CryptoAM: Ownership + Liquidity with Ethfinex, Bitmonster, and Smart Dubai

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Good morning CryptoAMers. Don't you just love the smell of napalm in the morning?


3 things you need to know:

One: Bitmain made a monster $1 Billion profit in Q1. That’s nearly as much profit as it made in the entirety of 2017. This is more positive news for Bitmain which is hoping to go public on the Hong Kong stock exchange in the near future. Bitmain is on track to have a $15 billion pre-IPO valuation. They’ve also been aggressively scaling their development team, signaling that they are looking to expand rapidly into a variety of crypto-related activities.

  • Hungry: Outside of manufacturing mining hardware, Bitmain is looking into manufacturing chips for AI and has made a number of strategic investments in companies such as Circle and Block.one.

  • To big to fail? Bitmain is causing sleepless nights for those who value decentralization. Many people worry that the size and massive production ability of Bitmain could allow it to launch a 51% attack on the Bitcoin network. Last month, Bitmain reported that they only have 4% control of the network — but this isn’t taking into account the amount of hardware bought from Bitmain (hardware backdoor?) or the nearly 50% BTC hashing power represented by mining pools controlled by Bitmain. This is likely an overblown worry, as the incentives aren’t there for Bitmain to attack the network, but it certainly isn’t an ideal situation either.

  • Read more…

Two: Binance Labs announces partnership with Libra Credit in order to provide BNB-backed loans. Libra Credit users will be able to use BNB as collateral to take out fiat or crypto loans. Libra Credit’s current loan book value is nearing $1 billion!

  • What is LIBRA? “LIBRA CREDIT is a decentralized global lending network that facilitates open access to credit anywhere and anytime.”

  • Financial Products: The cryptocurrency ecosystem is continuing to prove that you can take any traditional finance product, apply it to crypto, and find a winner. Recently crypto projects that mimic credit cards, savings accounts, money market accounts, loans, robo-advisors and more have come out. If the cryptocurrency world is to grow, we will need products in this space that provide people familiar avenues of use. It’s good to see innovation in the user experience space — we need people to interact with crypto in ways they are already used to.

  • Impact: If Binance allows its customers to take out loans directly from Binance.com, it could be huge news for BNB. It is unclear from the announcement whether Binance has any plans to integrate Libra Credit within its own platform. Currently, the only loan platform that accepts BNB is Nexo.

  • Read more…

Three: Dubai to integrate blockchain into its legal system. The Smart Dubai initiative is helping the Dubai International Financial Center courts to form a task force. The task force’s objective is to use a blockchain based system to share documents between courts, eliminating unnecessary duplication and ensuring parity and authenticity. Long term goals include potentially having some sort or dispute resolution on the blockchain, with laws coded into smart contracts.

  • “Future research will combine expertise and resources to investigate handling disputes arising out of private and public blockchains, with regulation and contractual terms encoded within the smart contract”

  • Read more…


Also in the news:


What I’m reading today:

Ethfinex and Their New Trustless Portal

The original dream of Bitcoin was to become a completely decentralized and open commerce system, not subject to the government or censorship in any way. Decentralization and the removal of intermediaries has been so central to the ethos of cryptocurrency, that it’s become the rallying cry for most people championing crypto.

Decentralize everything!

The odd thing is that most people interact with crypto through centralized intermediaries. When you buy cryptocurrency, it’s unlikely you’re buying from a friend. You’re probably buying from Coinbase, a centralized company. When you trade, you’re probably on Binance, or GDAX. You’re trusting another company to hold your cryptocurrency when you’re on a third party exchange. The only true way to own your crypto is by owning the private key, which no centralized exchanges offer at the moment.

There are good reasons that centralization has taken hold. It’s easier to build a centralized organization than a decentralized one. For a long time, the technology just hasn’t been available. Decentralized exchanges, marketplaces, and applications have been scant for quite some time as they were technologically difficult! Even when they were built out, the UI was so slow and unintuitive that few people used them. (*cough* EtherDelta *cough*)

Thanks to developments on the protocol layer (like 0x and Bancor) which make it easier to build out exchanges with we’ve seen a ramping up in the development of decentralized exchanges like ParaDex, Idex, etc. They generally have the same issues of UI and lack of liquidity, though the second generation has made slight improvements.

Enter hybrid exchanges. Hybrid exchanges allow users to store their crypto (and truly own it) while also getting access to the liquidity of traditional exchanges. There weren’t many large players in this space — until now.

Ethfinex — a sister company of Bitfinex, the largest crypto exchange in the world — recently announced they would be rolling out a trustless, decentralized portal that would allow users to trade their tokens on the intuitive Ethfinex UI, get access to the liquidity of the platform, and have full ownership tokens in same way a decentralized exchange works.

“Our model makes us unique. We’re a hybrid order book, allowing orders from centralized exchanges to be matched with users of a decentralised exchange interface. The result is a much cheaper and faster experience for the trader, whilst gaining all the benefits of full control over your funds.”

- Will Harborne, Director of Operations at Ethfinex

What’s interesting about their approach is they've utilized the 0x protocol, and managed to integrate it completely with the familiar Bitfinex/Ethfinex UI. I got excited about this because it’s the first large exchange to actively tackle the issue of decentralization, and have executed on it faster than Binance, Coinbase, etc. The most important part to traders will be the enhanced liquidity. On most decentralized exchanges there are incredibly wide spreads, which essentially amount to additional fees. As others continue to innovate we will see solutions improve and evolve, but for now you can check out the new portal on Ethfinex and send me your thoughts!


Around the corner:


Market Outlook:

Quick Take

We saw a breakthrough of the strong 8.1k support, and as expected have retraced down to 7.8k. The bullish market structure of the past few weeks has been broken, and a new strong resistance of 8.3k has established itself. I’m looking to 7.7k and 7.5k for support. A break below 7.7k and I’m shorting to 7.5k. A break below 7.5k and 6.8k is likely.

Daily Chart

Fear & Greed

We’re approaching fearful. We may see an attempted bounce off the 7.5k and 7.6k target levels due to panicked overselling.

Here’s a reminder of what these criteria mean

Overall Picture

Looking forward, the technicals and fundamentals of Bitcoin are looking bearish. While obviously not a rigorous (or representative) sample, the brief twitter poll I conducted yesterday has about 8% of respondents predicting the ETF will get passed on August 9th. Our own estimates for ETF approval are much lower, so if the market had priced in even 4% we likely saw overpriced BTC. The markets are still driven by retail investors, who often over/underestimate the potential of potential events.

The bullish theory was that a break above 8k would drive retail investors back into the market as they piled in. This theory was invalidated by the breakdown around 8.2k, and we now have to pay attention to the longer timeframe to judge movement.

My personal approach is to assume we are in a continued downtrend until 11.8k is broken or there is fundamental news that changes the landscape. I believe the cryptocurrency markets are likely saturated for the time being, and that new investors will require a catalyst to drive price up. Speculation of an ETF being approved was a potential catalyst, and did not generate enough buying pressure. I now believe something stronger is needed to restart a bull run.


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CryptoAM is a Ledger Group project. We offer consultancy, advisory and investing services for both established companies and start-ups interested in the blockchain & digital asset space.