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September 25, 2020

Episode 022

Matrixport, Money on Chain & RSK/IOV Labs


In this episode, Matrixport’s management team discussed the state of crypto trading in the Asian markets as well as the role of structured products.

While they are currently focused more on professional traders, the company, which is a spinoff from Bitmain, is developing a retail strategy, which COO  Daniel Yan discussed in detail. Meanwhile, Cynthia Wu, Matrixport’s head of business development and sales, talked about the state of cryptocurrency trading in China. 

Teana Baker-Taylor spoke with Gabriel Kurman, master advocate at IOV Labs, the company powering Bitcoin-fueled RSK, and Manuel Ferrari, co-founder of Money On Chain, which is behind a stablecoin collateralized by bitcoin. Both projects were building Bitcoin-fueled decentralized finance ecosystems before the DeFi craze on Ethereum began, and they discussed the role of their platform and coins in the market.

In Conversation With Matrixport 

Nisa Amoils spoke with Cynthia Wu and Daniel Yan, both of Matrixport, about the state of crypto trading in the Asian markets and structured products. Matrixport is a spinoff from blockchain and crypto mining giant Bitmain and offers digital asset financial services. The company is mostly focused on professional traders, but they are also developing a strategy for retail customers in the months to come. Daniel Yan, who is Matrixport’s chief operating officer, discussed part of that retail strategy, saying, 

(18:37) “The futures product is much more natural for them because it is just a leveraged spot of that; just think from retail’s perspective, it’s a linear transformation. But options, given the linearity, it can get a little confusing. So at this moment, I think not only with us, with everyone, all the retail products in the cryptocurrency world, I think most of the retail customers, they understand how to use structured products to earn money, which is embedded with options. But it’s generally difficult for them to understand how to just use options as a product to trade and how to trade it. It’s generally, very few people know. So that is definitely a big workload we need to focus on in the next year in part of our retail strategy, that is we need to provide quality content to help retailers understand how to use this product.” 

Cynthia Wu, head of business development and sales at Matrixport, talked about miners becoming more sophisticated in their hedging strategies, saying: 

 (20:03) – “As we are a spinoff from Bitmain and are quite familiar with mining communities globally, they are a very important part of our clientele. I would say that in the crypto mining space, all the miners are evolving really fast. I would say they’ve  evolved at light speed compared to some traditional commodity miners. So not only mining operations but also in terms of their financial savviness. A lot of the miners both from China and in the West are picking up the idea of hedging and risk management…especially in the past year. I think after March 12, when markets crashed, a lot of the miners actually had a very hard hit. And they started to realize the importance to protect against the downside risk. So they started to adopt that mindset that they don’t mind paying a small cost to buy the insurance. And they understand the importance of being in the game for the long term, which means that they need hedging.” 

Nisa also asked about China’s stance on cryptocurrency trading, in response to which Cynthia said, 

(26:12) “I think in China crypto is always defined as a liquid asset and a virtual commodity but not money. So that’s a very important difference compared to some other jurisdictions, which I think tells a lot about the stance of the Chinese government. I would say that China has not prohibited crypto outright, and actually in November last year the authority of the Chinese government actually said that bitcoin mining will not be an illegal industry in the country, which I think gives relief to people worried about the sustainability of bitcoin mining in China. But China prohibits token funding and also trading platforms from engaging in…business between the legal tender of the country and the cryptocurrencies. So I think that’s still going to be the case going forward.” 

Market Spotlight: DeFi on Bitcoin 

Much of the hype surrounding DeFi has been on Ethereum-based projects. But RSK, which was founded in 2015, was in decentralized finance before DeFi became the force that it is today. Teana Baker-Taylor spoke with Gabriel Kurman, master advocate at IOV Labs,  the company powering Bitcoin-fueled RSK, and Manuel Ferrari, co-founder of Money On Chain, which is behind a stablecoin collateralized by bitcoin and which incidentally is precisely what RSK built its platform for. 

RSK’s Gabriel Kurman discussed how far the company has come and where it is today, saying, 

(33:01) “From the beginning, the whole idea of merging the benefits from Bitcoin and Ethereum was to make sure that we developed a DeFi ecosystem, a financial system, that was so efficient and so programmable that it could be used by any person around the world. And after almost five years of building this, we are quite excited about what’s happening and what’s going on in the space right now. From a technical standpoint, we reached around 50% of total Bitcoin merge mining, securing the RSK blockchain. So this is a huge milestone and we’re always super grateful to all the Bitcoin miners that are ultra securing smart contracts and enabling DeFi for bitcoin because this is them providing the security…We also launched…an Ethereum bridge with RSK. So now projects such as Chainklink and Dai are also making their tokens available on the RSK ecosystem through this RSK/Ethereum bridge.”  

Money on Chain is behind a trio of tokens/actors, including the Bitcoin Stablecoin, Income for Bitcoin Holders and Leveraged Bitcoin.  Manuel Ferrari explained, 

(36:17) “The stablecoin is running on RSK. It’s the first 100 percent bitcoin collateral stablecoin. And it has other qualities…

(37:37) It’s a completely different financial model behind the smart contracts [vs. Dai and MakerDAO.] It has three main tokens or three main actors with different use cases. Of course there is the stablecoin; which is the dollar on chain, which as I mentioned is 100 percent backed by bitcoin and only bitcoin. Then we have a token which is a liquidity token which is called BPRO. The BPRO is a token which is meant for bitcoin holders and it has a little bit of leverage that usually is between 1.05 and 1.20.  So it has free leverage, which is actually something that anyone would like in a token like bitcoin if you are bullish on bitcoin — well, why not get free leverage on a bullish asset? And on top of that it has what we call, passive income. It gets part of the fees of using the platform, anyone who uses the platform has to pay a very small fee. Part of that goes to the liquidity providers, which are the BPRO holders and also it gets also part of the governance token…So it has several income sources to be a very interesting token for bitcoiners. So it’s a DeFi token meant for bitcoin holders.”  

Teana Baker-Taylor asked RSK’s Gabriel Kurman about how the upcoming release of Ethereum 2.0 will impact projects, in response to which he said,

(44:14) “It’s quite interesting now. It’s super challenging for Ethereum to move to 2.0 and change completely from proof-of-work to proof-of-stake. And I know for a fact that many projects running only on Ethereum are quite concerned about how that will affect their projects. In that sense, RSK has been built following Satoshi’s advice and way of seeing the world. So we believe in immutability and not rolling back a blockchain but also not changing the rules in the proof-of-work for the projects deciding to build..on-chain on top of RSK. Absolutely, RSK can be an option. It’s an option now. And we don’t see the world that you have to choose between one or the other. We believe that very important projects in the DeFi ecosystem should hedge themselves, should make sure that the projects and the users are safe regardless of what happens at an infrastructure level.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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