COTI has opted to use a Chainlink-based system as its oracle for the CVI index. As a way to expand trading and hedging opportunities in the crypto markets, COTI developed the Crypto Volatility Index (CVI). This index measures the rate of change in major tokens.
In a recent announcement, COTI disclosed that Chainlink will be used to both decentralize how the market data for the CVI is gathered, as well as how the data is distributed across the DeFi ecosystem.
As a trusted oracle platform, Chainlink will help the CVI to grow into a trusted source for crypto market volatility information, which can then be used to create derivatives contracts or be fed into other areas that can use the data.
COTI Created the First CVI
The CVI that COTI created is meant to be a “fear index” that measures the market’s view of how likely a large downturn is over the coming 30 days. The VIX has performed this function in the US equity markets for decades, and the CVI may become as popular in the crypto markets.
A volatility index is a basis for creating effective hedging derivatives, which is a tool that professional crypto investors have lacked up to this point. Instead of measuring a single crypto’s expected volatility, the CVI measures the major tokens, on a market-cap weighted basis.
By creating a broad hedging tool, the CVI will allow derivatives exchanges to open a new market in crypto volatility futures. DeFi volatility contracts can be created as well, and because Chainlink is a standard in the DeFi ecosystem, the CVI can easily interface with smart contracts.
A Solid Metric
COTI used Chainlink because it is able to aggregate numerous off-chain data sources and put them into an on-chain format. This means that the CVI can take data from just about anywhere, and package it into a form that is easy to use in the DeFi ecosystem.
The system uses Chainlink External Adapters, which creates smart contracts that are able to connect off-chain sources to Chainlink nodes. These contracts direct the data that the node gathers, via a list of specific tasks.
In short, this system will have access to the best data in the world and also be able to tap multiple sources so that the CVI represents an accurate reading of market conditions.
In addition to its capability, the Chainlink ecosystem is operated by some of the most trusted teams in the cryptosphere. By creating a high level of trust within its system, COTI has done a lot to make the CVI a future industry standard for market information.
The uses for volatility data in any market are diverse, and this kind of data will likely lead to new trading tools, as a volatility gauge is often used by algorithmic traders in their trading systems.
Signs of a Maturing Market
The upcoming CVI launch demonstrates how far the crypto markets have come in just a few short years. Tools like the VIX took decades to create, however, in the crypto space, the CVI has been developed a few years after cryptos came into the public eye.
Professional investors will no doubt welcome crypto tools that are based on the CVI – and given the open format of the CVI’s data distribution, it should be an easy sell to both crypto exchanges and legacy operations like the CBOE.
The debut of the CVI is just one more sign that crypto is entering the highest levels of finance, and will likely continue to expand in both popularity and use over the coming years.
The CVI’s Beta is live and can be seen by clicking here.
If you want to learn more about COTI, and the other projects that the company is developing, just click here to visit the company’s website.
Bitcoin down 3.5% as MicroStrategy confirms $1bn purchase
Bitcoin is currently trading 3.5% down from today’s high of $51,500 following MicroStrategy’s announcement that it had purchased more than $1 billion worth of Bitcoin.
MicroStrategy CEO Michael Saylor revealed that the Bitcoin was purchased at an average price of $52,765, taking the company’s overall holdings of BTC up to 90,531 ($4.44 billion).
Whilst many would expect this news to have a bullish reaction, the market immediately sold-off as it suppressed rumours that MicroStrategy was yet to buy after it raised $1 billion in the form of an unsecured loan last week.
Despite rallying alongside Bitcoin’s increase in value earlier this year, MicroStrategy’s share price is 43% down from its peak of $1,320 on February 8.
MicroStrategy has purchased an additional ~19,452 bitcoins for ~$1.026 billion in cash at an average price of ~$52,765 per #bitcoin. As of 2/24/2021, we #hodl ~90,531 bitcoins acquired for ~$2.171 billion at an average price of ~$23,985 per bitcoin. $MSTRhttps://t.co/FbsRYhXEhn
— Michael Saylor (@michael_saylor) February 24, 2021
The high risk and potentially high reward approach from MicroStrategy has not yet converted to many other companies with the exception of Tesla and Square, with the former investing $1.5 billion in January.
This may be due to the volatile nature of cryptocurrencies in general, with market cycles being susceptible to 80% drawdowns once the hype and euphoria around respective bull markets subside.
At the time of writing Bitcoin is trading at $49,450, a stark contrast to this time last year when Bitcoin was valued at $10,000 before it crashed to $3,800 in March.
For more news, guides and cryptocurrency analysis, click here.
Crypto Lending Explained 2021
Out of $7 bn locked in the whole DeFi niche, crypto lending dApps account for a half of this amount. To put this in perspective, DEXes aggregate only $2 billion. So, what are crypto lending platforms and how can you use them?
What is traditional lending?
Lending in traditional markets is a fundamental concept originated many years ago together with a definition of debt, but in crypto everything has just begun. Summer 2020 saw an influx of daily active users on top of such projects as MakerDAO, Compound and Aave – the platforms enabling their clients to lend and borrow a diverse range of cryptocurrencies.
Let’s take a deeper look at how these platforms work, but before we do so, here is how the concept of lending functions in traditional markets.
A lender is a financial institution that makes funds available to you, a borrower, with the expectation that you will repay the funds with an interest or fees after some time. While borrowing from a bank, you will be assessed based on your credit history and a pledged collateral.
Collateral may take the form of real estate or other kinds of assets that the lender will accept as security for a loan. Once you default on your loan payments, the lender can seize your collateral to recoup some or all of the losses.
What is crypto lending?
Why was the concept of traditional lending important to explain? Because it’s almost the same with the crypto markets, except… it’s not quite the same!
First of all, all of crypto lending services are based on blockchain, mostly on the Ethereum blockchain, although not necessary, which means no traditional banks or custodians.
In addition to that, market players manipulate with quite different assets and have to know where and how to purchase them.
And last but not least, the volatility in the crypto market is huge, so be prepared for your loans to be generally more than 100% collateralized.
This is what an ecosystem of the crypto-lending niche looks like:
Crypto lenders are not banks, they might be centralized entities, such as Genesis Capital, Unchained Capital, BlockFi, OTC desks or exchanges that use margin lending and trading, or decentralized ones.
The latter are protocols that rely on smart contracts to automate the distribution of loans and interest payments. These are the ones we will be talking about in this article: Maker, Compound and ETHLend.
Crypto borrowers normally wish to trade and can pledge collateral in the form of cash or crypto
Crypto lending platforms, interestingly, play the role of a middleman or a matchmaker in this game.
Although there are centralized crypto lending services, we’re going to talk about these platforms in DeFi since it’s a hot topic these days.
Top crypto lending platforms in DeFi
According to DappRadar, top three crypto lending platforms in DeFi, as of writing, are Aave, MakerDAO and Compound.
There are many more crypto lending services out there, of course, which you can see for yourself if you go to DappRadar. But for educational purposes, it will be enough to get familiar with at least top three of them in terms of total value locked.
Aave ($1,54 bn of total value locked)
As their website states, Aave (from the Finnish word for “ghost”) is an open-source and non-custodial protocol enabling decentralized lending and borrowing. Lenders provide liquidity to the market, to earn a passive income, while borrowers are able to borrow in an overcollateralized or undercollateralized fashion.
Lenders earn on ERC20-compliant aTokens at a 1:1 ratio to supplied assets. Meaning, while lending 36 Dai, they receive 36 aTokens (36 aDai).
Interest rates adjust algorithmically based on supply and demand, but Aave lets borrowers opt in to and out of (at any time) a stable rate that changes less often. From borrowers, a 0.00001% of the loan amount is collected on loan origination and 0.09% from Flash Loans, a developers oriented feature that allows to borrow any available amount of assets without collateral.
Compound ($621,2 mln of total value locked)
Compound is an algorithmic money-market protocol on Ethereum that allows you to borrow or lend funds and earn interest for providing liquidity. Rates adjust automatically based on supply and demand.
Just like in the Aave case, supplied asset balances are represented by ERC20-minted tokens, but on top of Compound, they’re called cTokens. Now, imagine you’ve accelerated a certain amount of cTokens on your account after lending funds, now you can borrow up to 50-75% of their cTokens’ value, depending on the quality of the underlying asset
The Compound protocol sets aside 10% of interest paid as reserves; the rest goes to suppliers.
C.R.E.A.M. Finance ($250.6 mln of total value locked)
C.R.E.A.M. Finance stands for Crypto Rules Everything Around Me. It is a peer-to-peer lending platform focused on providing lending, exchange, payment, and asset tokenization services.
The main feature of this platform is bringing liquidity to the underserved assets, such as stablecoins (USDT, USDC, BUSD, yCRV, etc), governance tokens (COMP, BAL, YFI, LEND, CRV, CREAM, MTA, SUSHI) and others such as ETH, LINK, and renBTC.
Since 1st September 2020, CREAM has made the switch from Ethereum to Binance Smart Chain (BSC).
Yield farmers who create and deposit assets into liquidity pools on Cream Swap’s platform receive Cream Pool Tokens (CRPT).
Summer 2020 saw an influx of daily active users on top of such projects as MakerDAO, Compound and Aave – the platforms enabling their clients to lend and borrow a diverse range of cryptocurrencies.
Out of $7 bn locked in the whole DeFi niche, crypto lending platforms account for a half of this amount.
Crypto lending services are based on blockchain, mostly on the Ethereum blockchain, although not necessary, which means no traditional banks or custodians.
DeFi crypto lending platforms have experienced a hype this summer attracting around $10 billion into their smart contracts.
Based on these numbers we might conclude that migration of banking to blockchain seems like a natural next step for the whole crypto niche and will only evolve.
Source: TradeSanta Start free trial
Make Money like Professional Trader with Easy Strategies
Professional traders have their way of doing things that set them apart from ordinary traders. With their trading techniques, mindset, and lifestyle, the traders have the upper hand to earn more money than novice traders. You’re likely asking yourself what more you can do to make money like a professional trader since you must have tried severally. Don’t worry because this article reveals easy strategies to make money like a professional trader.
Understanding the mindset of a professional trader
Professional traders know what it takes to be successful in the trade. They set everything right in place, including their minds. What they do revolves around professional trading techniques. These pros understand the benefits of using the right trading tools and the importance of time and effort. Therefore, to succeed as a professional trader, you need to learn how to trade wisely with the right tools. You also need to know how to utilize your time well, put in some effort, and remain focused.
Simple tips to help you trade like a pro
If you would like to become a successful trader, you need to begin behaving like one already. Many people normally treat trading just like one of their hobbies, and that’s why they fail. Trading is usually serious business, and you need to treat it as such to succeed. If you would like to build your life on top of the trading business and support your family, your actions should match your words. Below are some simple strategies you can use to make good money as a trader.
- Learn continuously
Pro traders have more knowledge than basic trading information. It would help if you also strived to acquire more trading knowledge to stay on top of the game. Being knowledgeable allows you to remain up-to-date on appropriate trading plans. It also keeps you flexible and alert to the ever-changing market trends. For example, if you need to invest in the stock market, you need to learn factors such as entry stock and different stock types to succeed. Hence, to make good money like a professional trader requires the readiness to learn and improve continuously.
- Choose your mentor
Every successful trader started their journey with a mentor. Similarly, it would be best to choose a successful trader in your industry that can mentor you appropriately. Mentorship in trading is critical because the mentors understand the business’s ins and outs. Trading under a mentor when you are getting started will give insight and prevent you from making mistakes that can lead to loss of business or money.
- Develop a winning mindset
You need to enter trading with an objective like that of a professional to win. Don’t rush into trade with only a mindset of making money. Yes, you need to make money, but that should be the ultimate result after mastering the trade.
- Work on your trading plan
Once you develop your trading plan, you should be ready to review the plan with time. Reviewing comprises the addition of beneficial ideas and eliminating the plans that have proven not to work well. Working on your plans should be an ongoing activity as a trader. You can set regular intervals for reviewing your trading plans to be more effective.
- Be a smart risk-taker
Risk-taking is part and parcel of pro traders. These individuals are willing to venture into businesses that novice traders are afraid to venture into. They understand the market trends and are aware that the market situation can change at any time. Experienced traders can pick up trading from anywhere rather than fearing to start a seemingly low market or competitive business.
Risk-taking can be profitable in business. However, you need to understand your risk tolerance before you start investing. One of the factors to consider in your risk tolerance is your entry stock for your stock trade.
- Trade with discipline
It would be best if you stuck to your trading plans to stay on track. Losing focus on the way can cost you a fortune. Your business doesn’t have to be profitable every time, but you need to stay focused on your plans. Professionals are always disciplined, and their self-control is on top. They are not easily swayed by any enticing events that seem to bring better earnings.
- Plan your life
Professionals know how to play their trading game without any interference from their personal lives. You need to properly plan everything surrounding your life to avoid disrupting your trade. It is important to keep your personal life issues away from the business. Learning how to separate your personal life from business is one of the ways you can succeed as a trader.
- Watch for warning signals
There are often early warnings signaling upcoming trade failure. It would help if you were alert to notice such signals with ease and take the necessary actions. Novice traders usually ignore the signals or assume them as they hope for magic to prevent their trade from failing. Ignoring such warning signs will only lead to massive losses that would have been preventable.
- Have unique and creative strategies
Business requires a lot of creativity to develop ideas that are different from the others. Unique and effective strategies allow your trade to stand out. You need to do in-depth research of the current market to develop such winning strategies. After developing your strategies, implement, and stick to them unless there’s a need to make some changes to match the rising market demands.
- Cultivate emotional resilience
Trading comes with both profits and losses. Even if you’ve mastered the art of professional trading, there will be a time when you will realize some losses. With emotional resilience, you will learn to treat losses as a learning opportunity. It is also good to be flexible and knowledgeable to know when to break from trading. Further, have control over your emotions to remain as objective as possible as you trade. Logic should drive you when trading rather than emotions and mere speculations.
Making money can be a complicated process, especially when trading as a beginner. However, if you implement the easy strategies highlighted in this post, you will make money like a professional trader and build your income.
Author Bio –
Robert Miller – I am Professional freelance writer for 10+ years and written for many clients online and offline. Since 2009, I have ghostwritten many blog entries for several satisfied customers. I am an avid reader of blogs that cover a wide variety of topics, I stay on top of what is relevant and popular in the world of blog writing.
Trailing Take Profit Explained
Trailing Take Profit
Trailing Take Profit is used by the traders to increase their gains when the prices moves in a favorable direction. Let’s have a look at what is Trailing Take Profit and how it works.
What Is a Trailing Take Profit?
Trailing Take Profit is a term largely used in crypto, whereas you may encounter the term Trailing Stop in traditional trading describing almost the same thing, So what’s the difference between Trailing Take Profit and Trailing Stop? Trailing Stop is a type of Stop Loss automatically moving in the same direction as the asset’s price. Trailing Take Profit is nothing else than Trailing Stop activated after initial Take Profit is reached.
The main difference between these two is that Trailing Take Profit takes the profit in any case (altough it might be later annihilated by Trailing Stop). Thus, Trailing Take Profit reduces the risks that might’ve occurred using Trailing Stop alone. Trailing Take Profit is bound to the maximum of Take Profit price instead of just a price increase/decrease.
As you might notice, the terms Trailing Take Profit and Stop Loss are quite similar. To avoid confusion, in this article we will be talking about Trailing Take Profit as defined above.
Trailing Take Profit only moves in one direction. It is designed to lock in profit and limit losses. The trailing profit only moves up (in case of a long strategy) once the price has surpassed previous high and a new high has been established. If the trailing take profit moves up, it cannot move back down, thus securing the profit and preventing losses.
Trailing Take Profit allows the trade to remain open and continue to profit as long as the price is moving in the investor’s favor. If the price changes direction and the change surpasses the previously set percentage the order will be closed.
How Does it Work?
For example if you buy BTC at the price of 10000, if you set a Take Profit at 11000 and a Trailing Take Profit at 5% :
If the price goes up to 10500, nothing happens because the Take Profit at 11000 has not been reached.
Then if the BTC price goes up top 11000, a Stop Order at 10450 will be set.
Then if the BTC price goes down to 10500, the Stop Order stays at 104500.
Then if the BTC price goes up to 12000, the Stop Order moves to 11400.
Then if the BTC price goes down to 11000, the Stop Order at 11400 is executed.
You see that without Trailing Take Profit, the buy order would have been sold at 11000. Thus, a trader would miss an earning opportunity at 11400.
The Risks of Trailing Take Profit
There are several rules to remember if you want to take advantage of Trailing Take Profit:
1)Don’t use Trailing Take Profit on coins with low liquidity (daily volume less than 100 BTC). You may end up losing money due to unpredictable price movements.
2)Avoid Trailing Take Profit for the coins with a wide spread between buy and sell. It may work not as you expected closing the deal earlier than needed.
3)Set Trailing Take Profit reasonably relative to the Take Profit Percentage. Establishing the idealing Trailing Take Profit distance is the hardest part. If you set Trailing Take Profit too tight, it will be triggered by the normal day market movements and the trade has little room to move and you may end up losing the gains you could’ve earned. If you set Trailing Take Profit too wide you’re risking to give up more profit than it was needed.
4)If you want to catch a price movement and expect the price to return to its previous level, consider using Take Profit instead of Trailing Take Profit option, Trailing Take Profit is used best
Trailing Take Profit is an effective tool in a traders arsenal. Keep in mind the risks of Trailing Take profit and test different approaches with Virtual bots to find the best approach for your trading style.
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