Exchange Coins - Crypto Academy S5W1 - Homework Post for @imagen
1.) Perform a complete analysis of the currency of an exchange. It is not allowed: BNB, KuCoin, Cake and Uniswap.
Houbi Token
From the name of the token, you can clearly tell the token belongs to the Huobi Exchange: Huobi Exchange is one of the popular CEXs and known by most steemians because its STEEM/USDT trade pair. The Huobi Exchange itself was launched in 2013. Huobi Exchange is a Seychelles-based exchange founded in china in 2013 by Leon Li, a Tsinghua University graduate. However Huobi officially launched their native token, The Huobi Token(HT), 5 years later in January, 2018.
The Huobi Token is an ERC-20 token based on the Ethereum blockchain. The value of most exchange coins depends largely on the reputation of the exchange, so does the value of HT on Huobi Excahnge.
Tokenomics
At the time of writing this assignment, HT is currently had a coinmarketcap ranking of #82, trading up by 7.57% at $9.70 over the last 24hours with a 24-hour high of $10.55 and 24-hour low of $9.61. The token has a market cap of $1,569,914,923 and a 24-hour trading volume up by 1.90% at $111,205,657.35
HT had an all time high of $39.81 this year in May,2021 and an all time low of $0.89 in January 2019.
Where can you purchase HT?
The Huobi Token can be purchased on some of the most popular exchanges including; KuCoin, Gate.io, FTX and HitBTC(there are a lot more).
There are lot of unique advantages that come with the the Huobi Token. Lets talk about them below.
Reduced Transaction Fees
Huobi Exchange users with VIP status receive good discounts on transaction fees. This VIP status is bought with the Huobi Token. The more HT tokens you hold, the higher your VIP status and the lower your commision costs. VIP users can therefore save a lot on transaction fees and commissions.
Easy Exchange Into/From Other Cryptocurrencies
The Huobi Token has many trading pairs to a lot of the most traded coins to motivate users to purchase and use this token. Many cryptocurrencies can be bought and sold for the Huobi Token.
New Token Distribution Dividends
Holders of the Huobi Token receive a part of newly listed coins depending on how much HT they’re holding. The higher percentage of newly listed coins will go to people holding the highest amounts of HT.
Participation in Voting and Decision Making
Yes, you thought right. With the Huobi Token, holders can vote and contribute to decision making concerning the development of the Huobi exchange including matters like coins to list and others. This is similar to the ability to vote for witnesses in a blockchain once you stake your coins.
2.) Make a purchase equivalent to at least 10 US dollars 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, futures trading, etc. Indicate the reasons why you chose that option (operation) on that platform.
As can be seen from my Huobi Exchange Exchange wallet above, I had 22USDT which I will be using to purchase HT Token.
My HT Purchase
- On the Homepage of Huobi Exchange, I tap
Search for coinson the top of the screen.
- Then I search
HTand I scroll until I find the HT/USDT pair.
- Once I find the HT/USDT pair, I click on it to launch the HT/USDT Trade Page. On this page, I tap
Buyin green on the bottom of the screen.
- On the next page, I change my order type which is Limit Order by default to Market Order. Then I enter the Amount of HT i would like to buy in USDT in the buy column, and I hit
Buy.
Below is a screenshot of the details of my HT purchase.
Transferring HT from Huobi To Poloniex
I will be performing a transfer movement with my HT i just bought now.
- So I go back to my Huobi Exchange Wallet and I click on
HTto reveal some options I can perform.
- Then I click
Withdraw
- Over here, I enter my withdrawal address(this is actually my HT deposit address from Poloniex) and withdrawal amount and I hit
Withdraw. You will see transaction fees for your transaction. You can see that using the TRC 20 network, I will not be charged anything for this transaction.
- In the screenshot below you can see my HT deposit reflection in my Poloniex account.
3.) Show the return on investment in periods of time 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 the capture.
At 0 hours, HT was trading at the price I purchased it and so there was $0 profit or loss at the time.
In the screenshot above, after 24 hours, HT is trading at $9.80 the price has dropped by 6.48% over the last 24 hours.
In 48-hours, I sold my HT for $9.9 as can be seen from the screenshot above. My final return on investment is -$1. I would keep it until price at least returns back to where I bought it so I don’t make a loss, but I really need the money now to help me handle a financial situation.
3.1) Has the price of the asset acted independently or does its price strictly follow the correlation with Bitcoin?
In the next few hours after I bought HT, we can see from the chart above that HT price in some way, behaves similarly to compared with BTC.
In 24 hours, the chart above compares HT and BTC movement, and clearly shows HT moving under influence of BTC. We notice how it drops as BTC does and rises as BTC rises.
In 48 hours after I bought HT, HT token is still acting dependent on BTC movement since the time I bought ut. However, from 15th to somewhere around 17th November, HT acted a little bit independent at the price of BTC as we can see that while BTC is making lower-highs, it is making a higher-highs at this time.
4.) What are futures operations?
A futures operation involves an agreement on buying or selling an assert at a predetermined locked price in the future and not the current market price. Futures involve trading an asset based on a future price of the asset. The predetermined price is called forward price.
In a futures contract, the person willing to sell at the said forward price is going short. The seller is betting that the asset price will depreciate. The other person buying at the forward price is going long. The buyer believes the asset’s price will appreciate. When people enter a futures contract, they have to deliver by buying or selling at the forward price agreed on, on the delivery date irrespective of whether the transaction is profitable or not.
Lets take an example. If I wanted to buy iPhone 13 next year, I could enter an agreement with a phone seller. The agreement will be that next year, I will buy the phone for say $700. If the phone is selling next year for $800(above the agreed price) the phone seller will still sell at $700 and handle the loss. However if the phone also is selling for $600(less than $700) I will still buy at $700 handling handling the loss. We are all obligated to deliver on our end of the bargain on the delivery date. In this case, $700 is our forward price and since I am buying at this price, I am going long because I think the phone will be worth more in a year, and the seller is going short because he thinks the phone will be worth less in a year time.
Unlike in spot markets where the only way to profit is if an asset’s price is rising, we can profit even if an assets price is depreciating in a futures market.
5.) What is the margin market?
Looking at it in a very simple way, margin markets generally operate like loans, where your broker provides you funds to trade with a leverage that increases your buying power. The maximum amount you are offered to trade with is your buying power. In a normal spot market, you can only trade with funds you have deposited. A margin market works a little bit different.
In margin market, your broker or other investors who want to earn interest for supplying margin funds will provide you with funds to trade depending on how much you have in your margin account and the leverage they’re willing to offer. If your broker or investor for instance is offering a 3:1 leverage or 3x leverage, that means they’re willing to offer you up to 3 times the amount you actually deposited as a loan. This will increase your funds to transact and increase your potential profit if your trades are successful.
6.) What happens to cryptocurrencies in an exchange when they suffer from some hack or turn out to be fraud? Present at least 2 real-life examples.
As much as exchanges are working to become more secure and invulnerable to hacks, hackers are working tirelessly too to discover new ways to hack and defraud these exchanges. Two of the most popular exchange hacks are the below.
Kucoin Hack
Some people consider the 25th September KuCoin crypto heist of about $275million the biggest crypto hack in 2020. This heist, estimated by forbes.com is now worth 1.75billion as of today and also represents half of all hacks in 2020. The hack was said to have been pulled off by a North Korean hacker group called Lazarus Group. Statistic details of stolen funds of the heist are : 1,0008 BTC, 11,543 ETH , 19,834,042 USDT-ETH, 18,495 XRP , 26,733 LTC , 999,160 USDT, $147M worth of ERC-20 tokens and $87M worth of stellar tokens.
When an exchange gets hacked, everyone who has funds on the exchange loses a certain amount of their funds depending on the amount of crypto stolen from the hack. In the above example, anyone who was holding this crypto coins at the time would’ve lost a fraction of their funds too.
Poly Network Hack
This hack a little bit of a mystery as after a heist of about $600m, the hacker returns about $200m, keeping roughly about $400m he claims until everyone is “ready”. The same hacker was offered $500,000 as a bug bounty. A bug bounty is reward offered by companies like exchanges rewarding people for discovering and reporting bugs that could hurt the company in the future. The hacker was also given a job offer to become the exchange’s security advisor. At first, he declined the offer obviously, but later said "I am considering taking the bounty as a bonus for public hackers if they can hack the Poly Network."
In this world of technology, everyone is improving. As exchanges fix bugs in their systems, hackers work hard to discover or create new bugs. People with funds on exchanges and even the exchange themselves suffer great losses when these exchanges are hacked. This is why it most advisable to not leave our crypto on exchanges after transactions but to move them to wallets which are more secure.
Exchanges are where we trade our cryptocurrencies and it is important they have high security against hacks. In order not to fall victims to losing funds during hacks, it is best we keep our coins in our external wallets and not leave them in the exchange wallet.
Most of the popular exchanges we use including Binance, PancakeSwap, KuCoin and Huobi, have native tokens created for the particular exchange. These exchange tokens offer a wife variety of advantages to holders including voting rights, involvement in decision making involving exchange development and receiving fractions of newly listed coins for some exchanges.
CC: prof @imagen
Gracias por participar en la Quinta Temporada de la Steemit Crypto Academy.
Continua esforzandote, espero seguir corrigiendo tus asignaciones.
Thank you for the review prof