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It’s effectively July 2017 in the world of decentralized finance (DeFi), and as in the heady days of the initial coin offering (ICO) boom, the numbers are only trending up.
According to DeFi Pulse, there is $1.9 billion in crypto assets locked in DeFi right now. According to the CoinDesk ICO Tracker, the ICO market started chugging past $1 billion in July 2017, just a few months before token sales started getting talked about on TV.
Debate juxtaposing these numbers if you like, but what no one can question is this: Crypto users are putting more and more value to work in DeFi applications, driven largely by the introduction of a whole new yield-generating pasture, Compound’s COMP governance token.
Governance tokens enable users to vote on the future of decentralized protocols, sure, but they also present fresh ways for DeFi founders to entice assets onto their platforms.
That said, it’s the crypto liquidity providers who are the stars of the present moment. They even have a meme-worthy name: yield farmers.
Where it startedEthereum-based credit market Compound started distributing its governance token, COMP, to the protocol’s users this past June 15. Demand for the token (heightened by the way its automatic distribution was structured) kicked off the present craze and moved Compound into the leading position in DeFi.
The hot new term in crypto is “yield farming,” a shorthand for clever strategies where putting crypto temporarily at the disposal of some startup’s application earns its owner more cryptocurrency.
Another term floating about is “liquidity mining.”
The buzz around these concepts has evolved into a low rumble as more and more people get interested.
The casual crypto observer who only pops into the market when activity heats up might be starting to get faint vibes that something is happening right now. Take our word for it: Yield farming is the source of those vibes.
But if all these terms (“DeFi,” “liquidity mining,” “yield farming”) are so much Greek to you, fear not. We’re here to catch you up. We’ll get into all of them.
We’re going to go from very basic to more advanced, so feel free to skip ahead.
What are tokens?Most CoinDesk readers probably know this, but just in case: Tokens are like the money video-game players earn while fighting monsters, money they can use to buy gear or weapons in the universe of their favorite game.
But with blockchains, tokens aren’t limited to only one massively multiplayer online money game. They can be earned in one and used in lots of others. They usually represent either ownership in something (like a piece of a Uniswap liquidity pool, which we will get into later) or access to some service. For example, in the Brave browser, ads can only be bought using basic attention token (BAT).
If tokens are worth money, then you can bank with them or at least do things that look very much like banking. Thus: decentralized finance.
Tokens proved to be the big use case for Ethereum, the second-biggest blockchain in the world. The term of art here is “ERC-20 tokens,” which refers to a software standard that allows token creators to write rules for them. Tokens can be used a few ways. Often, they are used as a form of money within a set of applications. So the idea for Kin was to create a token that web users could spend with each other at such tiny amounts that it would almost feel like they weren’t spending anything; that is, money for the internet.
Governance tokens are different. They are not like a token at a video-game arcade, as so many tokens were described in the past. They work more like certificates to serve in an ever-changing legislature in that they give holders the right to vote on changes to a protocol.
So on the platform that proved DeFi could fly, MakerDAO, holders of its governance token, MKR, vote almost every week on small changes to parameters that govern how much it costs to borrow and how much savers earn, and so on.
Read more: Why DeFi’s Billion-Dollar Milestone Matters
One thing all crypto tokens have in common, though, is they are tradable and they have a price. So, if tokens are worth money, then you can bank with them or at least do things that look very much like banking. Thus: decentralized finance.
What is DeFi?Fair question. For folks who tuned out for a bit in 2018, we used to call this “open finance.” That construction seems to have faded, though, and “DeFi” is the new lingo.
In case that doesn’t jog your memory, DeFi is all the things that let you play with money, and the only identification you need is a crypto wallet.
On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name.
I can explain this but nothing really brings it home like trying one of these applications. If you have an Ethereum wallet that has even $20 worth of crypto in it, go do something on one of these products. Pop over to Uniswap and buy yourself some FUN (a token for gambling apps) or WBTC (wrapped bitcoin). Go to MakerDAO and create $5 worth of DAI (a stablecoin that tends to be worth $1) out of the digital ether. Go to Compound and borrow $10 in USDC.
(Notice the very small amounts I’m suggesting. The old crypto saying “don’t put in more than you can afford to lose” goes double for DeFi. This stuff is uber-complex and a lot can go wrong. These may be “savings” products but they’re not for your retirement savings.)
Immature and experimental though it may be, the technology’s implications are staggering. On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name.
DeFi applications don’t worry about trusting you because they have the collateral you put up to back your debt (on Compound, for instance, a $10 debt will require around $20 in collateral).
Read more: There Are More DAI on Compound Now Than There Are DAI in the World
If you do take this advice and try something, note that you can swap all these things back as soon as you’ve taken them out. Open the loan and close it 10 minutes later. It’s fine. Fair warning: It might cost you a tiny bit in fees, and the cost of using Ethereum itself right now is much higher than usual, in part due to this fresh new activity. But it’s nothing that should ruin a crypto user.
So what’s the point of borrowing for people who already have the money? Most people do it for some kind of trade. The most obvious example, to short a token (the act of profiting if its price falls). It’s also good for someone who wants to hold onto a token but still play the market.
Doesn’t running a bank take a lot of money up front?It does, and in DeFi that money is largely provided by strangers on the internet. That’s why the startups behind these decentralized banking applications come up with clever ways to attract HODLers with idle assets.
Liquidity is the chief concern of all these different products. That is: How much money do they have locked in their smart contracts?
“In some types of products, the product experience gets much better if you have liquidity. Instead of borrowing from VCs or debt investors, you borrow from your users,” said Electric Capital managing partner Avichal Garg.
Let’s take Uniswap as an example. Uniswap is an “automated market maker,” or AMM (another DeFi term of art). This means Uniswap is a robot on the internet that is always willing to buy and it’s also always willing to sell any cryptocurrency for which it has a market.
On Uniswap, there is at least one market pair for almost any token on Ethereum. Behind the scenes, this means Uniswap can make it look like it is making a direct trade for any two tokens, which makes it easy for users, but it’s all built around pools of two tokens. And all these market pairs work better with bigger pools.
Why do I keep hearing about ‘pools’?To illustrate why more money helps, let’s break down how Uniswap works.
Let’s say there was a market for USDC and DAI. These are two tokens (both stablecoins but with different mechanisms for retaining their value) that are meant to be worth $1 each all the time, and that generally tends to be true for both.
The price Uniswap shows for each token in any pooled market pair is based on the balance of each in the pool. So, simplifying this a lot for illustration’s sake, if someone were to set up a USDC/DAI pool, they should deposit equal amounts of both. In a pool with only 2 USDC and 2 DAI it would offer a price of 1 USDC for 1 DAI. But then imagine that someone put in 1 DAI and took out 1 USDC. Then the pool would have 1 USDC and 3 DAI. The pool would be very out of whack. A savvy investor could make an easy $0.50 profit by putting in 1 USDC and receiving 1.5 DAI. That’s a 50% arbitrage profit, and that’s the problem with limited liquidity.
(Incidentally, this is why Uniswap’s prices tend to be accurate, because traders watch it for small discrepancies from the wider market and trade them away for arbitrage profits very quickly.)
Read more: Uniswap V2 Launches With More Token-Swap Pairs, Oracle Service, Flash Loans
However, if there were 500,000 USDC and 500,000 DAI in the pool, a trade of 1 DAI for 1 USDC would have a negligible impact on the relative price. That’s why liquidity is helpful.
You can stick your assets on Compound and earn a little yield. But that’s not very creative. Users who look for angles to maximize that yield: those are the yield farmers.
Similar effects hold across DeFi, so markets want more liquidity. Uniswap solves this by charging a tiny fee on every trade. It does this by shaving off a little bit from each trade and leaving that in the pool (so one DAI would actually trade for 0.997 USDC, after the fee, growing the overall pool by 0.003 USDC). This benefits liquidity providers because when someone puts liquidity in the pool they own a share of the pool. If there has been lots of trading in that pool, it has earned a lot of fees, and the value of each share will grow.
And this brings us back to tokens.
Liquidity added to Uniswap is represented by a token, not an account. So there’s no ledger saying, “Bob owns 0.000000678% of the DAI/USDC pool.” Bob just has a token in his wallet. And Bob doesn’t have to keep that token. He could sell it. Or use it in another product. We’ll circle back to this, but it helps to explain why people like to talk about DeFi products as “money Legos.”
So how much money do people make by putting money into these products?It can be a lot more lucrative than putting money in a traditional bank, and that’s before startups started handing out governance tokens.
Compound is the current darling of this space, so let’s use it as an illustration. As of this writing, a person can put USDC into Compound and earn 2.72% on it. They can put tether (USDT) into it and earn 2.11%. Most U.S. bank accounts earn less than 0.1% these days, which is close enough to nothing.
However, there are some caveats. First, there’s a reason the interest rates are so much juicier: DeFi is a far riskier place to park your money. There’s no Federal Deposit Insurance Corporation (FDIC) protecting these funds. If there were a run on Compound, users could find themselves unable to withdraw their funds when they wanted.
Plus, the interest is quite variable. You don’t know what you’ll earn over the course of a year. USDC’s rate is high right now. It was low last week. Usually, it hovers somewhere in the 1% range.
Similarly, a user might get tempted by assets with more lucrative yields like USDT, which typically has a much higher interest rate than USDC. (Monday morning, the reverse was true, for unclear reasons; this is crypto, remember.) The trade-off here is USDT’s transparency about the real-world dollars it’s supposed to hold in a real-world bank is not nearly up to par with USDC’s. A difference in interest rates is often the market’s way of telling you the one instrument is viewed as dicier than another.
Users making big bets on these products turn to companies Opyn and Nexus Mutual to insure their positions because there’s no government protections in this nascent space – more on the ample risks later on.
So users can stick their assets in Compound or Uniswap and earn a little yield. But that’s not very creative. Users who look for angles to maximize that yield: those are the yield farmers.
OK, I already knew all of that. What is yield farming?Broadly, yield farming is any effort to put crypto assets to work and generate the most returns possible on those assets.
At the simplest level, a yield farmer might move assets around within Compound, constantly chasing whichever pool is offering the best APY from week to week. This might mean moving into riskier pools from time to time, but a yield farmer can handle risk.
“Farming opens up new price arbs [arbitrage] that can spill over to other protocols whose tokens are in the pool,” said Maya Zehavi, a blockchain consultant.
Because these positions are tokenized, though, they can go further.
This was a brand-new kind of yield on a deposit. In fact, it was a way to earn a yield on a loan. Who has ever heard of a borrower earning a return on a debt from their lender?
In a simple example, a yield farmer might put 100,000 USDT into Compound. They will get a token back for that stake, called cUSDT. Let’s say they get 100,000 cUSDT back (the formula on Compound is crazy so it’s not 1:1 like that but it doesn’t matter for our purposes here).
They can then take that cUSDT and put it into a liquidity pool that takes cUSDT on Balancer, an AMM that allows users to set up self-rebalancing crypto index funds. In normal times, this could earn a small amount more in transaction fees. This is the basic idea of yield farming. The user looks for edge cases in the system to eke out as much yield as they can across as many products as it will work on.
Right now, however, things are not normal, and they probably won’t be for a while.
Why is yield farming so hot right now?Because of liquidity mining. Liquidity mining supercharges yield farming.
Liquidity mining is when a yield farmer gets a new token as well as the usual return (that’s the “mining” part) in exchange for the farmer’s liquidity.
“The idea is that stimulating usage of the platform increases the value of the token, thereby creating a positive usage loop to attract users,” said Richard Ma of smart-contract auditor Quantstamp.
The yield farming examples above are only farming yield off the normal operations of different platforms. Supply liquidity to Compound or Uniswap and get a little cut of the business that runs over the protocols – very vanilla.
But Compound announced earlier this year it wanted to truly decentralize the product and it wanted to give a good amount of ownership to the people who made it popular by using it. That ownership would take the form of the COMP token.
Lest this sound too altruistic, keep in mind that the people who created it (the team and the investors) owned more than half of the equity. By giving away a healthy proportion to users, that was very likely to make it a much more popular place for lending. In turn, that would make everyone’s stake worth much more.
So, Compound announced this four-year period where the protocol would give out COMP tokens to users, a fixed amount every day until it was gone. These COMP tokens control the protocol, just as shareholders ultimately control publicly traded companies.
Every day, the Compound protocol looks at everyone who had lent money to the application and who had borrowed from it and gives them COMP proportional to their share of the day’s total business.
The results were very surprising, even to Compound’s biggest promoters.
COMP’s value will likely go down, and that’s why some investors are rushing to earn as much of it as they can right now.
This was a brand-new kind of yield on a deposit into Compound. In fact, it was a way to earn a yield on a loan, as well, which is very weird: Who has ever heard of a borrower earning a return on a debt from their lender?
COMP’s value has consistently been well over $200 since it started distributing on June 15. We did the math elsewhere but long story short: investors with fairly deep pockets can make a strong gain maximizing their daily returns in COMP. It is, in a way, free money.
It’s possible to lend to Compound, borrow from it, deposit what you borrowed and so on. This can be done multiple times and DeFi startup Instadapp even built a tool to make it as capital-efficient as possible.
“Yield farmers are extremely creative. They find ways to ‘stack’ yields and even earn multiple governance tokens at once,” said Spencer Noon of DTC Capital.
COMP’s value spike is a temporary situation. The COMP distribution will only last four years and then there won’t be any more. Further, most people agree that the high price now is driven by the low float (that is, how much COMP is actually free to trade on the market – it will never be this low again). So the value will probably gradually go down, and that’s why savvy investors are trying to earn as much as they can now.
Appealing to the speculative instincts of diehard crypto traders has proven to be a great way to increase liquidity on Compound. This fattens some pockets but also improves the user experience for all kinds of Compound users, including those who would use it whether they were going to earn COMP or not.
As usual in crypto, when entrepreneurs see something successful, they imitate it. Balancer was the next protocol to start distributing a governance token, BAL, to liquidity providers. Flash loan provider bZx has announced a plan. Ren, Curve and Synthetix also teamed up to promote a liquidity pool on Curve.
It is a fair bet many of the more well-known DeFi projects will announce some kind of coin that can be mined by providing liquidity.
The case to watch here is Uniswap versus Balancer. Balancer can do the same thing Uniswap does, but most users who want to do a quick token trade through their wallet use Uniswap. It will be interesting to see if Balancer’s BAL token convinces Uniswap’s liquidity providers to defect.
So far, though, more liquidity has gone into Uniswap since the BAL announcement, according to its data site. That said, even more has gone into Balancer.
Did liquidity mining start with COMP?No, but it was the most-used protocol with the most carefully designed liquidity mining scheme.
This point is debated but the origins of liquidity mining probably date back to Fcoin, a Chinese exchange that created a token in 2018 that rewarded people for making trades. You won’t believe what happened next! Just kidding, you will: People just started running bots to do pointless trades with themselves to earn the token.
Similarly, EOS is a blockchain where transactions are basically free, but since nothing is really free the absence of friction was an invitation for spam. Some malicious hacker who didn’t like EOS created a token called EIDOS on the network in late 2019. It rewarded people for tons of pointless transactions and somehow got an exchange listing.
These initiatives illustrated how quickly crypto users respond to incentives.
Read more: Compound Changes COMP Distribution Rules Following ‘Yield Farming’ Frenzy
Fcoin aside, liquidity mining as we now know it first showed up on Ethereum when the marketplace for synthetic tokens, Synthetix, announced in July 2019 an award in its SNX token for users who helped add liquidity to the sETH/ETH pool on Uniswap. By October, that was one of Uniswap’s biggest pools.
When Compound Labs, the company that launched the Compound protocol, decided to create COMP, the governance token, the firm took months designing just what kind of behavior it wanted and how to incentivize it. Even still, Compound Labs was surprised by the response. It led to unintended consequences such as crowding into a previously unpopular market (lending and borrowing BAT) in order to mine as much COMP as possible.
Just last week, 115 different COMP wallet addresses – senators in Compound’s ever-changing legislature – voted to change the distribution mechanism in hopes of spreading liquidity out across the markets again.
Is there DeFi for bitcoin?Yes, on Ethereum.
Nothing has beaten bitcoin over time for returns, but there’s one thing bitcoin can’t do on its own: create more bitcoin.
A smart trader can get in and out of bitcoin and dollars in a way that will earn them more bitcoin, but this is tedious and risky. It takes a certain kind of person.
DeFi, however, offers ways to grow one’s bitcoin holdings – though somewhat indirectly.
A long HODLer is happy to gain fresh BTC off their counterparty’s short-term win. That’s the game.
For example, a user can create a simulated bitcoin on Ethereum using BitGo’s WBTC system. They put BTC in and get the same amount back out in freshly minted WBTC. WBTC can be traded back for BTC at any time, so it tends to be worth the same as BTC.
Then the user can take that WBTC, stake it on Compound and earn a few percent each year in yield on their BTC. Odds are, the people who borrow that WBTC are probably doing it to short BTC (that is, they will sell it immediately, buy it back when the price goes down, close the loan and keep the difference).
A long HODLer is happy to gain fresh BTC off their counterparty’s short-term win. That’s the game.
How risky is it?Enough.
“DeFi, with the combination of an assortment of digital funds, automation of key processes, and more complex incentive structures that work across protocols – each with their own rapidly changing tech and governance practices – make for new types of security risks,” said Liz Steininger of Least Authority, a crypto security auditor. “Yet, despite these risks, the high yields are undeniably attractive to draw more users.”
We’ve seen big failures in DeFi products. MakerDAO had one so bad this year it’s called “Black Thursday.” There was also the exploit against flash loan provider bZx. These things do break and when they do money gets taken.
As this sector gets more robust, we could see token holders greenlighting more ways for investors to profit from DeFi niches.
Right now, the deal is too good for certain funds to resist, so they are moving a lot of money into these protocols to liquidity mine all the new governance tokens they can. But the funds – entities that pool the resources of typically well-to-do crypto investors – are also hedging. Nexus Mutual, a DeFi insurance provider of sorts, told CoinDesk it has maxed out its available coverage on these liquidity applications. Opyn, the trustless derivatives maker, created a way to short COMP, just in case this game comes to naught.
And weird things have arisen. For example, there’s currently more DAI on Compound than have been minted in the world. This makes sense once unpacked but it still feels dicey to everyone.
That said, distributing governance tokens might make things a lot less risky for startups, at least with regard to the money cops.
“Protocols distributing their tokens to the public, meaning that there’s a new secondary listing for SAFT tokens, [gives] plausible deniability from any security accusation,” Zehavi wrote. (The Simple Agreement for Future Tokens was a legal structure favored by many token issuers during the ICO craze.)
Whether a cryptocurrency is adequately decentralized has been a key feature of ICO settlements with the U.S. Securities and Exchange Commission (SEC).
What’s next for yield farming? (A prediction)COMP turned out to be a bit of a surprise to the DeFi world, in technical ways and others. It has inspired a wave of new thinking.
“Other projects are working on similar things,” said Nexus Mutual founder Hugh Karp. In fact, informed sources tell CoinDesk brand-new projects will launch with these models.
We might soon see more prosaic yield farming applications. For example, forms of profit-sharing that reward certain kinds of behavior.
Imagine if COMP holders decided, for example, that the protocol needed more people to put money in and leave it there longer. The community could create a proposal that shaved off a little of each token’s yield and paid that portion out only to the tokens that were older than six months. It probably wouldn’t be much, but an investor with the right time horizon and risk profile might take it into consideration before making a withdrawal.
(There are precedents for this in traditional finance: A 10-year Treasury bond normally yields more than a one-month T-bill even though they’re both backed by the full faith and credit of Uncle Sam, a 12-month certificate of deposit pays higher interest than a checking account at the same bank, and so on.)
As this sector gets more robust, its architects will come up with ever more robust ways to optimize liquidity incentives in increasingly refined ways. We could see token holders greenlighting more ways for investors to profit from DeFi niches.
Questions abound for this nascent industry: What will MakerDAO do to restore its spot as the king of DeFi? Will Uniswap join the liquidity mining trend? Will anyone stick all these governance tokens into a decentralized autonomous organization (DAO)? Or would that be a yield farmers co-op?
Whatever happens, crypto’s yield farmers will keep moving fast. Some fresh fields may open and some may soon bear much less luscious fruit.
But that’s the nice thing about farming in DeFi: It is very easy to switch fields.
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In the cryptocurrency markets, no two exchanges are alike. Even in major crypto exchanges, trading U.S. dollars for bitcoin can have fairly different order sizes and spreads, according to data compiled by aggregator CryptoCompare.
Average order sizes over the past week were quite varied, CryptoCompare found. Orders on Bitstamp averaged $3,424.11, the highest of major dollar to bitcoin (USD/BTC) pair exchanges. ItBit was second to Bitstamp at $2,874.17, with Kraken at $2787.68. Gemini’s average was in the middle of the pack at $1,438.31, followed by Coinbase at $1,113.15. Bitfinex was lowest, with an average order totaling $342.09. The average order of the six exchanges was $1,996.58.
You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.
Average spreads between the highest bid offer and the lowest ask offer on an exchange order book also varied significantly. Data from CryptoCompare shows a few exchanges have a much larger daily price spread than others.
“This is derived from L2 order book data, without fee calculations, on top of this,” said Constantine Tsav, head of research for CryptoCompare. Level 2, or L2, order book data is a term for market information that includes the scope of bid and ask prices for a given asset, in this case USD/BTC.
Luxembourg-based Bitstamp, at $5.21 and New York-domiciled Gemini, at $2.38, have the largest average spreads in intraday trading, in this case CryptoCompare used a two-hour interval. Market spread is the gap between the highest bid and the lowest offer on the order book. Thus the gap is the difference between the price traders are willing to sell an asset and others are willing to buy an asset, and vice versa.
vipmex.comsubmitted by VipMex to u/VipMex [link] [comments]
A new trading platform called VipMex has entered the market, allowing users to invest in cryptos and futures contracts with ease.
About the Company
Hong Kong-based VipMex is a company specialized in providing all-inclusive financial investment options and management for crypto assets and futures.
The team behind VipMex is made up of many highly educated professionals with a background in various advanced technologies. Their main goal is to develop accessible futures and cryptocurrency options by establishing a secure investing environment which can be navigated by clients of all levels of experience.
This cryptocurrency exchange relies on a powerful trading system that serves as the basis of a comprehensive and strong trading environment. VipMex focuses on providing low cost and easy to use crypto investment alternatives that can be accessible to all users.
VipMex Risk Strategy
The VipMex exchange was built on providing exposure to cryptocurrency markets for all kinds of investors at competitive and low rates.
Usually, when the clients have opposing positions, let’s say one Bitcoin contract is long and the other Bitcoin contract short, both sides of the trade are covered, with the exchange making its profits from the fees of the trades.
If most clients trade in the same position, VipMex will hedge in the underlying market or derivates markets, meaning they might actually buy Bitcoin or long Bitcoin futures if the majority of clients take long positions on Bitcoin contracts. This allows the platform to pay out all its clients if their positions turn out to be correct.
In case of unforeseen market developments, the exchange will store a certain percentage of its profit in a Risk Reserve Fund to always pay out the revenues of their clients.
USDT Base Currency
On the VipMex crypto exchange, the Tether (USDT) stablecoin is used as the base currency, meaning that the exchange rates of the other digital assets are generally quoted against Tether. USDT is the most popular and used stablecoin in the crypto market, having its value pegged to that of the US dollar. The coin recently surpassed XRP and became the world’s third-largest crypto according to a market cap of $8.805.483.772. USDT is also the most traded crypto based on its 24-hour volume, surpassing even Bitcoin.
With the occasion of platform launch, VipMex is giving 346 USDT to users who register on the crypto exchange and perform trading activities.
Fees and Discount Bonus
VipMex users can withdraw USDT from their account without having to pay any fees. A one-time transaction fee which is 0.05% becoming the best cost-effective comparing with Binance, Huobi, SnapEx, OKEX etc. for each position opened.
The crypto exchange offers zero spread accounts, which have no difference between the bid and ask price. This allows traders to know their entry and exit levels when they open a position.
There are no slippage costs (the difference between the projected price of a trade and the price at which the trade is completed) and no clawback (take back money as a form of taxation).
Moreover, VipMex also introduced a system where users can gather bonus for missions or trading and then use these bonus to deduct their margin.
VipMex supports the trading of multiple digital assets and commodities from one single account. This means that users do not have to go and create multiple accounts to hold and manage different cryptos or futures. All trading can be done from one account, simplifying matters for investors who want a diverse trading portfolio.
In addition to cryptocurrencies, users can also trade using fiat by making deposits on the platform’s Over The Counter exchange. This way, those who are new to crypto and do not yet own the assets can still invest by using their fiat funds.
Up to 500x Leverage
VipMex users can engage in margin trading and leverage anywhere from 10x to 500x. While margin trading is riskier compared to other types of trades, it can bring higher rewards.
The trading platform incorporates a unique “close all” function. Also, in order to protect clients’ profitability and hedge against risk exposure, in certain extreme market conditions, VIPMEX might temporarily prevent clients from opening new positions in a single direction until it is safe to open trades on that position again.
Accurate Price Listing
VipMex displays its crypto prices by using a K-line weighted average based on the data sourced from 3 of the biggest crypto exchanges on the market, namely Binance (30%), OKEx (40%), and Huobi (30%). This is done in order to feature cryptocurrency prices in the most accurate way. Binance is the world’s first crypto exchange in terms of 24-hour trading volume, while OKEx is sixth.
VipMex is ready to help investors find easy crypto trading solutions, as well as futures contract options, and help them get the best profits by adopting risk-mitigating strategies.
TheorySome results (also from the GitHub repository):
Every trade execution by law of Central Limit Order Book logic has both a "maker" and a "taker" side from orders created.
Every "maker" order has an event pushed to the "OrderBook" websocket stream.
The API documentation in all cases of exchanges used indicates real-time pushing of updated data (we did not use streams where there was indication of 1000ms or so delays).
So the methodology used throughout is to programmatically watch: - The order book best bid/offer - The raw trade feed
Then look for trades which occur inbetween the bid/ask.
This would indicate a trade took place which no one else was able to execute because the trade never appeared on the order book for anyone to be able to see, to then take.
It is known that some exchanges are just not good at reporting the orderbook data and trade data in synch, or they do not provide detailed enough information of event timestamp/id to be able to resolve suspicious data.
The scripts here compute both Fake Trades Count vs Legit Trades Count, as well as Fake Volume vs. Legit Volume.
Feel free to request an exchange you use to be analysed using our methodology and we'll be happy to post it along with results.
|Exchange||Volume executed between the spread (_o_) ?||Notes|
|Binance||30%||Approx 30% of volume executes between the spread|
|Coinbase||2-3%||Approx 2-3% of volume executes between the spread|
|Bitstamp||<1%||Tested over a 12h period|
|FTX||<1%||within margin of error for latency issues|
|Kraken||0%||PERFECT - Tested and no fake volume identified|
|Bitfinex||-||Exchange has hidden orders so test is non applicable|
|"Bilaxy"||YES||Totally fake. See video|
CoinEx’s CEO Haipo Yang conducted his first Ask Me Anything (AMA) of 2020 on 22 February. During the AMA, he mainly shared about CoinEx’s Plan in this year and answered some most concerned questions of the community.submitted by CoinExcom to u/CoinExcom [link] [comments]
Special thanks to all engaged members and we appreciate every question and comment you raised. We will have more AMA this year to answer your questions. Stay tuned!
Here is the full transcript, which has been slightly edited for clarification.
Which market are you targeting for 2020? What strategies do you have to attract users, and keep them stay with your exchange for longterm?
Haipo: CoinEx is a global cryptocurrency exchange and our website has supported more than 10 languages. However, in the past we mainly focused on the Chinese and English-speaking markets. Our goal in 2020 is to cover at least 10 different languages speaking markets.
For users, the most important things are satisfaction and trust. First, we will continue to list more tokens and support more transaction types to satisfy users' different needs; second, we will strengthen our global branding and marketing work so that users will understand and trust CoinEx more.
Security is of high-importance to users. How do you ensure that users’ assets are safe with CoinEx?
Haipo: Security is always the most important thing for an exchange, and we are constantly improving it.
Exchange security includes system security, operation and maintenance security, and wallet security. In terms of system security, CoinEx is constantly improving the risk control system. While providing users a convenient and fast experience, it also prevents user assets from being stolen. For operation and maintenance security, CoinEx uses multiple security methods, such as hardware encryption systems, and strictly implements the principle of least privilege. For wallet security, CoinEx uses a multi-wallet solution. Large amounts of assets are hosted in cooperation with MatrixPort. Private keys of normal wallets are encrypted and have multiple physical backups.
And more, We always keep 100% Reserves.
For any Cryptocurrency exchange, liquidity is very important. So, whats your solution on this problem ?
Haipo: CoinEx's liquidity improved a lot in the past year. First, we set up our own trading team to provide liquidity and depth for most tokens, and to reduce the bid-ask spread to ensure the continuity of the K line.
At the same time, we also actively introduce more professional market makers. Currently CoinEx has dozens of market makers, and we provide them with good policies, such as lower transaction fees, interest-free with funding, etc. General transactions can be completed quickly at CoinEx, and we will continue to work hard to improve the liquidity.
What criteria is employed in listing token/coins on CoinEx? How can you ensure that you are only listing good and legit projects?
Haipo: For CoinEx, we do our best to select high-quality projects and to avoid fraud ones. We set up a dedicated research department to conduct in-depth investigations on each project, and a listing commission consisting of core team members review and vote on whether to launch a project.
But honestly, we can’t ensure that every token we list is a good project. The digital asset investment is still in the infancy and has high risks. High returns and high risks are always related, and investors have to do their own risk control.
Recently many exchanges has great move with public chains, so what’s your special plans in 2020 for CoinEx chain to overcome your competitors ?
Haipo: In November last year, CoinEx took the lead to launch the mainnet of CoinEx Chain, and CET is used as the preinstalled token on CoinEx Chain. CoinEx Chain is specially created for DEX, which achieves high performance, on-chain governance, and a real DEX without license. I think DEX will become a very important part of the Defi market in the future.
In 2020, we will build and improve the infrastructure around DEX, including further optimization of DEX, and the development of CoinEx Chain Explorer, wallets, etc. At the same time, the Smart Chain will be launched, and will be connected with the DEX public chain through cross-chain mechanism. It will bring more application scenarios to CoinEx Chain。
How do you see the current market? Do you have any advice for cryptocurrency investors?
Haipo: I think the market is now gradually recovering, especially in the near future, the halving of some cryptocurrencies such as Bitcoin has brought a good market. In the long run, now is more suitable for dollar cost averaging investment strategy. From a short-term point of view, the market will have a callback after the halving, which will bring good buying opportunities.
What are your thoughts on the Infrastructure Funding Plan for Bitcoin Cash (IFP)? Do you support it?
Haipo: CoinEx is neutral as an exchange and we will follow the market's decision.
It has become a standard for sizable exchange platforms to provide 24/7 customer support with knowledge people solving technical problems real-time. Can you tell us about CoinEx Customer Support?
Haipo: You can always contact our support team by online communicate or submit request. We have a powerful support team for you.
To ease the hassle for your users, Exchanges must provides “Mainnet Swap Support" to all listed tokens. So can we expect this on CoinEx Exchange platform?
Haipo: Sure we support.
There are lot of exchanges which provides many features & have multiple products. So, what’s special in CoinEx exchange?
Haipo: CoinEx is mainly focused on providing users with more high-quality tokens. We will continuously enrich our tokens listed, select good projects with potential, and have in-depth cooperation with project parties. At the same time, we will provide users with derivative transactions, such as leveraged transactions and perpetual contracts.
I'm a long term holder, so mainly focus on staking coins/tokens. What are the best ways available to earn passive income in this exchange platform?
Haipo: We have saving product, but only open for USDT now. We plan to open more in the future.
Do you plan to become a partner of an exchange market in Vietnam?
Haipo: As I mentioned above, we previously focused on the Chinese market, but in 2020, we will step into more markets, mainly the Southeast Asia and Eastern Europe. There's no doubt we will enter Vietnam market.
When it comes to permanent contract trading, stability is one of the most important factors for people, especially under the high volatility of the price. How can you avoid network errors or overload problems when there are tons of requests at once?
Haipo: Yes, it is very important. Out perpetual trading system is written by C. It is high speed and won't overload. Our sport and perpetual match-engine performed very good in the past.
Do you plan to integrate deposits via fiat? As many exchanges allows to deposits funds via the third parties like simplex and Koinal do you planned to integrate such system?
Haipo: Sure. Actually we are talking with several third parties and I am glad to announce we have reached a cooperation with two parties. I think next month we can provide such kind of service
Do you plan to have CoinEx become more driven to the community and more transparent?And is there any strategy to strengthen the relationship between CoinEx and the user will then have the opportunity to further participate in its development and growth?
Haipo: For exchanges, I don't think community-driven is a good thing, which often means inaction and confusion. The last one tried to do this is Fcoin. Operating an exchange is a very professional matter. Product development, customer support, listing, etc., all require very professional people to do.
On the market side, I think community-driven is very good, and we are planning to do so. We will launch a new ambassador program soon to better involve the community.
You have listed BNB in CoinEx. When will CET be listed in other exchange ?
Haipo: CET is already listed on Bitmax and Bkex, and we will list it on more exchanges. But it is not our main target.
Most attractive and trending topic is Defi... Do you have any plans for Defi system?
Haipo: Yes. We are working on developing CoinEx Smart and it will be launched in Q3. Defi applications can be implemented on CoinEx Smart chain.
Most investors choose tokens with high and stable prices to trade, how do you plan to make CET token prices higher ? and what are the programs and targets of CET tokens by 2020?
Haipo: The value of CET mainly comes from the following two aspects: the first is the business growth of the CoinEx exchange, which is the core value of CET; and the second is the introduction of more applications for the public chain, such as stable coins, Defi, etc. We are trying to bring stable coins to CoinEx Chain. By launching the Smart Chain, we will introduce Defi adoption. As for the burning of CET, we are still considering this option. Will announce it once we have made decision.
After burn completed what will be the total and circulating supply ?
Haipo: When the circulating supply of CET reduces to 3 BILLION, CoinEx will suspend the plan of CET repurchase and burning. You’ll have the options to use CET to enjoy more privileges for trading and get the early access to the future products. More info can be acquired on the announcement page, https://announcement.coinex.com/hc/articles/360027205411
Each tether issued will be backed by the equivalent amount of currency unit (one USDTether equals one dollar).Tether is centralized and dependent on your trust of Bitfinex/Tether Limited, and that the people behind it are honest people. For the new entrants to this market it will be greatly beneficial understand the timeline of Tether and their connection to Bitfinex.
Professional auditors will regularly verify, sign, and publish our underlying bank balance and financial transfer statement.
|Fiat Inflow/Market Cap Ratio||Tether as % of total market (no margin)||Tether as % of total market (15% on margin)||Tether as % of total market (25% on margin)|
|JP Morgan estimate (50:1)||27.5 %||36.9 %||43.3 %|
Author’s opinion - it is highly unlikely that Tether is growing through any organic business process, rather that they are printing in response to market conditions.https://www.tetherreport.com
Tether printing moves the market appreciably; 48.8% of BTC’s price rise in the period studied occurred in the two-hour periods following the arrival of 91 different Tether grants to the Bitfinex wallet.
Bitfinex withdrawal/deposit statistics are unusual and would give rise to further scrutiny in a typical accounting environment.
This engagement does not contemplate tests of accounting records or the performance of other procedures performed in an audit or attest engagement. Our procedures performed are not for the purpose of providing assurance...In addition, our services do not include determination of compliance with laws and regulations in any jurisdiction.They state right from the beginning that this is a consultancy job (not an audit), and that its not meant to be assurance to third parties. Doing a consultancy job is just doing a task asked by your customer. In a consultancy job you take information as true from the client, and you have no mandate to verify whether your customer's claims are true or not. The way they checked is simply asking Tether to provide them the information:
All inquiries made through the consulting process have been directed towards, and the data obtained from, the Client and personnel responsible for maintaining such information.Tether provided a screenshots of twp bank balances. One of these is in the name of Tether Limited, and while the other is a personal account of an individual who Tether Limited claims has a trust agreement with them:
As of September 15, 2017, the bank held $60,919,810 in an account in the name of an in individual for the benefit of Tether Limited. FLPP obtained an engagement letter for an interim settlement plan between that individual and Tether Limited and that according to Tether Limited, is the relevant agreement with the trustee. FLLP did not evaluate the substance of the letter and makes no representation about its legality.Even worse is that later on in Note 1, they clearly claim that there is no actual evidence that this engagement letter or trust has any legal merit:
Note 1: FLLP makes no representations about sufficiency or enforceability of any trust agreement between the trustee and the ClientEssentially what this is saying is that the trust agreement may not even be worth the paper it’s printed on.
“FLLP did not evaluate the terms of the above bank accounts and makes no representations about the clients ability to access funds from the accounts or whether the funds are committed for purposes other than Tether token redemptions”Basically Tether gave them a name of an individual with $60 million in their account according to a screenshot, Tether then gave them a letter saying that there is a trust agreement between this individual and Tether Limited. They also have account with $382 million but no guarantee that this account holds to any lien or other commitments, or that it can be accessed.
If traders lose confidence in it and its value starts to drop, “people will run for the door,” says Carlson, the former Wall Street trader. If Tether can’t meet all its customers’ demand for dollars (and its Terms of Service suggest that in many cases it won’t even try), tether holders will try to snap up other cryptocurrencies instead, temporarily causing prices for those currencies to soar. With tether’s role as an inter-exchange facilitator compromised, investors might lose faith in cryptocurrencies more generally. “At the end of the day, people would be losing substantial sums, and in the long term this would be very bad for cryptocurrencies,” says Emin Gun Sirer, a Cornell professor and co-director of its Initiative for Cryptocurrencies and Smart Contracts.https://www.wired.com/story/why-tethers-collapse-would-be-bad-for-cryptocurrencies/
Another concern is that Bitfinex might simply shut down, pocketing the bitcoins it has allegedly been stockpiling. Because people who trade on Bitfinex allow the exchange to hold their money while they speculate, these traders could face substantial losses. “The exchanges are like unregulated banks and could run off with everyone’s money,” says Tony Arcieri, a former Square employee turned entrepreneur trying to build a legally regulated exchange.
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