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Crypto Lending Solutions: A Review of 3 Blockchain Lending Platforms

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Crypto Lending Solutions: A Review of 3 Blockchain Lending Platforms

The proliferation of crypto lending platforms is the latest crypto solution bridging the gap with the traditional financial industry. These platforms offer institutional and retail investors the opportunity to access banking services previously only available in the traditional financial sector.

A typical crypto lending platform enables long-term crypto holders to put their tokens to good use by lending them for agreed-upon interest rates. Doing this beats the passive buy and hold investment strategy and users get access to interest rates that are higher than what the traditional banking sector offers. The financial services provided by these platforms is on par with the services provided by traditional lending solutions. For this reason, crypto holders are increasingly adopting lending services as a way to make passive crypto income. This has led to an explosion of crypto lending solutions aimed at satisfying growing demand.

While this growth justifies crypto’s viability and presents crypto holders with another avenue to make profits, it also complicates the process of determining which platform will best suit individual needs for potential borrowers and lenders. In this article, we will explore three of the leading crypto platforms and highlight the key differences between them to help those interested make a more informed decision. These platforms are BlockFi, Nexo and Celsius Network.

According to BitInfoCharts, 97% of wallets have less than 1 BTC, so the majority of the platforms have focused on retail investors.

Crypto lending solutions

BlockFi

BlockFi is a New York-based crypto lending platform. The startup has pulled off impressive funding rounds. In 2017, it raised $1.5 million in seed funding from Kenetic Capital, Consensys Ventures and SoFi. In 2018, the company was the first in the sector to receive an institutional credit facility from Galaxy Digital.

This year, it embarked on another round of funding, raising $18 million from Valar Ventures with participation from Fidelity, Susquehanna and numerous other strategic investors. BlockFi’s success in accessing financial backing has helped it in its quest to offer bank-like services to the unbanked.

According to BlockFi’s website, it takes an average of two minutes for users to access loans issued in USD on its platform that are backed by crypto assets. To borrow funds, all interested borrowers need to do is follow the sign-up procedure, enter the desired amount to be borrowed, and fill in the Know Your Customer and Anti-Money Laundering documentation. The platform will then instantly provide a loan offer. From there, the borrower deposits collateral in the form of crypto assets with BlockFi’s custodian, Gemini. When this is done, the amount requested is issued in fiat to the borrower’s account or sent as a stablecoin to the borrower’s wallet. Note that with BlockFi, borrowers will need to post at least 150% in collateral to receive a loan.

BlockFi partners with Gemini to store users’ assets. Gemini is an NYDFS licensed custodian, is Deloitte-issued SOC2-compliant, and owns a cold storage facility. For assets in its hot wallet, Gemini has secured insurance from AON.

What are BlockFi’s limits and rates?

BlockFi’s loan rate is pegged at a reasonable 4.5%, with a 25% loan-to-value ratio. Loans run for 12 months, and come with an option to pay the loan off before the term ends or refinance the loan when it’s due. As soon as the loan is repaid, the asset deposited is transferred back to the borrower. The only time the platform can choose to permanently and legally keep the collateral is when a borrower defaults on a payment.

Users of a BlockFi Interest Account can access interest rates as high as 8.6% when they deposit their crypto assets for others to borrow. Interestingly, BlockFi announced in September that it had removed the minimum deposit required before users can start earning interest.

BlockFi in interest account

On every Bitcoin (BTC) deposited into BlockFI, users are eligible to receive 6% in interest, which compounds to a 6.2% annual percentage yield, while the rate for Ethereum is pegged at 4%. When compared to the other platforms reviewed, it was clear that these rates are the highest. For instance, if 1 BTC is deposited with BlockFi for 10 years, and the price of Bitcoin stays at $10,000 throughout the duration. After compounding the interest, using the standard formula for compound interest, at 6.2% APY, the account will earn 0.819397 BTC. This beats a model that relies on rates based on simple interest calculations.

Of the three platforms compared in this post, BlockFi is the only one that does not have clauses promising different rates for token holders. In other words, users do not have to own or pay with a native coin to access the platform’s low rates. They are not urged to buy tokens that have no use outside of BlockFi’s platform, nor come under regulatory scrutiny as to whether those tokens are a security or not. Also, it saves them from worrying about the volatility of an extra coin. Lastly, it saves them from the hassles that come with reporting taxes on their primary coin (BTC or ETH) and the native token, which must be done separately.

Liquidity

BlockFi has embarked on various partnership deals to improve the platform’s liquidity. For one, the startup chose a licensed custodian, Gemini, to hold all deposited crypto assets. It has also teamed up with a third-party loan servicer, which is charged with managing loan contracts and repayments.

According to a report released in April, BlockFi has over $53 million assets under management. It is worth mentioning that BlockFi is planning to add more currency pairs to its platform, starting with the incorporation of the USD/LTC pair before the year runs out. There are also plans to launch a mobile app in the first half of 2020, which will make it easier for users to monitor their accounts and make deposits and withdrawals.

Celsius Network

Celsius Network operates very much like BlockFi, as it allows lending and borrowing without the hassles plaguing traditional lending platforms. Here, users get to take out loans in euros, dollars or stablecoins. Unlike BlockFi, Celsius Network operates an ecosystem where depositors are entitled to 80% of its revenue.

The startup’s marketplace has institutions as the entities accessing loans, while individuals are usually the lenders. This model contradicts conventional financial systems that have institutions supplying funds. As revealed in a publication, Celsius Network allegedly onboarded over 100 active institutional accounts in the first half of the year. Celsius has enlisted two custody solutions for its digital assets. The first is BitGo, which is fast becoming the go-to custodian for crypto firms, and the second is Fireblock.

From the information gathered from its website, there are no withdrawal fees, early termination fees, or default fees charged on the platform. The startup purported that the decision to enable a zero-transaction fee platform was to ensure that users get the appropriate returns on their investments.

Likewise, it recently launched its app to makes activities like depositing, borrowing, withdrawals, and account monitoring significantly easier. Also, the app comes with a feature named Cell Pay, which allows crypto onboarding at lightning speed. To get started, a user simply needs to select the coin he or she wants to send, enter an amount, create a link for the transaction, and send it to the desired contact. The recipient only needs to click the link and follow a simple procedure to claim the coin. This beats the lengthy method of waiting for the recipient to get a wallet and send his or her address.

Celsius Network’s rates

Celsius Network offers 8.95% as its loan rates. However, borrowers that intend to service their loans with the platform’s native token, CEL, can access rates that are as low as 4.95%. Owing to its goal to help users maximize their profits, Celsius Network is offering 8.15% as the interest rate on deposits disbursed in fiat currency, 4.3% on BTC deposits, and 3.75% on ETH deposits. However, native token holders have the opportunity to receive a 10% interest rate on their funds.

Liquidity

According to Cryptoslate, Celsius Network has processed over $4 billion worth of crypto loans. Another report revealed that it has over $375 million worth of assets under management. Furthermore, Celsius has incorporated Bitcoin.com’s trading platform into its ecosystem. This allows users to purchase a variety of crypto assets. Seeing as the platform has no lockup periods, users can withdraw their crypto whenever they like.

By and large, the launch of its app has optimized withdrawal speed. Combining this with the growing number of crypto pairs supported by the platform shows how serious Celsius Network is about providing wide coverage for the crypto community. At the time of this review, the network offers over 20 crypto pairs for its users.

Nexo

Nexo is also a crypto lending service, which has adopted a business model similar to the one Celsius Network runs. Individuals deposit collateral and are instantly eligible to access a revolving credit line. According to a report, Nexo has given out loans worth more than $700 million to 200,000 clients since it launched. To ensure that the platform remains compliant, Nexo has implemented KYC procedures and partnered with Chainalysis to confirm that assets deposited are not sourced from illegal activities.

Nexo uses BitGo as its custodian. BitGo’s cold storage comes with an insurance policy that covers losses of up to $100 million through an arrangement with Lloyd’s of London. More importantly, it charges zero fees. Users are allowed to withdraw their funds or make deposits at any time. In other words, the platform has no lockup period. Like the other two platforms reviewed, this platform adheres to strict KYC and AML requirements. To do this, Nexo utilizes Onfido, a popular ID authentication technology.

Like Celsius, Nexo pays dividends to token holders on the profit generated by lending. Token holders receive 30% of the platform’s profits. Since its launch in May 2018, Nexo has distributed $3,321,645.84 worth of dividends — the highest amount of dividends ever paid out by a blockchain-based company. The annualized dividend yield is an impressive 12.73%, which surpasses all of the highest dividend-paying stocks in the S&P 500.

The platform offers 24/7 account fraud monitoring features for each coin deposited. Similarly, there is a rate calculator embedded on the website, which allows potential borrowers to calculate the daily, monthly and yearly earnings on a given deposit as well as the maximum amount they can borrow against their specified crypto collateral.

Nexo’s Rate

Nexo offers 11.9% as its loan rate while Nexo token holders have access to loans at a lower rate of 5.9%. For its interest rates, lenders make 8.00% on the funds made available to borrowers on the platform. Depositors get to earn daily, as the interest rate compounds. This provides a secure high-yield passive income without any fees or commissions

Liquidity

As mentioned earlier, Nexo claimed to have processed loans to the tune of $700 million. If this assertion is anything close to the truth, then the platform should offer high liquidity. That said, its partnership with Mastercard for its debit card launch makes it easier for users to spend money equivalent to the worth of their digital assets.

Conclusion

While there is a growing number of platforms offering crypto loans, the aforementioned platforms have shown remarkable results that justify their place at the upper echelon of the emerging market. That said, this article is merely the opinion of the writer and shouldn’t be taken as investment advice. As with all investment channels available to the crypto community, readers must carry out their own research before selecting the crypto lending platform that best suits their needs and goals.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Constantin Kogan is a venture partner at BitBull Capital and has been a cryptocurrency investor since 2012. He has over 10 years of experience in corporate leadership, technology and finance. He contributes to the digital asset space as well as the sharing and value economies.

Published at Mon, 06 Jan 2020 14:59:00 +0000

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What Are “Crypto/Digital Assets” and How Can They Be Taxed?

By: Amanda Rosenstock and Aaron Grinhaus Thinking about buying or selling digital, or “cryptographic” assets such as Bitcoin, Ethereum and other cryptocurrencies? Does your business already deal with digital assets? Regardless of whether you’re an investor or a business owner, you should be aware of your potential tax liability when managing your Digital Asset portfolio. … Continued

The post What Are “Crypto/Digital Assets” and How Can They Be Taxed? appeared first on CryptoCanucks.

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By: Amanda Rosenstock and Aaron Grinhaus

Thinking about buying or selling digital, or “cryptographic” assets such as Bitcoin, Ethereum and other cryptocurrencies? Does your business already deal with digital assets? Regardless of whether you’re an investor or a business owner, you should be aware of your potential tax liability when managing your Digital Asset portfolio. Read on to learn more!

What are “Digital Assets”?

A Digital Asset is a cryptographic, often Blockchain-based, unit of value that is exchanged through a decentralized ledger system, based on cryptographic verification as opposed to a traditional third-party verifier such as a bank. “Blockchains” are decentralized payment systems, which allow parties to transfer and verify value exchanges directly, without the need for an intermediary.

Digital Assets are also called “Coins” and “Tokens”. Coins operate on their own Blockchain, store value and can be thought of as an asset intended to replace government-created, or “fiat”, currencies. Tokens are typically Digital Assets that convey information or value on a Blockchain platform created for a specific purpose.

Tax Treatment of Digital Assets

 The way that a transaction involving a Digital Assets is taxed depends on the nature of the transaction. One way the proceeds of disposition of Digital Assets purchased and held for investment may be viewed is as a capital gain. For example, when cryptocurrency that has increased in value is subsequently sold for fiat, the gain will be included in the calculation of an individual’s income for tax purposes in accordance with the current capital gains inclusion rate. On the other hand, when Digital Assets such as cryptocurrencies are exchanged for goods or services, or different cryptocurrencies are exchanged, any gains or losses associated with these transactions may be taxed as business income or barter income. Furthermore, cryptocurrency that is sold for fiat currency will be recognized as business income if trading volumes are frequent and short-term profits are consistently realized. Any profit that is made is fully taxable as business income, subject to any allowable deductions for business expenses. While business income is fully taxable, presently only 50% of capital gains are subject to tax, therefore making it more desirable to handle your Digital Assets in a manner that will trigger capital gains.

Barter transactions occur when goods are exchanged for other goods instead of fiat money. If this is done in the course of business, the fair market value of the goods being exchanged is included in the income of each respective participant in the transaction. For example, if a dentist agrees to perform dental services worth $1500 on a carpenter who, in exchange, offers to build a new deck worth $3000 for the dentist, the dentist must include $3000 in her income while the carpenter must include $1500 in his. In the case of Digital Assets: if an individual trades cryptocurrencies on a daily basis as her primary source of income then every trade could trigger a taxable event, even if no fiat currency was received. This results in a tax liability on the part of the trader even though she didn’t actually realize any gains, which is problematic.

As one of Canada’s earliest law firms specializing in the tax treatment of Digital Assets, the lawyers at Grinhaus Law Firm have the knowledge and expertise required to properly structure your crypto and Digital Asset business and holdings and mitigate your tax consequences. If you are looking to buy, sell or structure Digital Asset holdings, call or email us right away to give you peace of mind regarding your tax liability.

You may also consult with the book published by our founder, Aaron Grinhaus entitled A Practical Guide to Smart Contracts and Blockchain Law (Toronto: LexisNexis Canada Inc., 2019).

PLEASE NOTE: THIS IS NOT INTENDED TO BE LEGAL ADVICE AND SHOULD NOT BE RELIED ON AS SUCH. IT IS IMPORTANT THAT YOU CONSULT WITH A LICENSED PROFESSIONAL.

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Disclaimer: CryptoCanucks.com is not intended to provide tax, legal or investment advice, and nothing on CryptoCanucks.com should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any asset by CryptoCanucks.com or any third party. You alone are solely responsible for determining whether any investment, asset or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation.

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Source: https://cryptocanucks.com/what-are-crypto-digital-assets-and-how-can-they-be-taxed/

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Mining Bitcoin: How to Mine Bitcoin

Introduction to Bitcoin Mining Mid-19th century California gold miners were called “forty-niners” after the year 1849, but this rush actually spanned from 1848-1853; it took five years for a quarter-million people to flood the state in search of “free wealth”. Satoshi Nakamoto first published the white paper on cryptocurrency back in 2008, and Bitcoin was … Continued

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Introduction to Bitcoin Mining

Mid-19th century California gold miners were called “forty-niners” after the year 1849, but this rush actually spanned from 1848-1853; it took five years for a quarter-million people to flood the state in search of “free wealth”. Satoshi Nakamoto first published the white paper on cryptocurrency back in 2008, and Bitcoin was launched in 2009. Today, in 2019, there are at least a million bitcoin miners around the world. A single bitcoin (or “1 BTC”) is worth almost $10,000, give or take a few hundred dollars, and there are around 1,800 new bitcoins mined every day, meaning there’s a whopping $18,000,000 being ‘created’ every day.

Not bad for ten years. No wonder everyone wants to learn how to mine bitcoin.

A Brief History on Money

Cryptocurrency is math that can be used as money.

Money is, fundamentally, an accounting of debt; you owe someone for a good or service, and giving them money erases that debt. Banks are giant ledgers, accounting for every transaction – when you paid for your coffee, this “ledger” sees that you lost $2 and the coffee shop gained $2.

Paper dollar bills do not record this specific transaction – who lost and who gained those $2 – but they act as evidence of a transaction having taken place at some point. In fiat currency, a state is the ultimate arbiter or holder of all the debts – and the one that mints, or makes, the currency in the first place. They account for how much currency they put out, and approximately how much is present now; the only road bump being that they do not know every transaction in between.

In cryptocurrency, no one person or entity controls a central ledger, because this “ledger” is effectively on every computer connected to the network of that currency; everyone has it. Since each unit of the cryptocurrency is composed of math, as opposed to physical substances like paper or gold, this math effectively records every transaction

So Where Does it Come From?

Fiat currencies are “made” (or rather, minted) by states, and accounted for by banks, but these currencies are often directly or indirectly made from precious metals that are mined from the Earth – which is why so many people flooded California in the mid-19th century. Minting is a middle step between the mining and the currency.

Cryptocurrency cuts out that middle step; bitcoin is “minted” and made from BTC mining.

If bitcoin is commercialized math, then mining is the process of solving all its equations. A common, yet accurate, joke explanation is, “imagine if you could solve puzzles, then use those solved puzzles as money”. Bitcoin is that, but on a much larger and astronomically more complex scale; bitcoin mining is both the process of solving puzzles, and the process of verifying other solves puzzles.

That said, these “puzzles” (called “blocks” in BTC mining) are operating on a very complicated scale. BTC mining is basically the process of racing to correctly the correct number out of 115,792,090,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 possible options – and doing so hundreds, thousands, maybe even millions of times a day. This takes some pretty hefty computing power.

How to Mine Bitcoin

Despite a lot of chatter about bitcoin mining software, it is really a matter of hardware; software is just the most accessible way to access this hardware.

“Winning” or solving – and receiving payout for – is a combination of computational power and a bit of luck. If you accomplish this, you can get about 12.5 bitcoins, though starting in 2020, that will become 6.25. The number of bitcoins you receive for solving a block cuts in half every 210,000 blocks – which is roughly every four years, since the blocks get more and more complicated over time. This will keep going until 21 million bitcoins have been mined, a cap built into the system. There are currently only 3.17 million bitcoin left to be mined.

How to Mine Bitcoin in the Hard(ware) Way

There are two types of “miners” you can buy: application-specific integrated circuit (ASIC) or graphics processing unit (GPU). These are not only very expensive to buy, but they also take up a lot of electricity and require a powerful network connection. This is why mining calculators exist – these are various apps and sites into which you can input details on your miner, your power cost, and your network cost, to figure out how much profit (if any, even) you will turn.

It is usually pretty low, and these days, mining with your own hardware is only really advised for people who already happen to have lots of hardware and great network on hand, and would not need to go out of their way to get those.

That just leaves…

How to Mine Bitcoin With Bitcoin Mining Software

At 12.5 BTC per block, when bitcoins are worth $10,000 each, that’s $1,250,000 on the line every time you are competing with other miners to “guess the right number” first. This takes far more computer power than most people can afford on their own.

As such, the most common way to get in on BTC mining is to join a collective of miners and “rent” the mining tools – known predominantly as cloud mining.

The biggest advantage is that there is a much lower barrier to entry when you cloud mine bitcoins. The biggest disadvantage is that instead of getting the reward all to yourself, you are splitting those bitcoins with other people, and typically a lot of them. Winning a million dollars doesn’t mean as much when you’re splitting it with a million people.

Step 1: Choose Your Wallet

Before you start working for a job, you want to know how you will be getting your pay. By the same token, before you start mining for bitcoins, you should know where you will keep your bitcoins once you earn them.

Online wallets are typically the most convenient, and easiest to use. They are also typically the most efficient for actually using your bitcoins to purchase goods and services, and you will have your bitcoins even if you lose all your devices. That said, this does put you in a similar position with a bank. If the host is experiencing heavy traffic or DDOS attacks, you may not be able to access your funds, and if they are hacked, you can lose your bitcoins entirely.

Hardware wallets are the opposite extreme. As physical objects, are completely offline, and thus cannot be hacked or otherwise remotely attacked. As long as you have your hardware wallet and a device to access it with, you will be able to access your funds. But what you gain in remote security is lost in personal security; if you lose your device or it’s physically stolen from you, you lose your bitcoins.
The middle-ground between these is “software wallets” or “desktop wallets” (though these can also be mobile apps). These are on your local device, so even if exchanges go down or are attacked, you still have your bitcoins, and the only way you can lose them to remote exploitation is if you, the specific individual, are targeted and hacked, which is very unlikely. But, it can still be used to conduct transactions and otherwise go online as necessary. That said, this is also vulnerable to loss if you lose your physical device (i.e. if someone steals your computer).

Step 2: Find Your Cloud

Mining companies are the computing clouds or collectives of miners. While joining such a company might be couched in terms of renting the hardware, another way to look at it might be that you are investing.

The amount you invest, or the rate at which you rent, is known as a “mining package”, which you pick once you join a mining company. You can also invest ahead of time in new technology that will be coming out at a later date. That said, investing in something that doesn’t exist yet is always a heavy risk.

There are many sites in which you can find comparisons between companies, including user ratings and reviews. Be careful with the
reviews – while they can be insightful, many are also full of people attempting to get new ‘recruits’ specifically with referral codes, which will net the refer-er a small bonus or profit.

Step 3: Pick Your Pool

A “pool” is basically the team of miners that you choose to join up with, and contribute your invest or computing power. If you are just starting out mining bitcoins, you should start by joining an “older” (or rather, more established and vouched-for) pool, and perhaps one with lower fees. The payout or profit from these will usually be on the low side, but they are also less risky.

As you get the hang of bitcoin mining and learn how pools work, you can start venturing out to other pools that aren’t as established and carry higher risks, but also higher rewards.

Buy Bitcoin, Ethereum, XRP, and other cryptocurrencies on Coinsquare, the world’s home for cryptocurrency.


Coinsquare

Source: Coinsquare: Mining Bitcoin: How to Mine Bitcoin

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Disclaimer: CryptoCanucks.com is not intended to provide tax, legal or investment advice, and nothing on CryptoCanucks.com should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any asset by CryptoCanucks.com or any third party. You alone are solely responsible for determining whether any investment, asset or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. You should consult an attorney or tax professional regarding your specific legal or tax situation.

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Source: https://cryptocanucks.com/mining-bitcoin-how-to-mine-bitcoin/

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Elon Musk asks Twitter whether Tesla should accept Dogecoin for cars

The “Dogefather” may greenlight Dogecoin as an acceptable payment method for Tesla vehicles.

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Tesla CEO Elon Musk has stirred the proverbial “doges’ nest” once again with another tweet about the quintessential meme coin, Dogecoin (DOGE).

Tweeting on Tuesday, Musk ran a Twitter poll asking respondents whether they want Tesla to accept Dogecoin as a payment method.

The poll, posted at 8:00 a.m. UTC, garnered over 400,000 responses in the first 10 minutes and is almost at the one million mark as of the time of writing. Musk’s Twitter poll will run for 24 hours and could be a precursor to the company adding the popular meme coin as a payment method.

Dogecoin proponents have been urging the Tesla CEO to add the Shiba Inu-themed cryptocurrency to its list of accepted payment methods given Musk’s apparent fondness for the token.

Indeed, responses to the poll has been overwhelmingly favorable with about 78% of respondents in support of Tesla accepting Dogecoin payments.

As expected, Musk’s tweet has caused a significant reaction in the Dogecoin price with the 15-minute chart showing a sudden price action surge for DOGE coinciding with the time when the poll was published.

Source: TradingView

Dogecoin is up more than 10,600% year-to-date and seemed on course for the $1 mark earlier in May on the back of feverish market enthusiasm.

Such has been the Dogecoin enthusiasm that internet search interest for DOGE outstripped Bitcoin for the first time according to Google Trends.

Tuesday’s tweet is the latest linking Dogecoin to one of Musk’s companies. As previously reported by Cointelegraph, Geometric Energy Corporation — a Canadian manufacturing and logistics firm — has announced plans for a DOGE-fueled payload on one of SpaceX’s first rockets to the moon.

Tesla already accepts Bitcoin (BTC) as a payment method for its electric vehicles. The company made the announcement back in March while also stating its intentions to run a Bitcoin node. Tesla has also stated that it will “HODL” the BTC payments received for its cars.

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Source: https://cointelegraph.com/news/elon-musk-asks-twitter-whether-tesla-should-accept-dogecoin-for-cars

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Globe Closes $18M Round to Create Best-in-Class Derivatives Platform

Crypto derivatives, once the preserve of an elite group of risk-happy traders, have gone mainstream. Today, retail users flock to futures markets en masse, and they’ve now got one more venue to choose from: GlobeDX. The derivatives exchange is preparing to kick into high gear after closing an $18M private round that reads like a […]

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Crypto derivatives, once the preserve of an elite group of risk-happy traders, have gone mainstream. Today, retail users flock to futures markets en masse, and they’ve now got one more venue to choose from: GlobeDX. The derivatives exchange is preparing to kick into high gear after closing an $18M private round that reads like a who’s who of blockchain VC.

Investors are clearly bullish on the UK-based exchange, and so are retail investors too, judging by Globe’s heavily oversubscribed presale.

The company just announced a LBP on Balancer for the GDT token.

From there, it’s onto phase two: onboarding crypto traders, from newbies to pros. That will arguably be a tougher challenge than anything that’s passed up until now, but Globe’s team is confident it can deliver.

Y Combinator Coughs Up to Fuel Globe Expansion

Y Combinator was a lead investor in Globe’s private round which also saw Pantera Capital, Draper Dragon and Republic Crypto write checks. With the likes of OKEx, CMT Digital, and Wave Financial also chipping in, GlobeDX had no trouble in meeting its funding target, paving the way for everything that comes next.

First up, of course, is the public sale on April 30, after which participants will be able to put their newly acquired GDT tokens to use, initially to secure a discount on trading fees. There are clear analogies between GlobeDX and Binance when it was at a similar stage in its evolution. That’s not to say that Globe is destined to become the next Binance, but it’s certainly gotten off on a similarly sound footing.

Indeed, Globe’s recently completed presale was larger than that of Binance, and the fact that Globe has onboarded 200 partners already augurs well for its future. “We’re working closely with our investors and strategic partners to bring innovative products for our traders on Globe. Trading defi perpetuals on an exchange built by trad-fi veterans will be a whole new experience for crypto traders,” enthused GlobeDX CEO James West.

A Multi-Trillion Dollar Market

GlobeDX has entered a lucrative market whose trade volumes routinely run into trillions of dollars per month. $2.13T of futures were traded in March, with Bybit accounting for around $300 billion of that. While it will take time for Globe to capture serious market share from its rivals, it’s on the right track, and its pledge to deliver superior UX and deep liquidity is resonating with traders.

Just as the crypto spot and futures markets create winners and losers on a daily basis, the same is true of the exchanges themselves. Most of the new platforms that launch will not become the next Binance or Bybit, and will instead have to content themselves with soaking up the long tail of crypto traders who for whatever reason have eschewed the market-leading exchanges. If GlobeDX can build up a loyal user base of its own, however, it will be primed to start luring traders away from the big two.

Featured image via Unsplash.

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Source: https://www.cryptoglobe.com/latest/2021/05/globe-closes-18m-round-to-create-best-in-class-derivatives-platform/

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