Bancor’s Approach to Handling Impermanent Loss Shows Financial Viability

Bancor has been working on a reliable method to address impermanent loss and it seems to have struck gold with its insurance-based approach

The Bancor Network has been busy trying to solve the issue of impermanent loss on its decentralized exchange. In a recent report, the protocol showed significant success with its approach, leading to the belief that it might be able to handle the protection of temporary loss of funds in the long term.

Impermanent Loss on DEXs

Yesterday, Bancor released a Protocol Health Report for its v2.1 decentralized exchange (DEX) upgrade.

The report covered the exchange’s financial and operational performance for the past quarter, showing significant liquidity and revenue gains.

As the report showed, liquidity across the DEX rose by 100 percent over the past three months, resulting in about 700,000 BNT (worth $1.12 million) in earnings from swap fees. However, the platform’s strategy on impermanent loss appeared to have faltered.

When Bancor launched the DEX late last year, it focused primarily on effective impermanent loss management.

Also known as divergence loss, the impermanent loss is a problem that affects mostly exchanges that run on the automated market maker (AMM) protocol. It occurs when liquidity providers (LPs) lose funds due to the volatility of a trading pair. It basically describes how much revenue an investor would have earned if they had held on rather than provide liquidity to the market.

The effect of this divergence is a loss of value, compared to the benchmark “buy and hold” portfolio.

The loss is termed “impermanent” because it could be reverted if the prices returned to their original state. However, even in the best scenarios, losses due to divergence will reduce liquidity providers’ profits from price swings.

Possible Long-Term Benefits

Bancor had initially tried to solve the problem with oracles, which reads token prices and render arbitrage virtually unnecessary.

However, front-running issues rendered this approach impractical. So, the exchange deployed an insurance mechanism to cover the cost of impermanent loss.

The project implemented a vesting schedule to incentivize LPs to stake their tokens in the long term.

The protocol’s strategy was to incentivize more altcoin holders to become LPs instead of adopting the buy-and-hold strategy. Another strategy Bancor plans to explore is to encourage projects to use their treasuries to provide liquidity to AMMs. Just like proof-of-stake (PoS) rewards, the method could allow projects with considerable token reserves to increase liquidity on token pairs and also get additional rewards.

The vesting schedule will see Bancor provide one percent coverage on liquidity capital for up to 100 days. However, LPs who make withdrawals before 30 days won’t get any compensation for losses in that period.

Bancor’s approach appears to be yielding benefits. As the company reported, the total impermanent loss associated with withdrawn liquidity amounted to 41,000 BNT ($64,000). On the flip side, the protocol also earned 350,00 BNT ($560,000) in fees.

Bancor added that some LPs withdrew their deposits before getting 100 percent insurance. These LPs got partial protection, which was paid based on their coverage level. The report pointed out,

“As the proportion of insurance policies with 100% protection increases over time, it stands to reason that the associated cost to the protocol will rise. However, various factors suggest the protocol is able to handle this insurance burden.”

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Author: Jimmy Aki

A $6.6 Million Seed Round Startup Launches “Easy” Crypto Purchasing Services

  • Ziglu, a cryptocurrency startup based in London, launches allowing an easy, safe and reliable crypto purchase gateway.

An official report released by Ziglu on June 15, 2020 confirms the launch of crypto marketplace and exchange, Ziglu after a $6.6 million seed round funding from friends and other angel investors. According to CEO of Ziglu, Mark Hipperson, the exchange is aiming to bring to its customers the best, cheapest and fastest ways to purchase multiple cryptocurrencies from one place.

Over the past few years, cryptocurrency has taken a hold growing to a massive ~$200 billion market capitalization in a decade. The growth of the market enticed more banks to take up the role of providing a gateway for crypto purchases and withdrawals. Hipperson however believes the market has changed a lot since the early days and hence has a strategy to do things different.

As the competition to offer avenues to purchase crypto heats up, Hipperson believes the current buyers of crypto are looking for a safe and easy way to get their crypto. Speaking on the launch of Ziglu, Hipperson said,

“This launch marks the beginning of an exciting journey for Ziglu to deliver transformational financial services for our customers. By offering immediate and safe access to best-price crypto, customers can spend, exchange and send their money, regardless of the currency, where, when and how they want.”

Ziglu will allow users to buy and sell multiple cryptocurrencies on the platform including BTC, ETH, LTC and BCH with about “15 cryptocurrencies expected to be added this year” according to demand, Hipperson said.

The statement also confirms a possible debit card launch in the coming quarter to allow users to spend their crypto easily. Ziglu is currently available on the iOS Apple Store for mobile devices.

Hipperson also spoke on the effects of the current COVID-19 global pandemic on the launch of Ziglu. The application will partner with two exchanges (instead of the planned five) at launch with more exchanges expected at a later date.

Ziglu enters an arena full of competitors including Twitter CEO, Jack Dorsey’s Square app, which together with Grayscale Trust combine for a total of 50% of Bitcoin daily purchases from miners. The app recently rolled out new features that allows users to stack satoshis on a daily, weekly or monthly automatically.

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Author: Lujan Odera

JPMorgan’s Jamie Dimon Dismisses Libra as ‘Neat Idea’ That’ll Never Happen

Nowadays, you can’t go on any reliable source of blockchain news without stumbling into something new about Libra. Sadly, this remains the case.

Libra has taken large amounts of scrutiny, a fair amount of praise, and now a fair amount of pure dismissal. Jamie Dimon, JPMorgan Chase’s Chief Executive Officer, described Libra as something that’s a neat idea, but will never happen.

Dimon delivered this comment during his speech at the Institute of International Finance conference that happened on Friday. Bloomberg reported the comment on the 18th of October. Dimon stressed the fact that the ideas behind Libra’s construction aren’t unique. Dimon then rather cleverly turned the conversation to his company’s stablecoin: JPM Coin. He revealed that JPMorgan is investing over $11 billion on technological development this year.

JPM Coin, XRP and Libra

Dimon had reiterated his opinion about Facebook’s coin when he had commented in July this year that Libra has no short term threat for JPMorgan. At the time, he tried to argue that people have been talking about blockchain technology for more than seven years. In those seven years, according to Dimon, very little new things have happened. He stated that they’re going to talk about Libra like that within three years.

JPMorgan’s native coin is selling itself to have three early applications. Umar Farooq, Head of JPMorgan’s Blockchain Products, had stated that fact. The first application would be to help facilitate cross-border payments for large corporate businesses. These businesses currently rely on wire transfer networks, such as SWIFT.

The second application is Securities Transactions, with the last being Treasury Services to help replace funds a firm holds in various subsidiaries across the globe.

A Mudslinging Warning

Dimon, before JPMorgan announced its own stablecoin, has been incredibly vocal with his low opinion of Bitcoin. Now that the US Bank has stepped into the blockchain ring, all they have is praise for this new form of technology. They also hold condemnation for other types of cryptocurrency due to those being inadequate compared to theirs.

In an objective opinion, Dimon’s statement that Libra will never work out could easily be considered a mudsling. Something that was thrown out there to ruin Libra’s reputation. This could be further reinforced by the fact that directly after that comment, he moved to his company’s coin and sang its praises.

Whatever you, the readers, think about Libra, please do not let blatant political moves like this skew your view. Libra has made enough mistakes to warrant apprehension, and they have made enough promises to warrant praise. It is not Dimon’s job, as a direct competitor, to comment on anything about the prospective stablecoin.

Libra has already fallen on tough times due to regulators cracking down on the stablecoin. Countries across the EU and groups within the US consider Libra a threat to the world’s economy, due to its potential in destabilizing a country’s currency.

Times will inevitably change, and an international currency will happen. It may not be Libra, and it may not be now. However, it should definitely not be because a rival CEO commented about it.

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Author: Ali Raza

XRP Decentralization: Only One out of Five Of Ripple’s UNL Validators Are Run by Company

  • The UNL is a list of the validators that Ripple believes are most reliable to verify transactions.
  • Ripple aims to eventually no longer be a part of the process in selecting validators.

Decentralization is one of the key components of the cryptocurrency industry that has proponents excited. The fans of Ripple and XRP are now taking a moment to celebrate, due to a recent milestone achieved on the XRP Ledger. According to a recent article from crypto news outlet DH, the list of trusted validators with Ripple has been updated, and the new details reveal that 79% of the nodes no longer are run by Ripple, which is major progress for decentralization. More specifically, only seven of the 34 UNL validators recorded on the network claim Ripple as their owner.

Validators in the Ripple network are in charge of performing the math to decide if transactions are valid. This validity determines if the network accepts or rejects the transaction, which is meant to prevent abuse and double spending on the network. The list of trusted validators, which is a unique node list (UNL), shows which validators are deemed most reliable by Ripple.

True decentralization means that there is no one company or entity that is in charge, and Ripple has come under fire multiple times from the public for their seeming lack of decentralization. Still, Ripple aims to eventually remove itself from the process by which these validators are determined.

Ripple isn’t the only one with this type of process. CoinField, a cryptocurrency exchange in Canada, has recently launched a UNL validator.

Right now, there’s a project that Ripple is keeping under wraps to help them increase the adoption of the native token. However, at least until November’s Malta Blockchain Summit, this project remains a secret to anyone outside of the Ripple team.

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Author: Krystle M

VirgoCX Exchange Review: Safe to Use Crypto Trading Platform?

VirgoCX Exchange Review: Safe to Use Crypto Trading Platform?

VirgoCX is a secure, reliable, and liquid cryptocurrency exchange platform that deals in buying, selling, and trading digital assets such as Bitcoin, Ethereum, stablecoins, and more.

The Toronto-based fiat-to-crypto exchange offers the best-in-class trading experience to a global network of both retail and institutional investors. The platform is currently open to Canadians who are 18 years and above. The global platform will be available to the public in the fourth quarter of 2019 to serve international clients.

The platform seeks to redefine crypto trading by offering the following benefits:

  • Cost-effective: competitive trading and transaction costs
  • Liquid: It offers high liquidity whenever you want it. Users get optimal execution prices
  • Secure: the platform employs time-tested strategy to protect users against internal and external threats.
  • Easy to use: the platform comes with an intuitive and user-friendly interface.
  • Reliable: Users enjoy 24/7 continuous trading with rapid fiat deposits and withdrawals.

VirgoCX Features

Stablecoin Trading Center

On VirgoCX, users can buy, sell, or trade all major stablecoins such as Tether (USDT), Gemini Dollar (GUSD), Paxos Standard (PAX), USD Coin (USDC), and more.

Fully Regulated Service

VirgoCX is fully compliant with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) rules and regulations. The platform provides users with full transparency.

Industry-Leading Technology

Powered by VirgoTrade, the platform’s proprietary trade engine ensures a highly efficient trading experience and allows for advanced API connectivity.

Impeccable Security

The platform leverages multi-signature cold wallet technology and 90% of the assets will be stored in the cold wallet. Besides, fiat funds are held in trusted financial institutions in the US and Canada.

Efficient Fiat Payment

VirgoCX’s stable and long-lasting relationships with reputable payment partners make domestic or international fiat deposits and withdrawals fast and errorless.

24/7 Multi-Language Support

The platform has a reliable customer support staff, available 24/7 across the globe.

Account Security

VirgoCX strives to ensure that each account is as safe as possible. Therefore, all users are advised to enable Google Authenticator.

Steps to Set Up Google Authenticator

Step 1: To set up 2FA, you have to download the “Google Authenticator app.” Users can download the app from the Apple store or Google Play Store.

Step 2: When you have the “Google Authenticator” ready, log in to your account, click “Account Settings” from the left dashboard, and then click “Security.” You will find the “Google Authenticator” at the bottom. Simply click on “Enable” and follow the instructions to set up the 2FA.

Step 3:  Open the Google Authenticator app, scan the QR code, and it will generate a 6-digit code or “token.” Enter the code to confirm. This code is updated every 30 seconds. The Google Authentication Key is used only when you are not able to scan the QR code.

Please note that it is a good practice to keep a copy of Google Authenticator key at a safe place in case the Google Authenticator is lost and you will be able to recover the Google Authenticator using the key.

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Author: Bitcoin Exchange Guide News Team

Reserve and Chainlink Partner to Strengthen the Future of Decentralized Stablecoins

Reserve and Chainlink Partner to Strengthen the Future of Decentralized Stablecoins
  • Chainlink has been considered to be an industry leader when it comes to providing reliable data feeds that can be used for smart contracts.
  • Reserve will be utilizing Chainlink to help make the protocol that they rely on be more secure for users and also be able to accelerate the development timeline.

A Secure and Reliable Network is Needed for Success

Having a robust and dependable Oracle network is very important for any stablecoin design. These are smart contracts that have been incorporated with the stablecoin protocols, which become only as effective as the price data, that is used to regulate their behavior. Therefore, it is crucial for a company to get this step of implementation right as it aids in the success of the coin.

A reserve protocol requires to have reliable price data to ensure it can maintain the 1:1 peg against the US dollar, this is achieved by monitoring the reserve stablecoin constantly against the dollar. But this is not all as it will require adequate management of the portfolio of the current collateral tokens that have been used to back the Reserve Token.

“Natural” Industry Partners

The Co-founder and the CEO of the Reserve, Nevin Freeman, notes that he sees both the Reserve and Chainlink as being natural partners in the industry. As they are both able to build critical pieces that are needed for the decentralized infrastructure, making both part of the great movement.

Thus, without proper on chain price feed being offered, most dApps will not be able to work without them. He goes on to state the following.

“We’re very excited about stablecoins and their potential to make crypto a medium of exchange. Projects like Reserve are taking seriously the task of making crypto practical for daily transactions in the parts of the world that need it most.”

Since the launch of Chainlink, the Reserve team has been following very carefully, and from this, they considered the company to be the best option in using them as a reliable oracle solution.

Chainlink Considered A Community Leader

Chainlink has been established as a decentralized oracle network, that allows the smart contracts to access the off chain data feeds securely, traditional bank payments together with the web APIs.

A platform that is being selected as the top blockchain technologies by the leading firms within the community; the likes of Gartner.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Lorraine M