submitted by Joe-M-4 to CryptoCurrency [link] [comments]
EXPERIMENT - Tracking Top 10 Cryptos of 2019 - Month Twenty-Two - UP +66%
Like crypto and numbers? Or want to detox from the first meme weekend? Welcome!
\Note - price snapshots are always taken on the 1st of each month, so numbers below are before crypto spiked in early Nov.**
See the full blog post with all the tables here.
Month Twenty Two – UP 66%2019 Top Ten Snapshot for October
The 2019 Portfolio had a solid month, and was the best performer of the Top Ten Crypto Index Fund Experiments. Most of the cryptos ended October in positive or neutral territory, while the losses of the worst performers were no biggie (at least for crypto).
Question of the month:
In early October, the US Commodity Futures Trading Commission (CFTC) charged this crypto exchange with illegally operating an unregistered trading platform.A) Bittrex
D) That other crypto exchange that starts with the letter “B”
Scroll down for the answer.
Ranking and October Winners and Losers2019 Top Ten Ranking - 40% dropout rate
After losing quite a bit of ground in the rankings in September, the 2019 Top Ten rebounded a bit in October. Only BSV finished down on the month, down two places (from #9 to #11) and dropping out of the Top Ten. The rest either held or climbed: EOS, Tron and Stellar each advanced one position each and Litecoin picked up four places and was able to rejoin the Top Ten.
It’s good to have LTC back in the familiar confines of the Top Ten, as last month it found itself on the outside looking in, for the first time since the Experiments started back in January 2018.
40% of the crypotos that were in the Top Ten on January 1st, 2019 have dropped out: Tron, Stellar, BSV, and EOS have been replaced by BNB, DOT, ADA, and LINK.
October Winners – Big Poppa BTC had a great month, finishing up +25%. Second place goes to LTC, up +17% in October, followed by BCH, up +14%.
October Losers – The losses were moderate this month, but the L for October goes to BSV, which lost -7% and fell out of the Top Ten. EOS was second worst performing, down -5%.
For overly competitive nerds, here is a tally of which coins have the most monthly wins and losses during the first 22 months of the 2019 Top Ten Experiment:
Because it's the default winner in down months, Tether is still far ahead in terms of monthly victories (7). That’s more than twice as much as second place BSV, BTC, and ETH. And although BSV is up 74% since January 2019, it dominates the monthly loss count: it has now finished last in nine out of twenty-two months (paying attention, swing traders?). And XRP is still the only crypto that has yet to notch a monthly win.
Overall update – BTC’s lead increases, XRP back to the basement, 2019 Top Ten pulls ahead of other Experiments.BTC extended the lead it carved out last month over second place ETH in October. The top two are up +262% and +191% respectively, followed distantly by Litecoin, which is up +79% since January 2019. The initial $100 investment in BTC is currently worth $369.
For the first time since April 2019, BSV has dropped out of the Top Ten.
Twenty-two months into the 2019 Top Ten Index Fund Experiment, 70% of the 2019 Top Ten cryptos are either flat or in the green. After barely escaping the basement last month, XRP has once again sunk to the bottom of the pack, down -33% since January 2019.
At +66%, the 2019 Top Ten Portfolio has pulled ahead of the 2020 Top Ten Portfolio’s +61% gain and both are far, far ahead of the 2018 group , which is down -74% (more on that below).
Total Market Cap for the entire cryptocurrency sector:Total market cap since Jan 2019 is +215%
Since January 2019, the total market cap for crypto is up +215%. The overall market gained about $50B in October, ending the month just over the psychologically important $400B mark. This is now the highest month-end level since the 2019 Top Ten Experiment began 22 months ago.
Bitcoin dominance:Are you into BitDom?
After spending much of the year locked in the 65% range, BitDom took a short break in the summer to dip it low, but then has picked it up slow, and has now popped back up to 63%. As always, a high Bitcoin dominance signals less of an appetite for altcoins. Zooming out, the BitDom range since the beginning of the experiment in January 2019 has been between 50%-70%.
Overall return on investment since January 1st, 2019:The 2019 Group gained $122 in October, so after the initial $1000 investment, the 2019 Top Ten Crypto Portfolio is worth $1,660.
2019 Top Ten Index Fund Experiment ROI
For some context, here’s a look at the ROI over the life of the first 22 months of the 2019 Top Ten Index Fund experiment, month by month:
2019 Top Ten ROI summary
Unlike the completely red table you’ll see in the 2018 Top Ten Experiment, the 2019 crypto table is almost all green. The first month was the lowest point (-9%), and the highest point (+114%) was May 2019.
At +66%, the 2019 Top Ten Portfolio is now the best performing out of the three Experiments but not by much: the 2020 Top Ten Portfolio is up +61%.
Speaking of the other Experiments, let’s take a look at how the 2019 Top Ten Index Fund Portfolio compare to the parallel projects:
After a $3000 investment in the 2018, 2019, and 2020 Top Ten Cryptocurrencies, my combined portfolios are worth $3,537 ($264+ $1,660 +$1,613).
That’s up about +18% for the three combined portfolios, compared to +11% last month.
Here’s a table to help visualize the progress of the combined portfolios:
2018, 2019, 2020 Top Tens combined ROI
To sum up: +18% gain by dropping $1k once a year on whichever cryptos happened to be in the Top Ten on January 1st, 2018, 2019, and 2020.
But what if I’d gone all in on only one Top Ten crypto for the past three years? While many have come and gone over the life of the experiment, only five cryptos have started in Top Ten for all three years: BTC, ETH, XRP, BCH, and LTC. Let’s take a look at those five:
A tie: BTC catches up to ETH this month for leader of the Three Year Club
Up until this month, Ethereum would have been your best bet. As of the end of October, it’s basically a tie between BTC and ETH. Both are up +121%, (although BTC is technically $21 ahead of ETH).
On the other hand, if I had followed this world’s slowest dollar cost averaging approach with XRP, I’d be down -32%.
With BCH I would have just about broken even.
Alright, that’s crypto. How does crypto compare to the stock market?
Comparison to S&P 500:I’m also tracking the S&P 500 as part of the experiments to have a comparison point with traditional markets. The S&P continued to fall from an all time high in the summer, and is now up +30% since January 2019.
S&P since Jan 2019? +30%
The initial $1k investment I put into crypto 22 months ago would be worth $1,300 had it been redirected to the S&P 500 in January 2019. +30% is not a bad return at all. But the 2019 Top Ten Portfolio is up more than double (+66)% over the same time period.
That’s 2019. But what if I took the same world’s-slowest-dollar-cost-averaging $1,000-per-year-on-January-1st crypto approach with the S&P 500? It would yield the following:
After three $1,000 investments into an S&P 500 index fund in January 2018, 2019, and 2020, my portfolio would be worth $3,530.
That is up +17.6% since January 2018. Compared to a +17.9% gain of the combined Top Ten Crypto Experiment Portfolios. You can also compare against five individual coins (BTC, ETH, XRP, BCH, and LTC) by using the table above if you want.
It’s small, but that tiny 0.3% difference in favor of crypto. That’s now seven monthly victories for the S&P vs. three monthly victories for crypto, all clustered in the second half of the year.
Crypto re-takes the lead in October....barely
Conclusion:Thanks mainly to Bitcoin, October was a good month for crypto and a good month for the 2019 Top Ten Portfolio. As traditional markets have struggled over the last few months, crypto seems to be headed in the opposite direction. I’m looking forward to seeing if those trends hold in the last few months of a crazy year.
Take care of each other out there, stay safe.
Thanks for reading and for supporting the experiment. I hope you’ve found it helpful. I continue to be committed to seeing this process through and reporting along the way. Feel free to reach out with any questions and stay tuned for progress reports. Keep an eye out for the original 2018 Top Ten Crypto Index Fund Experiment and the 2020 Top Ten Experiment.
And the Answer is…C) Bitmex
In October, the Commodity Futures Trading Commission filed money-laundering and other charges against BitMEX for illegally operating in the US.
|submitted by BitcoinAllBot to BitcoinAll [link] [comments]|
This is the 1-month follow-up to my previous post about bot trading on 3Commas you can find it here: https://www.reddit.com/passive\_income/comments/i2zfjd/31\_daily\_return\_algorithm\_bot\_trading\_3commas/submitted by Pleucid to passive_income [link] [comments]
Since my last post, I have now officially been running the algorithm trading on 3Commas for 1 month and I am blown away by the results. My portfolio increased from 1267$ to 1568$ In 1 month giving me 301$ in profit at the same time I have also earned 0.02511 BTC increasing both my dollar value and the BTC value of the portfolio.
Market performance in test period (1st of August – 1st of September)Okay so cross referencing whether I’ve been better off just buying BTC and HODLING? In the period where I started from the 1st of August until the moment of writing this (September 1st) BTC only increased 0,627% meaning I outperformed the market with 20,8% in USD terms (Portfolio Performance)! Great news AND my BTC value increased significantly.
Benefits of trading bots· Bots make it easy to enter the industry (Since you are not actively managing or updating the algorithms, which can get quite complex)
· Ensuring efficiency across the board (Bots never sleep and don’t make mistakes)
· Trading on a 24-hour basis (Especially useful in the crypto space since the markets never close unlike the stock exchange)
· Removing emotions from the equation (You won’t make the emotional YOLO all-in on a crypto/stock that you subjectively like over other, the bot simply follows algorithms and orders and execute)
How to get started?You can sign up to 3Commas here for your own free 3 days trial period and if you choose to extend you will get a 10% discount and I will get a small commission, so win-win :-). I made a combination of two composite Gordon bots. A Binance BTC Conservative strategy (Safe & Slow) (50%) of portfolio and a Binance BTC Aggressive (Riskier & Fast) (50%) of portfolio. The aggressive bot was outperforming the conservative bot in terms of profit, but of course is more subdue to big volatility.
I have also modified my strategy Increasing the amount of trades my bots currently perform I have two Aggressive bots one using BTC and one using USDT. In total I usually have 9 active trading 24/7 and now earn around 25$ per day so expecting my return to exponentially grow as I optimize my bots. Hit me up if you need setup help and I’ll gladly support you first make an account here.
Current bot trades
What exchange? OkexI used Binance initially as 3Commas integrated perfectly with Binance and they are a trusted exchange with low fees. The base fee for trades on Binance is 0.1% for makers and takers. You can reduce that by 25% (that is, to 0.075%) if you hold BNB on Binance, so this is definitely a trick I recommend!. If you don’t have a Binance account you can sign up here and we both get 10% of each other’s trading volume (You will benefit from my continued trades on Binance).
However, on the 11th of August I made the transfer over to Okex due to 3Commas making an exclusive deal with Okex giving 100 USDT free in trading fees for new sign-ups giving me a much higher margin on my first trades on that platform. Okex is also highly recommended an have fantastic customer support that answers your question within 30 seconds guaranteed! I can only highly recommend Okex and you can get 10$ in free Bitcoins using this link
Sign up to 3Commas here(Free trial + 10% discount): https://3commas.io/?c=Reddit Sign up to Okex here: https://www.okex.com/join/1/2123821
Questions?I would love to help anyone interested in getting started with this as it seems like a great passive income stream as I used 15 minutes per day on this bot and earned 0,02511 BTC ≈ 300 USD so far and still counting.
submitted by Bitoffer_Official to BitOffer_Official [link] [comments]
The year 2020 is unusual as the COVID-19 attacked, the economic growth slowed down while the international business was gloomy and the financial market became much more volatile. Under the situation above, panic has been the main emotion when people are calling for a stable investment with high returns urgently to grow their asset value gradually. After fully understanding this demand, BitOffer and Goldman Sachs Asian team launched the first cryptocurrency guaranteed fund. With 2-year preparation in strategic layout, BitOffer will build a luxurious asset custody ecosystem to provide customized wealth management products for whales and cryptocurrency enthusiasts.
Though most exchanges were focusing on spot trading and futures trading, BitOffer anticipated that the market of derivatives still had a huge blank to fill. Thus, the first Bitcoin American Options, Bitcoin Ups & Downs, Dual-currency, etc. were launched by BitOffer. As 2 years gone by, BitOffer has become the most renowned Bitcoin Options provider with 100 million USD trading volume that is created by 100 thousand worldwide members. Even though, those data never stops being refreshed.
Finally, most exchanges started noticing that the cryptocurrency derivative market still has a huge blank. However, the team of BitOffer saw something others never noticed again. As the economy developed, people’s net worth improved. Since then, the demand for asset management has been desired to a much more expected extent. Asset Custody will be destined in the future. Though, the annualized yield of the products which are provided by the banking, financial institutions, and cryptocurrency exchanges is normally low and floating. The demand for human beings cannot be satisfied.
Overall, on Oct 23rd, BitOffer and Goldman Sachs Asian team launch the first cryptocurrency guaranteed fund which gives a 20% annualized yield. As it guarantees investors’ original investment, it means the 20% APY can be made with 0 risks. The main strategies of the fund are Quantitative Arbitrage, Quantitative Hedge and High-frequency trading, etc.
Compared with other Competitive Products:
Asset Servicing on Huobi Global: 7% Annualized Yield (Non-guaranteed),
Binance Earn: About 6% Annualized Yield (Non-guaranteed),
COBO: 5% Annualized Yield (Non-guaranteed)
BitOffer Quantitative Fund: 20% Annualized Yield (Capital & Interest Guaranteed)
After a simple comparison, we can see the return of the BitOffer Quantitative Fund is 3 times higher than that of others. Moreover, to guarantee investors’ original investment and interests, BitOffer Quantitative team shall do great in Quantitative and Arbitrage.
Lucian, the Chief Analyst of BitOffer, said “QA Fund is the first step to the field of asset custody. BitOffer owns a leading R&D and risk-control team. When BitOffer just launched, we have set up the blueprint for future development. In addition, BitOffer does not offer OTC trading, which means that BitOffer will never trigger any regulatory issues in any country. At the same time, BitOffer uses multiple wallets which separated into Cold Wallet and Hot Wallet, which can efficiently protect users’ assets from any risk. BitOffer is one of the safest Bitcoin exchanges.”.
Until now, BitOffer has served 4,000 institutions and more than 100 thousand users with their professional asset custody. Besides, BitOffer also provided customized Bitcoin wealth management products for Bitcoin Holders. The Dual-Currency provided by BitOffer offers the highest APY (which reaches 1,000%) than that of the same product on other exchanges. Recently, BitOffer even cooperated with Goldman Sachs and launched BitOffer Quantitative Fund which guarantees investors’ funds and interest. In 2 years, BitOffer will keep building the most innovative asset custody ecosystem.
To seize the initiative, BitOffer will keep developing and improving its own technique and service. In the near future, BitOffer will also provide a One-stop STO service: users will be able to trade or complete asset custody on truly their own wallets. It would be the trend to obey the regulation policy, and also the trend of the cryptocurrency financial ecosystem. The STO market would be pegged with real assets, it shall be a potential market of which value cannot be estimated. On the occasion, BitOffer will become the leader of the whole cryptocurrency derivatives market.
Author: Gamals Ahmed, CoinEx Business Ambassadorsubmitted by CoinEx_Institution to kybernetwork [link] [comments]
ABSTRACTIn this research report, we present a study on Kyber Network. Kyber Network is a decentralized, on-chain liquidity protocol designed to make trading tokens simple, efficient, robust and secure.
Kyber design allows any party to contribute to an aggregated pool of liquidity within each blockchain while providing a single endpoint for takers to execute trades using the best rates available. We envision a connected liquidity network that facilitates seamless, decentralized cross-chain token swaps across Kyber based networks on different chains.
Kyber is a fully on-chain liquidity protocol that enables decentralized exchange of cryptocurrencies in any application. Liquidity providers (Reserves) are integrated into one single endpoint for takers and users. When a user requests a trade, the protocol will scan the entire network to find the reserve with the best price and take liquidity from that particular reserve.
1.INTRODUCTIONDeFi applications all need access to good liquidity sources, which is a critical component to provide good services. Currently, decentralized liquidity is comprised of various sources including DEXes (Uniswap, OasisDEX, Bancor), decentralized funds and other financial apps. The more scattered the sources, the harder it becomes for anyone to either find the best rate for their trade or to even find enough liquidity for their need.
Kyber is a blockchain-based liquidity protocol that aggregates liquidity from a wide range of reserves, powering instant and secure token exchange in any decentralized application.
The protocol allows for a wide range of implementation possibilities for liquidity providers, allowing a wide range of entities to contribute liquidity, including end users, decentralized exchanges and other decentralized protocols. On the taker side, end users, cryptocurrency wallets, and smart contracts are able to perform instant and trustless token trades at the best rates available amongst the sources.
The Kyber Network is project based on the Ethereum protocol that seeks to completely decentralize the exchange of crypto currencies and make exchange trustless by keeping everything on the blockchain.
Through the Kyber Network, users should be able to instantly convert or exchange any crypto currency.
1.1 OVERVIEW ABOUT KYBER NETWORK PROTOCOLThe Kyber Network is a decentralized way to exchange ETH and different ERC20 tokens instantly — no waiting and no registration needed.
Using this protocol, developers can build innovative payment flows and applications, including instant token swap services, ERC20 payments, and financial DApps — helping to build a world where any token is usable anywhere.
Kyber’s fully on-chain design allows for full transparency and verifiability in the matching engine, as well as seamless composability with DApps, not all of which are possible with off-chain or hybrid approaches. The integration of a large variety of liquidity providers also makes Kyber uniquely capable of supporting sophisticated schemes and catering to the needs of DeFi DApps and financial institutions. Hence, many developers leverage Kyber’s liquidity pool to build innovative financial applications, and not surprisingly, Kyber is the most used DeFi protocol in the world.
The Kyber Network is quite an established project that is trying to change the way we think of decentralised crypto currency exchange.
The Kyber Network has seen very rapid development. After being announced in May 2017 the testnet for the Kyber Network went live in August 2017. An ICO followed in September 2017, with the company raising 200,000 ETH valued at $60 million in just one day.
The live main net was released in February 2018 to whitelisted participants, and on March 19, 2018, the Kyber Network opened the main net as a public beta. Since then the network has seen increasing growth, with network volumes growing more than 500% in the first half of 2019.
Although there was a modest decrease in August 2019 that can be attributed to the price of ETH dropping by 50%, impacting the overall total volumes being traded and processed globally.
They are developing a decentralised exchange protocol that will allow developers to build payment flows and financial apps. This is indeed quite a competitive market as a number of other such protocols have been launched.
In Brief - Kyber Network is a tool that allows anyone to swap tokens instantly without having to use exchanges. - It allows vendors to accept different types of cryptocurrency while still being paid in their preferred crypto of choice. - It’s built primarily for Ethereum, but any smart-contract based blockchain can incorporate it.
At its core, Kyber is a decentralized way to exchange ETH and different ERC20 tokens instantly–no waiting and no registration needed. To do this Kyber uses a diverse set of liquidity pools, or pools of different crypto assets called “reserves” that any project can tap into or integrate with.
A typical use case would be if a vendor allowed customers to pay in whatever currency they wish, but receive the payment in their preferred token. Another example would be for Dapp users. At present, if you are not a token holder of a certain Dapp you can’t use it. With Kyber, you could use your existing tokens, instantly swap them for the Dapp specific token and away you go.
All this swapping happens directly on the Ethereum blockchain, meaning every transaction is completely transparent.
1.1.1 WHY BUILD THE KYBER NETWORK?While crypto currencies were built to be decentralized, many of the exchanges for trading crypto currencies have become centralized affairs. This has led to security vulnerabilities, with many exchanges becoming the victims of hacking and theft.
It has also led to increased fees and costs, and the centralized exchanges often come with slow transfer times as well. In some cases, wallets have been locked and users are unable to withdraw their coins.
Decentralized exchanges have popped up recently to address the flaws in the centralized exchanges, but they have their own flaws, most notably a lack of liquidity, and often times high costs to modify trades in their on-chain order books.
Some of the Integrations with Kyber Protocol
The Kyber Network was formed to provide users with a decentralized exchange that keeps everything right on the blockchain, and uses a reserve system rather than an order book to provide high liquidity at all times. This will allow for the exchange and transfer of any cryptocurrency, even cross exchanges, and costs will be kept at a minimum as well.
The Kyber Network has three guiding design philosophies since the start:
1.1.2 WHO INVENTED KYBER?Kyber’s founders are Loi Luu, Victor Tran, Yaron Velner — CEO, CTO, and advisor to the Kyber Network.
1.1.3 WHAT DISTINGUISHES KYBER?Kyber’s mission has always been to integrate with other protocols so they’ve focused on being developer-friendly by providing architecture to allow anyone to incorporate the technology onto any smart-contract powered blockchain. As a result, a variety of different dapps, vendors, and wallets use Kyber’s infrastructure including Set Protocol, bZx, InstaDApp, and Coinbase wallet.
Besides, dapps, vendors, and wallets, Kyber also integrates with other exchanges such as Uniswap — sharing liquidity pools between the two protocols.
A typical use case would be if a vendor allowed customers to pay in whatever currency they wish, but receive the payment in their preferred token. Another example would be for Dapp users. At present, if you are not a token holder of a certain Dapp you can’t use it. With Kyber, you could use your existing tokens, instantly swap them for the Dapp specific token and away you go.
Limit orders on Kyber allow users to set a specific price in which they would like to exchange a token instead of accepting whatever price currently exists at the time of trading. However, unlike with other exchanges, users never lose custody of their crypto assets during limit orders on Kyber.
The Kyber protocol works by using pools of crypto funds called “reserves”, which currently support over 70 different ERC20 tokens. Reserves are essentially smart contracts with a pool of funds. Different parties with different prices and levels of funding control all reserves. Instead of using order books to match buyers and sellers to return the best price, the Kyber protocol looks at all the reserves and returns the best price among the different reserves. Reserves make money on the “spread” or differences between the buying and selling prices. The Kyber wants any token holder to easily convert one token to another with a minimum of fuss.
1.2 KYBER PROTOCOLThe protocol smart contracts offer a single interface for the best available token exchange rates to be taken from an aggregated liquidity pool across diverse sources. ● Aggregated liquidity pool. The protocol aggregates various liquidity sources into one liquidity pool, making it easy for takers to find the best rates offered with one function call. ● Diverse sources of liquidity. The protocol allows different types of liquidity sources to be plugged into. Liquidity providers may employ different strategies and different implementations to contribute liquidity to the protocol. ● Permissionless. The protocol is designed to be permissionless where any developer can set up various types of reserves, and any end user can contribute liquidity. Implementations need to take into consideration various security vectors, such as reserve spamming, but can be mitigated through a staking mechanism. We can expect implementations to be permissioned initially until the maintainers are confident about these considerations.
The core feature that the Kyber protocol facilitates is the token swap between taker and liquidity sources. The protocol aims to provide the following properties for token trades: ● Instant Settlement. Takers do not have to wait for their orders to be fulfilled, since trade matching and settlement occurs in a single blockchain transaction. This enables trades to be part of a series of actions happening in a single smart contract function. ● Atomicity. When takers make a trade request, their trade either gets fully executed, or is reverted. This “all or nothing” aspect means that takers are not exposed to the risk of partial trade execution. ● Public rate verification. Anyone can verify the rates that are being offered by reserves and have their trades instantly settled just by querying from the smart contracts. ● Ease of integration. Trustless and atomic token trades can be directly and easily integrated into other smart contracts, thereby enabling multiple trades to be performed in a smart contract function.
How each actor works is specified in Section Network Actors. 1. Takers refer to anyone who can directly call the smart contract functions to trade tokens, such as end-users, DApps, and wallets. 2. Reserves refer to anyone who wishes to provide liquidity. They have to implement the smart contract functions defined in the reserve interface in order to be registered and have their token pairs listed. 3. Registered reserves refer to those that will be cycled through for matching taker requests. 4. Maintainers refer to anyone who has permission to access the functions for the adding/removing of reserves and token pairs, such as a DAO or the team behind the protocol implementation. 5. In all, they comprise of the network, which refers to all the actors involved in any given implementation of the protocol.
The protocol implementation needs to have the following: 1. Functions for takers to check rates and execute the trades 2. Functions for the maintainers to registeremove reserves and token pairs 3. Reserve interface that defines the functions reserves needs to implement
1.3 KYBER CORE SMART CONTRACTSKyber Core smart contracts is an implementation of the protocol that has major protocol functions to allow actors to join and interact with the network. For example, the Kyber Core smart contracts provide functions for the listing and delisting of reserves and trading pairs by having clear interfaces for the reserves to comply to be able to register to the network and adding support for new trading pairs. In addition, the Kyber Core smart contracts also provide a function for takers to query the best rate among all the registered reserves, and perform the trades with the corresponding rate and reserve. A trading pair consists of a quote token and any other token that the reserve wishes to support. The quote token is the token that is either traded from or to for all trades. For example, the Ethereum implementation of the Kyber protocol uses Ether as the quote token.
In order to search for the best rate, all reserves supporting the requested token pair will be iterated through. Hence, the Kyber Core smart contracts need to have this search algorithm implemented.
The key functions implemented in the Kyber Core Smart Contracts are listed in Figure 2 below. We will visit and explain the implementation details and security considerations of each function in the Specification Section.
1.4 HOW KYBER’S ON-CHAIN PROTOCOL WORKS?Kyber is the liquidity infrastructure for decentralized finance. Kyber aggregates liquidity from diverse sources into a pool, which provides the best rates for takers such as DApps, Wallets, DEXs, and End users.
1.4.1 PROVIDING LIQUIDITY AS A RESERVEAnyone can operate a Kyber Reserve to market make for profit and make their tokens available for DApps in the ecosystem. Through an open reserve architecture, individuals, token teams and professional market makers can contribute token assets to Kyber’s liquidity pool and earn from the spread in every trade. These tokens become available at the best rates across DApps that tap into the network, making them instantly more liquid and useful.
MAIN RESERVE TYPES Kyber currently has over 45 reserves in its network providing liquidity. There are 3 main types of reserves that allow different liquidity contribution options to suit the unique needs of different providers. 1. Automated Price Reserves (APR) — Allows token teams and users with large token holdings to have an automated yet customized pricing system with low maintenance costs. Synthetix and Melon are examples of teams that run APRs. 2. Fed Price Reserves (FPR) — Operated by professional market makers that require custom and advanced pricing strategies tailored to their specific needs. Kyber alongside reserves such as OneBit, runs FPRs. 3. Bridge Reserves (BR) — These are specialized reserves meant to bring liquidity from other on-chain liquidity providers like Uniswap, Oasis, DutchX, and Bancor into the network.
1.5 KYBER NETWORK ROLESThere Kyber Network functions through coordination between several different roles and functions as explained below: - Users — This entity uses the Kyber Network to send and receive tokens. A user can be an individual, a merchant, and even a smart contract account. - Reserve Entities — This role is used to add liquidity to the platform through the dynamic reserve pool. Some reserve entities are internal to the Kyber Network, but others may be registered third parties. Reserve entities may be public if the public contributes to the reserves they hold, otherwise they are considered private. By allowing third parties as reserve entities the network adds diversity, which prevents monopolization and keeps exchange rates competitive. Allowing third party reserve entities also allows for the listing of less popular coins with lower volumes. - Reserve Contributors — Where reserve entities are classified as public, the reserve contributor is the entity providing reserve funds. Their incentive for doing so is a profit share from the reserve. - The Reserve Manager — Maintains the reserve, calculates exchange rates and enters them into the network. The reserve manager profits from exchange spreads set by them on their reserves. They can also benefit from increasing volume by accessing the entire Kyber Network. - The Kyber Network Operator — Currently the Kyber Network team is filling the role of the network operator, which has a function to adds/remove Reserve Entities as well as controlling the listing of tokens. Eventually, this role will revert to a proper decentralized governance.
1.6 BASIC TOKEN TRADEA basic token trade is one that has the quote token as either the source or destination token of the trade request. The execution flow of a basic token trade is depicted in the diagram below, where a taker would like to exchange BAT tokens for ETH as an example. The trade happens in a single blockchain transaction. 1. Taker sends 1 ETH to the protocol contract, and would like to receive BAT in return. 2. Protocol contract queries the first reserve for its ETH to BAT exchange rate. 3. Reserve 1 offers an exchange rate of 1 ETH for 800 BAT. 4. Protocol contract queries the second reserve for its ETH to BAT exchange rate. 5. Reserve 2 offers an exchange rate of 1 ETH for 820 BAT. 6. This process goes on for the other reserves. After the iteration, reserve 2 is discovered to have offered the best ETH to BAT exchange rate. 7. Protocol contract sends 1 ETH to reserve 2. 8. The reserve sends 820 BAT to the taker.
1.7 TOKEN-TO-TOKEN TRADEA token-to-token trade is one where the quote token is neither the source nor the destination token of the trade request. The exchange flow of a token to token trade is depicted in the diagram below, where a taker would like to exchange BAT tokens for DAI as an example. The trade happens in a single blockchain transaction. 1. Taker sends 50 BAT to the protocol contract, and would like to receive DAI in return. 2. Protocol contract sends 50 BAT to the reserve offering the best BAT to ETH rate. 3. Protocol contract receives 1 ETH in return. 4. Protocol contract sends 1 ETH to the reserve offering the best ETH to DAI rate. 5. Protocol contract receives 30 DAI in return. 6. Protocol contract sends 30 DAI to the user.
2.KYBER NETWORK CRYSTAL (KNC) TOKENKyber Network Crystal (KNC) is an ERC-20 utility token and an integral part of Kyber Network.
KNC is the first deflationary staking token where staking rewards and token burns are generated from actual network usage and growth in DeFi.
The Kyber Network Crystal (KNC) is the backbone of the Kyber Network. It works to connect liquidity providers and those who need liquidity and serves three distinct purposes. The first of these is to collect transaction fees, and a portion of every fee collected is burned, which keeps KNC deflationary. Kyber Network Crystals (KNC), are named after the crystals in Star Wars used to power light sabers.
The KNC also ensures the smooth operation of the reserve system in the Kyber liquidity since entities must use third-party tokens to buy the KNC that pays for their operations in the network.
KNC allows token holders to play a critical role in determining the incentive system, building a wide base of stakeholders, and facilitating economic flow in the network. A small fee is charged each time a token exchange happens on the network, and KNC holders get to vote on this fee model and distribution, as well as other important decisions. Over time, as more trades are executed, additional fees will be generated for staking rewards and reserve rebates, while more KNC will be burned. - Participation rewards — KNC holders can stake KNC in the KyberDAO and vote on key parameters. Voters will earn staking rewards (in ETH) - Burning — Some of the network fees will be burned to reduce KNC supply permanently, providing long-term value accrual from decreasing supply. - Reserve incentives — KNC holders determine the portion of network fees that are used as rebates for selected liquidity providers (reserves) based on their volume performance.
Finally, the KNC token is the connection between the Kyber Network and the exchanges, wallets, and dApps that leverage the liquidity network. This is a virtuous system since entities are rewarded with referral fees for directing more users to the Kyber Network, which helps increase adoption for Kyber and for the entities using the Network.
And of course there will soon be a fourth and fifth uses for the KNC, which will be as a staking token used to generate passive income, as well as a governance token used to vote on key parameters of the network.
The Kyber Network Crystal (KNC) was released in a September 2017 ICO at a price around $1. There were 226,000,000 KNC minted for the ICO, with 61% sold to the public. The remaining 39% are controlled 50/50 by the company and the founders/advisors, with a 1 year lockup period and 2 year vesting period.
Currently, just over 180 million coins are in circulation, and the total supply has been reduced to 210.94 million after the company burned 1 millionth KNC token in May 2019 and then its second millionth KNC token just three months later.
That means that while it took 15 months to burn the first million KNC, it took just 10 weeks to burn the second million KNC. That shows how rapidly adoption has been growing recently for Kyber, with July 2019 USD trading volumes on the Kyber Network nearly reaching $60 million. This volume has continued growing, and on march 13, 2020 the network experienced its highest daily trading activity of $33.7 million in a 24-hour period.
Currently KNC is required by Reserve Managers to operate on the network, which ensures a minimum amount of demand for the token. Combined with future plans for burning coins, price is expected to maintain an upward bias, although it has suffered along with the broader market in 2018 and more recently during the summer of 2019.
It was unfortunate in 2020 that a beginning rally was cut short by the coronavirus pandemic, although the token has stabilized as of April 2020, and there are hopes the rally could resume in the summer of 2020.
2.1 HOW ARE KNC TOKENS PRODUCED?The native token of Kyber is called Kyber Network Crystals (KNC). All reserves are required to pay fees in KNC for the right to manage reserves. The KNC collected as fees are either burned and taken out of the total supply or awarded to integrated dapps as an incentive to help them grow.
2.2 HOW DO YOU GET HOLD OF KNC TOKENS?Kyber Swap can be used to buy ETH directly using a credit card, which can then be used to swap for KNC. Besides Kyber itself, exchanges such as Binance, Huobi, and OKex trade KNC.
2.3 WHAT CAN YOU DO WITH KYBER?The most direct and basic function of Kyber is for instantly swapping tokens without registering an account, which anyone can do using an Etheruem wallet such as MetaMask. Users can also create their own reserves and contribute funds to a reserve, but that process is still fairly technical one–something Kyber is working on making easier for users in the future.
2.4 THE GOAL OF KYBER THE FUTUREThe goal of Kyber in the coming years is to solidify its position as a one-stop solution for powering liquidity and token swapping on Ethereum. Kyber plans on a major protocol upgrade called Katalyst, which will create new incentives and growth opportunities for all stakeholders in their ecosystem, especially KNC holders. The upgrade will mean more use cases for KNC including to use KNC to vote on governance decisions through a decentralized organization (DAO) called the KyberDAO.
With our upcoming Katalyst protocol upgrade and new KNC model, Kyber will provide even more benefits for stakeholders. For instance, reserves will no longer need to hold a KNC balance for fees, removing a major friction point, and there will be rebates for top performing reserves. KNC holders can also stake their KNC to participate in governance and receive rewards.
2.5 BUYING & STORING KNCThose interested in buying KNC tokens can do so at a number of exchanges. Perhaps your best bet between the complete list is the likes of Coinbase Pro and Binance. The former is based in the USA whereas the latter is an offshore exchange.
The trading volume is well spread out at these exchanges, which means that the liquidity is not concentrated and dependent on any one exchange. You also have decent liquidity on each of the exchange books. For example, the Binance BTC / KNC books are wide and there is decent turnover. This means easier order execution.
KNC is an ERC20 token and can be stored in any wallet with ERC20 support, such as MyEtherWallet or MetaMask. One interesting alternative is the KyberSwap Android mobile app that was released in August 2019.
It allows for instant swapping of tokens and has support for over 70 different altcoins. It also allows users to set price alerts and limit orders and works as a full-featured Ethereum wallet.
2.6 KYBER KATALYST UPGRADEKyber has announced their intention to become the de facto liquidity layer for the Decentralized Finance space, aiming to have Kyber as the single on-chain endpoint used by the majority of liquidity providers and dApp developers. In order to achieve this goal the Kyber Network team is looking to create an open ecosystem that garners trust from the decentralized finance space. They believe this is the path that will lead the majority of projects, developers, and users to choose Kyber for liquidity needs. With that in mind they have recently announced the launch of a protocol upgrade to Kyber which is being called Katalyst.
The Katalyst upgrade will create a stronger ecosystem by creating strong alignments towards a common goal, while also strengthening the incentives for stakeholders to participate in the ecosystem.
The primary beneficiaries of the Katalyst upgrade will be the three major Kyber stakeholders: 1. Reserve managers who provide network liquidity; 2. dApps that connect takers to Kyber; 3. KNC holders.
These stakeholders can expect to see benefits as highlighted below: Reserve Managers will see two new benefits to providing liquidity for the network. The first of these benefits will be incentives for providing reserves. Once Katalyst is implemented part of the fees collected will go to the reserve managers as an incentive for providing liquidity.
This mechanism is similar to rebates in traditional finance, and is expected to drive the creation of additional reserves and market making, which in turn will lead to greater liquidity and platform reach.
Katalyst will also do away with the need for reserve managers to maintain a KNC balance for use as network fees. Instead fees will be automatically collected and used as incentives or burned as appropriate. This should remove a great deal of friction for reserves to connect with Kyber without affecting the competitive exchange rates that takers in the system enjoy. dApp Integrators will now be able to set their own spread, which will give them full control over their own business model. This means the current fee sharing program that shares 30% of the 0.25% fee with dApp developers will go away and developers will determine their own spread. It’s believed this will increase dApp development within Kyber as developers will now be in control of fees.
KNC Holders, often thought of as the core of the Kyber Network, will be able to take advantage of a new staking mechanism that will allow them to receive a portion of network fees by staking their KNC and participating in the KyberDAO.
2.7 COMING KYBERDAOWith the implementation of the Katalyst protocol the KNC holders will be put right at the heart of Kyber. Holders of KNC tokens will now have a critical role to play in determining the future economic flow of the network, including its incentive systems.
The primary way this will be achieved is through KyberDAO, a way in which on-chain and off-chain governance will align to streamline cooperation between the Kyber team, KNC holders, and market participants.
The Kyber Network team has identified 3 key areas of consideration for the KyberDAO: 1. Broad representation, transparent governance and network stability 2. Strong incentives for KNC holders to maintain their stake and be highly involved in governance 3. Maximizing participation with a wide range of options for voting delegation
Interaction between KNC Holders & Kyber
This means KNC holders have been empowered to determine the network fee and how to allocate the fees to ensure maximum network growth. KNC holders will now have three fee allocation options to vote on: - Voting Rewards: Immediate value creation. Holders who stake and participate in the KyberDAO get their share of the fees designated for rewards. - Burning: Long term value accrual. The decreasing supply of KNC will improve the token appreciation over time and benefit those who did not participate. - Reserve Incentives:Value creation via network growth. By rewarding Kyber reserve managers based on their performance, it helps to drive greater volume, value, and network fees.
2.8 TRANSPARENCY AND STABILITYThe design of the KyberDAO is meant to allow for the greatest network stability, as well as maximum transparency and the ability to quickly recover in emergency situations. Initally the Kyber team will remain as maintainers of the KyberDAO. The system is being developed to be as verifiable as possible, while still maintaining maximum transparency regarding the role of the maintainer in the DAO.
Part of this transparency means that all data and processes are stored on-chain if feasible. Voting regarding network fees and allocations will be done on-chain and will be immutable. In situations where on-chain storage or execution is not feasible there will be a set of off-chain governance processes developed to ensure all decisions are followed through on.
2.9 KNC STAKING AND DELEGATIONStaking will be a new addition and both staking and voting will be done in fixed periods of times called “epochs”. These epochs will be measured in Ethereum block times, and each KyberDAO epoch will last roughly 2 weeks.
This is a relatively rapid epoch and it is beneficial in that it gives more rapid DAO conclusion and decision-making, while also conferring faster reward distribution. On the downside it means there needs to be a new voting campaign every two weeks, which requires more frequent participation from KNC stakeholders, as well as more work from the Kyber team.
Delegation will be part of the protocol, allowing stakers to delegate their voting rights to third-party pools or other entities. The pools receiving the delegation rights will be free to determine their own fee structure and voting decisions. Because the pools will share in rewards, and because their voting decisions will be clearly visible on-chain, it is expected that they will continue to work to the benefit of the network.
3. TRADINGAfter the September 2017 ICO, KNC settled into a trading price that hovered around $1.00 (decreasing in BTC value) until December. The token has followed the trend of most other altcoins — rising in price through December and sharply declining toward the beginning of January 2018.
The KNC price fell throughout all of 2018 with one exception during April. From April 6th to April 28th, the price rose over 200 percent. This run-up coincided with a blog post outlining plans to bring Bitcoin to the Ethereum blockchain. Since then, however, the price has steadily fallen, currently resting on what looks like a $0.15 (~0.000045 BTC) floor.
With the number of partners using the Kyber Network, the price may rise as they begin to fully use the network. The development team has consistently hit the milestones they’ve set out to achieve, so make note of any release announcements on the horizon.
4. COMPETITIONThe 0x project is the biggest competitor to Kyber Network. Both teams are attempting to enter the decentralized exchange market. The primary difference between the two is that Kyber performs the entire exchange process on-chain while 0x keeps the order book and matching off-chain.
As a crypto swap exchange, the platform also competes with ShapeShift and Changelly.
5.KYBER MILESTONES• June 2020: Digifox, an all-in-one finance application by popular crypto trader and Youtuber Nicholas Merten a.k.a DataDash (340K subs), integrated Kyber to enable users to easily swap between cryptocurrencies without having to leave the application. • June 2020: Stake Capital partnered with Kyber to provide convenient KNC staking and delegation services, and also took a KNC position to participate in governance. • June 2020: Outlined the benefits of the Fed Price Reserve (FPR) for professional market makers and advanced developers. • May 2020: Kyber crossed US$1 Billion in total trading volume and 1 Million transactions, performed entirely on-chain on Ethereum. • May 2020: StakeWith.Us partnered Kyber Network as a KyberDAO Pool Master. • May 2020: 2Key, a popular blockchain referral solution using smart links, integrated Kyber’s on-chain liquidity protocol for seamless token swaps • May 2020: Blockchain game League of Kingdoms integrated Kyber to accept Token Payments for Land NFTs. • May 2020: Joined the Zcash Developer Alliance , an invite-only working group to advance Zcash development and interoperability. • May 2020: Joined the Chicago DeFi Alliance to help accelerate on-chain market making for professionals and developers. • March 2020: Set a new record of USD $33.7M in 24H fully on-chain trading volume, and $190M in 30 day on-chain trading volume. • March 2020: Integrated by Rarible, Bullionix, and Unstoppable Domains, with the KyberWidget deployed on IPFS, which allows anyone to swap tokens through Kyber without being blocked. • February 2020: Popular Ethereum blockchain game Axie Infinity integrated Kyber to accept ERC20 payments for NFT game items. • February 2020: Kyber’s protocol was integrated by Gelato Finance, Idle Finance, rTrees, Sablier, and 0x API for their liquidity needs. • January 2020: Kyber Network was found to be the most used protocol in the whole decentralized finance (DeFi) space in 2019, according to a DeFi research report by Binance. • December 2019: Switcheo integrated Kyber’s protocol for enhanced liquidity on their own DEX. • December 2019: DeFi Wallet Eidoo integrated Kyber for seamless in-wallet token swaps. • December 2019: Announced the development of the Katalyst Protocol Upgrade and new KNC token model. • July 2019: Developed the Waterloo Bridge , a Decentralized Practical Cross-chain Bridge between EOS and Ethereum, successfully demonstrating a token swap between Ethereum to EOS. • July 2019: Trust Wallet, the official Binance wallet, integrated Kyber as part of its decentralized token exchange service, allowing even more seamless in-wallet token swaps for thousands of users around the world. • May 2019: HTC, the large consumer electronics company with more than 20 years of innovation, integrated Kyber into its Zion Vault Wallet on EXODUS 1 , the first native web 3.0 blockchain phone, allowing users to easily swap between cryptocurrencies in a decentralized manner without leaving the wallet. • January 2019: Introduced the Automated Price Reserve (APR) , a capital efficient way for token teams and individuals to market make with low slippage. • January 2019: The popular Enjin Wallet, a default blockchain DApp on the Samsung S10 and S20 mobile phones, integrated Kyber to enable in-wallet token swaps. • October 2018: Kyber was a founding member of the WBTC (Wrapped Bitcoin) Initiative and DAO. • October 2018: Developed the KyberWidget for ERC20 token swaps on any website, with CoinGecko being the first major project to use it on their popular site.
submitted by UMITop to u/UMITop [link] [comments]
Ethereum cryptocurrency that comes second in terms of capitalization on the crypto market is traditionally seen as fast and profitable. However, over the last few weeks it's had a rough patch. Since early August, the network has had huge queues of transactions pending processing while fees have skyrocketed and surpassed the historical high.
The main issue though is that even fees of a few dollars per transfer don't help get rid of the“traffic jams”. The cause of this is numerous DeFi projects and a huge number of financial pyramids based on the Ethereum platform. Both generate excessive load on the network.
The situation is downright unpleasant, and our users might question whether the UMI network could face a similar challenge? We'd like to assure you it could not. The UMI network is by default protected against these problems — it cannot have “traffic jams”, fees or financial pyramids. But first things first.
How has the Ethereum network ground to a halt?
In its report dated August 4, Arcane Research that provides analysis within the field of cryptocurrency stated that over the previous week the daily size of transaction fees in the Ethereum network has surged up to a record high for over two and a half years. On August 3, the median value #%D0%9F%D1%80%D0%B8%D0%BC%D0%B5%D1%80_%D0%B8%D1%81%D0%BF%D0%BE%D0%BB%D1%8C%D0%B7%D0%BE%D0%B2%D0%B0%D0%BD%D0%B8%D1%8F)of the fee amounted to $0.82, with the overall amount of transaction fees totaling $2 mln. However, it only signaled the start of real problems.
Over the next week, fees continued to grow and by August 11 the median fee value almost doubled equaling $1.57. Larry Cermak, an expert at a big analytical and news-making crypto portal The Block, wrote in his August 15 tweet that over a week the total amount of transaction fees in the Ethereum network totaled $34.5 mln, having surpassed its historical high. Meanwhile, in the Bitcoin network that is seen as too expensive the fees were almost four times lower at $9 mln.
The total fee amount paid by cryptocurrency users over a week:
Historical Growth Chart for Ethereum Fees. Source
The existing situation shows that Ethereum is actually not as fast and profitable as commonly cited. Additionally, this could happen to almost any cryptocurrency except UMI that charges no fees whatsoever. We will tell you why.
Why have these problems emerged?
There is nothing unoriginal: the Ethereum network simply can't handle an increased load. Arcane Research analysts consider that a principal cause of this situation is the constantly increasing number of the DeFi ecosystem projects built on the Ethereum blockchain. Their number is growing all the time which causes the overload of the network. As of August 12, the total amount of funds in DeFi applications reached $4.3 billion which is 19.5% higher than that in the past week. At the time of writing this article, the amount surged to $6.21 billion. You can see the current data here. What is the most unpleasant about DeFi protocols is that a lot of them are scam projects.
Which is not the worst part though. There is also another factor that significantly slows down the Ethereum network. There are a lot of pyramid-like projects that are built on the EOS platform and use smart contracts. One of them is SmartWay Forsage, which regularly overloads the network with a large number of transactions, causes traffic jams, and, consequently, leads to increased fees (keep in mind that Ethereum miners choose transactions with a higher commission). Vitalik Buterin, the co-founder of Ethereum, revealed his disapproval of the SmartWay Forsage methodology and asked them to "leave and not pollute Ethereum ecology in the future". However, the project is slow to do this — it continues to deceive users.
This is only the tip of the iceberg of scam projects which abounds on the EOS network –– they continually emerge, work for a while, then go down as scams and are replaced with new ones. This never-ending stream of "investment projects" based on the Ponzi scheme overloads the system. This is the reason why Adam Back, a pioneer of the crypto industry and founder of the technology company Blockstream, equated Ethereum with such infamous projects as Onecoin and Bitconnect. Adam Back's solid dig at Ethereum became the subject of much debate among crypto enthusiasts.
Of course, it all doesn't mean that Ethereum is a bad cryptocurrency. On the contrary, it has a lot of advantages over other coins. But all that has happened exposes Ethereum's faults which must be eliminated. The problem is that they may not be fixable. It is far from certain that the developers will be able to get rid of all the defects as the system has huge scalability problems.
The crypto community has to admit that Ethereum, like other first-generation cryptocurrencies, has issues with capacity, fees, and scalability and is gradually becoming obsolete.
2020 is the time for young innovative cryptocurrencies such as UMI.
UMI is the flagship of new-generation cryptocurrencies.
In real fact, any cryptocurrency could face it. Each cryptocurrency charges fees which typically surge when the network is overloaded or the price is going up. Everyone will remember 2017 when in line with price growth and the network's overload Bitcoin transaction fee reached a high of around $40.
But when it comes to UMI, it works the other way round. The UMI network's advantages are high capacity, no fees, and scaling possibilities. It uses the best and fastest crypto industry solutions and excludes all inefficient methods by default. Smart optimization in combination with the Proof-of-Authority technology operating on the master node basis enables almost instant payments.
At the stage of network testing, an incredibly high capacity was achieved:
The UMI network can process transactions that Ethereum processes over a year in a few days and with no fees. More details
What is more important is that less than 0.001% of the network's overall potential is used now. The UMI network has a lot of reserve capacity and can handle hundreds of thousands of times heavier load. Moreover, with scaling possibilities, UMI can keep up with the times. The UMI code ensures the safe introduction of any upgrades — the network can be easily modified and scaled with cutting edge technology solutions. In other words, traffic jams will never pose a problem for us. UMI will instantly process all transactions, with no fees. Always.
A real-time speedometer displays the number of transactions processed by the UMI network per second. Link
Additionally, unlike Ethereum and other cryptocurrencies, the UMI's staking smart contract prevents possibilities of any pyramid schemes, meaning eliminates their negative influence. Our staking is completely safe and secured against scammers. Read more about this in our article. Any UMI staking structure could work forever. In other words, you can multiply your coins at a rate of up to 40% per month for an indefinitely long period of time.
UMI doesn't inherit the disadvantages of the first-generation cryptocurrencies. This is an innovative, carefully designed network based on state-of-the-art technologies. UMI is an ambitious step toward the future. And we're making it together right now!
Sincerely yours, UMI team
These crypto lending & borrowing services found early traction. Are they capable of bundling more financial services and winning the broader consumer finance market?submitted by mickhagen to genesisblockhq [link] [comments]
This is the third part of Crypto Banking Wars — a new series that examines what crypto-native company is most likely to become the bank of the future. Who is best positioned to reach mainstream adoption in consumer finance?
While crypto allows the world to get rid of banks, a bank will still very much be necessary for this very powerful technology to reach the masses. As we laid out in our previous series, Crypto-Powered, we believe a crypto-native company will ultimately become the bank of the future. We’re confident Genesis Block will have a seat at that table, but we aren’t the only game in town.
In the first post of this series, we did an analysis of big crypto exchanges like Coinbase & Binance. In our second episode, we looked at the world of non-custodial wallets.
Today we’re analyzing crypto lending & borrowing services. The Earn and Borrow use-case covers a lot of what traditional banks deliver today. This category of companies is a threat worth analyzing. As we look at this market, we’ll mostly be focused on custodial, centralized products like BlockFi, Nexo, and Celsius.
Many of these companies found early traction among crypto users. Are they capable of bundling more financial services and winning the broader consumer finance market? Let’s find out.
Institutional BorrowersBecause speculation and trading remains one of the most popular use-cases of crypto, a new crypto sub-industry around credit has emerged. Much of the borrowing demand has been driven by institutional needs.
For example, a Bitcoin mining company might need to borrow fiat to pay for operational costs (salaries, electricity). Or a crypto company might need to borrow USD to pay for engineering salaries. Or a crypto hedge fund needs to borrow for leverage or to take a specific market position. While all of these companies have sufficient crypto to cover the costs, they might not want to sell it — either for tax or speculative reasons (they may believe these crypto assets will appreciate, as with most in the industry).
Instead of selling their crypto, these companies can use their crypto as collateral for loans. For example, they can provide $1.5M in Bitcoin as collateral, and borrow $1M. Given the collateralization happening, the underwriting process becomes straightforward. Companies all around the world can participate — language and cultural barriers are removed.
The leader (and one of our partners) in this space is Genesis Capital. While they are always the counterparty for both lenders and borrowers, they are effectively a broker. They are at the center of the institutional crypto lending & borrowing markets. Their total active loans as of March 2020 was $649M. That number shot up to $1.42B in active loans as of June 2020. The growth of this entire market segment is impressive and it’s what is driving this opportunity for consumers downstream.
Consumer ProductsWhile most of the borrowing demand comes from institutional players, there is a growing desire from consumers to participate on the lend/supply side of the market. Crypto consumers would love to be able to deposit their assets with a service and watch it grow. Why let crypto assets sit on an exchange or in cold storage when it can be earning interest?
A number of consumer-facing products have emerged in the last few years to make this happen. While they also allow users to borrow (always with collateral), most of the consumer attraction is around growing their crypto, even while they sleep. Earning interest. These products usually partner with institutional players like Genesis Capital to match the deposits with borrowing demand. And it’s exactly part of our strategy as well, beyond leveraging DeFi (decentralized finance protocols).
A few of the most popular consumer services in this category include BlockFi, Nexo, and Celsius.
BlockFiBlockFi (Crunchbase) is the leader in this category (at least in the West). They are well-capitalized. In August 2019, they raised $18.3M in their Series A. In Feb 2020, they raised $30M in their Series B. In that same time period, they went from $250M in assets under management to $650M. In a recent blog post, they announced that they saw a 100% revenue increase in Q2 and that they were on track to do $50M in revenue this year. Their growth is impressive.
BlockFi did not do an ICO, unlike Celsius, Nexo, Salt, and Cred. BlockFi has a lot of institutional backing so it is perceived as the most reputable in the space. BlockFi started with borrowing — allowing users to leverage their crypto as collateral and taking out a loan against it. They later got into Earning — allowing users to deposit assets and earn interest on it. They recently expanded their service to “exchange” functionality and say they are coming out with a credit card later this year.
It’s incredible that BlockFi has been able to see such strong growth despite their numerous product and security woes. A few months ago, their systems were compromised. A hacker was able to access confidential data, such as names, dates of birth, postal addresses, and activity histories. While no funds were lost, this was a massive embarrassment and caused reputational damage.
Unrelated to that massive security breach and earlier in the year, a user discovered a major bug that allowed him to send the same funds to himself over and over again, ultimately accumulating more than a million dollars in his BlockFi account. BlockFi fortunately caught him just before withdrawal.
Poor Product Execution
Beyond their poor security — which they are now trying to get serious about — their products are notoriously buggy and hard-to-use. I borrowed from them a year ago and used their interest account product until very recently. I have first-hand experience of how painful it is. But don’t take my word for it… here are just a few tweets from customers just recently.
For a while, their interest-earning product had a completely different authentication system than their loan product (users had two sets of usernames/passwords). Many people have had issues with withdrawals. The app is constantly logging people out, blank screens, ugly error messages. Emails with verification codes are sometimes delayed by hours (or days). I do wonder if their entire app has been outsourced. The sloppiness shines through.
Not only is their product buggy and UX confusing, but their branding & design is quite weak. To the left is a t-shirt they once sent me. It looks like they just found a bunch of quirky fonts, added their name, and slapped it on a t-shirt.
To the innocent bystander, many of these issues seem totally fixable. They could hire an amazing design agency to completely revamp their product or brand. They could hire a mercenary group of engineers to fix their bugs, etc. While it could stop the bleeding for a time, it may not solve the underlying issues. Years of sloppy product execution represents something much more destructive. It represents a top-down mentality that shipping anything other than excellence is okay: product experience doesn’t matter; design doesn’t matter; craftsmanship doesn’t matter; strong execution doesn’t matter; precision doesn’t matter. That’s very different from our culture at Genesis Block.
This cancerous mentality rarely stays contained within product & engineering — this leaks to all parts of the organization. No design agency or consulting firm will fix some of the pernicious values of a company’s soul. These are deeper issues that only leadership can course-correct.
If BlockFi’s sloppiness were due to constant experimentation, iteration, shipping, or some “move fast and break things” hacker culture… like Binance… I would probably cut them more slack. But there is zero evidence of that. “Move fast and break things” is always scary when dealing with financial products. But in BlockFi’s case, when it’s more like “move slow and break things,” they are really playing with fire. Next time a massive security breach occurs, like what happened earlier this year, they may not be so lucky.
Based on who is on their team, their poor product execution shouldn’t be a surprise. Their team comes mostly from Wall Street, not the blockchain community (where our roots are). Most of BlockFi’s blockchain/crypto integration is very superficial. They take crypto assets as deposits, but they aren’t leveraging any of the exciting, low-level DeFi protocols like we are.
While their Wall Street heritage isn’t doing them any favors on the product/tech side, it’s served them very well on winning institutional clients. This is perhaps their greatest strength. BlockFi has a strong institutional business. They recently brought on Three Arrows Capital as a strategic investor — a crypto hedge fund who does a lot of borrowing. In that announcement, BlockFi’s founder said that bringing them on “aligns well with our focus on international expansion of our institutional services offering.” They also recently brought someone on who will lead business development in Asia among institutional clients.
BlockFi Wrap Up
There are certainly BlockFi features that overlap with Genesis Block’s offering. It’s possible that they are angling to become the bank of the future. However, they simply have not proven they are capable of designing, building, and launching world-class consumer products. They’ve constantly had issues around security and poor product execution. Their company account and their founder’s account seem to only tweet about Bitcoin. I don’t think they understand, appreciate, or value the power of DeFi. It’s unlikely they’ll be leveraging it any time soon. All of these reasons are why I don’t see them as a serious threat to Genesis Block.
However, because of their strong institutional offering, I hope that Genesis Block will ultimately have a very collaborative and productive partnership with them. Assuming they figure out their security woes, we could park some of our funds with BlockFi (just as we will with Genesis Capital and others). I think what’s likely to happen is that we’ll corner the consumer market and we’ll work closely with BlockFi on the institutional side.
I’ve been hard on BlockFi because I care. I think they have a great opportunity at helping elevate the entire industry in a positive way. But they have a lot of issues they need to work through. I really don’t want to see users lose millions of dollars in a security breach. It could set back the entire industry. But if they do things well… a rising tide lifts all boats.
Honorable MentionsCelsius (ICO Drops) raised $50M in an ICO, and is led by serial entrepreneur Alex Mashinsky. I’ve met him, he’s a nice guy. Similar to Binance, their biggest Achilles heel could be their own token. There are also a lot of unanswered questions about where their deposits go. They don’t have a record of great transparency. They recently did a public crowdraise which is a little odd given their large ICO as well as their supposed $1B in deposits. Are they running out of money, as some suggest? Unclear. One of their biggest blindspots right now is that Mashinsky does not understand the power of DeFi. He is frequently openly criticizing it.
Nexo (ICO Drops) is another similar service. They are European-based, trying to launch their own card (though they’ve been saying this forever and they still haven’t shipped it), and have a history in the payments/fintech space. Because they haven’t penetrated the US — which is a much harder regulatory nut to crack — they are unlikely to be as competitive as BlockFi. There were also allegations that Nexo was spreading FUD about Chainlink while simultaneously partnering with them. Did Nexo take out a short position and start spreading rumors? Never a dull moment in crypto.
Other players in the lending & borrowing space include Unchained Capital, Cred (ICO Drops), and Salt (ICO Drops).
Wrap UpWhile many companies in this category seem to be slowly adding more financial services, I don’t believe any of them are focused on the broader consumer market like we are. To use services like BlockFi, Nexo, or Celsius, users need to be onboarded and educated on how crypto works. At Genesis Block, we don’t believe that’s the winning approach. We think blockchain complexity should be abstracted away from the end-user. We did an entire series about this, Spreading Crypto.
For many of these services, there is additional friction due to ICO tokens that are forcefully integrated into the product (see NEXO token or CEL Token). None of these services have true banking functionality or integration with traditional finance —for example, easy offramp or spending methods like debit cards. None of them are taking DeFi seriously — they are leveraging crypto for only the asset class, not the underlying technology around financial protocols.
So are these companies potential competitors to Genesis Block? For the crypto crowd, yes. For the mass market, no. None of these companies are capable of reaching the billions of people around the world that we hope to reach at Genesis Block.
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