Encrypted financial map of the bull market, looking for income artifacts
Text | Edited by Wang Zelong | Tong Source | PANews
The cryptocurrency market continued to strengthen. Bitcoin hit a new high in 15 months, broke through $12,000 and continued to move upwards. Ethereum was not far behind, climbing rapidly in the past month. As of 12 noon on June 26, it recorded a new high of $331 point. The top 100 currencies by market capitalization are green with "vigor and vitality".
On Monday, the CFTC (U.S. Commodity Futures Commission) approved the first Bitcoin futures with physical delivery of Bitcoin. LedgerX, invested by Google and Lightspeed Venture Capital, took the lead in getting admission tickets for Bitcoin futures than Bakkt. The news injected a dose of stimulant into an already seething market.
In the near future, whether it’s Facebook’s official white paper on libra or JPMorgan Chase’s trial of JPM Coin, behind the resurgence of the bull market—heavier tonnage and larger institutions have entered or are entering the market, and more people will be swept into this digital feast , and encrypted finance is an indispensable tool for new entrants and old currency circles.
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Encrypted financial management
In the encrypted financial world, encrypted financial management is a relatively new subdivision. Most of its products started at the end of the bull market in 2017, but in terms of the number of active products, there is already a considerable number. According to the TokenInsight report, as of March 2019, hundreds of wealth management products were active in the encrypted world, and since the fourth quarter of 2018, the number of new products has increased significantly. According to the issuers of wealth management products, related service providers are divided into three categories: exchanges, wallets, and wealth management platforms. However, these three categories also have intersections. For example, exchanges may provide wallet services at the same time, and some wallets also have built-in wealth management platforms.
From the perspective of product attributes, digital asset wealth management products can be mainly divided into debt wealth management, dividend wealth management and node wealth management. Debt-based wealth management mainly obtains spread income through direct lending by users on the platform. Dividend-sharing wealth management mainly obtains income through platform-side leveraged transaction income dividends, quantitative fund income dividends, or other dividend methods. Node financing includes node entrustment (running the master node as an agent) and PoS continuation.
exchange
exchange
Exchanges have also tried to launch wealth management products, which can basically be divided into two categories. One is the deposit-to-coin model represented by OKEx, whose annualized rate of return is in the range of 0.026%-2.7%, and supports mainstream currencies such as Bitcoin, Ethereum, Litecoin, and Ripple; the other is Coinbase , the Staking model represented by Huobi. It is estimated that Coinbase can provide customers with an annualized return of about 6.6% after deducting related management fees.
Financial platform
wallet
wallet
Cobo, Kcash, etc. provide better wealth management services in the wallet. The annualized interest rate of the former is 1.2%-40%, and the annualized interest rate range of regular and current wealth management is 12%-14% and 1.2%-5% respectively. ; while the Staking annualized return range of the PoS part is 6.5%-40%. Cobo has completed three rounds of financing, raising a total of more than 100 million RMB. The investors include Linear Capital, Fengrui Capital, NGC, Danhua Capital and Shuanghu Capital.
Kcash provides current and regular financial management methods, supports three currencies of BTC, ETH, and EOS, and has an annualized interest rate range of 4%-8.8%. It has completed three rounds of financing, and the disclosed financing amount is thousands of dollars from Gongxinbao. The other investors include Coin Capital, Huobi.com, and Huobi Ecological Fund.
Due to the increasingly tightened regulation and the high volatility of cryptocurrency itself, the track of encrypted financial management is still full of uncertainties. Even if it is as hot as Staking, it still lacks a convincing profit model, and the degree of diversification of financial management methods is still limited. Can be improved.
crypto lending
crypto lending
Among the current financial products in the encrypted world, lending is a relatively attractive part in terms of enterprise scale and product richness.
The current encrypted lending products are becoming more and more complex in form. A lending product may integrate multiple functions such as stable currency, token value preservation and appreciation, and leverage. The products of decentralized lending and centralized lending are not clear-cut, and there will be some integration between the two.
centralized
centralized
In terms of centralized encrypted lending products, Genesis Capital is the largest one, leading the way in terms of cumulative loan volume.
Judging from its first-quarter report released this month, it released an additional $425 million in cryptocurrency loans during the current period, bringing its total lending volume since its launch in March 2018 to a new high of $1.53 billion.
The main business of Genesis is to "borrow tokens from whale investors and early Bitcoin investors, and then lend them out at higher interest rates." Up to 7.5%, the relevant interest is paid in cryptocurrency.
But it does not use cold storage, and all tokens flow in and out instantly. “Each of our tokens is used for lending,” Genesis CEO Moro said. In addition, 10% of Genesis' products are fiat currency loans, which is a pilot product launched at the end of last year.
The brilliant data of Genesis is inseparable from the support of the big boss behind it. The blockchain investment institution rated as the number one by CB Inisghts is also its parent company Digital Currency Group, which is an important condition for its prosperity and development. Among the investment targets and subsidiaries of DCG are CoinDesk, Grayscale Fund (Garyscale), Circle and other leading organizations in the encryption world.
The competing product that poses a big challenge to Genesis is BlockFi. In contrast, the latter’s business model is relatively diversified: on the one hand, customers mortgage cryptocurrencies and then obtain US dollar loans. The annualized interest rate of loans is 4.5%, and the customer asset pledge rate Around 50%;
On the other hand, customers can deposit Bitcoin, Litecoin or Ethereum into BlockFi's account to earn interest, with a maximum annualized interest rate of 6.2%. Benefiting from the booming market, BlockFi’s deposit products have received more than $35 million worth of token deposits since January this year. So far, BlockFi has completed 4 rounds of financing, with a total of $60.4 million in funding. Investors include ConsenSys Ventures, Galaxy Investment, Akuna Capital, etc.
decentralized
decentralized
In terms of decentralized lending, Maker DAO, Compound, and Dharma occupy the top three seats.
As of June 4, 2019, the collateral value of the largest DeFi lending platforms on Ethereum (millions of dollars) | Source: Binance Research, DefiPulse
Decentralized lending products generally rely on over-collateralization of Ethereum or some centralized stable currency, and then issue loans to customers, and decide whether to close the loan during the period (the mortgage may be required due to the price fluctuation of the mortgage token) more loans).
As shown in the above figure, the total price of staking cryptocurrencies in Maker DAO has reached about 404 million US dollars, and the total price of staking tokens in Compound and Dharma has exceeded 20 million US dollars. According to the report of Binance Research Institute, in terms of market value, Maker DAO’s stablecoin Dai has become the world’s largest stablecoin issued by encrypted assets. As of the 4th of this month, the mortgage ratios of the top three are around 480%, 400% and 210% respectively.
According to Crunchbase, among the top three, Maker DAO has completed 3 rounds of financing since its establishment in 2014, with a total of 27 million US dollars (because the third round is private equity financing, the amount of financing is unknown). These financings all occurred after December 2017. The first two rounds of financing were led by Andreessen Horowitz. Other investors included China’s Fenbushi Capital, FBG Capital, and San Francisco’s Polychain and 1confirmation Capital.
Compound has conducted two rounds of financing, with a total of $9.2 million in funding. The main investors are Andreessen Horowitz, Bain Capital Ventures, and Polychain.
Dharma also conducted two rounds of financing, with a total of about 7.12 million US dollars. The main investor is Green Visor Capital, and well-known institutions among the participating investors include Coinbase, YC, Polychain, etc.
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Crypto Derivatives
If encrypted wealth management and lending are both encrypted currency dancing in situ, it is a basic deposit and loan business, then the products and services of the encrypted derivatives track enable encrypted currency to take flight and deduce more for the market. possibility.
In the traditional financial market, there are huge differences in the market size between different categories. According to data from Visual Capitalist, in the traditional financial world, the total amount of global cash is 7.6 trillion U.S. dollars, the stock market value is about 73 trillion U.S. dollars, the real estate market value is about 217 trillion U.S. dollars, and the market value of various spot-based financial derivatives is about Derivatives are clearly the largest market.
According to the estimation of Huobi Research Institute, based on the scale of the global digital asset market value of about 131.6 billion US dollars on December 1, 2018, and then estimated by 10 times, the market size of digital asset derivatives may reach the trillion-dollar level.
Encrypted derivatives generally include futures, forward contracts, options, Swap, and a variant of ordinary futures called perpetual contracts. In addition, some views believe that the prediction market is also a kind of derivatives.
Derivatives trading service provider
The development of the derivatives market is inseparable from the promotion of related products by exchanges. At present, both native exchanges and traditional exchanges in the encrypted world are entering this field:
Representatives of the former include BitMEX, OKEX, and Bitflyer, while Binance, Huobi, and Kraken are also trying to get a share of this market. These exchanges are trying to launch more diversified product forms in order to grab a larger market share. For example, BitMEX is expected to launch option products in addition to its existing perpetual contracts;
Representatives of the latter include Chicago Mercantile Exchange (CME), Bakkt, Erisx, LedgerX, etc. Among them, CME is the first batch of traditional giants in the world to launch Bitcoin futures, and its Bitcoin futures trading volume has almost been rising since this year The transaction volume in May exceeded 8 billion US dollars. LedgerX was approved to provide physical bitcoin futures contracts on Monday local time in the United States, and the contract products will be available to both institutional customers and retail investors. Bakkt, which has been absent in the market for a long time, will test the same type of contract products approved by LedgerX in July. It is not difficult to predict that there will be a fierce competition among these derivatives trading service providers.
In addition, since both LedgerX and Bakkt's bitcoin futures contracts will be settled with physical bitcoins, which is different from the current cash settlement, this may push up the demand for hoarding bitcoins by large institutions and some retail investors, and help the market to further flourish.
Goldman Sachs is also rumored to be involved in Crypto Deritatives. First, its executive Rana Yared told the New York Times in May 2018 that it would trade bitcoin and that it would launch a bitcoin non-principal forward delivery contract (bitcoin non- deliverable forward contracts) - but this will only be available to some customers. However, in April this year, Goldman Sachs CEO Solomon (Soloman) denied the relevant plans when he met with congressional representatives.
The leading product of encrypted derivatives
If the above-mentioned institutions provide peripheral water delivery services, then various encrypted derivatives are frontline members.
dYdX, a decentralized financial derivatives protocol, uses smart contracts to rewrite and reimplement the trading rules of financial derivatives. The project was established in January 2017 and has completed two rounds of financing so far, with a total of 12 million US dollars in funding. The leading investors are Andreessen Horowitz, Polychain, and a16z crypto.
The latest dYdX supports margin trading, and the corresponding leverage is up to 4 times. In addition, it also supports lending, and the corresponding initial pledge rate is 125% (the price fluctuates during the process, and the pledge rate must not be lower than 115%).
Among the main products in the prediction market, Augur is the oldest one. It was established in 2014. According to public information, it has received 3 rounds of financing totaling 5.3 million US dollars, of which the first round of financing occurred in 2015. It was conducted through an ICO and raised US$5.3 million; the amount of the next two rounds of financing was not disclosed, and its investors were KR1 and Alexis Berthoud;
Both Gnosis and Bodhi (Bodhi) are prediction market products launched in 2017, both of which have received more than US$10 million in financial support, but also mainly through ICO;
Guesser and Veil are new-generation players in this market segment. Judging from their investment objects, they are currently more favored by some first-tier capitals in the industry, including Sequoia Capital, 1confirmation, Paradigm, etc.
