Hola folks!👋🏻
It’s Day 20 of #web3glossary 🚀
A whooping $670 mn were identified in crypto losses in Q2 of 2022🤯🤯
Now that I have your attention, let’s get to some learning👀
T: Token, testnet, transaction, TPS, TVL
Token 🎟️
Token is a digital asset created on an existing blockchain & can be used to represent digital and physical assets or to interact with dapps. It allows the holder to use it for investment, to store value, or to make purchases.
Created through an ICO (initial coin offering), crypto tokens are often used to raise funds for crowd sales.
💡Crypto tokens ≠cryptocurrency & altcoins
eg. LINK, UNI, AAVE
A common question in the crypto space is, how many TPS can any blockchain handle?
What is TPS?
👉Transactions per second
It's the number of txns that a blockchain can handle per sec, & is used as a benchmark to measure its computational power.The number is purely theoritical
It's calculated by knowing the block time, the average txn size, and the block size.
Eg, a block size of 2 MB, an average txn size of 1 kb, and a block time of 30 seconds would equate to a theoretical TPS of 167 ((1000/2)/30=167).
👉Bitcoin is currently around 7 TPS, ethereum around 15, Solana at upto 65,000 Polygon upto 72,000 TPS
Why does it matter?👀
Because it indicates the network's current capacity to process txns & hence is used as a benchmark for blockchains. The faster the network is..
..the better it manages congestion. This gives it a higher payment efficiency and thus, a higher chance of adoption, institutional or individual
📌IMHO, TPS should MATCH the NEEDS of the BLOCKCHAIN
For some even a TPS of 15 would do and for some even 15k would be less 👀
Total Value Locked (TVL)
TVL is the total value of assets locked (i.e. being used) in a specific protocol. DeFi lending protocols like Compound Finance and decentralized exchanges like Uniswap use liquidity pools which lock assets in a vault, and therefore have a TVL.
📌Ethereum currently has highest TVL at $7.9 bn
TVL is an excellent indicator for the DeFi area of cryptocurrency & probably the most utilized to assess the health & growth of the market.
The cost of failure or mistakes on a mainnet is very high and at times irreversible so developers need an environment where they can comfortably work without these risks.
That's why we have testnets 🚀
Its the Minimum Viable Product (MVP) of a blockchain
Technically, its a software environment that mimics a mainnet blockchain, mainly used to test network upgrades and smart contracts before deploying them to the mainnet.
But why testnets though?
Because you can test & experiment with you smart contracts without risk to real funds or the main chain. Testnets also help you ensure that the smart contracts & dApps you deploy are functional and secure.
👉Testnets operate on a separate ledger.
This separation creates a low-risk environment where developers can test and experiment without the costs of deploying on the mainnet.💯💯
ex: Rinkeby and Kovan are Ethereum based testnets.
Looking for some hands on?
👇👇
A guide on deploying smart contracts to Kovan testnet:
medium.com/nerd-for-tech/…
Thats a wrap for Day 20!
I’ll be sharing information on the new vocabulary of the web for next 30 days.
It’s like a free crash course on the terms and methodolgies in Web3.
📌Follow me @laishawadhwa for more such web3 gyaan!
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