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Why Liquidations Are Needed In Crypto

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Nexo

If the current COVID-19 pandemic has exemplified one thing, it is that our individual actions might have dire consequences for all of us. Unfortunately, human nature propels the majority of humankind to put their individual interests first and it truly takes a severe crisis to open up our eyes to the interconnectedness of everything.

Of course, the crypto markets and the blockchain space are not resistant to the general forces that rule everywhere else. The unprecedented meltdown of prices across crypto assets with BTC shedding as much as 47% of its value intraday on March 12–13, 2020, calls for a rigorous analysis of the most recent events and an explanation on how Nexo did what it had to do to protect its customers.

It is through assessment of real-life stress-testing that the blockchain industry’s collective immune system develops the necessary resilience and this is of the utmost importance as the world’s total unpreparedness for the COVID-19 threat clearly showed.

This post examines the crypto lending space in which Nexo takes a prominent place but the conclusions can be projected to any asset-based lending business and any financial institution throughout the world.

Crypto Lending 101

Any significant crypto lender has two major lines of business:

1. Crypto-backed lending​ — clients deposit crypto assets as collateral with a crypto lender in order to receive a loan. This happens without any credit checks, as the loan is secured by the underlying collateral.

2. Earn interest products​ — clients add funds to their accounts with a crypto lending company in order to earn interest on their idle assets.

While some companies might use the funds received on ‘Earn Interest’ products for a myriad of trading strategies and directional bets on the market, the general case states that a crypto lending institution should be using the funds received from ‘Earn interest’ products to finance crypto-backed loans for their customers.

Knowing what the company that you are entrusting your hard-earned cash with is doing and how it protects your assets makes all the difference for your financial success, especially during times of immense volatility.

At Nexo, we are completely transparent as to what we do with the funds clients are earning interest on — we finance crypto loans secured by 200–500% of collateral.

The reason we are the financial institution of choice for crypto-backed lending is simple: Nexo has developed fully automated lending and collateral management capabilities that can handle a large number of loans with near-instant execution in 200+ jurisdictions around the clock. The fact is that automated online credit facilitation is no simple matter, and we have been doing it successfully for more than 13 years now. We believe this is the main differentiating factor and reason why more than 650,000 users entrust Nexo with their assets.

Let’s Talk about the Elephant in the Room — Liquidations

Nexo

It is our hope that you, a savvy enough individual to take an interest in crypto, someone equipped with the mindset to encompass the crypto lending business model in its entirety, will appreciate the fact that an enterprise such as Nexo is at all times protecting the interests of both the borrowers and the people funding the loans, i.e. those earning interest on their assets.

Let us unequivocally state: We do not enjoy liquidating clients as this brings them great distress and there is nothing we like to see less. Nexo’s revenues and NEXO Token holders’ dividends are generated by the interest our clients pay on their loans, therefore liquidations go against the very essence of our business and token models as they shrink the loan book and reduce revenue.

Still, we have a fiduciary duty to everyone involved with Nexo. Considering that there are no credit checks for our products, the collateral that borrowers pledge in order to receive a loan is what guarantees the funds of those clients earning interest on their assets. The entire Nexo loan portfolio is overcollateralized by a factor of 200–500% which is what makes Nexo’s ‘Earn Interest’ product arguably even safer than banking deposits which guarantee funds only up to €100,000 in the EU, and only up to $250,000 in the US. It is important to note that Nexo’s protection mechanisms apply to any amount and are not capped.

Consider these two types of entities:

1. An institution that transparently says to its loan customers — “if the collateral backing your loan drops below a certain point and you do not add more collateral or repay part of your loan, we will need to automatically liquidate your assets in order to ensure that the people who have funded your loan do not lose their funds”

VS.

2. A company that takes no interest in price volatility and tells its loan customers that they can take their time to top up their collateral or repay their loans, as there will be no liquidations in the meantime even when the collateral becomes insufficient to cover their outstanding loan.

Would you ever consider entrusting any form of money to the second company?​ Of course, you would not.

If for some reason you still decide to place your funds with them, imagine the following scenario: A borrower takes a $100,000 loan against BTC but the price of BTC drops and the collateral is now worth merely $20,000. This loan is entirely funded by your money. How incentivized do you think the borrower would be to repay the loan at all and how protected would your savings be?

The truth of the matter is that a crypto lending company that does not issue price-based margin calls and does not liquidate collateral automatically most probably does not have working collateral management and

liquidation engine systems at all. Not liquidating collateral efficiently and on time for loans that are underwater is basically betting the entire enterprise and by extension, all the customers’ funds. Masquerading the lack of liquidations as an act of goodwill towards its clients would be audacity of the highest caliber, as it is quite simply making a risky bet on the price of crypto assets. In the instance of March 12–13, 2020 such a bet worked out as the market quickly recovered. But had prices continued to decline, the company and its clients would have been wiped out at even lower prices.

Why Does Nexo Care If Another Company Blows Up?

make your own cryptocurrency

For a number of reasons — predominantly because we are taking the long-term view and do not want people in our still nascent industry to lose any of their assets. And without price-based liquidations of collateral, this is bound to happen sooner rather than later. Аs anyone who has ever visited a casino knows all toо well — play long enough and you will lose everything. The free drinks equivalent of the casino in our example above are the few percent of interest that are being “paid back to the community” by such companies in order for them to keep on making risky bets with your hard-earned assets until ​the bubble blows up​.

Unlike traditional financial markets, where bailouts by governments might reduce some of the systemic risks, the ramifications of such a blowup in the crypto space go well beyond just the individual losses — they are detrimental to crypto lending and the entire blockchain community. It gives legislators, politicians and those failing to recognize the benefits of distributed ledger technology further excuses to stifle innovation and to prevent the mass adoption of crypto by pointing out the deficiencies and the foul play of irresponsible actors. We have seen this time and again with every instance of something going wrong in the crypto space.

If the blockchain space and crypto finance are to grow beyond being a boutique, niche industry of a few hundred billion dollars, all major drivers of the space need to adopt proper fiduciary governance and the space needs to institutionalize. Only this will ensure a large influx of people coming to realize that in light of the money printing bonanza and the distorted market principles that proliferate our economies today, crypto is part of the possible solution to not only preserving your current wealth but managing and growing it.

Disclaimer: This is a sponsored post. Readers should do their own due diligence before taking any actions related to any company, product or service mentioned in this article. BitcoinAfrica.io is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this post. 

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Conflux Ecosystem Grants Program: With Over 2.4 Billion CFX In Rewards

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Conflux Ecosystem

We are pleased to announce the launch of our Conflux Ecosystem Grants Program.

About the Conflux Ecosystem Grants Program

ConfluxThe Conflux Ecosystem Grants Program aims to fund entrepreneurs, engineers, and evangelists who have the vision to catapult innovations in software development, research, education, and community building for the Conflux Network ecosystem.

Our grants program application process will be launched in waves. In the first wave, we are looking to support submissions that are focused on supporting infrastructure tools for developers to build highly scalable products and DApps that drive the innovations and augment the composability of our technology stack to bring more users and developers to the decentralised world.

The categories we are interested in funding through this grants program are mentioned below.

Grant Categories

Tools and Infrastructure

Development tools and infrastructure components that will make the Conflux Network easily accessible and composable.

  • Development Environments like frameworks, IDEs, and security tools to attract existing developers to build on Conflux and tools that bridge the gap for new programmers to become blockchain developers. 
  • Blockchain Bridges to other established networks for asset and state transfers and facilitate the interoperability and cross-chain composability of blockchains that are crucial to the growth of Web3.
  • Oracles for prices, identity, land management, intellectual property, etc. that are a key component in facilitating the transition from Web2 to Web3 and a critical link to real-world information. 
  • Mobile Development tools like SDKs, Key Management, Wallets, and others that can put blockchain applications on devices across the world in a safe, secure, and reliable manner.
  • Token standards for NFTS, RFTS, fungible token equivalents, presenting novel ways of tokenising assets or information, with the potential to form methodologies and standards that can be applied to various use cases.

Decentralised Applications

DApps to drive user adoption, liquidity, and composability on Conflux Network.

  • DEXs for Swap/AMM (Automated Market Making), perpetual swap (futures), leverage trading, exotic derivatives (options and synthetic assets) that will be crucial for next-generation DeFi and grow our DEX ecosystem through new types of exchanges and swappable assets.
  • Token projects like non-USD Stablecoins, Cross-chain BTC, ETH, Gold custodian backed tokens, others backed by different assets in order to diversify the economic activity on Conflux Network.
  • Payment channel on Conflux with USDT (or other Stablecoins) for micropayments and settlement scenarios like gaming, tipping, gifts, etc. by leveraging our super-low transaction fees and fast confirmation time, reducing the barriers of adoption.
  • Identity Solutions like Decentralised ID, user control data exchanges, automated KYC that are integral to create new applications for broader adoption of the Web3 space. 
  • Lending & Borrowing platforms as they are powerful components of our growing DeFi ecosystem that will give users the ability to lend and borrow, and grow their assets.

Grant Funding Tiers

The projects applying for grants are eligible for funding of up to $50k based on the grants category, market potential, and alignment with the Conflux Network’s vision. The grant amounts mentioned below are in USD and the funds will, subject to eligibility and the terms and conditions of the Program, be disbursed in CFX post full Mainnet launch.

Tiers

Tier 1 – Grant amount up to $15k per project that can be completed in 0-2 months

Tier 2 – Grant amount up to $50k per project that can be completed in 2-6 months

The approval process for Projects applying for Tier 1 grants is faster than projects applying for Tier 2. Preference will be given to projects that are not planning on having 100% of their early-stage funding covered through the Conflux Ecosystem Grants.

Eligibility Requirements

We are looking for tangible outcomes in a fixed timeframe from the projects that apply for the grants. Few important points that would make a successful application are: 

  1. The project work should be in progress and open-source for community use. This will be helpful for transparency and quicker due diligence for decision making.
  2. The teams should have experience in delivering blockchain solutions in the past and strong track records that are quantifiable.
  3. Projects should be working towards tangible outcomes that can be achieved in a set timeframe, preferably 6 months or less. We are looking for sharpshooters with a precise, actionable aim in mind.
  4. Projects should be able to clearly disclose what the grant shall be used for with a detailed breakdown of costs.
  5. The teams need to demonstrate a long term commitment to build and operate the solutions on the Conflux Network, thus mutually beneficial for the growth of the platform and the products that are built.

How to Apply For a Grant

To apply for the Ecosystem Grants Program, please visit grants.confluxnetwork.org

Get in Touch With Us

If you have any questions about the grants process, please email us at grants@conflux-chain.org

Disclaimer: This is a paid sponsored post. Readers should do their own due diligence before taking any actions related to any company, product or service mentioned in this article. BitcoinAfrica.io is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this post. 

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How to Trade Stock Indices with Bitcoin on TradeConnect

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TradeConnect

When you hear people talking about “the market”, they are often talking about Stock Indices. Even if you haven’t ever traded a Stock Index before, there’s a good chance that you will have heard the name of some of the more famous US, European, and Asian Stock Indices such as the Dow Jones or the NASDAQ in the US, the ASX200 in Australia, the DAX 30 in Germany or the Nikkei 225 in Japan.

Finding ways to trade Stock Indices with bitcoin isn’t easy. This is mostly due to the fact that if you want to trade both traditional and new digital markets, it is expensive and time consuming to move in and out of fiat on multiple trading platforms.

TradeConnect removes these barriers to entry by connecting crypto traders with over 60 different global financial assets including Forex, Stock Indices, Commodities and Cryptocurrency CFDs using bitcoin or ethereum as margin collateral in a single, easy-to-use trading network.

Trading Stock Indices on TradeConnect is quick, easy and secure. TradeConnect uses a central limit order book to ensure all trades on the platform are transparent and fulfilled at the best price, at the best time. It also has a $100 million dollar insurance policy to ensure security is the highest priority.

TradeConnect also has some of the lowest fees in the industry due to its unique ‘Connect Fee’ model and daily fee rebates of up to 75% for active Makers and Takers.

BONUS PROMOTION: New traders also get $50 USD in BTC, ETH or TCO free when they complete their first 10 trades on TradeConnect.

So let’s take a closer look at what a Stock Index is, why you would trade it and how you can trade Stock Indices using bitcoin on TradeConnect.

What is a Stock Index?

A Stock Index, also known as a Share Index or a Stock Market Index, tracks and measures baskets of related stocks from a particular country.

Stock Indices are created by combining the value of several Stocks to highlight one aggregated value that is then used to compare current market price levels with historical price levels in order to calculate the overall market performance within a specific country.

Stock Indices are powerful indicators for global and country-specific economies worldwide and are used by economists, politicians and analysts to help understand how well the financial markets, and companies within those country-specific markets, are performing.

Types of Stock Indices

Stock indices can be made up of many different factors. Some are grouped by geographical location, others industry sector or even company size. Different stock exchanges deal with different types of stocks.

For example, the NASDAQ Index only lists technology stocks. The ASX200 consists of Australia’s largest 200 companies by market capitalization. The S&P 500, in contrast, measures the stock performance of the top 500 companies in the US.

There are approximately 5000 US indexes in the US alone and the 3 most followed stock indices, by both the media and investors, are generally thought to be the S&P 500, Dow Jones Industrial Average and the NASDAQ Composite. In 2018 it was reported that there are nearly 3.3 million stock market indices around the world.

Advantages of Trading Stock Index CFDs

The advantage of trading a Stock Index over individual stocks is that firstly, they offer exposure to an entire industry rather than a single Stock; Secondly, you do not need to conduct research on every individual company report as you would if you traded a single Stock; Thirdly, the price movement of Stock Indices is generally known to be much less volatile and a smoother experience than trading individual Stocks as an individual Stock can’t cause an extreme price spike within a Stock Indice.

How to Trade Stock Indices with Bitcoin on TradeConnect?

TradeConnect LogoOn TradeConnect you can trade over 15 different Stock Index CFDs using bitcoin, including: Australia 200 (AUS200), BOVESPA Future (BRAZIL 60), China A50 (CHINA50), Euro Stoxx 50 (ESTX50), French CAC 40 (FRA40), German DAX 30 (GER30), Hong Kong H250 (HK50), Japan Nikkei 225 (JPN225), Nasdaq (NAS100), SPAIN 35 (SPAIN 35), US S&P 500 (SPX500), UK 100 (UK100), Dow 30 (US 30), US Dollar Index (USDINDEX), and the South Africa 40 Index (ZAR40)

To get started trading Stock Indices with bitcoin on TradeConnect all you need to do is follow these 5 simple steps:

Step 1: Download the TradeConnect app

Step 2: Select the Stock Index that you want to trade

Step 3: Deposit bitcoin into your TradeConnect wallet

Step 4: Open your trading position

Step 5: Monitor and close your trading position

That’s it!

Want to trade Stock Indices with bitcoin on TradeConnect? Download the TradeConnect mobile app today!

Disclaimer: This is a paid sponsored post. Readers should do their own due diligence before taking any actions related to any company, product or service mentioned in this article. BitcoinAfrica.io is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this post. 

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African Traders Prefer PrimeXBT’s Powerful Trading Technology Over Competition

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PrimeXBT

Bitcoin is one of the most disruptive and impactful new technologies of the 21st century. But some of the technology powering the trading platforms where the asset trades on the open market, pack nearly as much innovation and power.

PrimeXBT is an award-winning Bitcoin-based margin trading platform offering traders access to not only emerging digital assets like cryptocurrencies, but CFDs on traditional assets such as gold, oil, forex, and major stock indices like the Nasdaq 100 consisting of top US tech stocks.

Accounts are denominated in Bitcoin, so savvy investors are able to continue to accumulate more BTC trading any instrument on the platform. The variety and diversity alone helps PrimeXBT stand out from the competition, but the technology the platform is built on and innovative features are second-to-none.

Secure, Reliable Trading Platform Protected By Bank Grade Protections

PrimeXBTPrimeXBT offers a custom, in-house trading engine that provides up to 99.9% uptime for the ultimate reliability.

Cloudflare DDoS protection, password encryption, address whitelisting, and two-factor authentication protects the website from any attacks, disruption of service, or intrusion attempts. Client funds lie behind multiple layers of bank-grade security.

Crystal by Bitfury is integrated within the platform to prevent money laundering and ensure full AML compliance, further protecting users.

Customisable User Interface, Advanced Trading Tools, And More

The trading terminal is highly customisable, and the easy-to-use interface offers many widgets to build the ideal trading environment for any trader of any experience level. Built-in charting software gives traders full control over their trading strategy, and clicking on the chart to place orders provides incredible accuracy.

Long and short portions let traders profit whichever way the market turns, and stop loss and take profit orders enable added control over risk and reward.

A progressive fee discount system offers the most active traders up to 50% off all trading fees and is tracked internally within the account dashboard so users can keep track of their progress towards each of the many levels of savings.

Innovative Trading Performance The Competition Cannot Match

The advanced trading platform has many innovative tools that simply aren’t found elsewhere at competitors. A new short-duration synthetic Bitcoin product called Turbo lets traders uniquely position themselves within the market by accurately predicting which way the market will turn.

PrimeXBT Bitcoin

A first-of-its-kind Telegram bot keeps users tapped into market and position data at all times, even when mobile carrier signals are deteriorating or when Wifi isn’t strong enough to access the full platform.

During normal conditions, a free mobile app offered through the Apple App Store for iOS and Google Play Store for Android devices offers everything mentioned above from anywhere in the world.

All trades are executed on one of many Amazon AWS cloud servers, that are connected to multiple liquidity providers for ultra fast order execution.

Ongoing investment into research and development ensures that the platform will remain ahead of the competition and best serve its clients through future updates.

Digital and Traditional Assets Combined Under One Roof

African traders not only prefer PrimeXBT for its technology but for the vast variety of trading instruments offered on the platform. Nowhere else can traders build such a diverse portfolio of assets across digital and traditional markets.

The cutting edge trading platform offers the trading of cryptocurrencies such as Bitcoin, Ethereum, Ripple, Litecoin, and EOS. In addition, PrimeXBT offers CFDs for forex, commodities, stock indices, and gold and silver.

Major stock indices, oil, gold, and more have all been experiencing some of the strongest volatility in history, and all of these assets on one platform is a value simply not found elsewhere other than PrimeXBT.

The Bottom Line: African Traders Prefer PrimeXBT Tech

With low minimum deposits, 60-second registration, and a platform built from the ground up on powerful technology and unrivaled innovation, PrimeXBT is the preferred platform by African Bitcoin traders seeking an all-in-one solution.

New user registrations in the region show a steady uptick in growth, and recent job listings point to further global expansion by the platform. With plans to continue to aggressively grow so apparent, what technology will PrimeXBT roll out with next?

Disclaimer: This is a sponsored post. Readers should do their own due diligence before taking any actions related to any company, product or service mentioned in this article. BitcoinAfrica.io is not responsible, directly or indirectly, for any loss or damage caused by or in connection with the use of or reliance on any content, product or service mentioned in this post. 

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