try to spread our funds in more than one non-custodial wallet if something goes wrong with any of them. This approach can mitigate some risks while sacrificing some readability and comfort of having everything in one place.
If you want to support us in our mission of spreading educational content and aligning the goal of different communities, join our discord server and help us grow the interest for web3 to the masses.
Or delegate to Citizen Cosmos validator to help us continue to write more quality content for the community.
