Blockchain Finance

Thoughts

Decent Interest!

2nd April 2021


Just read the great Bitmex blog “All Aboard!” from its founder Arthur Hayes. As an arbitrage trader by heart (well, it was my first professional trading job as well), it just opens the eyes to a sea of opportunities.



You own 100,000 EUR, but you are unhappy with the banks charging you a negative interest rate?


Do you want to earn interest rates as high as inflation rates at least? Or even better a lot more?


Let’s do it. Currently, you may earn 5.26% for 100,000 USD with ETH staked at Blockfi in a year. However, you have the price risk of ETH.

But this is not what you want! You want

  • no crypto risk

  • 100,000 EUR invested

  • a decent return


You wonder how some of these companies can pay you so much on staking BTC or ETH. It may be just arbitrage. I discussed a few weeks ago the arbitrage of GBTC and BTC, here we have a look at the arbitrage opportunities with ETH.


What you have to do is

  • sell 100,000 EUR, buy USD for it

  • trade a EURUSD forward until years end (protects your exchange rate)

  • buy ETH with the USD

  • sell ETH-Futures to years end (no delta risk on your crypto)


What does it give you?

  • around 25% annualized return

  • no currency risk

  • no crypto risk


Well, you encounter counterparty risk and contract risk as always. You may also encounter slippage, depends on the quality of your execution.



Is anybody interested to build a company on this? Please let me know, let’s change the financial world.



#interestrates #investing #bonds #currency #crypto #ether

Staking BTC - Arbitrage?

8th March 2021

When you stake BTC, you can earn interest.


One staking company is BlockFi where you earn on a deposit of 1 BTC for one year an amount of 3,047.91 USD annually, i.e. 6% with BTC at 50,719 USD.


How does BlockFi earn the interest? Maybe somebody wants to take out a credit in BTC and BlockFi charges a higher rate than 6%. Or by arbitrage?


Maybe BlockFi shorts a BTC holding entity which is fully regulated but trades at a premium to BTC. For example, Grayscale Bitcoin Trust (GBTC) was trading at 40% premium to BTC according to ycharts on the 21st December 2020.


So, BlockFi borrows GBTC shares and sells the GBTC shares at 140% of BTC. BlockFi shorts GBTC.

Simultaneously, BlockFi delivers BTC to Grayscale to convert them into GBTC (so called in-kind contribution). These newly created GBTC become unrestricted after a 6 month holding period, i.e. can be delivered to the lender of the GBTC shares.


Profit: 40% - GBTC lending fees - transaction fees


Interesting fact: BlockFi holds 36.1 million shares of Grayscale Bitcoin Trust (GBTC), currently around 1.5 billion USD.

Each GBTC holds Bitcoin per share: 0.00094680



But now, the premium disappears or you can say it collapsed. It is a discount!


And now?



#BTC #staking #GBTC #arbitrage

Pancake or Sushi? Hungry?

22nd February 2021

The success of decentralized exchanges is fascinating. Automated market makers as SushiSwap or PancakeSwap grow substantially.

The cost of gas resulted in moves between the basic chains from Ethereum to Binance Smart Chain with the consequence of impressive return rates on BNB token, but on Cake and Syrup as well.


What do you think? Still hungry?


Have a great week!


#defi #sushi #pancake #fintech #collaboration #crypto

Crypto on the Move!

14th February 2021

Algorand, Ethereum, Cardano, Tezos, Polkadot, Chainlink, Cosmos - just go for it!


Returns are hyperbolic, Algorand made 100% in just 7 days.


Gas is becoming costly, more than 7% fee for a transfer of 100 USD in Ether.


Earn money on your cryptos? Staking, derivatives? Staked, Blockfi, Deribit?


What do you make out of it? Do you need advice, contact me!


#crypto #fintech #collaboration #ethereum #defi

Citadel, Robinhood, GameStop, SEC

7th February 2021

Fair? Complicated! Broken!


Robinhood sells orders to Citadel, Citadel works in high-frequency trading as well as in dark pools. Citadel was even „Fined by Finra for Trading Ahead of Clients“ (Bloomberg, 21st July 2020).


High-frequency trading and dark pools may impact the transparency of markets.


Misconduct in darkpools was fined with more than 229 million USD in the US beween 2011 and 2018, MiFIR in Europe limits the trading in dark pools with the Double Volume Cap.


High-frequency trading uses colocations to get faster access to data. They are able to transact faster then others by this practice.


Interesting:

„Protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.“ (SEC)


Change the broken system of intransparent trading, centralized institutions, and intrinsic systemic problems.


Protect investors through transparency and with decentralized access to data!


Go for blockchains!


What is your opinion?


#decentralize #financeinnovation #crypto #Robinhood #hedgefunds #GameStop

GameStop, Robinhood, and an old & broken market system

31st January 2021

Trading in GameStop is the story of the day, well Blackberry, AMC, Varta and some more are traded in a similar way. Hedgefunds lost a lot and complain. Have all the traders of Robinhood complained that high-frequency trading hedgefunds do use their technology to their advantage (access to central exchange servers)? Have the Robinhood traders even complained that trades from Robinhood are sent to Hedgefunds for trading and that Robinhood gets paid for it? (Robinhood gets even more for option trades).


Gamestop trading was stopped by Robinhood due to growing settlement risks, Robinhood used their credit lines and got an extra funding of 1bn USD. Robinhood as a central entry point simply restricted access.


This tells us that there is no free market anymore, trades do not get to the marketplace anymore. Also, the old settlement system looks like Atlantis, but is still running.


Let‘s learn from the cryptomarkets. Free access for everybody, decentralized trading possible, more or less immediate settlement (just depending on the time until some blocks are confirmed).


What is your opinion?


#decentralize #financeinnovation #crypto #Robinhood #hedgefunds #GameStop

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About


The financial sector is having to catch up with the potential of blockchain and the integration of this technology into it.


You are looking for a firm that understands blockchain and its potential in the financial sector, and can help them capitalise on this.


Blockchain Finance is a European company advising on the application of blockchain in finance. We work with our clients to advise them on the potential of integrating blockchain technology into their businesses, as well as providing them with training courses for employees in relation to blockchain education.




Tokenization - Asset to Token, Token Derivatives

STO - Tokenomics, Whitepaper, Regulation

Cryptocurrencies - Trading, Structuring, Asset Management


Contact

Prof. Dr. Ralf Wandmacher


Professor of Finance and Entrepreneurship, accadis University of Applied Sciences

PhD in Finance, University of Cape Town

Diplom-Kaufmann, University Goettingen


Phone: +49 6195 674 2603

Mobile: +49 151 2263 0119

Email: ralf@wandmacher.com


Linkedin: rwandmacher

Twitter: @rwandmacher