How Bitfinex will handle a hardfork with respect to Margin Trading and Funding
New post on Bitfinex regarding the handling of Margin positions and Funding in the event of a Bitcoin hardfork: Due to the complexities surrounding a potential Bitcoin hardfork event, we would like to communicate Bitfinex’s plan for handling the accounting of margin positions and borrowed funding. We must, once again, strongly urge the Bitcoin mining community to avoid such an event, if at all possible. The knock-down effects on Bitcoin exchanges and their customers could be severe, causing substantial price fluctuations, inefficient price discovery, and needless customer losses. In the event of a hardfork that results in a chain split, Bitfinex and other major exchanges—such as Poloniex, Kraken, and GDAX—are faced with the challenge of resolving complex accounting issues in margin trading. Ideally, each exchange would agree to a uniform and coherent methodology; however, each serves different audiences and have different market structures, making a universal solution unworkable. For example, Bitfinex has decided to take a different approach than the one proffered by Poloniex. While we understand Poloniex’s approach may make sense for their business, it is not an approach that ultimately satisfies our operational requirements at Bitfinex. After much analysis, we have chosen to handle the accounting of margin trading and funding based on the model of how stock spinoffs, dividends, and distributions are handled in equity markets. Specifically, in the case of a hardfork event, lenders will receive both BTC and BTU. Anyone that is short BTC/USD or long any BTC trading pair (ETH/BTC, LTC/BTC, etc.) will owe BTU to the lender, effectively making the user short BTU. An exception is in the case that BTC is borrowed but not in use as margin collateral, in which case BTU accrues to the lender. Users that are margin long BTC/USD or short any BTC trading pair will receive BTU. This methodology is complex and operationally challenging, but we believe it to be the most economically correct and fair approach for Bitfinex and our customers. Furthermore, we believe it is the only approach that will keep the BTC lending market functioning through a hardfork event. Imagine a hypothetical situation where lenders do not receive BTU. They will simply stop lending if a hardfork appears imminent. And while Bitfinex has, rarely, stepped in to become a lender of last resort, in such a dramatic situation Bitfinex would be unable to—and would not want to—cover demand. Consequently, lending liquidity would completely disappear and Bitfinex would be obliged to begin partial liquidations of margin positions using borrowed BTC that could no longer be renewed. We believe that such a hypothetical outcome should be avoided at all costs. Our plan should prevent the negative consequences of this hypothetical and seems likely to allow the funding market to continue to operate. While our proposed methodology will ensure a functioning lending market for BTC, borrowers must understand that while their P&Ls may climb during a hardfork event, they will have offsetting BTU liabilities that will be applied to their accounts, but perhaps not immediately. At the moment Bitfinex detects a BTU block that is incompatible with the BTC chain, we will immediately halt the processing of all BTC deposits and withdrawals for all users, and freeze all movements for all currencies for any borrower of BTC. This freeze will last until the BTU accounting can be adequately prepared and addressed. BTC borrowers can hedge or estimate this liability with newly listed Chain Split Tokens (CSTs). We wish to state clearly and publicly that the scope of any disruption associated with a potential hardfork is in the hands of the Bitcoin Unlimited developers. We request that the Bitcoin Unlimited developers implement strong two-way replay protection and wipeout protection so that, if a hardfork event occurs, we can quickly list BTU and resolve accounting issues for customers with BTU liabilities. More details on the specific procedures will be forthcoming, but we feel that it is important to address the economic implications as soon as possible so that our customers can plan accordingly.
Any bitfinex pro here can share tips how to margin trade for maximal gain? I'm no finance background but i freakin love bitfinex margin and funding feature. My capital growth at least 50 % fold thx bitfinex
Any experience trader here using bitfinex platform share your trading philosophy and tips??
How to Margin Trade on Bitfinex - a Short Guide Based on my Experiences
Disclaimer: margin trading is gambling with lent money. However, on bitfinex you have your deposit as a collateral for your loans, so you will at most lose your deposit amount. I recently tried bitfinex, and was amazed how effortless it was to use, and also how cheap credit you can get there - USD loans (swaps) are offered around 0,05% per day, and bitcoin swaps are offered much much lower. So if you want to short, it is very cheap, longing is quite cheap still in my opinion but more expensive than shorting. Trading fees are 0,1% per trade for liquidity providers and 0,2% for "takers" (market order). The fees are definitely from the lower spectrum in bitcoin services. Basically there are couple of use cases for margin trading. Mine was that I wanted to hedge my long position - I don't have any fiat left to invest to Bitcoin and have been all-in for some time, but still saw that now might be a good time to invest. Therefore I decided to go for a loan. A normal bank would never have given me a loan to trade bitcoins, but on bitfinex it is possible. Of course there is a risk, but I'm willing to lose my collateral. Second use case is shorting. Basically you want to benefit from the falling Bitcoin price. You take BTC loan, sell the BTC, buy them back when price is cheaper, pay back your loan and take the profit. Third use-case is being a lender, and earning modest income on your deposit. You can lend money under "Total return swaps" tab. Theoretically you can lose money, if traders lose the money on slippage - however I'm not well aware of exact risks involved. As there seems to be plenty of loans available on both BTC and USD, it looks like the lenders trust both bitfinex and those currencies. Litecoin doesn't have as good rates, and the litecoin-nominated loans are very expensive - this probably indicates that Litecoin holders don't trust litecoin. Fourth use case is using bitfinex as a normal bitcoin exchange. Bitfinex prices seem to be a little below bitstamp, so it could be a good place to buy bitcoins. Currently I wouldn't recommend it for selling bitcoins, as prices tend to be constantly under bitstamp. To trade on margin, just go to "Margin Trade" tab, and place an order. There are several order types, but limit and market orders are sufficient for normal speculator. It is very easy - you don't have to manage your loans, the system will take them automatically when you put a margin order in. Disclaimer: Remember the bitcoinica fiasko, and that margin trading is generally very risky. However if you are willing to risk it, happy speculating, and best of luck!
Crypto-Powered - The Most Promising Use-Cases of Decentralized Finance (DeFi)
A whirlwind tour of Defi, paying close attention to protocols that we’re leveraging atGenesis Block. https://reddit.com/link/hrrt21/video/cvjh5rrh12b51/player This is the third post ofCrypto-Powered— a new series that examines what it means forGenesis Blockto be a digital bank that’s powered by crypto, blockchain, and decentralized protocols. Last week we explored how building on legacy finance is a fool’s errand. The future of money belongs to those who build with crypto and blockchain at their core. We also started down the crypto rabbit hole, introducing Bitcoin, Ethereum, and DeFi (decentralized finance). That post is required reading if you hope to glean any value from the rest of this series. 97% of all activity on Ethereum in the last quarter has been DeFi-related. The total value sitting inside DeFi protocols is roughly $2B — double what it was a month ago. The explosive growth cannot be ignored. All signs suggest that Ethereum & DeFi are a Match Made in Heaven, and both on their way to finding strong product/market fit. So in this post, we’re doing a whirlwind tour of DeFi. We look at specific examples and use-cases already in the wild and seeing strong growth. And we pay close attention to protocols that Genesis Block is integrating with. Alright, let’s dive in.
Stablecoins are exactly what they sound like: cryptocurrencies that are stable. They are not meant to be volatile (like Bitcoin). These assets attempt to peg their price to some external reference (eg. USD or Gold). A non-volatile crypto asset can be incredibly useful for things like merchant payments, cross-border transfers, or storing wealth — becoming your own bank but without the stress of constant price volatility. There are major governments and central banks that are experimenting with or soon launching their own stablecoins like China with their digital yuan and the US Federal Reserve with their digital dollar. There are also major corporations working in this area like JP Morgan with their JPM Coin, and of course Facebook with their Libra Project.
Stablecoin activity has grown 800% in the last year, with $290B of transaction volume (funds moving on-chain).
USDC($1B): This is the most reputable USD-backed stablecoin, at least in the West. It was created by Coinbase & Circle, both well-regarded crypto companies. They’ve been very open and transparent with their audits and bank records.
DAI ($189M): This is backed by other crypto assets — not USD in a bank account. This was arguably the first true DeFi protocol. The big benefit is that it’s more decentralized — it’s not controlled by any single organization. The downside is that the assets backing it can be volatile crypto assets (though it has mechanisms in place to mitigate that risk).
Three of the top five DeFi protocols relate to lending & borrowing. These popular lending protocols look very similar to traditional money markets. Users who want to earn interest/yield can deposit (lend) their funds into a pool of liquidity. Because it behaves similarly to traditional money markets, their funds are not locked, they can withdraw at any time. It’s highly liquid. Borrowers can tap into this pool of liquidity and take out loans. Interest rates depend on the utilization rate of the pool — how much of the deposits in the pool have already been borrowed. Supply & demand. Thus, interest rates are variable and borrowers can pay their loans back at any time.
So, who decides how much a borrower can take? What’s the process like? Are there credit checks? How is credit-worthiness determined?
These protocols are decentralized, borderless, permissionless. The people participating in these markets are from all over the world. There is no simple way to verify identity or check credit history. So none of that happens. Credit-worthiness is determined simply by how much crypto collateral the borrower puts into the protocol. For example, if a user wants to borrow $5k of USDC, then they’ll need to deposit $10k of BTC or ETH. The exact amount of collateral depends on the rules of the protocol — usually the more liquid the collateral asset, the more borrowing power the user can receive. The most prominent lending protocols include Compound, Aave, Maker, and Atomic Loans. Recently, Compound has seen meteoric growth with the introduction of their COMP token — a token used to incentivize and reward participants of the protocol. There’s almost $1B in outstanding debt in the Compound protocol. Mainframe is also working on an exciting protocol in this area and the latest iteration of their white paper should be coming out soon.
There is very little economic risk to these protocols because all loans are overcollateralized.
Buying, selling, and trading crypto assets is certainly one form of investing (though not for the faint of heart). But there are now DeFi protocols to facilitate making and managing traditional-style investments. Through DeFi, you can invest in Gold. You can invest in stocks like Amazon and Apple. You can short Tesla. You can access the S&P 500. This is done through crypto-based synthetics — which gives users exposure to assets without needing to hold or own the underlying asset. This is all possible with protocols like UMA, Synthetix, or Market protocol. Maybe your style of investing is more passive. With PoolTogether , you can participate in a no-loss lottery. Maybe you’re an advanced trader and want to trade options or futures. You can do that with DeFi protocols like Convexity, Futureswap, and dYdX. Maybe you live on the wild side and trade on margin or leverage, you can do that with protocols like Fulcrum, Nuo, and DDEX. Or maybe you’re a degenerate gambler and want to bet against Trump in the upcoming election, you can do that on Augur. And there are plenty of DeFi protocols to help with crypto investing. You could use Set Protocol if you need automated trading strategies. You could use Melonport if you’re an asset manager. You could use Balancer to automatically rebalance your portfolio. With as little as $1, people all over the world can have access to the same investment opportunities and tools that used to be reserved for only the wealthy, or those lucky enough to be born in the right country.
You can start to imagine how services like Etrade, TD Ameritrade, Schwab, and even Robinhood could be massively disrupted by a crypto-native company that builds with these types of protocols at their foundation.
As mentioned in our previous post, there are near-infinite applications one can build on Ethereum. As a result, sometimes the code doesn’t work as expected. Bugs get through, it breaks. We’re still early in our industry. The tools, frameworks, and best practices are all still being established. Things can go wrong. Sometimes the application just gets in a weird or bad state where funds can’t be recovered — like with what happened with Parity where $280M got frozen (yes, I lost some money in that). Sometimes, there are hackers who discover a vulnerability in the code and maliciously steal funds — like how dForce lost $25M a few months ago, or how The DAO lost $50M a few years ago. And sometimes the system works as designed, but the economic model behind it is flawed, so a clever user takes advantage of the system— like what recently happened with Balancer where they lost $500k. There are a lot of risks when interacting with smart contracts and decentralized applications — especially for ones that haven’t stood the test of time. This is why insurance is such an important development in DeFi.
Insurance will be an essential component in helping this technology reach the masses.
Decentralized Exchanges (DEX) were one of the first and most developed categories in DeFi. A DEX allows a user to easily exchange one crypto asset for another crypto asset — but without needing to sign up for an account, verify identity, etc. It’s all via decentralized protocols. Within the first 5 months of 2020, the top 7 DEX already achieved the 2019 trading volume. That was $2.5B. DeFi is fueling a lot of this growth. https://preview.redd.it/1dwvq4e022b51.png?width=700&format=png&auto=webp&s=97a3d756f60239cd147031eb95fc2a981db55943 There are many different flavors of DEX. Some of the early ones included 0x, IDEX, and EtherDelta — all of which had a traditional order book model where buyers are matched with sellers. Another flavor is the pooled liquidity approach where the price is determined algorithmically based on how much liquidity there is and how much the user wants to buy. This is known as an AMM (Automated Market Maker) — Uniswap and Bancor were early leaders here. Though lately, Balancer has seen incredible growth due mostly to their strong incentives for participation — similar to Compound. There are some DEXs that are more specialized — for example, Curve and mStable focus mostly only stablecoins. Because of the proliferation of these decentralized exchanges, there are now aggregators that combine and connect the liquidity of many sources. Those include Kyber, Totle, 1Inch, and Dex.ag.
These decentralized exchanges are becoming more and more connected to DeFi because they provide an opportunity for yield and earning interest.
As it relates to making payments, much of the world is still stuck on plastic cards. We’re grateful to partner with Visa and launch the Genesis Block debit card… but we still don’t believe that's the future of payments. We see that as an important bridge between the past (legacy finance) and the future (crypto). Our first post in this series shared more on why legacy finance is broken. We talked about the countless unnecessary middle-men on every card swipe (merchant, acquiring bank, processor, card network, issuing bank). We talked about the slow settlement times. The future of payments will be much better. Yes, it’ll be from a mobile phone and the user experience will be similar to ApplePay (NFC) or WePay (QR Code).
But more importantly, the underlying assets being moved/exchanged will all be crypto — digital, permissionless, and open source.
Someone making a payment at the grocery store check-out line will be able to open up Genesis Block, use contactless tech or scan a QR code, and instantly pay for their goods. All using crypto. Likely a stablecoin. Settlement will be instant. All the middlemen getting their pound of flesh will be disintermediated. The merchant can make more and the user can spend less. Blockchain FTW! Now let’s talk about a few projects working in this area. The xDai Burner Wallet experience was incredible at the ETHDenver event a few years ago, but that speed came at the expense of full decentralization (can it be censored or shut down?). Of course, Facebook’s Libra wants to become the new standard for global payments, but many are afraid to give Facebook that much control (newsflash: it isn’t very decentralized). Bitcoin is decentralized… but it’s slow and volatile. There are strong projects like Lightning Network (Zap example) that are still trying to make it happen. Projects like Connext and OmiseGo are trying to help bring payments to Ethereum. The Flexa project is leveraging the gift card rails, which is a nice hack to leverage existing pipes. And if ETH 2.0 is as fast as they say it will be, then the future of payments could just be a stablecoin like DAI (a token on Ethereum). In a way, being able to spend crypto on daily expenses is the holy grail of use-cases. It’s still early. It hasn’t yet been solved. But once we achieve this, then we can ultimately and finally say goodbye to the legacy banking & finance world. Employees can be paid in crypto. Employees can spend in crypto. It changes everything.
Legacy finance is hanging on by a thread, and it’s this use-case that they are still clinging to. Once solved, DeFi domination will be complete.
At Genesis Block, we’re excited to leverage these protocols and take this incredible technology to the world. Many of these protocols are already deeply integrated with our product. In fact, many are essential. The masses won’t know (or care about) what Tether, USDC, or DAI is. They think in dollars, euros, pounds and pesos. So while the user sees their local currency in the app, the underlying technology is all leveraging stablecoins. It’s all on “crypto rails.” https://preview.redd.it/jajzttr622b51.png?width=700&format=png&auto=webp&s=fcf55cea1216a1d2fcc3bf327858b009965f9bf8 When users deposit assets into their Genesis Block account, they expect to earn interest. They expect that money to grow. We leverage many of these low-risk lending/exchange DeFi protocols. We lend into decentralized money markets like Compound — where all loans are overcollateralized. Or we supply liquidity to AMM exchanges like Balancer. This allows us to earn interest and generate yield for our depositors. We’re the experts so our users don’t need to be. We haven’t yet integrated with any of the insurance or investment protocols — but we certainly plan on it. Our infrastructure is built with blockchain technology at the heart and our system is extensible — we’re ready to add assets and protocols when we feel they are ready, safe, secure, and stable. Many of these protocols are still in the experimental phase. It’s still early.
At Genesis Block we’re excited to continue to be at the frontlines of this incredible, innovative, technological revolution called DeFi.
--- None of these powerful DeFi protocols will be replacing Robinhood, SoFi, or Venmo anytime soon. They never will. They aren’t meant to! We’ve discussed this before, these are low-level protocols that need killer applications, like Genesis Block. So now that we’ve gone a little deeper down the rabbit hole and we’ve done this whirlwind tour of DeFi, the natural next question is: why?
Why does any of it matter?
Most of these financial services that DeFi offers already exist in the real world. So why does it need to be on a blockchain? Why does it need to be decentralized? What new value is unlocked? Next post, we answer these important questions. To look at more projects in DeFi, check outDeFi Prime,DeFi Pulse, orConsensys. ------ Other Ways to Consume Today's Episode:
Global Electronic Trading Platform Market: Technology, Future Trends, Market Opportunities 2020 & Key Players: Fidelity, TD Ameritrade, Ally Invest, etc.
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BitOffer Institute: Parse of Bitcoin Options by Lucian, Chief Analyst
https://preview.redd.it/97g8khceloh41.png?width=1501&format=png&auto=webp&s=2949f176163b5559dd487efe77891a6877fbe0d2 The last October, BitOffer officially launched Bitcoin Options, which was the first intraday Bitcoin Options that requires 0 fees, 0 margins, and no exercise, and be able to reach 2,000X leverage. The most significant feature of BitOffer Bitcoin Options is that the investors are enabled to earn a thousand times payoff whether the bull market or bear market. The purpose of launching Bitcoin Options is to provide investors an accurate hedge tool and an extra trading product. It is worth mentioning the price index of BitOffer Bitcoin Options is a weighted average of bitcoin prices from selected exchanges( Including：Kraken，Bitstamp，Coinbase，Bitfinex，Huobi，Binance，OKEX) with significant trading volumes, which makes it fair and transparent. Q: What is Bitcoin Options? Lucian: Bitcoin Options is a prediction of the movement of Bitcoins in the future. Essentially, it operates like the spot trading, but it allows the investors to buy call or put: Call when the investors expect the market to be bullish, Put when the investors expect the market to be bearish. Its profit formula is the same as that of the spot trading: Within the Options contract period, the investors would earn the price spread if the investors choose the correct direction. In short, BitOffer Bitcoin Options allows the investors to use a small budget to bet the change of the Bitcoins in the future and earn a considerable profit. Q: How do we trade Bitcoin Options? Lucian: BitOffer Bitcoin Options supports 2-mins, 5-mins, 1-hour, 4-hours, 12-hours, 1-day and 7-day contract period for investors to choose. For example, the Bitcoin price now is $10,000, and you hold the view that the Bitcoin price will rise in an hour, then you buy a 1-hour call options contract with $10. After then, the Bitcoin price rises by $500 in an hour, you will earn $500 as profit when the contract settled, which means that you will earn a 50 times payoff as a return. Q: Is Bitcoin Options the best hedge tool ever? Lucian: BitOffer Bitcoin Options, the most innovative Bitcoin Options, is the best hedge tool ever for Bitcoin trading on the spot trading. Then, how do the investors hedge their Bitcoin trading from the risk of the Bitcoin prices decreases? For example, now the Bitcoin price is $10,000. When it rises to $11,000, the profit will be $1,000. However, what if it falls to $9,000? If you do not hedge your Bitcoin trading, you would directly lose $1,000. If you hedge your Bitcoin trading by buying a put options contract with $10, when the Bitcoin price drops from $10,000 to $9,000, you would earn $1,000 from the put options contract. Thus, your $1,000 loss on the spot trading would be hedged. This is how Bitcoin Options attracts investors. Q: Which exchanges offer Bitcoin Options? Lucian: There are few exchanges that offer Bitcoin Options now. Only BAKKT, CME, BitOffer, Binance JEX, OKEx, etc. do, but except BitOffer, the Bitcoin Options offered by the others belong to European Options, which means investors need to buy a whole Bitcoin, otherwise, they will only be able to give it up and lose the options premium. However, BitOffer Bitcoin Options is much simpler due to its features of 0 margins, 0 fees, and no exercise requirement. Q: For newbies, which is much more suitable? Options trading or spot trading? Lucian: The essences of Bitcoin Options and the spot trading are the same because a Bitcoin Options contract equals to the right of holding a Bitcoin. We can make a simple comparison of Bitcoin Options and the spot trading: When the Bitcoin price is $10,000,
Buying a Bitcoin needs $10,000;
Buying a Bitcoin Options contract needs a minimum of $5.
If the Bitcoin price rises from $10,000 to $10,500, you would earn $500 in both. The payoff of these two is the same, but the budgets have a 200-fold difference. On the contrary, when the Bitcoin price falls, if you predict the wrong direction, your largest loss in Bitcoin Options will only be the premium of your Bitcoin Options contract, which means you will only lose $5. The payoffs of the spot trading and Bitcoin Options are the same, but the budget of investing in Bitcoin Options is much lower, which makes the risk become lower. Q: Are investors able to experience Bitcoin Options for free? Lucian: For now, BitOffer is holding campaigns for Bitcoin Options, the date of the campaign now is 2020.2.14 09:00 to 2020.2.28 09:00 (UTC+8). In this period, new registrations on BitOffer will receive 50 USDT on their bonus account to experience Bitcoin Options for free. Moreover, the 50 USDT for experiencing Bitcoin Options is allowed to withdraw after applying. https://preview.redd.it/q4vo83ikloh41.png?width=1456&format=png&auto=webp&s=4f5a686240a954b61f9e605f3c814a988c74ab9d
Understanding Tether: Why it accounts for a substantial part of the crypto market cap and why its the #1 outstanding issue in crypto markets today
In this post I will go in-depth on:
How Tether got to be what it is today
Why Tether's market cap is a lot more than 0.5% of the total market cap for crypto you see on CoinMarketCap
Tether printing timing
What could happen to the market if Tether is found to not be backed by reserves
Tether is incredibly important to the cryptocurrency market ecosystem and I've noticed far too few people understand what is going on. Very little actual discussion of the 2nd biggest crypto by volume happens here and whenever someone starts a discussion they most often got slapped for "FUD". Tether themselves recently hired the major New York based PR firm 5W to spread positive information online and take down critics, I'm sure some of their operatives are probably on Reddit. But its absolutely critical you understand the risks behind Tether and especially now with the explosion in reserve liability, breakdown in relationship with banks and their auditor and recently announced subpoena.
What exactly is Tether and what happened so far?
Tether is a cryptocurrency asset issued by Tether Limited (incorporated in the British Virgin Islands and a sister company of Bitfinex), on top of the Bitcoin blockchain through the Omni Protocol Layer. It is meant to give people a "stablecoin", for example a merchant who accepts bitcoin but fears its volatility could shift bitcoin into tether, which can be easier to do than exchanging bitcoin for dollars. Recently they've also added an Ethereum-based ERC20 token. Tether Ltd claims that each one of the tokens issued is backed by actual US dollar (and more recently Euro) reserves. The idea is that when a business partner deposits US dollars in Tether’s bank account, Tether creates a matching amount of tokens and transfers them to that partner, it is NOT a fractional reserve system. Tether makes the two following key promises in its whitepaper on which the entire premise is build:
Each tether issued will be backed by the equivalent amount of currency unit (one USDTether equals one dollar). Professional auditors will regularly verify, sign, and publish our underlying bank balance and financial transfer statement.
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. A brief timeline:
Bitfinex operators Phil Potter and CFO Giancarlo Devasini set up Tether Limited in the British Virgin Islands, but told the public that Bitfinex and Tether are completely separate. Throughout 2015 and 2016, the amount of Tether stays relatively flat.
In August 2nd, 2016, the second-largest digital currency exchange heist in history happened, when Bitfinex lost nearly 120,000 bitcoin. Bitfinex never revealed full details of the hack, but BitGo (the security company that had to sign off on the transactions) claims its servers were not breached.
Just 4 days after the hack Bitfinex “socializes” its losses from the theft by announcing a 36 percent haircut for almost all of its customers. In return, customers receive BFX tokens, initially valued at $1 each.
Two weeks after the hack Bitfinex announces it has hired Ledger Labs, to investigate the theft and perform a financial audit of its cryptocurrency and fiat assets. The public nevers sees the results of the investigation, and months later, Bitfinex admits it never actually hired Ledger Labs to perform an audit to begin with.
In May 2017, after long standing calls for an actual audit, Bitfinex hires Friedman LLP to "complete a comprehensive balance sheet audit."
November 7, 2017: Leaked documents dubbed “Paradise Papers” reveal Bitfinex and Tether are run by the same individuals.
November 19, 2017: Tether is hacked, with 31 million USDT suddenly disappearing. Tether Limited reacts to this by creating a hard fork.
December 4, 2017: Right after hiring the PR firm 5W to help improve their image, Bitfinex hires law firm Steptoe & Johnson and threatens legal action against critics.
December 6, 2017 - CFTC issues a subpoena to Tether and Bitfinex. This news isn't made public until the end of January.
December 21, 2017 : Without making any formal announcement, Bitfinex appears to suddenly close all new account registrations. Those trying to register for a new account are asked for a mysterious referral code, but no referral code seems to exist.
After a month of being closed to new registrations, Bitfinex announces it is reopening its doors, but now requires new customers to deposit $10,000 before they can begin trading.
Friedman LLP completely cut ties with Tether on January 27, 2017.
Most common misconception: Tether is only a small part of the total market cap
One of the most common misconception people have about cryptocurrencies is that the "market cap" amount they see on CoinMarketCap.com is actually the amount of money that is invested in each coin. I often hear people online dismiss any issue with tether by simply claiming its not big enough to cause any effect, saying "Well Tether is only $2.2 billion on CoinMarketCap and the market is 400 billion, its only 0.5% of the market". But this misunderstands what market capitalization for cryptocurrency is, and just how different the market cap for Tether is to every other token. The market cap is simply the last trade price times the circulating supply. It doesn't take into account the order book depth at all. The majority of Bitcoin (and most coins) are held by those who either mined or purchased for a very low price early on and simply held on as very small portions of the total supply was rapidly bid up to their current price. An increase in market cap of X does NOT represent an inflow of X dollars invested, not even close. A 400 billion dollar market cap for crypto does NOT mean that there is 400 billion dollars underwriting the assets. Meanwhile a 2 billion dollar Tether market cap means there should be exactly $2 billion backing up the asset. Nobody can tell for sure exactly how much money has been invested in cryptocurrency market, but analysts from JPMorgan found that there was only net inflow of $6 billion fiat that resulted in $300 billion market cap at the time. This gives us a roughly 50:1 ratio of market cap to fiat inflow. Prominent crypto evangelist Julian Hosp gives the following estimate: "For a cryptocurrency to have a market cap of $1 billion, maybe only $50 million actually moved into the cryptocurrency." For Tether however the market cap is simply the outstanding supply, 2.2 billion USDT is actually equal to 2.2 billion USD. In order to get $50 USDT you have to deposit $50 real U.S. dollars and then 50 completely new tokens will be issued, which never existed before on the market. What is also often ignored is that Bitfinex allows margin trading, at a 3.3x leverage. Bitfinexed did an excellent analysis on how tether is entering Bitfinex to fund margin positions There are $2.2 billion in Tether outstanding and the current market cap of the entire market is $400 billion according to CoinMarketCap. You can actually calculate Tether as a % of total fiat invested in the market according to the JP Morgan estimate, the following table outlines for a scenario of no margin lending and 15/25% of tether being on a 3.3x leverage margin account:
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)
Even without any margin lending Tether is underwriting the worth of about 27.5% of the cryptocurrency market, and if we assume only 25% was leveraged out at 3.3x on margin we have a whole 43% of the market cap being driven by Tether inflow. A much better indicator on CoinMarketCap of just how influential Tether is actually the volume, its currently the 2nd biggest cryptocurrency by volume and there are even days where its volume exceeds its market cap. What this all means is that not only is the market cap for cryptocurrencies drastically overestimating the amount of actual fiat capital that is underwriting those assets, but a substantial portion of the entire market cap is being derived from the value of Tether's market cap rather than real money. Its incredibly important that more new investors realize that Tether isn't a side issue or a minor cog in the machine, but one of the core underlying mechanisms on which the entire market worth is built. Ensuring that whoever controls this stablecoin is honest and transparent is absolutely critical to the health of the market.
Two main concerns with Tether
The primary concerns with Tether can be split into two categories:
Tether issuance timing - Does Tether Ltd issue USDT organically or is it timed to stop downward selling pressure?
Reserves - Does Tether Ltd actually have the fiat reserves at a 1:1 ratio, and why is there still no audit or third party guarantee of this?
Does Tether print USDT to prop up Bitcoin and other cryptocurrencies?
In the last 3 months the amount of USDT has nearly quadrupled, with nearly a billion being printed in January alone. Some people have found the timing of the most recent batch of Tether as highly suspect because it seemed to coincide with Bitcoin's price being propped up. https://www.nytimes.com/2018/01/31/technology/bitfinex-bitcoin-price.html This was recently analyzed statistically:
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. 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.
https://www.tetherreport.com I'm still undecided on this and I would love to see more statistical analysis done, because the price of Bitcoin is so volatile while Tether printing only happens in large batches. Simply looking at the Bitcoin price graph over the last 3 months and then the Tether printing its pretty clear there is a relationship but it doesn't seem to hold over longer periods. Ultimately to me this timing isn't that much of an issue, as long Tether is backed by US dollars. If Bitfinex was timing the prints then it accounts to not much more than an organized pumping scheme, which isn't a fundamental problem. The much more serious concern is whether those buy order are being conducted on the faith of fictitious dollars that don't exist, regardless of when those buy orders occur.
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 Client
Essentially what this is saying is that the trust agreement may not even be worth the paper it’s printed on. And most importantly… Note 2:
“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. Currently Tether has 2.2 billion USDT outstanding and we have absolutely no idea whether this is actually backed by anything, and the long promised audit is still outstanding.
What happens if its revealed that Tether doesn't have its US dollar reserves?
According to Thomas Glucksmann, head of business development at Gatecoin: "If a tether debacle unfolds, it will likely cause quite a devastating ripple effect across many of the exchanges that see most of their volumes traded against the supposedly USD-backed cryptocurrency." According to Nicholas Weaver, a senior researcher at the International Computer Science Institute at Berkeley: "You could see a spike in prices in tether-only bitcoin exchanges. So, on those exchanges only you will see a run up in price compared to the bitcoin exchanges that actually work with actually money. So you would see a huge price diverge as people see that only way they can turn tether into real money is to buy other cryptocurrency then move to another exchange. That is a bank run." I definitely see the crypto equivalent of a bank run, as people actually try to secure their gains an realize that this money doesn't actually exist within the system:
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. 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.
Tether-enabled exchanges will see a massive spike in Bitcoin and cryptocurrency prices as everyone leaves Tether. Noobs in these exchanges will think they are now millionaires until they realize they are rich in tethers but poor in dollars.
Exchanges that have not integrated Tether will experienced large drops in Bitcoin and alts as experienced investors flee crypto into USD.
There will be a flight of Bitcoin from Tether-integrated exchanges to non-Tether exchanges with fiat off-ramps. Exchanges running small fractional reserves will be exposed, further increasing calls for greater reserves requirements.
The exchanges might slam the doors shut on withdrawals.
Many exchanges that own large balances of Tether, especially Bitfinex, will likely become insolvent.
There will be lawsuits flying everywhere and with Tether Limited being incorporated on a Carribean Island whose solvency and bankruptcy laws will likely ensure they don't ever get much back. This could take years and potentially push away new investors from entering the space.
We can't be 100% completely sure that Tether is a scam, but its so laiden with red flags that at this point I would call it the biggest systematic risk in the crypto space. Its bigger than any nation's potential regulatory steps because it cuts right into the issue of trust across the entire ecosystem. Ultimately Tether is centralizing one of the very core mechanics of the cryptocurrency markets and asking you to trust one party to be the safekeeper, and I really see very little reason to trust Bitfinex given their history of lying and screwing over their own customers. I think that Tether initially started as a legit business to facilitate the ease of moving money and avoiding regulations, but somewhere along the lines greed and/or incompetence took over (something that seems common with Bitfinex's previous actions). Right now we're playing proverbial hot potato, and as long as people believe that Tether is worth a dollar everything is fine, but as some point the Emperor will have to step out from hiding and somebody will point out they have no clothes. In the long term I really hope once Tether collapses we can move on and get the following two implemented which would greatly improve the market for all investors:
Actual USD fiat pairings on the major exchanges for the major currencies
Regulatory rules on exchange reserve requirements
I had watched the Bitconnect people insist for the last 2 years that everything about Bitconnect made perfect sense because they were getting paid daily. The scam works until one day it suddenly doesn't. Tether could still come clean and avoid all of this "FUD" by simply getting a simple review of their banking, they don't even need a full audit. If everything was legit with Tether, it would be incredibly easy to have a segregated bank account with the funds used solely to back up Tether, then have an third party accounting firm simply review the account and a bank reconciliation statement then spend a few hours in contact with the bank to ensure no outstanding liabilities are held on that balance. This is extremely basic stuff, it would take a few hours to set up and wouldn't take a lot of man-hours for a qualified account to do, and yet they don’t do it. Why? Why hire a major PR firm and spend god knows how much money to pay professional PR representatives to attack "FUD" online instead? I think I know why.
The Absolute Fucking Impossibility of Reporting Taxes On This Shit
EDIT: PLEASE STOP ASKING ME FOR DAY-TRADING TIPS. LEARN BY DOING. I'm in the US. I day-trade cryptocurrencies and have made tens of thousands of orders across many pairs and exchanges (and have made substantially more than I would have by just "hodl xd", even with short-term penalty added, thank you very much). Uncle Sam wants his pie. Okay, fine. I know exactly how much I've made by simply tallying the deposits and withdrawals from by bank to my fiat gateways, and I'm willing to be taxed on that, but... The IRS expects me to report every single transaction on a form with each interval gain and loss step reported in USD. Every single one of my tens of thousands of orders and partial trades, most of which having no actual valuation or realization in USD, yet somehow I'm expected to calculate the imaginary USD gain/loss of each when BTC/USD fluctuates by whole percents every other minute on the reference fiat exchange (GDAX, say). No matter what painstaking diligence is paid to reporting the notional USD gain/loss for every alt pair and perpetual swap trade by cross-referencing those irrelevant data points, I will inevitably end up with a totally fictional sequence of numbers that deviates significantly from my known, actual USD gain from what hit my fucking bank and what is presently on my exchange accounts. This especially when transaction and trading and funding fees are taken into account, as well as the nightmare of slippage and partial fills. Also Bittrex completely wiped out my trade history, and everyone else's from what I hear, but my deposits/withdrawals are still there and that should really be all that matters (but not to the IRS apparently). I also had a stint on poswallet.com, same situation. Now here's the mind-melting part: I use BitMEX. I've made most of my gains from there. (Yes, I know that US customers are ostensibly disallowed by BitMEX from using BitMEX, but we all know this is lip service, and it is not illegal in itself by US law to violate a site's T&S, and honestly BitMEX rocks so hard I'd be willing to set up an offshore company to keep using it). The IRS virtual currency guidance defines cryptocurrency as "property" and seems to concern itself with "exchange of virtual currency for other property", which is taxable. Okay, but is a perpetual swap or futures contract taxable? How is it possible to calculate the "cost basis" of a BitMEX position, where posted margin can arbitrarily and dynamically scale? No actual buying or selling of bitcoin occurs on BitMEX, so how is it taxable? How is it reportable? How? How the fuck do I even report any kind of short position on Form 8949? This would apply to Poloniex and Bitfinex as well. The IRS stipulates different (and highly favorable) tax rules for conventional futures trading, such as the 60/40 rule, where as I understand it 60 percent of futures gains are considered long-term and 40 percent are considered short-term, as marked-to-market. Would this apply to BitMEX futures as well? And how about when, at the end, you withdraw your bitcoin from there and it becomes "property" again to sell for fiat? Even if I went to a tax attorney or CPA, as I intend to do, would they know more than me what with the terribly incomplete guidance the IRS has given about all this? Nevermind the logistical insanity of the step-by-step fictional USD conversion process. And forget about bitcoin.tax; they don't handle BitMEX or any kind of serious trading activity. I've made a lot of money. I'm fine with being taxed fairly on my net gain. But the IRS has not adequately addressed the problems I have described in their guidance. What the hell do I do?
How and why exchanges are manipulating the price in order to capitalize on the new market dynamics
The current market seems to be largely driven not by organic buying and selling, but by exchange driven manipulation of the spot market to exploit the current dynamics of leverage trading. We just saw it again now as they liquidated 3K longs but you can see this pattern of clear manipulation over and over in the last few weeks . We have seen several forces set an incentive for exchanges to do this:
Consistently declining volume - this leads to lower total fee revenue for exchanges, and an incentive to manipulate the price in order to earn revenue through liquidations rather than trading fees.
Move towards more leveraged positions - both leveraged shorts and leveraged longs are at or near record levels. Shorts especially have gone from 8K outstanding in January to 33K right now, a whole tripling in outstanding positions.
Move away from the spot market and towards derivatives - Anybody who has been checking the combined orderbook over the last few months has seen Bitmex completely take over the market, while GDAX, Bitfinex, Gemini and others see consistent declines. I've noticed myself an increased interest across the Internet on how derivatives work and anecdotely I have seen more people move away from the HODL meme and towards trading taking high margin bets with a portion of their stack.
Some exchanges like Gemini have reacted to all of this by increasing their trading fees by 400%. Meanwhile Bitfinex specifically seems to be using its hefty weight to manipulate the price in order to capitalize on the record number of people using margin to bet. Both longs and shorts are bets on the price moving up or down and they have a "liquidation price" at which they get liquidated by the exchange, essentially the exchange gets the entire stack they bet with and extracts a high market fee multiplied by the leverage. Since the exchanges know the characteristics of the outstanding shorts/longs, and since volume is low after these pumps or dumps leading to sideways drift, they can essentially engineer movements in price that create income in terms of liquidations. When there are lots of overleveraged shorts, an exchange can pump the price with bots briefly and collect the short position. Same with longs but in reverse, a quick burst of selling pressure. You can see this in the most recent pumps too on Bitfinex, where 1K buy orders appear out of nowhere after long sideways movement only to be followed by either sideway movement or slow bleed on pathetic volume: https://i.imgur.com/3YaWVBI.png https://i.imgur.com/pvpcd7Z.png Take a look at the most recent pump up to 7K, it instantanously liquidated about 700 short positions: https://i.imgur.com/3sCLEB8.png Now this last dump was a laddered 12.5K sell order on Bitfinex that liquidated around 3K long contracts https://i.imgur.com/znYyUT8.png Bitfinex tends to be where the big money traders move (their minimum deposit is 10K) so even if each long position was only 0.5 BTC on average they exchange would make a ton of money. If you look at the BitmexRekt twitter feed that shows a running list of Bitmex liquidations with humorous commetary, you will see many >$1 million dollar positions being liquidated during these moves. This is what all the "Bart" formations we have seen stem from. Its not George Soros pumping Bitcoin for shits and giggles, nor is it the nebolous "whales". They have no incentive to try and pull off PnDs now that it only leads to either sideways movement or decline after the pump. A PnD only works if the delta between the top of the pump end point and dump initiation point is positive, while now it seems to be followed by sideways movement. Those who do want to bet on further upward movements seem to be doing it off the spot market, using margin with futures and perpetuity swaps on Bitmex. This makes the low volume spot market ripe for manipulation, exchanges like Bitfinex and Bitmex have every incentive right now to manipulate the price. Looking back it seems almost inevitable that this would have happened, that traders would try to replicate the gains they saw by buying and selling on the spot market a few months ago by using increased leverage and derivatives. In December and January there were days where your holdings would increase by at least 20% no matter what you bought. Once you experience those 20% daily gains you don't want to go back to a market where it slowly bleeds down a few percent every week, so people jumped in on high leverage short positions to multiply their profit on those single percent moves down. For the small time investor there really isn't much you can do to stop this. This is what being part of an unregulated market means, it means that things like wash trading and long/short liquidation hunting is allowed. All you can really do if you're a trader is look at the current ratio of longs vs shorts on Bitfinex and be aware that once short contracts become too high its possible that an exchange may pump the price to profit on it, while if the longs become too dominant we may see a dump. Edit: Bitfinex, not Bitfenix.
Can ParamountDax Challenge Binance, Poloniex, and Bitfinex?
https://preview.redd.it/cmgzvivop8y31.png?width=540&format=png&auto=webp&s=efae868fb8d23b08d126359e06ee28be02350325 Dear Community, ParamountDax’s dream of becoming a cryptocurrency giant seems to become more achievable day by day, however, cryptocurrencies have noticeable challenges both at the technical and the social level, so let’s dive in. The majority of well-known large exchanges have encountered unforeseen problems, for example, Binance, Bittrex, Poloniex. ParamountDax is a promising platform for cryptocurrency exchange, which took into account all the flaws of its competitors and created a unique and comfortable platform for its users. A few important steps before joining an exchange: Reputation — reputation is always the major point, which defines the brand in general. Security — is the second and very important way to identify the right platform, as it’s important to know your money is safe. Fees — some bitcoin exchanges are taking a fee on every transaction like withdrawal, deposit, or trading, some of them are not. Choose the platform according to the kind of trader you are. Payment Methods — every platform has different methods, make your own analysis and find out what fits you more. Verification Requirements and Geographical Restrictions — are also important. Pay attention to this part before completing the registration. Support — The best services offer 24/7 support.
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About: since 2014, Bitfinex has emerged as one of the world’s leading bitcoin exchanges. Based in Hong Kong, the company first entered the market in 2012 and has enjoyed steady expansion ever since. In addition to bitcoin, it provides access to the world’s leading altcoins as well as full-spec wallet services. Claims that: in addition to being widely recognized as the world’s largest bitcoin exchange, Bitfinex offers a customizable interface that allows you to personalize your workstation. The platform is fully equipped with margin trading and ten different order types that give you the opportunity to trade the market without limitation. Security: because Bitfinex gets a lot of its liquidity from Tether, many people are concerned that the exchange might not be as financially secure as it claims to be. But it was not any precedents yet. In Conclusion, ParamountDax offers new tools that satisfy the needs of any trader, which will set its standards for ideal trading. ParamountDax clients are able to count on the answer at their requests 24 hours 7 days a week. Other exchanges could keep silence a few months and the user will stay without helpful information. The aim of the ParamountDax team is to meet worldwide demand. Good luck! And see you soon! Website : https://paramountdax.io/ View MVP : https://staging.paramountdax.com And here’s how to get involved with the ParamountDax community: Telegram : https://t.me/joinchat/LNehJxUX9sVoZabNrnaEZA Twitter : https://twitter.com/ParamountDax Facebook : https://www.facebook.com/Paramountdax-2024636494500768 Bitcointalk: https://bitcointalk.org/index.php?topic=5137789.0 Reddit: https://www.reddit.com/ParamountDax/
I demand my 16k back from Bitfinex. Follow my legal struggles with them here.
I'll save you guys the hassle and give you a tl;dr first. You can scroll through my dealings with Bitfinex. Every post is on chronological order. If anyone is experiencing similar issues regarding the negligence of Bitfinex in the handling of the BCH hard fork, give me a direct message. I can help you to the details of my lawyer and we can even coordinate our efforts or just share our findings. I know some trolls here are p*** by Bitfinex to shut us up or make readers doubt what's going on here. Don't get distracted by them. They will come at me trying to discredit my story. Crypto exchanges think they can use us their clients as cash cows, but when they screw up, they don't even think twice about screwing you over. This is my story:
Bitfinex stated in a public announcement that all trading on BCH pairs would be stopped at 16:40 PM UTC on November 15th;
I started the morning of November 15th with about ~16k in equity on my margin account. I had been scalping throughout the morning/afternoon and had a position open just before the hard fork took place;
Bitfinex screwed up by allowing trading to continue after the hard fork time, causing the price to drop from $ ~430 to $ 250 as depicted in the chart below (Exhibit 0) in a few minutes time;
During the flash crash that followed (mind you, this happens after the hard fork at 16:40), I tried to close my position manually trying to market close the whole position of 100 BCH - their engine didn't allow the whole position to go through and only 40 BCH went through in increments of 10. As you can imagine they closed at prices wayyyy below the original base price, which was $ ~435 at 16:40;
But what happens next is where it gets interesting. After price hits $ 250, Bitfinex decided it was time to close my position and only reimburse 60% of my position in spot BSV / BAB (60 instead of the 100);
My account balance started showing weird numbers not making any sense (4.38 BAB and 4.38 BSV, ?!??). After a while my ending balance becomes: $ -13,875 | 60 BAB | 60 BSV. Which at current prices equals $ -13,875 + ( 60 x 129.19 ) + ( 60 x 75,34 ) = $ -1,603;
Numerous mistakes followed, the amount of negligence here is shocking, a response time unworthy of a legitimate exchange, among others, caused my account to go from a net account balance of $16k (my equity) to currently -1,6k (yes really!); and here comes the weird stuff;
BFX accepted their negligence and came up with the following proposal to reimburse me: $ -21,785 | 100 BAB | 100 BSV;
At current prices, this absurd proposal would amount to: $ -21,785 + ( 100 x 129.19 ) + ( 100 x 75,34 ) = $ -1,332. Meaning that I would still owe them 1,3k, for destroying my account balance; and
Mind blowing stuff.
Exhibit 0 1.Bitfinex announcement regarding the Bitcoin Cash Hard Fork
Snapshot Event at 16:40 PM UTC on November 15, all BCH balances to be frozen and BCH trading to be halted.
Exhibit 1 2. Day 1: E-mail received from Bitfinex, "Position nearing liquidation", at 16:42 pm (UTC) on November 15th
Remember, trading should have stopped at 16:40. It did not;
Date and time of e-mail received from BFX (see 1); and
E-mail content announcing that my position is nearing liquidation at 16:42 PM (see 2).
Exhibit 2 3. Day 1: Order history imported from BFX Ledger
I started trading on 15 November with a short position of 70 BCH, built up between 11:14 and 11:30 AM;
Closed position in profit between 12:07 and 12:35 PM;
Second position of in total 80 BCH short created between 13:13 and 13:18 PM;
Closed position in profit between 13:42 and 14:43; and
The third position is where everything wrong. Went long with 100 BCH, created between 13:47 and 13:58;
Market executed 4 x 10 BCH between 16:41:57 and 16:43:29 at average prices way below the settlement price (keep in mind that settlement should have happened at hard fork time: 16:40 and ~$ 435); and
I tried to market close the whole position but the system wouldn't allow it.
Exhibit 3 4. Day 1: Conversation started with BFX Telegram Admin shortly after on 15 November at 18:16 PM (UTC +1)
Conversation started after requesting to direct message an admin in the BFX Public Channel (from which I got banned on 19 November after ventilating my frustration about its incredible slow support service and how they could let trading continue; and
The conversation continues for a few days during which I give him all the information there is about what has occurred. Initially he tells me I received the correct amount, namely 60 BCH, not wanting to admit BFX screwed up badly here (you'll see that they admit to this eventually).
Exhibit 4 5. Day 1: Support ticket sent to BFX on Thursday 15 November at 17:26 PM
Ticket opened after TG Admin' suggestion; and
Requesting guidance regarding the BCH flash crash.
Exhibit 5 6. Day 2: Second e-mail to BFX Support Service at 17:23 PM on 16 November
I'm asking what to do with my negative account balance, which at the time was changing constantly with weird numbers that didn't make any sense;
Asking whether to settle the spot 60 BCH that was credited to me by selling them immediately or not do anything to prevent making things worse than they are; and
Notified Bitfinex Support of my conversation with TG admin, and requested to have the conversation added to the ticket.
Exhibit 6 7. Day 3: Initial reply by BFX to ticket received at 03:10 AM on 17 November
Initial reply by support indicates that 0 research was done regarding the situation. He just copy pasted my ledger, a copy which I had already sent their TG admin explaining why it was wrong. Have a look at the time of the ledger entries and it tells you enough ;);
Position was claimed at 17:03:54 (the snapshot should have been taken at 16:30) as stated by BFX itself; and
Wrong amount credited to my account, 60 instead of 100.
Exhibit 7 8. Day 3: Reply to previous e-mail on 17 November at 12:44 PM
My reply shows screenshots from my BFX ledger stating the following:
i ) trading continued wrongfully and snapshot time should have been 16:40;
ii) market executing 4 times 10 BCH between 16:41:57 and 16:43:29; and
iii ) trading after 16:40 PM should NOT have been possible, which this guy has trouble understanding.
Exhibit 8 9. Day 6: An apologetic reply by BFX (one of many): issue forwarded to relevant team, promises to 'get back soon' on 20 November at 03:33 AM
Reminder sent between day 3 and day 6.
Exhibit 9 10. Day 7: Reminder sent, requesting an indication for a reply, stating full reimbursement on Wednesday 21 November at 14:32 PM Exhibit 10 11. Day 9: E-mail by BFX: settling negative balances following BCH hard fork on Friday 23 November at 08:45 AM & reply Exhibit 11 12. Day 13: Reminder sent to previous e-mail received on Day 9, no information, just 'inundated with support requests regarding the BCH fork' on Tuesday 27 November at 22:00
What a shocker, I'm not the only experiencing this issue.
Exhibit 12 13. Day 20: Another apologetic e-mail, investigation continuing, promises to have a response shortly, received on Tuesday 4 December at 10:13 AM & Day 21: Answer to previous e-mail and requesting to have account reinstated, sent on Wednesday 5 December at 10:53 AM Exhibit 13 14. Day 23: No info besides 'explanation takingslightlylonger than anticipated on Friday 7 December at 11:38 AM & Day 28: Another reminder sent on Wednesday 12 December at 10:24
Of course they aren't stalling for time...
Exhibit 14 15. Day 29: Proposal in progress, "continue to trade", will not affect decision and proposal by further actions on the platform on Thursday 13 December at 10:52 AM
Account balance is still negative, their suggestion to continue trading would mean that I would have to add back 4k from my own money to get to a net account balance of 0 (see Exhibit 17);
Only any additions after that would allow me to be able to trade again ([email protected]#!$); and
Meanwhile my 'Net trading balance' sits at -4,087.07, yes really ([email protected]$), numerous reminders followed.
16. Day 38: Proposal finally in my inbox. What follows is an admittance of guilt and the proposal to settle. Looks like a happy end right? Not so fast. Proposal received on December 22nd at 09:33 AM & Day 39: Requesting confirmation of the stated reimbursement, sent on 23 December at 13:02 The highlights are:
"Your BCH position was claimed at an incorrect time..... being claimed at an incorrect base price.";
"...you were credited far less.... than should have been";
"...orders after the 16:40:00 timestamp should not have gone through.";
Your USD balance prior to the claim was 16,042 USD; remember this?; and
"In light of this error".
This initial offer would mean: $ -7,603 + 100x130,11 + 100x75,96 = $ 13,004. That's still 3k less than my initial account balance before this shit show. But alright, it looks like we're getting somewhere right?
Exhibit 16 18. Day 44: "it seems I misspoke in my previous outline", how many screwups are possible? Received on 28 December at 04:57 AM Exhibit 17 19. Day 54: Demand letter by my lawyer sent on 7 January at 13:10 & Day 55: Quickest reply I've ever seen from BFX, wow. Received on 8 January at 02:37 AM & Day 61: E-mail by lawyer requesting my account balance to be reinstated to $ 16,042 (my equity before they screwed up). Sent on 14 January at 14:52 PM
My lawyer sent a demand letter requesting my $$$ back;
10 day deadline given;
Response by BFX is the quickest I've ever seen from them during the past 2 months; and
They are trying to bury us in details here, mostly details that aren't of any importance. I'm a Finance as well as Financial Law major. I (heart) details.
Exhibit 18 20. Day 69: Lawyer BFX replies with "I trust that this comprehensive explanation of the proposal will satisfy your client's concern and we can move to wrap up settlement of this matter"
This, redditors, is called stalling for time by their lawyers:
Exhibit 19 You know the weird part in all of this. When, not if, the Supervisory Board of iFinex finds out it has several investigations going on against them - because of a mere 16k - they are going to have a field day with these people, mark my words.
On Wednesday we launched the leaderboard page. While our exchange partner pushes the envelope in terms of transparency and we’ve had a hand in helping to shape that, it’s a simple concept that people understand, and nothing there is anything less than common sense. People are used to the previous model of not asking to see cold wallet addresses or any proof of proper fund management. They accept that model because they don’t know what’s possible and they can’t see the problem until the entire system breaks down and everyone loses their funds. A decentralized marketplace which builds value for affected users with every transaction is a new concept, as is the precursor leaderboard. What we are doing has not been done before. When things are new, they are hard to explain and be understood. People accept the bankruptcy as the best possible outcome because they don't see any better outcome. I hope this post will help. My background (those who don’t know me yet): My name is Matt. I’ve lived in Calgary my whole life, and have been running businesses and programming since I was 10 years old. I’m a recent graduate of the University of Calgary in a business and computer science double major, and I currently manage the software team (6 students) at a small Calgary IoT startup. My past business experiences include running a window cleaning franchise across 6 communities, a popular concession stand, and a free web hosting service with over 10,000 clients. I first got involved with cryptocurrency in 2017, when we had the big run up. Prior to that, I’d done a ton of research but never actually invested. While my losses in Quadriga are significant, they’re nowhere near some of the losses I’ve been hearing about. I’m fortunate to be in a “walk away” position if I so choose and I more or less did for the first week. But I couldn’t stay away. It isn’t right. Especially not now when the solution is so close and the potential impact is so significant. The challenge: Here’s how I’ve defined “recovery”:
All inputs must come from our community, or be networked. Quadriga had a massive impact, so this is actually an extremely powerful resource.
Any costs borne by affected users or other participants count against the end goal. I don’t count my time, because I’m learning a lot and meeting great people nearly everyday.
The end result must be capable of recreating the entirety of the lost value. There are a multitude of solutions that can generate a small amount of relief for affected users (bankruptcy among them). I want this made right.
Value must actually be created. No gimmicks or illusions or trickery.
Every affected users must have or have had the opportunity to be a part of the recovery.
There should be minimal additional risks at any stage, ideally none at all. Suggestions to reduce risks are always welcome!
As I want to inspire people, including those in less desirable circumstances, I tend to limit myself to an extreme shoestring budget.
Basic concepts: Value is created in an economy by businesses. By their very definition, a successful business takes inputs of less value and produces outputs of greater value. All people have economic power, by way of choosing which businesses to deal with. The larger the group, the greater the economic power if they act collectively. Numerous businesses have expressed an interest in assisting with the recovery, and they definitely have an interest in reaching us as consumers. The larger the group that acts together, the more economic power and the faster we can create a recovery. Every stage of this plan is a “win-win”, where all parties involved benefit. It has nothing to do with the bankruptcy, other than using that to determine losses. Consumers: Let’s say you:
Prefer to support smallelocal businesses instead of large corporations.
Prefer to deal with crypto-friendly businesses instead of big banks.
Like the idea of helping fraud victims in your purchase.
Don’t want to get scammed by a purchase.
Want to get a decent/good deal, saving money.
It’s super easy to set up a scam website. One can just copy a legitimate website and change the name, or build their own seemingly legitimate website. Then, all one does is take the ordepayment or a deposit and not give the promised product/service. With crypto, the consumer has no recourse, unless through legal means. The scam walks away with their money. When enough people complain, they just rebrand and repeat. Since anyone can say anything on a website, having a way to verify the reputation of a business is an important tool for consumers. We’d like to be able to enable small businesses to start effectively and reduce barriers to entry (so we can have a vibrant crypto economy that enables small businesses), while at the same time, we can’t have a scam business with no reputation getting a lot of sales (ie scamming a lot of consumers). There is a niche market of consumers who wish to spend cryptocurrency and/or deal with crypto-friendly businesses, because they believe in this future. There is also a market of consumers who were affected by various cryptocurrency scams or feel close to the issue, and so they’d like to help victims recover through their purchases. The desire to support small businesses is a considerable trend, as is deal shopping. Offering a central portal/listing of crypto friendly businesses is a great tool for consumers to use when trying to find a place to do business. The present alternatives are a few posted lists I could find in Google and businesses that advertise themselves on Google. There really isn’t any sort of feedback/review metric on Google nor indication of reputation (except for brick and mortar stores in Google Maps) and the lists I found only had very large/notable businesses. If a consumer uses cryptocurrency, it’s very challenging to find a crypto-friendly and reputable small business. Their best alternative is Googling, and Googling, and then Googling reviews, and then Googling more reviews, and then trying to make a guess if those reviews they Googled are legitimate customers or some sort of bots/trolls/paid advertisers. This takes a lot of time, and time is the most precious resource that anyone has. We can make this massively easier for consumers by having every business in one list, and letting real verified customers create/compile reviews to put together a useful ranking. The flow for participating consumers is pretty simple. They:
Buy or hold tokens,
Pay tokens for the discount (buy a promotion code, or pay tokens to the business), and
Complete the standard checkout at the discounted rate.
If they don’t want to buy/use the tokens, the market is still an amazing tool to find reputable businesses, saving time and reducing scams or problems. They would just pay full price. The tokens are only used if they want to save money (and help affected users in the process). While of course we aim to protect all consumers, it isn’t a guarantee. It’s just - better than any present alternative that they have, if they want to deal with crypto. There are tons of fiat alternatives (largest being Amazon or Ebay), so this is a niche market targeting specific crypto consumers as identified. It also has some elements of Groupon in the deal aspect, without a lot of the negative effects for businesses. While Groupon is focused on deal-building, we are focused much more on relationship-building. Our listings are based on the “business” instead of the “deal”. While Groupon targets brick and mortar restaurants, our key business market would likely be online service businesses or niche product businesses, with a focus on crypto/technology products/services and resources that small businesses may need/benefit from. Businesses: Let’s say you sell a product/service, and you:
Are a small or medium size business.
Are crypto-friendly, looking to reach a Canadian customer base.
Wish to do what you can to help out fraud victims.
Like the idea of offering deals only to some customers.
Want to expand/grow your business reputation and reach.
Marketing is an ongoing challenge every business faces. They are always looking for ways to get their brand, products, and services seen and used by more people. A growing number of businesses in Canada are experimenting with, or interested in, accepting cryptocurrencies, and this is expected to be a growing trend as time moves on. A centralized portal for crypto friendly businesses in Canada gives an easy place for a business to engage with potential customers. Since the listing process doesn’t cost anything, and only requires a banner and deal in support of fraud victims, it’s a pretty straightforward decision. Of the businesses I talked to, almost every one of them likes the idea of being able to help fraud victims just by offering a deal. As the portal grows, more businesses will want to be a part of it. Once we work out all the integration challenges, the easiest solution for the business involves secret promotion codes, which apply at checkout. It’s something that a business can set up in under a minute per deal, and leave up and running. More technically-capable businesses can take advantage of the full ERC20 token integration to accept more complex deals directly. As time goes on, a number of these solutions can be set up and integrated into third party checkout systems, making it super easy and flexible for many more businesses to participate. As the leaderboard fills up, it becomes competitive. The new business can easily gain reputation for themselves by accepting the first batch of clients/customers at a generous reduced price, having the difference payable in tokens. It brings in customers to get initial reviews and feedback (building a reputation), while still honouring the full worth of their services. The difference goes directly into reputation/ranking as tokens are accepted and benefits affected users. Because the tokens are based on CAD discounts, it isn’t restricted to payments in cryptocurrency and fiat customers can understand/use the deals too. As the business reputation/ranking grows, they have full flexibility to adjust the discount, while still benefiting from previous reputation/generosity. If sales are slow, add a bigger discount. If they speed up, set it lower. The whole time, it’s a price segment and customers who deal directly (often more interested) can still pay full price. With an active market, businesses near the top have an incredible degree of control, and can essentially drive whatever they need to fill capacity and/or maximize revenue. (It can function similar to Air Miles in this respect.) Proceeds from the deal go directly towards supporting affected users/fraud victims, so it isn’t wasted, and furthermore, customers are “paying the same total”, just as a split between CAD and tokens, providing better value perception than a normal discount. There really aren’t a lot of disadvantages for businesses, other than integration complexity and that they need to offer a deal of some sort. Any profitable business that’s building value in the economy should have a decent profit margin to pull from. Otherwise, they should work to increase this by building a strong competitive advantage for themselves, find ways to optimize their process, or switch industries. Business can list themselves for free if they offer any sort of token discount, even a tiny discount on one product/service. We just need a 728x90 banner with the business, products/services, and the deal/discount (“XX% payable in tokens”). Rankings are in the following order:
The top ranking is based on tokens sent to the burn address. This happens whenever fixed value coupon codes are sold, or whenever tokens are burned by the business.
The next level (tie breaker) is based on traffic sent to the marketplace (a “voting” mechanism). This is part of our promotional push to get people using the leaderboard.
The bottom criteria (tiebreaker to the above) is a simple “first come first serve”. Businesses to sign up first will get listed at the top. An incentive to join early. The signup only requires a banner with a tentative deal.
In order to create a really useful service, we have discretion to remove any businesses which are deemed fraudulent, illegal, or not family friendly. Otherwise, businesses generally remain on the list with their rank as long as they offer any kind of deal in support of affected users. As more businesses join, we can offer categories and better searchability. The rough steps/stages we have ahead:
Building up an initial example leaderboard of 7 businesses. These are real businesses, but the deals are only tentative, meaning we are still sorting out the integration, the deals could end up changing, and there is no committed timeline. Once we have the initial list, we can start promoting it as an announcement, and build up some buzz for the deals, generosity, and recovery. Affected users can “see” that there are real businesses wanting to help out, and other businesses can “see” what kind of deals their competitors or others are offering. The number one objection affected users want to believe is that no business cares about them or would participate. In my discussions with real businesses, nothing could be further from the truth. There is considerable uncertainty about the future of this, many businesses want to wait until we have things set up, and businesses have difficulty with integration given their own limited resources! However, interest is definitely there. We will continue to simplify the concept, and we will keep talking to more businesses.
Continue our focus on affected user onboarding. We need to get 1,000 affected users/email signups or the token project doesn’t launch. One would think that having a free signup with almost no information needed and working hard for 8 months to try to help affected users would be enough, but the damage to trust runs deep from Quadriga and nothing like this has been done before (so completely unproven and all skepticism is justified). Once the leaderboard is up there are a mix of strategies (some and not all will be used):
Aim to get in podcasts, newspapers, media, etc…There are a number of these underway. Past experience shows that a generous percentage of all affected users are interested and will sign up.
Emailing out the mailing list of affected users who so graciously provided their emails to Reddit earlier in the process, seeking their feedback.
Engage and build a stronger community from those affected users we have, try to get word of mouth. If each affected user signs up 3 people, it’s a massive push.
Set up the leaderboard to reward based on “voting”. Businesses send traffic to the leaderboard, and if those visitors do a “vote” (fill out a captcha to prove they are human) then the rank increases for that business.
Put together videos on YouTube.
Put together articles on Medium.
Continue to network with Twitter. (Apparently the top platform for crypto.)
Attempt to create more useful content on Reddit.
Onboard/integrate more businesses, building up the list further and each one builds up the movement.
See if we can get big name assistance. That includes notable affected users, any famous crypto celebrities, or key businesses/brands.
Adding a feedback feature to the website. Focusing on improving the usability.
Check if there is any way to work with government or other industry bodies, all of which have an interest in seeing the happily resolved.
At this point, the next step would be a partner exchange launch. The launch can happen regardless if we hit the previous goal, however the claim process and tokens are not going to happen unless we hit the 1,000 sign-ups. (This was our deal with Ethan.) So there is potentially some delay here where we have an exchange and not enough affected users to move forward with the launch. I have the feeling that a real cryptocurrency exchange launch announcement will be pulling in some “on the fence” affected users and hopefully at this point we are close to our goal. The exchange has a compelling value proposition of its own - as it’s the only Proof of Reserves exchange in Canada. Even though many cryptocurrency traders like the “wild west” and don’t understand what the issue is since they haven’t been scammed yet, those days are numbered and those traders will get burned eventually. We are targeting those who prefer not to lose their funds. Our target market has either been burned or are close enough to someone else who got burned to avoid the notion that they are somehow immune to it. We prove proper fund management, because you or anyone else can take a look right on the blockchain using Proof of Reserves. We'll be building simple interfaces to prove reserves exist, are owned by the exchange, and include your balance. Or you can go with the competitors and have no clue where your money is. (If you’re lucky a third party audit at some point.) We believe the best way to keep traders safe is to have as many eyes as possible on the funds in the reserve.
Now, we have a system of various feedback loops, all working in support of one another:
If affected users sign up for a claim, they’ll register on the exchange to prove it. Some of them will end up using the exchange and checking the marketplace.
Users of the exchange will increase the profitability, and add demand for the tokens (accepted as a discount on the exchange). This will, in turn, build confidence among all players in the system and other affected users. Past networking efforts have failed due to a degree of skepticism. Once affected users see some recovery and a valid exchange, the equation changes dramatically and people can start referring one another. (The laws of arbitrage would dictate that this should spread quickly.)
All of this builds buzz around the leaderboard, and we bring in an increasing number of businesses. The competitive ranking drives even more traffic into the system, furthering everything else.
From here, we launch the leaderboard token competition, integrating the first businesses to start accepting tokens. We can now start to get some real feedback from consumers and an organized list. This adds in more processes:
Businesses have a greater incentive to offer better deals and promote the initiative, driving more consumers into the system, who will ultimately be more likely to engage with other businesses.
Consumers join the exchange to get tokens, and help to overall increase the profitability and demand for the tokens, as well as spreading the word.
To speed up the recovery, we can work to build up sales through the marketplace, by:
Integration with third party payment processors, so they can accept the tokens and process these on behalf of businesses.
Attracting bigger name brands into the system, and follow up with businesses which expressed interest but aren’t part of the system yet.
Building up the review mechanism for businesses, giving valuable feedback for businesses, and making transacting safer for consumers.
Serve as an “incubator” for new businesses, providing a community of support, access to cheap products/services they need, and easy access to a wide Canadian marketplace to help them launch.
Consistently working with consumers and businesses to gather feedback and identify how we can build further value.
As we near the recovery and start running out of tokens (aka success after a really long and hard journey), we can launch similar initiatives against the growing number of other mass-scale scams, and these will benefit from many of the same group of businesses and consumers. We would have a preference for cryptocurrency exchange fraud cases, and target more of the ones where victims lose all or a large chunk of their money. Each of these scams acts sort of like a “franchise”, using the same model with a different/new token and recovering funds for a new set of victims, and each time gets easier as we build on the past success. I suspect many businesses will accept all the different recovery tokens interchangeably, although that will be up to their discretion. Each leaderboard/token would operate separately, with a high degree of connectivity.
A bit on the tokens:
Tokens have no cash value. There’s no guarantee of any liquidity. Think of “Canadian Tire Money”. Do not use them as an investment.
Affected users get them for free (airdrop). You just have to validate your losses in the partner exchange, in a claim process which will be open after the bankruptcy. The only action you need to take now is a pre-claim to save your balance. (Because the E&Y website can go offline at any time, at which point your documentation is as valid as the next person’s Photoshop skills!)
Other consumers can buy tokens on the exchange at the market-set price. This would be at a discount, in order to save money on purchases they plan to make. All the proceeds from these sales go to affected user recovery. In the Bitfinex token recovery, they started at a price around 2 cents. Ours could start even lower or not even be liquid of course.
Tokens can be spent at participating businesses as $1, in the form of a discount. Ie Instead of paying full price in CAD/crypto, you would pay some number of tokens, and a discounted amount of CAD/crypto. The discount could be up to 100% (free items), or as small as the business wants. Discounts the business already offers to the public or that can be found by a quick Google search don’t count. Price in tokens is based on the lowest public price minus the affected usediscounted price. All deals are optional. Do not feel that you should buy things you don't want or need just because it's a good price.
Tokens accepted by businesses are burned, so they can’t be spent again. Each business has a burn address and this burning creates the leaderboard rank. Businesses at the top of the list are those which ran deals that created the most value for affected users. They get maximum reach and reputation as a reward.
There is a finite number of tokens, capped at the amount of losses which can be proven. No tokens are minted outside of verified losses. All of our team have losses in Quadriga and we will get the same 1 token per $1 of verified loss.
Token validation combines E&Y user balance, bankruptcy paperwork, and KYC/AML. It is done inside the TxQuick exchange after the bankruptcy. No deposit or trading is required to get the tokens, and it doesn't change your bankruptcy claim. Free is free. It just takes your time to sign up and set up the claim. Every person who signs up helps us be more successful, and we need to achieve a critical mass in order for this to work.
Current status: We are more than half-way through getting the initial list of 7 partner businesses. We have 4, including our partner exchange, a couple of other businesses from our team, and our first ever business outside our team. Although we launched the leaderboard page to help explain the concept, all the businesses will remain secret until we get to 7. We plan to have this as a sort of “Christmas present”/"holiday surprise" for affected users. We also continue to work towards 1,000 affected users/email sign-ups on the site. Friends/family can also sign up if they want to help out - it just has to be a real person signing up and interested in what we are doing! Signup is 100% free, takes a couple of minutes, and has no impact on your bankruptcy claim: https://www.quadrigainitiative.com/ Email-only is fine for our 1,000 sign-up goal. Please let us know your thoughts or any questions/comments!
Chin up boys and girls – the DApps (Decentralized Apps) are finally coming. Utility, not speculation/manipulation/shilling etc., is what, in the end, will give/justify the value of blockchains.
Of the top 100 tokens, 91 of them are on the Ethereum blockchain (ERC-20). The most valuable non-Ethereum tokens by market cap are USDT (4) and GAS (25). Eventually, ICX (6), VeChain (3) and EOS (1) and several others will be migrating to their own blockchains. Still, this leaves Ethereum with an overwhelming market dominance for tokens (aka DApps) and Ethereum has been clearly recognized as the blockchain to launch ICOs/DApps.
For the rest of March + Q2 (April - June) we are going see the biggest implementation of DApps on the Ethereum mainnet to date. Below I’ve laid out, in alphabetical order and in varying detail, what’s happening between now and the end of Q2 of this year. (I’ve also added some info, where especially relevant, of big stuff coming after Q2). I hope any biases I may have do not come through too much in the writing.
To hammer home on utility once more: One year ago today, the daily transaction count was at 57,000. Yesterday, the network confirmed over 752,000 transactions (a 13x increase) (And remember, ATH in January was 1.349 million txns!) [Source]
AirSwap is a decentralized exchange for trading Ethereum based tokens. It allows its users to trade tokens in a peer-to-peer fashion across the Ethereum blockchain. The token trader is currently live, in a limited capacity, trading AST and (W)ETH.
More token pairs will be added before the end of the Q1, as part of the upcoming release, Token Marketplace. A mobile app is also in development and will be entering beta soon.
Aragon is a project that aims to disintermediate the creation and maintenance of decentralized organizational structures by using blockchain technology. "We provide the tools for anyone to become an entrepreneur and run their own organization, to take control of their own lives." Originally slated for a February release, Aragon Core v0.5 (which is a fully functioning version of the DApp on mainnet) should be released any day now.
Augur is a fully-decentralized, open-source prediction market platform built on the Ethereum blockchain for any and all predictive markets. Augur Beta is currently live on Kovan testnet and launch is “months away.”
In order to mitigate bugs and problems, the first market on mainnet will be something along the lines of 'Will there be a critical vulnerability discovered in Augur by a certain date?” Given Augur’s development history, this could be launching a little after Q2, but the progress looks promising.
UPDATE (3/7/18): Contract audits are complete and the full audit report of augur-core will be released next week. "Some work still being down on UI, Augur Node, and additional screens." Next step is the bug bounty (first prediction market on Augur).
UPDATE (3/12/18): Core security audit report is released following a four-month long audit by Zeppelin. Augur's contracts are ready to ship and "over the coming weeks we plan to release more details around a bug bounty program and market."
BlockCAT lets anyone create, manage, and deploy smart contracts on the Ethereum blockchain with just a few clicks. No programming required. BlockCAT will be releasing their first visual smart contract on the mainnet on March 14 (the full details of exactly what this contract does, will also be released when it goes live.)
UPDATE (3/14/18): BlockCAT's first visual smart contract, Tabby Pay, has been released on mainnet. Tabby Pay is a smart contract that’s built to prevent user error - if you send Ether to the wrong wallet, you can cancel the payment and your Ether will be returned.
Digix is a DAO (Distributed Autonomous Organization) and is composed of two main parts: DGD and DGX, both of which are ERC-20 tokens.
DGD is a governance token that allows holders to vote on proposals that are submitted for the growth of the Digix ecosystem and offers rewards to holders on the basis of their successful contribution to the Digix Ecosystem.
DGX is a gold-backed token and is slated for a public market release by end of Q1 2018. DGX is backed by physical gold on a basis of 1 token to 1 gram of gold. "DGX represents value on the blockchain that can be retained over time with relatively little volatility; giving it greater utility than Ether for a wide range of use-cases. Retail, Rentals, Salaries, Commerce, Lending, Wealth Management."
Ethorse is a DApp for betting on the price of Cryptocurrencies and winning ETH from everyone who bets against you. Users bet with ETH on one of the listed coins or tokens to have the highest price gain in a fixed period. Currently live on the Kovan testnet, with mainnet launch before end of Q2.
FunFair is a decentralised gaming technology platform which uses the Ethereum blockchain, smart contracts and their own Fate (State) Channels to deliver casino solutions with games that are “fun, fast and fair.” FunFair has been on testnet for many months now and the Showcase has been live for even longer. Currently on-boarding casino operators, FunFair is on schedule to launch with its first operator in early Q2.
FundRequest is a decentralized marketplace for open source collaboration. It introduces an easy and secure way to reward bugfixes and feature builds on any project. The FundRequest platform will be going live on mainnet in Q1-Q2 and will allow users to fund and crowdfund open source issues on GitHub using the FND token. Developers can claim the FND token after they’ve successfully resolved the GitHub issue. Q2 will also bring the ability to use any ERC-20 token to fund Open Source Issues on GitHub.
Giveth is an Open-Source Platform for Building Decentralized Altruistic Communities. The first working prototype of their “Minimum Loveable Product,” the Giveth Donation Application, is live on testnet and they “expect to fully open the platform for the public in March 2018.”
Golem has branded itself as “the worldwide supercomputer.” Golem Brass beta will be releasing on the mainnet before end of Q2, allowing users to sell their computing power and earn real GNT for the first time.
iExec is a decentralized cloud computing platform that is blockchain-based. Using a decentralized cloud that connects users to one another it aims to tackle the current limitations of centralized cloud computing that are holding business and innovation back.
Launching in Q2, iExec 2.0 — Cloud Marketplace will include the full marketplace platform network, with the PoCo algorithm (Proof-of-Contribution) enabling the first decentralized cloud.
Kyber network is an on-chain protocol which allows instant exchange and conversion of digital assets and cryptocurrencies with high liquidity. Launched on mainnet in February and was at first only available to people on the ICO whitelist but has since slowly started allowing new user on the platform. Currently only has a few tokens listed but that list will continue to grow and will hopefully bring along with it a surge in daily users/volume.
MakerDao is a decentralized stable coin project that is currently live on mainnet. It is composed of two main parts: MKR and dai (both are ERC-20 tokens).
MKR is a governance token: "MKR holders are the highest authority in the Maker system - they govern the system and benefit financially when they govern it well, but they also have to foot the bill if things are mismanaged - as a group they need strong social cooperation and a vigilant attitude towards governance."
Dai is a decentralized stable coin that is price stabilized against the value of the U.S. Dollar. Dai is used in conjunction with their Oasisdex decentralized exchange, and their CDP (collaterized debt position) margin trading platform to offer "a full solution for global decentralized finance where everyone gets to benefit from the massive economies of scale that become available when global finance is done right."
Currently, dai is only collateralized by Ether but multi-collateral dai will be released in Q2. This means dai will begin to be backed by gold (through DGX) and other ERC-20 tokens. Maker is also looking into collateralizing more traditional investments, like real estate, in the future.
This project can take a little time to understand, so here's a thorough ELIM5 walkthrough.
The Melon protocol is a portal to digital asset management on the blockchain. The frontend operates on top of IPFS, while the backend leverages off a set of Ethereum smart contracts. Melonport just launched on mainnet and they currently have a bug bounty with 500 MLN in it. In a few weeks, the current version will be shut down for fixes and a new version will roll out. Melonport: "Disrupting the US$84.9 trillion asset management industry, one block at a time."
OmiseGo is the Plasma decentralized exchange, hosting an open-source digital wallet platform created by parent company, Omise, connecting mainstream payments, cross-border remittances, and much more. They just had their White Label Wallet SDK public release.
In Q2, OmiseGO will deliver the OmiseGO network and lay the foundations in preparation for Plasma. In Q2 we will see the OmiseGO Proof of Stake public blockchain release, meaning staking will be possible.
(OMG’s cash in/out interface and the Plasma mainnet launch are scheduled for the tail end of 2018/early 2019. Learn more about Plasma from the most cheerful person I know, Karl Floersch, here
Request is a decentralized network that allows anyone to request a payment for which the recipient can pay in a secure way. The first iteration of Request working with Ethereum on mainnet is still on track to launch before March 31. The code for mainnet is currently being audited and when the audits are done, a bug bounty program will follow.
A cryptoeconomic powered adult entertainment ecosystem built on the Ethereum network. Basically, a decentralized cam site (plus a lot more!) Launching on mainnet in Q2 is SpankChain Camsite v1 which will allow for ETH + ERC20 payments and public and private shows all while implementing a low 5% fee for performers (According to their whitepaper, most adult camsites take between a 30-50% cut of performer earnings on top of payment processing fees).
UPDATE (3/23/18): According to community manager Chase Cole, they are aiming to launch the camsite on April 2.
UPDATE (3/27/18): It's official - beginning April 2, the cam site beta program will give token holders and community members access to the initial closed beta shows.
0x is a protocol that facilitates trustless peer-to-peer exchange of ERC20 tokens. 0x protocol is free to use and allows anyone to create a decentralized exchange; we call these relayers. This isn’t a DApp, but allows for the creation of DApps.
A list of some of the DEXs, in varying states of development, that will be utilizing 0x:
Also, an informative article about some of the differences between the various decentralized exchange protocols here. Some general Ethereum news to be excited about:
Vitalik recently hinted, in a since deleted tweet, that the sharding testnet will be coming online in the near future (I think Q2 isn’t too early a guess).
What is sharding? Sharding is where the entire state of the network is split into a bunch of partitions called shards that contain their own independent piece of state and transaction history. In this system, certain nodes would process transactions only for certain shards, allowing the throughput of transactions processed in total across all shards to be much higher than having a single shard do all the work as the mainchain does now. [Source]
What is Casper? Casper FFG aka Vitalik’s Casper is a hybrid POW/POS consensus mechanism. This is the version of Casper that is going to be implemented first. In a Proof of Stake system, validators stake a portion of their Ethers and start validating blocks. Meaning, when they discover a block which they think can be added to the chain, they will validate it by placing a bet on it. [Source]
(To stay up-to-date on Ethereum research development, check out Ethresear.ch)
Speakers include representatives from the Ethereum Foundation, Ledger, Metamask, Shapeshift, Oraclize, Uport, Web3Foundation, Melonport, ConsenSys, JP Morgan, Coinbase – Toshi, Parity, SpankChain, FunFair, Aragon, AirSwap, EEA, IExec, Cosmos, OmiseGO, Circle, Gnosis, among others.
UPDATE: EthCC was a resounding success! If you missed it or want to re-watch any of the talks, check out this handy thread of videos, painstakingly culled and timestamped by u/alsomahler.
The Ethereum Developer Conference (EDCON) is May 3-5 in Toronto. This will be the biggest ETH dev conference since DEVCON 3 last November. The agenda is still being worked out, but speakers include representatives from the Ethereum Foundation, Polkadot, Parity, Plasma, OmiseGO, Cosmos, Tendermint, Giveth, Maker, Gnosis, and many others.
5.6 billion requests per day for Infura.io (Decentralized web3 infrastructure)
280,000 downloads of TruffleSuit (ETH development framework) [Source]
ConsenSys has grown to over 600 employees in six major offices located around the world. I personally think ConsenSys is important (and awesome) because they are huge Ethereum evangelists and provide (in)valuable resources to help bring DApps come to life!
From their website: “The ConsenSys “hub” coordinates, incubates, accelerates and spawns “spoke” ventures through development, resource sharing, acquisitions, investments and the formation of joint ventures. These spokes benefit from foundational components built by ConsenSys that enable new services and business models to be built on the blockchain.”
Several of the projects I listed above are ConSensys formations including AirSwap and MetaMask.
Thanks for reading this far! Hopefully it wasn’t too exhausting of a read.
I am certain I have forgotten some DApps, so please feel free to comment/PM any and all suggestions/corrections to make this list more informative/inclusive/accurate and I will update it. TL;DR
Bitfinex security breach: Trading will be halted as well as all crypto deposits/withdrawals
Today we discovered a security breach that requires us to halt all trading on Bitfinex, as well as halt all digital token deposits to and withdrawals from Bitfinex. We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down and the maintenance page will be left up. The theft is being reported to—and we are co-operating with—law enforcement. As we account for individualized customer losses, we may need to settle open margin positions, associated financing, and/or collateral affected by the breach. Any settlements will be at the current market prices as of 18:00 UTC. We are taking this necessary accounting step to normalize account balances with the objective of resuming operations. We will look at various options to address customer losses later in the investigation. While we are halting all operations at this time, we can confirm that the breach was limited to bitcoin wallets; the other digital tokens traded on Bitfinex are unaffected. We will post updates as and when appropriate on our status page (Bitfinex.statuspage.io) and on the maintenance page. We are deeply concerned about this issue and we are committing every resource to try to resolve it. We ask for the community’s patience as we unravel the causes and consequences of this breach. Updates: As it stands, we are continuing to investigate the hack and understand exactly how relevant systems were compromised. We are also cooperating with authorities and the top blockchain analytic companies in the space to track the stolen bitcoins. In the meantime, we have been working on getting the platform up and running on a secure instance so that users can log in and see if their accounts have been affected as well as the state of their positions and orders. We hope to have an update with more substance later today UTC time. FAQ: How much btc was stolen in the hack? 119,756 Was any LTC/ETH/ETC/USD stolen? No, only bitcoin was stolen. I'll continue to update this, but I'm going to go back to answering messages now. As I see questions come in i'll update the faq.
Bitcoin margin trading, in simple words, allows opening a trading position with leverage, by borrowing funds from the exchange. For example, if we opened a Bitcoin margin position with a 2X leverage and Bitcoin had increased by 10%, then our position would have yielded 20% because of the 2X leverage. Registering with Bitfinex. If you already have a Bitfinex account, go down to “Setting Up Bitfinex Passive Income Margin Funding (Lending).” If you need to get a Bitfinex account we offer you a 10% discount on your trading fees for the first 30 days through Bitfinex referral program. Bitfinex is a centralized cryptocurrency exchange located in British Virgin Islands. It currently has a 24-hour trading volume of $95,960,593 from 154 coins and 307 trading pairs. Bitfinex is established in year 2012. More information about Bitfinex exchange can be found at bitfinex.com Bitfinex allows users to trade with up to 5x leverage by receiving funding from the peer to peer margin funding platform. Users can enter an order to borrow the desired amount of funding at the rate and duration of their choice, or they can simply open a position and Bitfinex will take out funding for them at the best available rate at that time. The largest and most advanced cryptocurrencies exchange
Bitfinex Pt. 6: Margin Trading Bitcoin Facil. Loading... Unsubscribe from Bitcoin Facil? Cancel Unsubscribe. Working... Subscribe Subscribed Unsubscribe 2.6K. Loading... Kostenlos abonnieren: https://goo.gl/12TEw6 In diesem Video zeige ich euch die Basics vom Bitfinex Margin und Exchange Trading. NÄCHSTER 30X ICO? Review Kryptowährungen https://youtu.be/mvsyl ... https://www.bitfinex.com/?refcode=KDERcqElbi Sign up for a Free account on Bitfinex and get 10.0% on trading fees 10.0% on lending fees Margin Lending Calcul...