Creditcoin Q&A | August 2023

This month we discuss the advantages of 2.0+, how to join the network, and the risks of RWA investment...

Creditcoin Q&A | August 2023

Welcome to the regular Q&A, where we answer the communities most burning Creditcoin questions! With the official release of the Creditcoin 2.0+ mainnet, we've taken some time to answer your questions about the upgrade and remind you how you can claim a FREE CTC token to begin staking on the Network today!

If you'd like to have your question answered next month (and win some CTC for getting selected), then make sure you follow us on Twitter and tap the bell icon to get notified when the Q&A survey goes live! Otherwise, feel free to drop into the Discord, say hi, and ask any questions you may have. Let's jump in.

What’s the best way to get involved in the Network and earn rewards?

With the launch of Creditcoin 2.0+, there’s never been a better time to join the Network. For a limited time only, you can join our QuestN event to get a free mainnet token to begin staking and earn rewards from our prize pool of 150,000 CTC tokens. For more information on how to join, make sure you head to our exciting QuestN campaign today 👇

If you’re a developer, business or anyone else who’d like to explore opportunities for collaboration, then please reach out to the team at [email protected].

And of course, if you’d just like to say hi, feel free to pop into our Discord community today!

Can you explain how Creditcoin's 2.0+ mainnet release enhances scalability, security, and real-world asset tokenization, and how these benefit users, RWA partners and developers?

Great question. Let's break it down by topic.

Scalability: NPoS offers a significantly more stable and predictable consensus system than PoW. Mining is a randomised process, creating probabilistic block times which can slow down network performance. In contrast, NPoS delivers far more predictability and therefore consistency, allowing us to reduce the block times from an average of 60s → 15s.

More blocks processed means more transactions processed too, helping the protocol deliver greater throughput and stability for our RWA partners.

By lowering validation costs (energy efficiency if increasing by over 99%) the Creditcoin 2.0+ upgrade helps capture far more value for network participants. This also puts the network on a much firmer and flexible economic footing, increasing the scope for sustainable long-term growth.

Security: Whilst PoW is tried and tested, it does carry significant security trade-offs. Given the mobility of mining power, the risks are particularly prevalent for relatively smaller PoW chains such as Creditcoin.

If just 1% of Bitcoin’s mining power is transferred to Creditcoin, it would be possible for a single miner to monopolise the validation process and threaten the security of the network. In contrast, NPoS makes such an attack economically unfeasible, or at least, disadvantageous.

In addition, mining carries significant up-front costs, making it inaccessible for smaller users to partake in network validation. In contrast, NPoS makes validating on Creditcoin much more accessible. For example, you can begin nominating with as little as 1 CTC via our staking dashboard. With PoW, you’d have to run an entire mining rig. This accessibility helps us boost the network’s decentralization, improving network security.

RWA tokenization: As mentioned previously, the efficiency gains associated with NPoS allow us to greatly increase the throughput of the Network. This helps our RWA partners such as Aella record more loans on-chain than ever before.

However, just recording more loans isn’t enough for Creditcoin to achieve its long-term vision. Whilst, 2.0+ was primarily designed to resolve the scalability and security challenges of the network, to truly unlock Creditcoin’s true potential, the network must support various kinds of programmable and interoperable loan functions.

That means smart contracts and EVM-compatibility. Discover Creditcoin 3.0 and the exciting future of the protocol today.

With Creditcoin 2.0+ now out, how can I get the mainnet tokens I need for staking? Is there a swap feature coming for CTC (ERC-20) and CTC (mainnet)?

Currently, the only way you can/could receive mainnet tokens is listed below:

  • By partaking in the current QuestN campaign where you’ll receive a guaranteed CTC reward:
  • You participated in our Testnet campaigns and have already received your CTC airdrop.
  • You participated in mining before the release of Creditcoin 2.0+.

In the coming weeks, we will be releasing the first version of our CTC token swap. Initially, this 1:1 swap tool will be one-way only, allowing you to swap your CTC (ERC-20) ⇒ CTC (mainnet).

This means you’ll be able to buy CTC (ERC-20) on exchanges and then convert it into CTC (mainnet) tokens for staking. Although this swap is one way only, we are working on further liquidity solutions for mainnet CTC.

I have been hearing good things about RWA but my question is are there any downsides that I should worry about when investing in RWAs?

Investing in real-world assets presents an alternative investment opportunity for DeFi investors today, especially when many DeFi yields are at historic lows. In this kind of investment climate, RWA investments can offer a relatively stable source of high-yield, not typically available to DeFi investors, with most RWA platforms today offering yields of between 5-15% on USDC or USDC equivalents.

Because RWA investments generate their yield through the real-world economy, they are often seen as more sustainable investments when compared to the cyclical nature of DeFi investing.

We recommend checking out our list covering the top 6 RWA platforms today for a comprehensive analysis of your investment options: [add link]

Most RWA investment products come in the form of corporate lending. In other words, earning yield by lending out your USDC to various fintechs and other fast-growing companies. Whilst other RWA opportunities exist, such as treasury bonds, carbon credits, real estate and more, most platforms such as Centrifuge, Goldfinch and indeed Gluwa, are all focused on debt investment. We’ll be focusing on this type of RWA investment here.

There are some risks associated with this form of RWA investing. Despite decentralising access to these investment opportunities, most RWA platforms carry with them similar counterparty risks as TradFi. Primarily, counterparty debt default risks.

Whereas DeFi protocols insure against default risks through over-collateralization requirements, RWA investments are usually only partially secured. When things do go wrong, enforcement relies on legal mechanisms rather than smart contracts alone, making things slower and more expensive.

This doesn’t mean that RWAs are necessarily MORE risky than DeFi protocols. For example, most RWA investment platforms do not rely as heavily on smart contracts, reducing the risks of hacks and other technical failures commonly associated with DeFi investing.

Essentially, RWA investment comes with different risks. All we can do is help you understand the different kinds of risks involved. It’s for you to decide which risks you can tolerate and which investment approach you ultimately prefer.

About Creditcoin

Creditcoin is the world’s leading real-world asset infrastructure chain for financial institutions, connecting global borrowers, lenders and investors on-chain. To date, the protocol has helped its partners record over 4.27 million real-world credit transactions, valued at $79.7 million USD, while servicing 337,000 customers worldwide across emerging markets.

By transparently securing credit history and loan performance on the Credicoin network, the protocol has already helped thousands of borrowers, businesses, and investors secure capital financing, build credit history, and grow their global RWA investment footprint.

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