The Hard Fork – Weekly Market Commentary

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This Week’s Topics:
1) FTX launches bitcoin options trading
2) Uniswap transactional fee volume rises
3) Bitcoin.com seeks $50 million IEO

 

Indices Round-up
TradeBlock Index Asset1 Price ($) 7d∆2
BCX Bitcoin Cash 266.80 12.99%
LTX Litecoin 50.38 11.66%
EOSX EOS 3.13 11.64%
ZCX Zcash 36.15 9.36%
XBX Bitcoin 8,105.22 7.25%
ECX Ethereum Classic 5.41 7.25%
XMRX Monero 58.11 3.85%
ETX Ethereum 143.80 1.27%
XRX XRP 0.21 0.36%
XLMX Stellar Lumens 0.05 -1.13%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 01/06/2020 06:00 ET thru 01/13/2020 06:00 ET.

7 day price movers

Digital currencies posted a broad rally on the week. Among our indexed currencies, BCX rose the most, gaining 12.99%. Conversely, XLMX declined the most, losing 1.13% on the week. Ether Classic traded up as its hard fork, Agharta, was successfully initiated on Sunday. Agharta allows Ether Classic to become more interoperable with Ethereum. Ether Classic and Ethereum were initiated as separate chains as the result of a hard fork in July of 2016. In traditional markets, US equities closed the week higher after US and Iranian tensions cooled, allowing for a renewed optimism in global economic expansion.

 

FTX launches bitcoin option trading

This past week the digital currency derivatives trading platform, FTX, launched options on bitcoin and within the first two hours saw $1 million in trading activity. In addition to its options offering, FTX also offers futures contracts on various digital currencies.

The number of firms launching options trading on digital currencies is set to increase considerably in the near future. Bakkt launched bitcoin options trading in December, and both the CME and OKEx are set to launch options trading in the next days to weeks.

Digital currency derivative trading has risen over the last year as more platforms initiate new product launches. In 2019, various firms launched new digital currency futures offerings as bitcoin futures trading volume across US regulated platforms saw its highest volume year yet. Despite the increase in futures trading volume over the full year, the second half of 2019 saw activity fall as the price of bitcoin slumped.

 

Uniswap transactional fee volume rises

The Ethereum based decentralized exchange, Uniswap, has seen an increase in trading activity as volumes on the exchange approach their highest levels yet. In the figure below, we diagram trading volume at Uniswap over time. While trading volumes at Uniswap have increased making it one of the highest volume decentralized exchanges, DEXs still see markedly lower volumes than centralized exchanges.

Figure 1: Uniswap trading volumes over time

Data for chart sourced from Uniswap

As trading activity has risen, so have the fees generated from this increased volume. Currently, participants that add liquidity to the Uniswap network receive 30 bps per trade. Over 2019, more than $1.2 million have been paid to liquidity providers on the network. In the figure below, we diagram trading fees generated on the Uniswap network over time. DEXs are one of the closer watched areas within decentralized finance (DeFi), and a rise in fee activity indicates as increase in sustainability of such platforms.

Figure 2: Uniswap trading fee payment over time

Data for chart sourced from Uniswap

 

Bitcoin.com seeks $50 million IEO

Bitcoin.com, which maintains an exchange like marketplace, is looking to raise $50 million in an Initial Exchange Offering (IEO). Offering documents obtained by The Block, have indicated the firm would look to raise the funds in a private sale in which contriobuters would receive the exchange’s BCE token.

If Bitcoin.com is successful in its raise, it will join a long list of other exchanges that have launched their own tokens. Earlier this year, Bitfinex launched its LEO token, joining Binance, FTX, Huobi, and other exchanges that currently maintain their own tokens. While the exact details of Bitcoin.com’s token and its token economics remain unclear, the majority of exchange tokens include provisions that the exchange will use a percentage of its trading revenue to buy back and burn outstanding tokens.

While IEOs were popular in the first few months of 2019, in recent months there has been a reduction in new offerings. If Bitcoin.com raises $50 million, it would rank as one of the larger IEO tokens by capital raised.

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