||Exchange Coins|| Steemit Crypto Academy - S5W1 - Homework Post for @imagen
Hope you are all doing well. We are in first week of season 5 of Cryptoacademy. Today i am writing homework task for professor @imagen which is about Exchange Coins etc. Let's begin.
Perform a complete analysis of the currency of some exchange. Not allowed: BNB, KuCoin, Cake and Uniswap.
Crytocurremcy exchanges are market places that facilitate trade between buyers and sellers. Crypto exchanges are coming up with diverse trading options. All the exchanges provide some basic trading types and support most of the crypto coins with good market cap and ranking. Some of the exchanges also provide some unique features as well. Most of the well know exchanges like Binamce, Kucoin, FTX etc have their native tokens. Native tokens are maemt to provide some special benefits to users of that exchange. For this task, I'l discuss about DETO token.
DETO is the native token of Delta exchange that has been serving us since 2018. DETO is the ERC 20 standard based utility token of Delta exchange that provides following benefits to the users of Delta exchange.
- DETO is rewarded to the users participating in ROBO trading and AMM based liquidity mining of Delta exchange. Robo trading is one of the versatile features of exchange where in a user need to select a particular type of strategy available on exchange and stake funds there. Those funds are automatically used on the exchange and generate rewards for users. For example, BTC/DETO, Large cap Momentum (Deto) , cash arbirage DETO, Top 20 Momentum DETO strategy etc. Suppose a trader choose to stake funds for "Top 20 Momentum (DETO) " robo trading strategy. Funds will be automatically used for training in cryptos that show significant change in the price in either direction and therefore will generate high yield for traders in the form of DETO tokens that will be proportional to the staking amount in the pool of that particular robo strategy.
Delta exchange accepts DETO as a trading fee token and is therby a great use case of DETO token. Although there is a limit of 25% on its acceptance as a trading fee . I think that would mount to significant amount on higher trading volume. Moreover, Delta exchange is committed to accept DETO at minimum support price (MSP) irrespective of market price. This MSP initiative in itself can create arbirage opportunities for trader in case market price drops below MSP. So arbitage would be an add on benefit in that case.
DETO is accepted as collateral in Delta future and margin trades and therefore trader can take advantage by leveraging higher sums to accrue more profit. But one has to be careful that final settlement won't be carried out in DETO but it is carried out in other major Crypto like BTC Or USDT.
Delta exchange offers DETO denominated insurance fund that insures traders in adverse circumstances. Moreover, it faciltates staking on the exchange that inturn reduces DETO supply and maintain its supply demand dynamics. Moreover, higher staked funds also increase the reliability of the exchange and therefore facilitate more trade on exchange.
Being a reward token, DETO is distributed among the active traders on the exchange proportionate to their trading volume on daily basis. Delta had dedicated one percent of its total token supply for reward purpose. Similarly, rewards are also distributed to the traders for referral mining when the trader referred starts actively trading on the exchange.
Make a purchase equal to at least US $ 10 of the currency you explained above. You must make some movement with that currency within the exchange that created that currency. Show screenshots and explain in detail the steps to follow. Example: transfer of funds, Staking, participation in a Launchpad, trading in futures, etc. Indicate the reasons why you chose that option (operation) on that platform.
I'll be doing this part of task from Delta exchange app. Launch the app and from the main page of the app, click on spot trade.
Next, select the trading pair. I choose DETO/USDT. Next, we get to see order book.
Click on "Trade" from the bottom panel.
Fill the details of the amount or choose the percentage of the amount to be used from the total available balance like 25% , 50% , 75% , 100% . I had 12. 62 USDT available. I choose 100%. For 12.62USDT, I got 28.32 DETO tokens.
I placed order at market price. You can place limit order or stop limit order by clicking on type of order.
Click on Buy DETO to place order. Being market order, it is executed spontaneously.
Move DETO within Delta exchange.
I choose "Top 20 Momentum" strategy of robo trading. For participating in this strategy I need to convert my DETO to USDT. Strategies that support DETO, need more than 500 DETO tokens. So I prefer converting Deto to USDT. After selling DETO for USDT , click on robo trading.
Select "Top 20 Momentum* strategy. Click on subscribe. Check the details like staked amount, returns etc.
Next select amount of token. Minimum number of tokens required to participate are 17 USDT. I choose max amount.
Click on Subscilribe and we are done. We can see that one subscription is added.
Exit the trade
I exited for the sake of this task at 12 hours after subscription. I could have explored returns for long duration, if I had participated in this task earlier. But task is approaching expiry, so I had to exit.
To exit, click on robo trading and look for strategy opted above.
Click on it and under subscription we find 1 entry.
Now we get option to add more subscription or exit.
Click on exit and fill the amount details. I choose max.
Click on confirm to finalise the exit.
Show the return on investment in time frames of 0, 24 and 48 hours from the moment you bought. Take screenshots where you can see the price of the asset and the date of capture
| Time(hr) | Entry price | Exit price |
|---|---|---|
| 0 | 17.71 USDT | - |
| 12 | - | 17.72 USDT |
Screenshots have been shown above. But there isn't timestamp or date on them. And there was no way to create it. ROI in above case is 0.01USDT.
Has the asset's price acted independently or does its price strictly follow the correlation with Bitcoin?
DETO price correlates with the price of Bitcoin strictly. I'll be showing it with the help of charts shared from two different softwares. For BTC I'll use tradingview chart and for DETO, I'll use Delta exchange chart.
BTC and DETO on 1 day chart.
BTC on 1D time frame
DETO on 1D time frame
From the two charts shared above, we can see that DETO price follows same trajectory as that of BTC.
What are futures trading?
Futures trading is a type of trading where a trader places order in derrivative market and therefore trade contracts of the assets. Traders do not actually trade the assets but they trade the contracts like perpetual or quarterly contracts. Perpetual contracts don't have expiry but quarterly contracts have expiry period. So it is advisable for traders to trade perpetual contracts.
In future trading, an exchange offers leverage to the trader so that a trader can trade more contracts with lesser funds of their own and book proportionately higher profit. However, in case of trade going in wrong direction, a trader has to bear proportionately bigher loss too. So futures trading involve more profit and more risk as well. For example, a trader having only $10 on his future account can take 10x leverage and trade contracts worth $100 There are two possibilities, if trade goes in predicted direction, a trader can book 10x profit where as if trade goes in wrong direction , a trader has to bear 10x loss.
In future trading, a trader can long as well as short the position and therefore benefit from both rising as well as falling market. In future trading, a trader has to pay funding fee after a specified period (usually 8 hours) . In case, a trader want to hold his position longer than the specified period, he has to again pay the fee.
What is the margin market
Margin trading is a type of trading where a trader places order in spot market and therefore trade actual assets. So margin trading differs from future trading in the type of market where orders are placed . Margin trading is also carried out with the help of leveraged funds but usually the leverage is lesser than that in the future trading. Just like future trading , a trader can take advantage from leveraged funds and earn proportionately higher profit but at the same , in case of wrong direction of trade, a trader may have to suffer higher loss too.
In case of margin trading, interest rates have to be paid more frequently (usually hourly) and therefore is a bit more expansive than future trading.
In case of both margin and future trading, there are isolated and cross margins. In case of isolated margin, if trade doesn't go in favourable direction, forced liquidation is carried by the exchange and take away the funds that are used for the trade whereas in case of cross margin, if trade doesn't go in favourable direction, apare funds can be liquidated from margin/future account.
Advantages of Margin and future Traditing.
Traders are provided opportunity to book higher profits. With small amount of funds available, traders can take advantage of leverage and amplify their profits.
Margin and future trading allows traders to take advantage of timely market opportunities even if you have limited cash in hand.
Margin and future trading allows for diversification because several positions can be opened with small amount of capital.
Future trading allow users to take advantage of market move in either direction by allowing traders to long as well as short.
Disadvantages of Margin and future trading.
Risk of losing all the funds in case of unfavourable move of market.
In case of insufficient funds to support the loss , additional loss in the form of interest has to be kept in mind too. Therefore, it is mandatory to maintain some minimum balance in your account for such trading.
Trading fee and interest rates are time bound unless spot trades.
What happens to the cryptocurrencies of an exchange when they suffer from a hack or it turns out to be a fraud? Present at least 2 real life examples.
With the boom of digital currencies , their prices have increased exponentially and so does greed of some malicious users . The dream of becoming rich overnight in minds of some malicious users or groups , make them resort to some illegal activities like hacking of exchanges . As many as, three dozens of exchange have been hacked since 2012 . It is worth mentioning that in last few years, the hacking episodes have reducer dramatically because of sophisticated security mechanisms in place on Crypto exchanges. Let's talk about two hacks aa demanded by task.
Kucoin - sep 25 , 2020 hack.
As we all know that, Kucoin is one of the leading crypto exchange in the market now. On sep 25 , 2020 , it suffered loss of cryptos worth $275 million. The reason that came into limelight later was , the leakage of private keys of the hot wallets on Kucoin exchange. Being a centralized exchange, the lost funds were compensated by the insured funds of the exchange and law enforcement agencies were also involved to take action against the attackers.
Balancer - June 29 2020 .
Balancer is a decentralized exchange that was hacked on the mentioned date and digital tokens worth $500 000 were stolen. It was later claimed that, it was technically sound attack launched by miscreants with thorough understanding of the protocol of the exchange. But the sad part of the story is that, the exchange was neither able to recover the lost funds nor was able to compensate the users whose funds were lost.
So, it is worth noting that any exchange can suffer hack and fate of funds after hack is unpredictable. Although, centralised exchanges are now coming up with insurance policies to compensate funds in case of loss. It is also noteworthy that, exchanges have come up with better security measures. The advantages of growing technology is equally explored by some malicious users too and they are also coming with new sophisticated measures to launch attacks.
Conclusion
Cryptocurrency exchanges are market places that facilitate various trading activities like stalking, burrow, lending and different types of trades like spot, future, margin etc. Most of the well known exchanges have their native utility and rewards tokens. These tokens offers multiple advantages for token holders