On August 6th, the Greater Bay Area International Blockchain Week Summit organized by Cointelegraph in Shenzhen was held as scheduled. At the event, Deepcoin founder Eagle Huang, Huobi Business Vice President Ciara Sun, Binance Contract Director Justin Cheng, and Kronos Research Chief Operation jointly discussed about the cryptocurrency derivatives market on the theme “Who is the Dark Horse of Contracts in 2020” at the roundtable forum. This summit was live broadcasted on the YouTube platform simultaneously.
Prior to founding Deepcoin, Eagle Huang had more than 10 years of Internet experience and served as the head of a wealth management company with 1 million customer base, whilst managing over $7 USD billion in assets. “Deepcoin team members come from more than ten countries and regions around the world, covering institutions such as Temasek, Morgan Stanley, Huobi, Binance, and Bybit etc. I have a lot of industry ideas that I want to share with you.” he said. Here are some brilliant viewpoints from him:
- The crypto exchange circuit is in homogeneous competition, the battle lines are long and open before regulatory and demographic dividend disappear
- The most fundamental and effective way to protect investors is through client risk identification and investor education
- Digital assets are natural without borders
- Deepcoin wants to make Starbucks-like international products
- The competition of derivative products is like a Formula One race. The most important thing is to pursue the ultimate polish on various details
Homogenization of Competition
A bottleneck that applies to all exchanges in the cryptoasset space, according to Eagle Huang, is homogenization of competition. He explained that exchanges are evaluated primarily under the same set of metric – liquidity, business model, deposited assets, and market depth. Apart from continuous strengthened product features and micro innovations, no sign of market evolvement has appeared for the time being. He added that:
“The trading engine technology exchanges have applied is nothing new. It has been developed and utilized for decades in the traditional financial markets. The lack of unified global regulatory has created a huge arbitrage for cryptoasset trading business, which can be seen as a vertical segment under traditional finance. ”
According to Huang, the turning point for the market is unlikely driven by the internal business models or any major industry event, but by external economic, political and environmental factors. He analogized cryptoasset exchange business to phone business. The industry is not going to change like the way Apple changed the phone industry. He added examples that:
“Bitcoin halving, Mt. Gox, ICO ban, Libra, DECP, Covid-19 and Presidential Election have played major roles in the crypto trading markets. I’d say the event that would bring fundamental impact to the cryptoasset derivative market would also come from reasons out of the derivative market.”
Derivatives markets are perfect for those seeking high returns, but they are also fraught with high risk. In slightly volatile markets, users are exposed to the risk of liquidation. Huang pointed out that exchanges are conducting similar risk control mechanisms like gradient based system, automatic position reduction, and partial liquidation, etc. He explained what Deepcoin has done differently from the alternative exchanges is the market index data generation.
“We find that under extreme market conditions, the indexes are usually inaccurate or delayed, which leads to loss of clients' interests or in extreme cases, to the failure of exchanges’ risk control system. Deepcoin cooperates with ICE Group, the parent company of NYSE. ICE draws indices based on quotes provided by various exchanges. That is to make sure that the price is real, reliable, timely and effective. We are the only platform that ICE Group is working with besides Bakkt,” Eagle Huang added.
Positioned as a Private Bank for Cryptoassets
Deepcoin positions itself as a private bank for cryptoasset, according to Huang. He stressed the necessity to put strict restrictions to the largest order amount for individual investors with modest holding positions.
“We did a lot of work on educating investors, not just to teach them how to trade but to deliver fundamental knowledge on derivative markets and asset management. At Deepcoin, we need every staff that faces investors to hold a qualification on derivative trading. The large order trading is only available to qualified investors after careful evaluation,” said Eagle Huang.
Global Challenge and Opportunity
Deepcoin wants to make products that are highly adaptable to local markets like Starbucks, said Huang. And he admitted the challenges and instability during turbulent international environment. Huang continued with an example that：
“Huang continued with an example a lot of markets, however, due to the complex political situations between China and the U.S., we have seen serious backlash from India, the U.S, etc. Although the cryptoassets do not have a broader, but the people who use the assets do.”
Additionally, Huang believes blockchain companies have to think about what kind of value they are delivering and if certain values are adaptable to the local market.
Deepcoin is a global digital asset trading platform with all-inclusive financial services. It was founded in 2018, headquartered in Singapore, and received strategic investment from FenbushiCapital in 2019. The partners include Cobo wallet, SNZ, and ICE, etc.
Deepcoin has bank-grade hardware security modules, customized multiple signature schemes, leading anti-hacking technology in separating cold and hot wallets. Deepcoin insists on global compliance operations, and has been granted licenses from three major authoritative regulatory bodies, including U.S. NFA, U.S. MSB, and Canadian MSB.