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31

Crypto Discussion / CoinEx Charity | A Heart-warming Delivery: A Special Easter Gift for Over 500

« on: April 30, 2022, 08:56:41 PM »

As Brazilians celebrated Easter on April 17, 2022, CoinEx Charity worked with the Brazilian singer Mc Lustosa and launched a charitable event for poor children at Jardim Brasil and Parque Edu Chaves in the north of Sao Paulo, Brazil. During the event, staff members sent chocolate-covered Easter eggs to children in these poor communities and celebrated the festival with them. Having sent over 200 Easter gifts, the event delivered both warmth and care to local poor kids.



Easter is just like spring: it is a time of rebirth, renewal, and hope. For poor children in this region who live on public assistance, however, toys and snacks available to the average kid are a luxury. Moreover, they can’t even get Easter eggs on such a major occasion as Easter. To help them taste the joy of receiving gifts, CoinEx Charity prepared Easter egg gifts for 500+ children in poor communities in Sao Paulo, Brazil. Seeing the big smiles on the face of children who received the gifts, CoinEx Charity hopes that the event could leave these children with happy memories.

Help the disadvantaged through good deeds

In 2022, CoinEx Charity launched a $10 million charity fund to help children and teenagers in poor areas around the world through charitable actions, ensuring their basic living conditions while giving them equal access to education. Following the principles of benevolence, mutual assistance, happiness, and sharing, CoinEx Charity strives to help more children in need grow up with good health and happy memories.
Since 2021, CoinEx Charity has launched a series of charitable events across the globe. In December 2021, CoinEx Charity visited children in Uniuyo Teaching Hospital and distributed care packages; on December 31, after Typhoon Rai hit the Philippines, CoinEx Charity immediately responded and offered full disaster assistance and a large donation; in February 2022, CoinEx Charity distributed living supplies to poor families in Iran; on February 15, after Brazil was hit by heavy rainstorms, CoinEx Charity immediately participated in local charitable events and made donations to the disaster-stricken areas.
This April, upon learning that some poor children in remote areas of Brazil cannot receive the traditional chocolate gifts at Easter, CoinEx Charity prepared over 500 Easter gifts and delivered them to each child in person. In just a few months, CoinEx Charity has left its mark around the world.



Charity never stops

According to the 2021 Global Multidimensional Poverty Index (MPI), about 644 million children worldwide are multidimensionally poor. Many children still suffer from hunger, dropout, and disease in many dark corners around the world. Charity should be pursued through real actions, and efforts of public welfare should never stop. CoinEx Charity suggests that the international community should examine the circumstances facing poor children around the world and join hands to care for them. We can only improve the lives of more poor kids and provide them with a comfortable growth environment by making charitable efforts on a greater scale.
As the global impact of the COVID-19 pandemic gradually expands, the world has witnessed more conflicts, and more actions are urgently needed. Meanwhile, helping poor kids has become a pressing issue. Every child deserves a bright future. Always committed to the principles of charity, CoinEx Charity has called for the prioritization of children’s interests in countries across the globe. We should keep all children out of poverty, defend their rights, and protect their childhood. In the future, CoinEx Charity will launch more charitable events for children globally, encourage the general public to lend a helping hand to children in need, and jointly create a better world for children.
Contact us
Email: [email protected]
Twitter: @CoinexCharity

32

Crypto Discussion / CoinEx | Profit-making Opportunities Arising From the Funding Rate

« on: April 24, 2022, 12:16:54 PM »

Futures, which have no expiry date, are in a class by themselves in the crypto exchange. Since the delivery contract will be delivered on a regular basis, despite a large spread between the contract price and the spot price, the price will go back to the spot level eventually.



With no delivery date, futures can be held by users for good. The lack of a correction mechanism may lead to an everlasting or even growing deviation between the contract price and the spot price, which is a price decoupling as we know. To this end, the futures have introduced a funding fee mechanism to maintain the consistency between the contract price and the spot price and make the former anchored to the latter.
The Funding Fee is settled every 8 hours. When the Funding Rate is positive, the Funding Fee is paid by long traders to short traders; when the Funding Rate is negative, the Funding Fee is paid by short traders to long traders. The Funding Fee will be charged according to the Funding Rate calculated one minute before the last timestamp. For example, when settled at 16:00, the Funding Fee will be charged in accordance with the Funding Rate at 07:59. The Funding Fee is not charged by the platform but paid by/to traders.
The Funding Fee is calculated as below (Take CoinEx for example. The Funding Fee may be subject to different calculation methods in other exchanges):
Funding Fee = Position Value * Funding Rate
Funding Rate = Clamp (MA (((Impact Bid Price + Impact Mark Price) / 2-Spot Price) / Spot Price — Interest), a, b)
*Currently, Interest is 0, a=-0.375%, and b=0.375%.
* Impact Bid Price = Average Price of “Impact Margin Amount” for Bidders, Impact Mark Price = Average Price of the “Impact Margin Amount” for Sellers.
* Clamp(A, B, C): When A is within the range of B and C, take A; otherwise, take B as the lower limit and C as the upper limit (B < C).
It is thus clear that a positive Funding Rate reveals a bullish market, while a negative Funding Rate suggests a bearish market.
So what profit-making opportunities could the Funding Rate offer? First of all, the value of the Funding Rate can function as an indicator of the market sentiment. Yet still, it’s just for reference. After all, a single indicator cannot build up a picture of the general market.
Secondly, arbitrageurs with a relatively large amount of capital can arbitrage using the Funding Rate of futures. Calculated from the data of the previous time period, the Funding Rate is inevitably subject to certain delay, and therefore can be roughly estimated based on the forecast.



When the Funding Rate is on the high side, traders can buy the spot contract of 1 BTC while shorting futures of 1 BTC. In this case, no matter how the BTC price moves, the spot profits can hedge the loss of the futures, and traders can earn the Funding Fees paid by long traders to short sellers. For example, if the current Funding Rate reaches 0.1%, with the BTC price of 41,000 USDT at this moment, there will be a profit of 41 USDT.
The Funding Rate in the next time period matters too. If it plummets, traders can close the position to gain profits. If a positive Funding Rate becomes negative, then traders need to decide whether to go the other way round for arbitrage.
Futures traders must have a keen eye for market data, of which the Funding Rate is a very important part. Only well-informed traders can seize the first-mover advantage and grasp the market sentiment to rake in profits they deserve.

33

Crypto Discussion / CoinEx Institution | Payment LEGO: An Overview of Streaming Payment Projects (II

« on: April 24, 2022, 12:14:11 PM »

Let’s continue with the overview of streaming payment projects.




3. Streamflow

Streamflow is a suite of products that enables organizations and individuals to distribute funds simply and straightforwardly. Currently deployed on Solana, Streamflow supports tokens that include USDT, prtSOL, and several other SPL tokens.
Streamflow builds protocols, SDKs, and applications to help users solve problems in fund distribution (e.g. token vesting, payroll, multi-signature treasuries), allowing them to streamline processes and save time and money. Streamflow’s Product Suite covers:
Token Vesting: An open-source, verifiable, programmable token vesting protocol that features common configurable parameters for token unlocking/vesting, including start/end time (including the locked time), TGE ratio, and release rate;
Stream Payments: A progressively released payment in the form of a time-lock escrow account (see the paragraph below for the specific steps);
Batch Payments: Payroll for a team or reward distribution for crypto natives, including easy one-to-many payments;
Multisig Wallet: Create treasuries and vaults that require M/N signatures.
When creating a stream payment on Streamflow, the sender may enter/select a series of information, including the token type, amount, recipient address, frequency (per second/hour/day/week/month/year), contract title, start date & time, who can transfer contract (recipient, sender, both, or neither), who can cancel contract (recipient, sender, both, or neither), and whether to activate automatic withdrawal.



In addition, Streamflow is backed by a strong lineup of investors, including Jump Crypto, Solana Ventures, GVB, Amber, etc.

4. Zebec

Zebec Protocol is a programmable streaming payment protocol and a multi-currency treasury management tool deployed on Solana. The automatic money streams made possible through Zebec allow businesses, employees, and consumers to completely reimagine how they are paid, how they invest, and how they buy products or services.
Zebec Pay, Zebec’s first application, is an efficient, low-fee payroll solution that enables employees to be paid by the second and immediately use their money. The app now supports Solana tokens that include SOL, ZBC, USDC, and USDT. Zebec Pay is more than just a streaming payment tool. It also offers employees superior crypto-native financial services, covering:
Automated Dollar Cost Averaging: Zebec provides the real-time, by-the-second dollar-cost averaging investing function. Users can automatically convert a percentage of their paycheck into cryptocurrencies, allowing them to invest their salary with greater ease.
Investments & Yield-Farming: Users have complete control over how they use their money through easy-to-program smart contracts, which enables the automatic investment in cryptocurrencies or DeFi applications to earn yield.
Crypto IRA and 401K Accounts: Users can effortlessly allocate a portion of their paycheck to compliant crypto IRA and 401K accounts.
Free Fiat On-Ramp and Off-Ramp: Users can swap their cryptocurrencies into USD and transfer their money to their regular bank accounts without paying any fees.
When creating a stream payment, the sender must first deposit tokens to Zebec protocol and enter/select information that includes transaction name, remark, receiver address, token type, amount, start time, and completion time. If the fixed streaming rate is selected, then the amount and completion time are not required. Instead, the sender should only select a streaming rate (e.g. a number of tokens to be sent per X week(s)/month(s)/day(s)). Once a stream is created, users may also suspend or terminate the stream.



At the moment, Zebec is the only streaming payment protocol that has issued tokens (ZBC), with a total supply of 10 billion. On March 16, Zebec raised $28 million, $21 million of which is from private investors that include Circle, Coinbase, Solana Ventures, Lightspeed Venture Partners, and Alameda Research, and the remaining $7 million was obtained through public sales in partnership with Republic.

Conclusion

Though the core business of all the four projects above is streaming payments, they differ in terms of product design. Concerning the number of networks supported, Sablier ranks №1 and is followed by Superfluid. However, it should be noted that these two projects mainly support EVM-compatible networks, while Streamflow and Zebec support Solana, which is not compatible with EVM. With regard to the type of streams, Sablier allows for streams with a fixed amount, while Superfluid supports streams with a fixed flow rate. Meanwhile, the two only require simple information when creating a streaming payment. On Streamflow and Zebec, on the other hand, users have more options, and more customized information is required when creating a streaming payment.
Each of the four projects has its own unique advantages. Sablier provides a well-designed visual interface, with clearly presented data. Superfluid features a community-based development model that allows members of the community to explore more application scenarios. In addition, its framework enables developers to build more functions. Streamflow makes the protocol more visible, and an operation on Streamflow is converted into text when creating a streaming payment. The most prominent feature of Zebec is that it provides solutions to how employees of crypto organizations get paid. In addition to streaming payments, Zebec also offers streaming investment/management of wages, compliant crypto IRA and 401k accounts, as well as fiat on-ramp and off-ramp.

The table below contains the basic information about the four projects:



IV. Application Scenarios of Streaming Payments

Although streaming payment might not flourish on its own, it is nevertheless a major tool in the Web 3.0 process. One may even argue that it is an indispensable infrastructure. Streaming payments play a vital role in the realization of micro-innovations in Airdrop, IDO, and fund management, as well as the implementation of roadmaps for projects in categories such as DeFi, NFT, DAO, and the metaverse.
The following paragraphs introduce several application scenarios of streaming payments. Readers are encouraged to imagine and explore more use cases of streaming payments.

1. Real-time payroll

Company employees, service providers, or DAO contributors can all get paid in real time through a streaming payment protocol without any spatial/temporal limits. Streaming payments reduce both labor costs and financial costs. With streaming payments, folks will no longer have to waste money on accounting, invoicing, and timestamps. Instead, they simply need to pay Gas fees when creating/terminating a stream, which also improves the money flow. Here is a more specific scenario of real-time payroll: Multinationals could pay their employees based around the world through streams with a fixed streaming rate in real time (compliance factors must be considered). In addition, students of short-term training courses may pay for the courses through streams with a daily frequency, without having to pay a lump-sum fee at the beginning. Finally, landowners in a metaverse could pay their virtual world designers tokens such as MANA through streams with a fixed amount.

2. Token unlocking & airdrops

Private/public investors of a project can often invest in its tokens at a lower price, which is why project teams require such investors to go through a lock-up period. For instance, when distributing tokens, TGE has set a certain percentage that will be locked for six months to a year. When the lock-up period ends, the tokens will be released monthly or daily during a period that ranges from 1 year to 2 years. Such an approach creates management problems for the project team and frays the bond of trust between the project and investors. Here, a streaming payment tool can be used to solve the problem. With streaming payments, project teams will not need to create separate smart contracts. Instead, they will only have to set up simple parameters such as the vesting ratio and the lock-up period on a streaming payment platform to enable the real-time token vesting (as introduced in paragraphs above). At the same time, investors don’t have to worry about the non-performance of the agreement on the part of the project team because the sender would not be able to stop the agreement once a stream is created. Moreover, the project team would not have access to the funds locked up in the agreement.
The same also applies to airdrops. Right now, most airdrops are lump-sum distributions where tokens distributed to users create selling pressure. However, a streaming payment protocol allows project teams to distribute airdrop rewards in real time at a fixed frequency, which mitigates such pressures.

3. Fund management

For example, Zebec’s Automated Dollar Cost Averaging and investment functions allow users to convert a percentage of their paycheck into cryptocurrencies for investment purposes, which enables an automatic investment plan that reduces short-term fluctuations. That said, when it comes to the specific technical implementation, streaming payment protocols and DeFi protocols should form a LEGO. When investing their funds, users could predetermine the amount and frequency of the automatic investment plan (i.e. the automatic & regular purchase of a token). For instance, 1,000 USDT of ETH could be purchased every Wednesday, which saves users the time for fund management.

34

Crypto Discussion / CoinEx | You Ask We Answer Vol.7: Twitter Q&A

« on: April 24, 2022, 12:08:04 PM »

On April 8th, CoinEx organized an Q&A Session on Twitter. Users were encouraged to ask any question about Futures Trading. Hundreds of comments were received, and here we’ve selected some of them to answer. Each selected asker is rewarded a $50 contract cash voucher.



1. @unometralica: As someone who has never used futures in crypto, do you have a working system to ease and assist newcomers in participating to futures trading in your platform?

CoinEx has made multiple product adjustments to help beginners get started with futures right away. To begin with, the exchange provides a simple & straightforward futures webpage that helps users check the present market conditions and existing orders with ease. Secondly, before starting a futures position, users can learn how to trade futures via the Futures Tutorial provided on the webpage by watching the tutorial video and completing the quiz. The tutorial is designed to help beginners get familiar with the process of futures trading as quickly as possible.



Meanwhile, CoinEx also offers a professional, all-encompassing Help Center that allows users to dive right into futures through simple illustrated articles and videos. Moreover, users may also search for new futures jargon through the Help Center.
In addition to user-friendly interactions and all-inclusive futures tutorials, CoinEx has also introduced multiple mechanisms like Auto-deleveraging (ADL) and the Insurance Fund. On CoinEx, the Futures Index Price, which is a more reasonable price mechanism with built-in exception-processing logic, prevents malicious forced liquidation as a result of price manipulation. In short, CoinEx meets a wide range of user demands and helps users trade futures with confidence.

2. @Ava_shoja: What is leverage and line trading? I have been wanting to trade futures for more than a year, but because they say it is risky, it is better to do spot trading. Futures trading is ambiguous for me. Where can I start to learn trades?

Although futures trading is indeed riskier than spot trading, the primary goal of trading futures is to improve one’s capital efficiency. To be more specific, with leverage, we can multiply our principal to increase our capital efficiency. For example, a principal of 10 USDT can be multiplied with a 100X leverage ratio to start a 1,000 USDT position.
Users who are willing to take the risks and try earning higher profits can trade futures. They can also find out more about futures at our Help Center https://support.coinex.com/hc/en-us/categories/360001448453-Futures-Contract before trading.
In addition, users can easily find the Futures Tutorial on CoinEx’s futures webpage to get familiar with futures trading right away. We advise new traders to start a small position with a low leverage ratio at the beginning and move on to more advanced arbitrage operations when they become more skilled at futures trading.

3. @cv_oi0: Why is futures trading necessary in the first place? I don’t think it will add value to the product, but it seems that it is only for the purpose of zero-sum games. Want to know the significance?

Indeed, the futures market is a zero-sum game as it does not generate any profits. However, this does not mean that futures trading is pointless. After all, financial derivatives are invented to improve capital efficiency and solve insufficient market liquidity. Users can also tap into futures to hedge against the risks they face, which is just the aim of futures. For example, some miners worry that the BTC price might fall in the short term, which will lower their profits. Such users could go short on BTC through futures to hedge against the risk of the potential price drop concerning Bitcoins they would mine in the future.

4. @Rozmina17: Please explain the difference between a linear contract and a reverse contract.

In markets of futures, contracts are normally divided into linear contracts and inverse contracts. In the crypto market, linear contracts are also known as USDT-margined contracts or stablecoin-margined contracts as they are priced in USDT, while inverse contracts are also called coin-margined contracts. The greatest difference between the two is that linear contracts are USDT-margined, while inverse contracts are margined by trading coins like BTC.
In markets of linear contracts, all contracts use USDT as the margin, and users only need to hold USDT to trade. On the other hand, inverse contracts are margined by trading coins like BTC and ETH, and users must hold the corresponding coin to trade in a market. For instance, in the BTCUSD inverse contract market, you should deposit BTC as the margin. Simply put, when it comes to linear contracts, holding USDT will grant you access to all markets where linear contracts are traded, while you are required to hold the specified type of coin when trading inverse contracts. Plus, the profits you’ve earned will also be settled in the specified type of coin.

5. @AminurIslamshe2: What is the difference between index price and market price?

Futures involve three prices: the Latest Executed Price, Index Price, and Mark Price. The Latest Execution Price refers to the price at which the latest order (the last order of the execution list on the futures page) was executed in the market. Index Price is a mechanism introduced by crypto exchanges that help prevent losses arising from abnormal price fluctuations on a single platform. It is often determined according to the spot price of multiple exchanges through weighted calculation. Therefore, the price reflects the true market price more fairly. The Mark Price introduces the Funding Fee based on the Index Price, which makes it a more reasonable estimation of the futures price. Most exchanges rely on the Mark Price as the basis for futures liquidation to protect users’ rights and stabilize the futures market.

6. @yugiam06: Why in futures trading, every coin is settled by USDT? But in spot trading, coin can be settled by different coins like BTC and ETH?

In addition to linear contracts settled in USDT, CoinEx also features inverse contracts that are margined by coins like BTC. USDT-margined contracts are the mainstream choice in the present futures market. In its essence, trading a futures contract means predicting the future price trend of a cryptocurrency, which differs from the swapping-oriented spot trading (e.g. BTC-ETH). Moreover, spot trading priced in USDT is subject to wild price fluctuations due to insufficient trading volume or poor liquidity, which magnifies the risks facing the average user.

7. @srvmsrvm23: How should be aware of risk control in futures trading? What are the benefits differ from spot trading?

When trading futures, one should keep the funding ratio within a reasonable range. If a trader is not sure how the price may change, he should avoid trading futures or start a small position. In addition, traders should also take profits and stop losses in time to make sure that the losses do not exceed the acceptable amount. Meanwhile, traders should remain rational after losses and refrain from seeking “revenge” (i.e. opening multiple large positions just to recover the losses). Such emotional trades are more likely to lead to forced liquidation, resulting in unavoidable losses.

8. @Bnc6661: When I enter the buy price the liquidation price is not showing after the trade starts then only we can see the liquidation, why can’t I see the liquidation before the trade.

Before trading futures on CoinEx, users can check the liquidation price using the Calculator provided on the futures webpage. After a position is opened, they can find out about the liquidation price of the contract in Position Details.

9. @AdiPrab10410697: What should we do before trading futures in order to make a profit? how do we analyze a coin that is right for futures?

Traders should control the risks within an acceptable range when starting a position and choose a reasonable leverage ratio according to their financial status. Moreover, they should always set a SL price in advance. At the same time, one should remain calm when suffering losses, and if a trader is confident in his price predictions, then he can also increase the position to lower the risks.
On the other hand, if a trader is not sure how the price might change, he should close his position in time and place an order when the trend becomes clearer. Additionally, it is always sensible to learn more hedging methods and work out a sound trading strategy relying on multiple products like margin trading and spot trading. The essential goal of futures trading is to lock in the profits and lower the losses to earn higher returns.

10. @Crypt765: How we can manage/choose a leverage for a trade at some point in the market?

When choosing a leverage ratio, futures traders should account for the available fund. If a trader is not risk-tolerant, then he should go for a low leverage ratio; if the trader is confident about the future price trend, he could always set a higher leverage ratio as appropriate.

11. @BDeztiny: Can I change leverage on open position?

At the moment, CoinEx users cannot change their leverage on open positions.

12. @cogne0589: Please tell me about Calculation of Liquidation Price on CoinEx?

Let us go through one example. Suppose we start a long position of 1 BTC with a 10X leverage ratio when the BTC price stands at 30,000 USDT. We then deposit an Initial Margin of 3,000 USDT, with an Available Margin of 2,000 USDT in the account. At this point, the BTC price falls by 5%, and the Mark Price now stands at 28,500 USDT. In the meantime, no Margin is manually added. For the convenience of calculation, transaction fees will not be included below. At this point,
The Unrealized PNL = Position Amount * (Mark Price — Avg. Opening Price) = 1*(28,500–30,000) = -1,500 USDT;
The Position Margin = Opening Price + Increased Margin — Decreased Margin + Unrealized PNL = 3,000–1,500 = 1,500 USDT;
Under the Isolated Margin mode, Margin Rate = (Position Margin)/Open Value = 1,500/30,000 = 5%;
Under the Cross Margin mode, Margin Rate = (Available Margin + Position Margin)/Open Value = (1,500+2,000)/30,000=11.67%.
According to the official CoinEx website, the Maintenance Margin Rate is 0.50% when the position level falls between 0–10 BTC, which indicates a Margin Rate of 0.50%. Therefore, the system will liquidate the position. We can then calculate the Liquidation Price in the above case.
Maintenance Margin = Open Value * Maintenance Margin Rate = 30,000*0.50% = 150 USDT
Under the Isolated Margin mode, the Unrealized PNL = Maintenance Margin — Initial Margin = 150–3,000 = -2,850 USDT; the Liquidation Price = Unrealized PNL/Position Amount + Avg. Opening Price = 27,150 USDT;
Under the Cross Margin mode, the Unrealized PNL = Maintenance Margin — Initial Margin — Available Margin = -4,850 USDT; the Liquidation Price = Unrealized PNL/Position Amount + Avg. Opening Price = 25,150 USDT
You can also use the Calculator function on CoinEx to determine the liquidation price.
13. @iman45404171: How can we use stop loss in future trading in CoinEx app?
You can go to CoinEx’s Help Center to find out about how the TP & SL function is used. Click on the link below and follow the illustrated guides step by step: https://support.coinex.com/hc/en-us/articles/4408436566809-How-to-Take-Profit-Stop-Loss-in-Futures-Trading-
14. @Shreyas14971738: Do you have a plan to do some promotional activity to attract more future traders?
In the future, we will introduce more futures trading events. Please keep track of CoinEx’s website announcements, as well as our official news on social media platforms like Twitter and Telegram.

35

Crypto Discussion / CoinEx Institution | Payment LEGO: An Overview of Streaming Payment Projects (I)

« on: April 24, 2022, 12:01:30 PM »

I. The Origin of Streaming Payments
While studying at the London School of Economics (LSE) in 1949, New Zealand economist William Phillips (“Bill” Phillips) invented MONIAC (Monetary National Income Analogue Computer), which consisted of a series of transparent plastic tanks and pipes for simulating the process of the UK’s national economy. Phillips illustrated the constant money streams through water flows, which reflects the natural state of money — it flows over time.



In a national economy, time functions as the bridge connecting wages, consumer spending, investment funds, and government spending. Picture a world with “streaming money” — payments are no longer discrete but continuous, enabling the completion of money transfers within seconds. Time determines people’s net worth. In theory, work should be paid in real time, but factors such as management costs prevent us from achieving real-time payments.
Fortunately, the advent of blockchain technology removed both the spatial (borderless payment) and temporal restraints of payment. With blockchain, payments can be made every second, giving rise to a continuous stream. This payment model is called “streaming payments”, or real-time payments. The concept of streaming payment was first proposed by Andreas Antonopoulos, the author of Mastering Bitcoin, back in 2017. In 2019, Paul Razvan Berg implemented streaming payment technology through Ethereum smart contracts and founded a project called Sablier.

II. The Realization of Streaming Payments

This rule applies to scenarios (e.g. investment) where the payment amount and the start & end time are known. During the period from the start time to the end time, money is streamed towards the recipient per second at a certain streaming rate.
Streaming Rate = Payment Amount / (End Time — Start Time)
Streamed Balance = Streaming Rate * (Current Time — Start Time)

2. Streams with a fixed streaming rate

This rule applies to scenarios (e.g. salary payment) where there is no fixed stop time. After the start time, money is streamed towards the recipient per second at a specified streaming rate until hitting the maximum payment amount. In addition, the rule does require any end time — the duration of the stream can be extended by increasing the maximum payment amount.
End Time = (Maximum Payment Amount / Streaming Rate) + Start Time
Streamed Balance = Streaming Rate * (Current Time — Start Time)

3. Streams with installments

This rule is applicable to streams with a large fixed amount. Moreover, with this rule, the number of installments can be randomly set, and the cash flow will no longer be occupied.
It should be noted that the amount transferred through a stream is not the real amount, and we will not see these ongoing payments on every block. What is transferred via a stream is the “streamed balance”, which is the amount that the sender or recipient owns at a certain point on the streaming payment protocol. Additionally, the sender/recipient may end the stream at any time before the stream ends and obtain the streamed balance at that time by making withdrawals.

III. Overview of Streaming Payment Projects

In this chapter, we will introduce four streaming payment projects currently available in the market in terms of the deployed network, technical framework, product features, and interactive process.

1. Sablier

Sablier, the earliest streaming payment protocol, was launched on December 14, 2019. According to data from DeFi Pulse, Sablier’s total value locked (TVL) reached $158 million at the end of March 2022 and peaked at $800 million in November 2021. Most of the TVL comes from protocols that use Sablier to unlock tokens. With Sablier, projects can unlock tokens automatically, and recipients can claim tokens seamlessly.



Mainnets supported by Sablier now include Ethereum, Arbitrum, Avalanche, BSC, Optimism, and Polygon. Meanwhile, it also supports testnets such as Goerli, Kovan, and Rinkeby. It features a wide range of token payments within these networks, covering mainstream USD-pegged stablecoins, stablecoins pegged to other fiat currencies, Wrapped assets, as well as certain native tokens on the network.
Sablier features a well-designed UI and simple operations. The protocol provides separate operation interfaces for both senders and recipients (https://pay.sablier.finance/ and https://app.sablier.finance/, respectively). When creating a streaming payment, a sender only needs to enter the token type, total amount, recipient address, and duration (ranging from 1 hour to 20 years). During this process, the fees include the Gas fee and platform fee (a portion of the tokens deducted from the stream).
Once the contract is created, an info-sharing link will pop up on Sablier web-app, leading the sender to a page where he can view information such as the token amount that has been streamed, the remaining time, as well as the withdrawal amount on the part of the recipient. He may also click on “Links” to go to the blockchain explorer and check out more information about the transaction. In addition, the sender could also tap “Cancel” to terminate the transaction. If a stream is canceled before the set end time, money that has been streamed still belongs to the recipient and the remaining deposits will be returned to the sender.
In the case of the above stream, the recipient’s interface looks similar to that of the sender, and the only difference is that the recipient can click on the “Withdraw” button to withdraw the amount that has been streamed. The recipient needs to withdraw the money to have it transferred to his wallet; otherwise, the funds will remain on the Sablier protocol.



Sablier was acquired by Hifi Finance in July 2021 and has yet to issue any tokens.

2. Superfluid

Superfluid had attracted much attention during the “airdrop craze” and was also one of the tasks of RabbitHole. Initially, Superfluid was only listed on Polygon and xDAI (Gnosis Chain). Now, it is also deployed on Arbitrum and Optimism. In terms of testnets, Superfluid supports Arbitrum Rinkeby, Avalanche Fuji, Goerli Testnet, Kovab Testnet, Optimism Kovab, Polygon Mumbai, Rinkeby Testnet, and Ropsten Testnet.
Superfluid’s framework primarily covers the following components:
(1) Super Agreement Framework
Super Agreement is the cornerstone of Superfluid that allows it to expand and add new features. It is also the key of payment LEGO. The Super Agreement consists of a host contract and multiple agreement contracts. An agreement contract must be on the approve-list; otherwise, the host contract will not execute the agreement code.
To be more specific, Superfluid now features two agreements: 1) Constant Flow Agreement (CFA), which allows tokens to flow out of a user’s wallet; 2) Instant Distribution Agreement (IDA), which lets a user send tokens to multiple recipients in one transaction. The independent or combined use of the two agreements enables a wide range of application scenarios. Additionally, the Superfluid community is also exploring more innovative and practical agreements.
(2) Super Token Framework
Super Agreements set the “rules” of how a Super Token can behave. There are two types of Super Tokens: 1) Wrapper Super Token (the wrapped version of ERC20 tokens), and 2) Custom Super Token (tokens without an underlying asset). The former is wrapped at a 1:1 ratio through the Superfluid protocol (subsequently redeemed at a 1:1 ratio at any time), and the latter is issued through Superfluid and compatible with ERC777 and ERC20.
Superfluid’s token framework comes with the following features:
l An extended ERC777 token standard: Tokens that can react to certain events using callbacks;
l Batch Capabilities: Users can do multiple things in a single transaction;
l Meta-Transactions: It allows for transactions where one person creates and signs data off-chain and that are executed by another person who pays the Gas.
(3) Super App Framework
A Super App can “manage” agreements and respond to changes. This is where developers can write their own custom logic/behavior. More specifically, scenarios that involve calling agreements include:
l If the sender starts streaming a token to the contract, then another token (e.g. Wrapped tokens) will stream back automatically using CFA.
l If a project team unlocks tokens, then IDA will distribute tokens to all investors.
Generally speaking, the real value of Superfluid is that it effectively alleviates two problems: difficulties of key management and expensive Gas fees. Furthermore, the protocol has created a new composable, scalable network of value flows, which demonstrates the charm of the blockchain space.
On Superfluid, before creating a streaming payment, a user (sender) should first wrap the tokens in his wallet or create custom tokens. Next, the sender needs to enter or select certain information, including the recipient address, token type, and flow rate (one-time, daily, weekly, monthly, and yearly). It should be noted that a buffer will be withheld from all streams, except for one-time payment.
The buffer will be returned when the user closes the stream or will be deducted when the token balance is 0. The type of Superfuild stream is with a fixed streaming rate. As long as the token balance of the Superfuild account is not zero, the stream will continue until the sender or recipient has it canceled. Tokens received by the recipient are also super tokens, which will only be shown in a wallet after being unwrapped.
Favored by many institutional investors, Superfluid announced in July 2021 that it had received a seed round funding of $9 million, with involvement from investors that include Multicoin Capital, Delphi Digital, and DeFiance Capital.
In the next chapter, we will review more streaming payment projects.

36

Crypto Discussion / CoinEx | 4 Types of Future Margins: Initial, Frozen, Maintenance & Position

« on: April 21, 2022, 11:09:10 AM »

Margin is a term so important that you cannot neglect when trading futures. Yet many people would feel confused about the terms related to margin. This article will go deep into every detail of various margins in futures.



To begin with, we need to know that, as a vital mechanism in futures trading, Margin can be regarded as a kind of deposit. When trading futures, you will be charged a small amount of money according to your Open Value and Leverage as the security deposit of your position, which is what we normally call Margin.

Initial Margin

The first is the Initial Margin, which refers to the margin required for starting a position.
Initial Margin = Open Value * Initial Margin Rate; Initial Margin Rate = 1 / Leverage * 100%.
For example, suppose you want to start a long position of 1 BTC with 10X leverage when the BTC price stands at 30,000 USDT, and the Position Amount is 1 BTC.
Open Value = Position Amount * Open Strike Price = 1*30,000=30,000 USDT
Initial Margin Rate = 1 / Leverage * 100%=1/10*100%=10%
Initial Margin = Open Value * Initial Margin Rate=30,000*10%=3,000 USDT
As such, before opening the order, you need to pay an Initial Margin of at least 3,000 USDT.

Frozen Margin

The Frozen Margin refers to the frozen Initial Margin and trading fees when the current order cannot be executed immediately. Simply put, part of the Margin needs to be frozen before the limit order is executed. The Frozen Margin is calculated as below:
Linear Contract:
(Frozen) Initial Margin = Contract Amount * Buying (or Selling) Limit Price * Initial Margin Rate
(Frozen) Trading Fees = Contract Amount * Buying (or Selling) Limit Price * Maker Rate
Inverse Contract:
(Frozen) Initial Margin = Contract Amount * Contract Value / Buying (or Selling) Limit Price * Initial Margin Rate
(Frozen) Trading Fees = Contract Amount * Contract Value / Buying (or Selling) Limit Price * Maker Rate
Here is an example. On CoinEx Exchange, you start a long position of 1 BTC with 10X leverage at the unit price of 30,000 USDT. At this moment, Bitcoin is worth 30,001 USDT, and as a result, the limit order of 30,000 USDT cannot be executed immediately. Suppose the VIP Level is LV5 and the Maker Rate is 0.0200%, and then:
(Frozen) Initial Margin = Contract Amount * Buying Limit Price * Initial Margin Rate=1*30,000*10%=3,000 USDT
(Frozen) Trading Fees = Contract Amount * Buying Limit Price * Maker Rate=1*30,000*0.0200%=6 USDT
In this case, before the limit order is executed, the Initial Margin of 3,000 USDT and Trading Fees of 6 USDT, i.e. a total of 3,006 USDT, need to be frozen as the Frozen Margin.

Maintenance Margin

The Maintenance Margin refers to the minimum amount of Margin required to keep your position open.
Maintenance Margin = Cumulative Open Value * Maintenance Margin Rate
Cumulative Open Value = ∑Cumulative Historical Open Value — ∑Cumulative Historical Liquidation Value.
According to the CoinEx website, the Maintenance Margin stands at 0.50% when the position ranges from 0 to 10 BTC. In the above case, Maintenance Margin = Open Value * Maintenance Margin Rate=30,000*0.50%=150 USDT.

Position Margin

The Position Margin refers to the amount of assets locked for the position. In isolated margin, when the Position Margin is lower than the Maintenance Margin, the position will be force-liquidated, and you can increase or decrease the Position Margin manually; in cross margin, when the Position Margin is lower than the Maintenance Margin, the Available Balance will be automatically transferred as Margin to the position.
Position Margin = Initial Margin + Increased Margin — Decreased Margin + Unrealized PNL
For example, you start a long position of 1 BTC with 10X leverage at the unit price of 30,000 USDT. You then deposit an Initial Margin of 3,000 USDT, with an Available Margin of 2,000 USDT in the account. At this point, the BTC price falls by 5%, and the Mark Price now stands at 28,500 USDT. In the meantime, no Margin is manually added.
At this point, Unrealized PNL = Position Amount * (Mark Price — Avg. Open Price) = 1*(28,500–30,000) = -1,500 USDT; Position Margin = Initial Margin + Increased Margin — Decreased Margin + Unrealized PNL = 3,000–1,500 = 1,500 USDT.

37

Crypto Discussion / CoinEx Institute | NYM, A Privacy-preserving Network Under Web 3.0

« on: April 21, 2022, 11:05:38 AM »

Backed by the popularization and advancement of the Internet infrastructure, anyone can now access and create online content with ease and convenience. However, behind the freedom lies a potential risk — the infringement on personal privacy. The more content a person posts/views on the Internet, the more likely his/her private data will be collected by others.
On the conventional Web 2.0 Internet, data generated by users were collected by the websites they used and sent to centralized Internet-based companies. From a technical perspective, these companies can process user data with absolute freedom. Furthermore, it is difficult to prevent the leakage of user data even if legal restrictions are already in place.



Most users find it difficult to keep their data private. Although we regard personal privacy as an important asset, the existing Internet infrastructure has failed to ensure the security of such assets. When we talk about the disruptive applications of Web 3.0 and the innovation it might bring, a key focus is the Web 3.0 users’ control over their private information.
NYM, the project that we will focus on today, is a protocol committed to the preservation of privacy. It aims to build the underlying privacy-preserving infrastructure of the blockchain world. As an extremely promising project in the category of privacy protection, NYM uses blockchain technology and economic incentives enabled by its token to decentralize the network, thereby keeping your data fully private.



I. NYM = Mixnet + Access Mechanism + Blockchain, helping users hide in the network
Different from other public chains or network protocols, NYM focuses more on the bottom layer. It has built a complex Mixnet, allowing user information to be mixed and hidden.
NYM’s solution to online privacy protection is called Mixnet, which is a decentralized, multi-layered computer network. Instead of sending messages directly over the internet, users convert message packets into encrypted “Sphinx” packets on their own devices. The “Sphinx” format unifies the presentation of all data packets in terms of their size, making them untraceable. The ordering of these packets is then mixed through Mixnode to disrupt the sequence by which information and data enter and leave the network, which means that monitors will not be able to determine the time of data input and output according to the sequence. In addition, when you are using the Mixnet, cover information will be generated, so that the monitor will have no idea about the time when the information is hidden.
Meanwhile, the Mixnet also requires authorization or authentication services provided by different players to help users stay “invisible”. In NYM, players perform different roles to jointly protect your privacy and keep the Mixnet up and running. Four types of NYM players need to collaborate, i.e., Service Provider, Validator, Gateway, and Mix Node.



1. Service Provider: Helping users connect to the NYM network through API-enabled access
NYM’s Mixnet does not directly face end users. For example, if A plans to send a message to B through the Mixnet for privacy protection, then the software that sends the message from A to B is called the Service Provider. Developers of such software can access the Mixnet by integrating NYM’s client API. From the perspective of users, this process does not affect the normal use of the software, and no additional operations are required. Meanwhile, the Mixnet is included in transferring the bottom-layer data, which enables privacy protection

2. Validator: Authorizing user access & recording public information in the network
To enter NYM’s Mixnet, you must meet one precondition — Validators will run an investigation that covers such aspects as the cost. For instance, they will examine whether your entry fee (NYM tokens) is sufficient or whether you’ve got other proofs (proof of adulthood, zero-knowledge proof, etc.). Validators are responsible for issuing credentials for eligible users to prove that “you do have enough entry fees” to use the network (bandwidth credentials), as well as the “right to access” (service credentials).

3. Gateway: Your entrance to the network
You may access the NYM network once Validators provide you with credentials. The information you have sent will first go to the gateway, which will check whether the credentials are in place. Upon passing the verification, you can then choose a single gateway or multiple gateways to transmit the target information for privacy protection. Simply put, a gateway is like an intersection on the street, and passing through the gateway will lead you directly to the Mixnet.

4. Mix Node: Mixing the sequence and timing of traffic transmission in the network
At each layer of the Mixnet, computers called “Mix Nodes” will mix your online traffic with other users’ traffic, making it impossible to track the packets and analyze the communication pattern. Therefore, Mix Nodes are the key to privacy protection in NYM.

II. NYX blockchain: Recording the circulation of NYM tokens and information that keep the Mixnet running
NYM is backed by a Cosmos-based blockchain called NYX that supports Cosmos smart contracts. The blockchain, maintained by Validators, broadcasts and publishes secure information, including:
The public key and parameters of Mix Nodes accessing the network;
The number and status of NYM tokens pledged by participants in the current network;
The amount and status of user deposit in the NYM token pool;
Other data that keep the network secure.
The NYX blockchain maintains these data to confirm the number and status of NYM tokens, thereby checking the transaction history of tokens and whether they have been double-spent. Additionally, doing so also helps the blockchain confirm how packets are mixed in the network and the quality of the mixing process, which serve as the criteria for the distribution of token rewards.
To put it bluntly, the NYX blockchain is like a state machine that records data transformations required by the entire NYM network, making sure that all efforts of privacy protection are traceable. Moreover, as NYX is based on Cosmos, the blockchain comes with fast, easy integration, as well as its own Coconut protocol. In the future, NYX can also provide a basic platform for applications that require enhanced privacy protection, such as DeFi protocols that demand the integration of privacy protection. The NYX mainnet, launched this year, has already issued its native token. According to its blockchain explorer, 2,809 Mix Nodes, 20 Gateways and 2 Validators around the world have joined the network.



To sum up, the advantage of NYM is that the network provides a feasible privacy-preserving solution that features a clear division of labor and solid technologies. Such a solution is superior to traditional VPN and Tor. This is the case because the latter two merely offer encrypted packets, and monitors can still analyze the size, as well as the inbound/outbound sequence, of packets for anonymity-eroding operations. NYM’s Mix Nodes, on the other hand, disrupt the ordering of packets completely, which keeps the relevant data fully private.
Such a privacy-preserving solution not only protects privacy at the network layer but also extends privacy protection to the application level. Meanwhile, the solution encourages everyone to run the network in a decentralized manner through token incentives. When it comes to the regulatory issues of privacy protection, NYM has introduced real-world identity authentications that allow you to participate in the network by submitting legal identity certificates. In the meantime, there are also NYM players who are responsible for the verification of identity and requests. NYM, founded to end the era of Internet surveillance, is building the next generation of privacy infrastructure.

38

Crypto Discussion / CoinEx | Ways to Calculate the Margin Rate

« on: April 19, 2022, 12:33:29 PM »

When trading futures, it is vital to know how the Margin Rate (Ratio) is calculated because it will determine whether your position will be forced-liquidated. That said, the Margin Rate (Ratio) is calculated differently across trading platforms. For instance, forced liquidation will be triggered when the Margin Rate (Ratio) falls below a certain level on some platforms, while the risk of forced liquidation increases as the Margin Rate (Ratio) goes up on other platforms. Today, let’s dive into how the Margin Rate (Ratio) is determined on different platforms.



1. CoinEx
There are two types of Margin on CoinEx: Isolated Margin and Cross Margin.
When Isolated Margin is selected, Margin Rate = (Position Margin) / Open Value;
When Cross Margin is selected, Margin Rate = (Available Margin + Position Margin) / Open Value.
In particular, Position Margin = Initial Margin + Increased Margin — Decreased Margin + Unrealized PNL.
Suppose a CoinEx user starts a long position of 1 BTC with 10X leverage when the BTC price is at 30,000 USDT and adds an Initial Margin of 3,000 USDT. If the BTC price drops by 5% (the Mark Price falls to 28,500 USDT) and the total Margin for his position is fixed at 3,000 USDT, the Margin Rate of the user’s position will be calculated as follows (excluding the transaction fee):
Margin Rate = (Available Margin + Initial Margin + Increased Margin — Decreased Margin + Unrealized PNL) / Open Value = (3,000–1,500)/30,000 = 5%.
On CoinEx, a position will be forced-liquidated when the Margin Rate falls below the Maintenance Margin Rate. In other words, the lower the Margin Rate, the higher the risks of forced liquidation.

2. Binance
Here is how the Margin Ratio is calculated on Binance: Margin Ratio = Maintenance Margin / Margin Balance. The Maintenance Margin is the minimum Margin Balance required for maintaining a position, while the Margin Balance equals the Wallet Balance plus Unrealized PNL.
Suppose a Binance user starts a long position of 1 BTC with 10X leverage when the BTC price is at 30,000 USDT and adds an Initial Margin of 3,000 USDT. In addition, on Binance, the Maintenance Margin Rate corresponding to Level 1 (1 BTC) is 0.4%. If the BTC price drops by 5% (the Mark Price falls to 28,500 USDT) and the total Margin for his position is fixed at 3,000 USDT, the Margin Ratio of the user’s position will be calculated as follows:
Maintenance Margin = Open Value * Maintenance Margin Ratio = 30,000*0.4% = 120 USDT;
Margin Ratio = Maintenance Margin / Margin Balance = 120/(3,000–1,500) = 8%
On Binance, a position will be forced-liquidated when the Margin Ratio reaches 100%, which means that the risk of forced liquidation increases as the Margin Ratio goes up.

3. Huobi
On Huobi, the Margin Rate is called the Margin Ratio, which is determined as follows:
Isolated Margin Ratio = (Account Equity / Used Margin) * 100% — Adjustment Factor.
Cross Margin Ratio = Account Equity / ∑ (Used Margin * Adjustment Factor) of all futures contracts in the cross account — 100%;
Account Equity = Account Balance + Current-period Realized PnL + Current-period Unrealized PnL;
In particular, Used Margin = Position Margin + Frozen Margin; Position Margin = Contract Face Value * Position Quantity * Latest Price / Leverage.
Suppose a Huobi user starts a long position of 1 BTC with 10X leverage when the BTC price is at 30,000 USDT, the Contract Face Value stands at 0.001 BTC (i.e. the Net Position equals 1,000), and the Adjustment Factor is 7.5%. In addition, the Margin is set at 3,000 USDT. If the BTC price drops by 5% (the Mark Price falls to 28,500 USDT) and the total Margin for his position is fixed at 3,000 USDT, the Margin Ratio of the user’s position will be calculated as follows:
Position Margin = Contract Face Value * Position Quantity * Latest Price / Leverage = 0.001*1,000*30,000/10 = 3,000 USDT
Account Equity = Account Balance + Current-period Realized PnL + Current-period Unrealized PnL = 3,000–1,500 = 1,500 USDT
Margin Ratio = (Account Equity / Used Margin) * 100% — Adjustment Factor = (1,500/3,000)*100% — 7.5% = 42.5%
On Huobi, a position will be forced-liquidated when the Margin Ratio ≤0%. In other words, the lower the Margin Ratio, the more likely the position will be forced-liquidated.
Given that there are many ways to calculate the Margin Rate (Ratio), users should be careful with the ways through which the rate is determined when trading futures on different platforms. By comparison, Huobi’s Margin Ratio is the most complicated, while CoinEx features a much simpler calculation process.

39

Crypto Discussion / CoinEx Institute | A Comprehensive Analysis of Arbitrum — The Layer 2 Ascetic

« on: April 17, 2022, 07:41:35 PM »

It has been more than 6 months since the launch of Arbitrum. Although the project was initially upstaged by shitcoins and rug-pull projects, Arbitrum kept growing. According to L2beat (Figure 1), as of March 21, Arbitrum’s TVL reached approximately $3.2 billion, which is far ahead of all its rivals. The project accounts for 50% of the total Layer 2 TVL (about $6.35 billion), with a TVL that is 3.2 times higher than that of dYdX, the second-largest Layer 2 project by TVL.



These figures suggest that Arbitrum is stilled favored by investors, with a prominent status during the expansion of Ethereum. In addition, Offchain labs announced the launch of Anytrust Chains on March 2, opening more possibilities for the Layer 2 category. As such, we will discuss Arbitrum in two parts. Part 1 will present the overview of Arbitrum, examine its competitiveness from the perspective of users, and compare the project with its rivals. In Part 2, we will introduce the native ecosystem of Arbitrum and focus on its growth prospects.

Introduction to Arbitrum
Arbitrum is an Ethereum scaling solution created by Offchain labs, which raised $120 million in a Series B round back in 2019, with involvement from leading institutional investors such as Pantera Capital, Polychain Capital, Coinbase, etc.
Arbitrum features cheap, fast transactions and sends all transaction information back to the main Ethereum chain. Here is a simple comparison: Ethereum processes about 14 transactions per second, and the gas fee varies according to how congested the network is. Moreover, the gas fee soars to hundreds of dollars when Ethereum is highly congested. By contrast, Arbitrum comes with 40,000 TPS and charges about $0.6 in gas fee per transaction. Furthermore, Arbitrum is fully compatible with Ethereum Virtual Machine (EVM), which means that developers can directly integrate their Dapps with Arbitrum, cutting the time required for redevelopment.



It is easy to understand how Arbitrum is run. Simply put, Arbitrum packages multiple transactions or things together, settles them on a designated sidechain, and then submits the transaction data to the main Ethereum chain. The network employs a technology called Optimistic Rollup, which compresses the data of blockchain transactions and rolls them up into a single transaction. The advantage of this approach is that the blockchain only needs to process a single transaction without having to confirm the transactions contained in the Rollup, thereby saving both time and gas fees.
On Arbitrum, security is guaranteed by validators. By default, Optimistic Rollup assumes all transaction data to be correct. Despite this, if a validator suspects that fraud may exist, the relevant transaction can be challenged through the dispute resolution mechanism. As such, Optimistic Rollup has introduced the challenge period. If the validator has found a suspicious transaction, he/she may challenge the transaction, and the challenged transaction can be recovered during the challenge period. As a result, it only takes about 10 minutes to transfer funds from the Ethereum mainnet to Arbitrum, while sending funds from Arbitrum back to the Ethereum mainnet takes approximately a whole week.
The Competitiveness of Arbitrum
When it comes to the competitiveness of Arbitrum, analyses that focus on the technical differences among Layer 2 projects may seem unintelligible to the average user. As such, we decided to adopt the perspective of users and noticed that there are two things users really need: 1) satisfying user experiences, and 2) strong asset security. The paragraphs below will focus on these two factors.
In terms of user experiences, when making crypto transfers, users are more concerned with the speed of their transactions and how much gas fee they should pay. From this perspective, Arbitrum’s rivals are not limited to Layer 2 projects but also include high-performing Layer 1 main chains like Solana, AVAX, and BSC that also feature high TPS and low transaction fees. Moreover, assets on such Layer 1 projects can be quickly swapped across different chains and withdrawn as well.
Over the past year, as Layer 1 and Layer 2 projects flourished, assets on Ethereum spilled over to other blockchains. In terms of the market shares of Ethereum bridges, the lion’s share is now taken by AVAX, followed by Polygon and Ronin. In this regard, Arbitrum ranks 4th.



According to the above ranking, Arbitrum is not the best choice. One of the reasons is that the project is less superior in terms of the gas fee than Layer 1 projects like AVAX, Polygon, and Solana, which charge negligible gas fees. However, the Arbitrum team said that they will reduce the gas fee in the future by increasing the speed limit while expanding the network capacity.
Meanwhile, the fee will be lowered as Arbitrum’s transaction volume grows larger. Secondly, Arbitrum suffers from long cross-chain cycles. For users who demand high asset flexibility, a waiting period of one week is a big concern. However, many cross-chain bridges that support Arbitrum have solved this problem. For example, the Hop protocol uses intermediate assets and AMM mechanism from cross-chain swaps, which reduces the time needed to swap Arbitrum’s Layer 2 assets to other chains.
Despite such defects, Arbitrum still boasts many advantages. The biggest selling point of the network lies in its full compatibility with EVM. This means that developers can migrate their Ethereum-based applications onto Arbitrum quickly and cheaply, without having to modify the original codes. With Arbitrum, users can use native protocols on Ethereum with lower costs, which is great news for loyal Ethereum users troubled by the expensive gas fees.
At the moment, over 150 Ethereum-based projects, including the leading protocols or Dapps of various Ethereum infrastructures, are running on Arbitrum one. Additionally, on March 2, 2022, Offchain labs announced the launch of Anytrust Chains, which will be run together with Arbitrum one for further optimization targeting the fields of gaming and NFTs. When the Anytrust chain is live and running, Arbitrum will cover NFT/GameFi projects, in addition to DeFi protocols.
Regarding asset security, one should focus on two factors: 1) protocol security of the network, and 2) the risk of hacking when swapping assets across different chains. Protocol security of the network: Arbitrum, a sidechain of Ethereum, is as secure as Ethereum. As such, the project’s security is fully ensured.
Cross-chain risks: When used to swap Ethereum assets from/to other chains, the top high-performing Layer 1 projects have all suffered security breaches. For example, the Solana-based cross-chain bridge Wormhole was once hacked, and the cross-chain bridge of THORchain had been the victim of three consecutive attacks, resulting in a loss of more than $16 million. Assets are exposed to the risk of hacking when swapped from Ethereum to other Layer 1 blockchains or sidechains. When Ethereum assets are swapped to Arbitrum, on the other hand, the risk of hacking is significantly lowered thanks to the Rollup and the challenge period.
Here, we must shed light on other Layer 2 projects that also employ Optimistic Rollup. Right now, projects featuring Optimistic Rollup include Optimism, Metis Andromeda, and Boba Network. To be more specific, Metis and Boba are two branches of Optimistic with expanded scaling performance and lower gas fees.



The above table shows that fees charged by Arbitrum are still higher than several other projects that also use Optimistic Rollup. The greatest difference between Optimism and Arbitrum lies in compatibility, which explains the drastic gap between the two projects in terms of the market share and the number of ecosystem-based Dapps, even though they were launched during the same period. In addition, Boba and Metis achieved faster withdrawals — instead of having to wait a week or so, users can withdraw assets in minutes or hours. Compared with these projects, Arbitrum is superior in its well-established ecosystem, which helped the project secure a large market share.
The Arbitrum Ecosystem
As mentioned above, since Arbitrum is highly EVM-compatible, the big infrastructure projects on Ethereum were deployed on Arbitrum soon after it was launched. Through Arbitrum, users can try out Ethereum projects with low fees and at a high speed. For instance, DEXes like Uniswap, Sushiswap, and Balancer, stablecoin projects such as Curve Finance and Abracadabra Money, as well as cross-chain bridges including Ren, Multichain, and Synapse are all available on Arbitrum. That is an essential reason why Arbitrum has managed to grab market shares within such a short period. The project provides smoother and cheaper trading experiences for loyal Ethereum users.
In this section, we will not dive into the native protocols of Ethereum. Instead, we will focus on the outstanding Arbitrum-enabled protocols, which include the following:
Dopex
Dopex is a decentralized options platform that offers liquidity to option traders through option pools while maximizing gains for both buyers and sellers of options contracts through a rebate system, as well as arbitrage functions. The protocol was built by an anonymous team of 18 developers, with @tztokchad and @witherblock at its core. It has received investments from Tetranode and DeFiGod1, two DeFi KOLs.
At its core, Dopex provides Single Staking Option Vaults (SSOVs), which allow users to lock up tokens for a specified period of time and earn yields on their staked assets. Users will be able to deposit assets into a contract. The system then sells the deposits as call options to buyers at fixed strikes that they select for end-of-period expiries. To put it bluntly, users deposit assets to sell a call/put option. By the same token, there will also be buyers purchasing a call/put option for hedging.
Options on Dopex are similar to conventional options. For users who deposit a call option into a pool on Dopex, if the price of the underlying asset goes up, SSOV depositors may preserve the dollar value of the option, i.e, buyers exercise the option contract they purchase, while sellers sell tokens at the strike price. If the price of the underlying asset drops, buyers choose not to exercise the option contract they purchase, while sellers may still preserve the value of their tokens. In both scenarios, depositors receive returns from their options and DPX rewards according to their liquidity share and the at-the-money ratio of the strike price.
Dopex adopts a dual-token economy where DPX serves as the governance token and protocol fee token. This means that fees charged for purchasing calls in an option pool, swaps, fines, and strategy vaults are all paid in DPX. At the same time, 15% of all fees charged will be distributed proportionally to DPX holders after each epoch. On Dopex, rDPX acts as the rebate token. To eliminate the risk of losses arising from extreme swings, option holders receive rDPX as compensation in each epoch. Dopex users can use rDPX to mint synthetic assets or have the tokens deposited as collateral to expand their exposure.
Sperax
Sperax is a decentralized stablecoin protocol that taps into both staking and algorithms. Its stablecoin USDs is backed by external assets plus its governance token SPA. To be more specific, USDs is minted by burning SPA and adding collateral. Sperax keeps USDs stable through collaterals and algorithmic stability (arbitrage).
The project is also backed by a strong lineup of institutional investors and developers. Sperax has completed a $6 million fundraising at the valuation of $200 million. Institutional investors including Amber Group, Alameda Research, and Jump Capital, as well as the big-name DJ Steve Aoki, invested in the project by purchasing SPA tokens. The team behind Sperax includes Nicolas Andreoulis, the former core developer of Terra, and Marco Di Maggio, a Harvard professor.
What is unique about Sperax is its dynamic transition between algorithmic and collateralized stabilization. Sperax uses an on-chain mechanism to calculate the fraction of the money supply that is algorithmically determined versus the collateralized. If the token price is above the peg, the money supply will be determined by algorithmic stabilization; if the price is below the peg, the reliance on external collaterals goes up. The major difference between USDs and other decentralized stablecoins lies in its built-in automatic earning feature, which earns interest through the DeFi aggregator on Sperax.
GMX
On GMX, an Arbitrum-based decentralized perpetual exchange, users can trade cryptos like ETH, BTC, and LINK with up to 30X leverage. The most prominent advantages of GXM are low swap fees and zero-slippage transactions. At the moment, the project is deployed on Arbitrum and AVAX and recorded a $380-million AUM. GXM ranks third among all Arbitrum-based projects in terms of TVL and has evolved into a leading decentralized perpetual exchange on Arbitrum.
To ensure zero-slippage transactions, GMX does not employ pools composed of trading pairs. Instead, liquidity providers stake assets such as ETH and BTC in the GLP pool, and this multi-asset pool performs swaps and leverage trading. The capacity of the GLP pool is larger than that of trading pair pools. Moreover, trades are priced based on the values provided by Chainlink and other DEXes, which minimizes the impact of slippage.
The project also employs a dual-token economy. GMX serves as the platform’s governance token, which can be used for staking. In addition, GMX holders receive 30% of the platform fees. GLP is the certificate issued to liquidity providers when they deposit assets into the GLP pool, and the price of GLP is based on (the total worth of assets in the GLP pool)/(GLP supply). GLP holders earn 70% of platform fees and esGMX that can be fully converted to $GMX after one year. By capturing liquidity through token incentives within a short period, GMX has recorded an increasingly higher trading volume and protocol revenue.



Generally speaking, most Arbitrum-based projects focus on infrastructures such as crypto wallets and cross-chain bridges. On Arbitrum, the second-largest category is DeFi, especially derivatives. The strong performance of Arbitrum creates an enabling environment for derivatives projects, as well as a slim chance of survival for projects that have been criticized for their poor liquidity and expensive fees. Finally, only a few Arbitrum projects focus on NFT and GameFi — there are now only three NFT projects in the Arbitrum ecosystem, with small trading volumes.
For a sidechain, NFT and GameFi projects are more demanding in terms of performance. This is the case because some applications need to minimize their costs or withdraw NFTs within a shorter period. In addition, the high-load operation and trading demands of GameFi projects also require strong blockchain performance. As such, Arbitrum will launch Anytrust Chains to enable the growth of NFT/GameFi projects within its ecosystem.
Growth Prospects
In a market where Layer 1/Layer 2 projects pursue competitive differentiation, where is Arbitrum headed? When will the project record exponential growth?
Arbitrum has taken a different path. As an Ethereum sidechain, Arbitrum is built to solve the scalability issue of Ethereum, and the Arbitrum team has always been committed to this original goal while enhancing the network’s performance from a technical level.
As for the issuance of native tokens, when Arbitrum was just launched, the community believed that Arbitrum would follow the same path as other Layer 2 solutions — airdropping native tokens to early users. However, Off-chain labs confirmed that it does not plan to offer any such native tokens.



After this announcement, the growth rate of Arbitrum’s TVL significantly slowed down. Moreover, the project even lost about 50% of its TVL. In today’s context, the 50% loss might just be a start — Arbitrum is making solid progress, drawing a line between itself and profit-seeking speculators. The project’s self-restraint from rushing to issue tokens for quick cash has exactly boosted its growth. By dedicating itself to technology and ecosystem building, Arbitrum has expanded its influence.
According to the latest official plans, Offchain labs will continue to upgrade the Arbitrum protocol. The team will go from Arbitrum One to Arbitrum Nitro and then launch Anytrust Chains to venture into the NFT market and GameFi. Arbitrum is not just a Layer 2 pioneer. In the future, it may even extend Rollup to other Layer 1 projects, opening up a vast growth space for public chain

40

Crypto Discussion / Introducing CoinEx Dock: All-new Services to Streamline Crypto Investment

« on: April 16, 2022, 06:51:40 PM »

Over recent years, as the industry grows bigger, crypto investment & fundraising have surged in terms of both frequency and amount. Meanwhile, plenty of innovative projects have appeared. Despite that, only a handful of projects can receive large investments from institutional investors, and most projects suffer from insufficient funds in their infancy.
In the meantime, though many investors wish to invest in promising projects for high returns, retail investors are daunted by the investment threshold of the primary market. As a result, promising projects lack access to funds, while retail investors can hardly invest in them. Committed to making crypto trading easier, CoinEx has launched a new platform to help projects raise funds while lowering the investment threshold for retail investors.



CoinEx Dock has been launched on the CoinEx website on April 8. As an all-new service segment for crypto investment & fundraising, CoinEx Dock focuses on identifying and remodeling promising projects to meet the increasingly diversified demands among crypto investors. It creates a sound fundraising and promotion platform for outstanding, innovative projects and provides fair, convenient opportunities to invest in such projects.
Eligible projects may reach out to CoinEx through CoinEx Dock on its official website. After rigorous assessment, the exchange will choose an appropriate date to list such projects on CoinEx Dock, thereby providing subscription channels for investors while allowing projects to raise initial funds.
Meanwhile, users can invest in a project through CoinEx Dock during the subscription period. CoinEx Dock provides detailed project information and subscription rules on its webpage. To sign subscription agreements and start subscribing, CoinEx users must first complete the KYC authentication and upgrade their account to VIP 1 or a higher VIP level. During the subscription period, users need to stake a certain amount of CET as collateral. Before the subscription period ends, all subscribed shares can be canceled at any time, and the funds and collateral will be returned to the user’s spot account.
However, since premium projects are less accessible and more profitable, they might be frequently oversubscribed. Therefore, CoinEx Dock will conduct a lottery based on the slots of subscription and the total subscription. After the lottery ends, the staked assets will be automatically returned to users’ Spot Account. Users who won the lottery can get the subscribed tokens. The payment and staked assets will be returned for those who missed the lottery. If a user has more than one subscription and only part of it won the lottery, he will only be charged for the winning part while the rest of the payment and staked asset will be automatically returned to his spot Account.
CoinEx Dock features simple procedures and a low threshold in terms of the funding amount. It creates a secure fundraising platform for outstanding projects and allows most users to invest in such projects. CoinEx Dock provides a simple, secure, and accessible investment channel for more users who plan to invest in the crypto world.
Over recent years, CoinEx has continued to gather innovative, premium assets and adopted strict coin-listing criteria, with a focus on value discovery. CoinEx now offers over 500 premium cryptos and nearly 1,000 trading markets. On CoinEx, users can trade assets based on different ecosystems (e.g. AVAX, SOL, LUNA, and FTM) and receive impressive returns. As of March 7, LUNA has surged by 16,211.43%, SOL by 3,757.17%, and AVAX by 1,507.6%, since their listing on CoinEx, which allows more investors to stay ahead of peers.
Dock, where the grand voyage sets off, is now the start in the Age of Crypto Discovery, leading the quality projects to the doorstep of global users. In the future, CoinEx Dock will bring the quality cryptos into users’ premier focus with simple crypto trading services. Through the platform, the exchange will meet all demands for both investment and trade and help outstanding projects raise funds with ease. As it sets sail to the Crypto Metaverse and beyond, CoinEx will explore the future growth of the industry and share the blockchain benefits with users and crypto practitioners

41

Crypto Discussion / CoinEx | Transaction Fee vs Funding Fee in Futures Trading

« on: April 14, 2022, 03:32:54 PM »

When trading futures, sometimes, the total asset of your position might go down even though the ROI stays positive. Why? In such cases, the part of the total asset you lost has been taken away by the exchange as the service fee for the current round of liquidation. Therefore, some veteran traders often advise newbies to focus on observation, rather than trading. Trading futures frequently affects a trader’s mindset, reduces the likelihood of winning, and increases the trading cost. The service fee could be very expensive as it adds up over the long run.
The goal of trading on a crypto exchange is always profit, and blinded trading without learning the rules governing how the service fee is charged on a platform will often bring losses. Right now, the service fee for futures trading on mainstream exchanges consists of two parts: 1) Transaction Fee, and 2) Funding Fee.



Transaction Fee
When trading futures, both Makers and Takers will have to pay a Transaction Fee. In particular, the Maker Fee might differ from the Taker Fee, and different exchanges have different rules about the rate for Makers and Takers.
It should be noted that the Maker Fee is generally lower than the Taker Fee, which is understandable because Makers bring more liquidity to the market by placing orders, while Takers consume liquidity by accepting orders. As such, the Maker Fee is lower than the Taker Fee on most exchanges.
Learn more about Maker and Taker here.

Suppose a regular user is trading cryptos on CoinEx, and he would have to pay the following fees:
Maker: 0.03%
Taker: 0.05%
Linear Contract’s Trading Fee = Fee rate * Position Qty * Buying/Selling Price
Inverse Contract’s Trading Fee = Fee rate * Contract Amount * Contract Value * Buying/Selling Price
User A is trading linear contracts. He starts a long position of 1 BTC with 400 USDT (a leverage ratio of 100X) when the BTC price is at 40,000 UDST and sells the entire position at 50,000 UDST, then User A will have to pay the following fee:
Transaction Fee for opening the position = 0.05%*1*40,000 USDT = 20 USDT
Transaction Fee for closing the position = 0.03%*1*50,000 USDT = 15 USDT
The Transaction Fee for inverse contracts can also be determined by the above formula. In short, we can tell that although User A profits from the deal, he has to pay 35 USDT in Transaction Fee alone, which is roughly 1/10 of his principal. Though the fee may seem minimal, it could become a very expensive cost as it adds up over the long run.
Is there a way to pay less fee?
The answer is yes. Right now, many exchanges have offered many benefits to lower the trading threshold for users. For example, on CoinEx, the Maker/Taker Fee for retail users stands at 0.03%/0.05%. However, when a user’s CET holding reaches a certain level, the Maker/Taker Fee will go down.



Funding Fee
In a market of crypto contracts, apart from futures, there are also delivery contracts, which are settled monthly/quarterly. Such regular settlements make sure that the market price of delivery contracts stays the same as the spot price. Futures, on the other hand, do not have a settlement date, which means that traders may hold onto them indefinitely. As such, if there is no price correction mechanism, the price gap between spot and futures will become increasingly larger. To bring the futures price back to the level of the spot price, a correction mechanism is needed to minimize the price gap, which triggered the invention of the Funding Fee.
In addition to the Transaction Fee, the Funding Fee will also affect a trader’s cost. When the futures price is higher than the spot price, the exchange will announce a positive Funding Rate, which means that the Funding Fee will be paid by long traders to short traders; if the Funding Rate becomes negative when the futures price is lower than the spot price, then the Funding Fee is paid by short traders to long traders. It is noteworthy that the Funding Rate is never fixed. Instead, it varies according to market fluctuations and is determined by the long-short ratio of a market.
On CoinEx, the Funding Fee is settled every 8 hours at 0:00, 08:00, and 16:00 (UTC). Users only have to pay/receive the Funding Fee if they hold a position at these three timestamps. If a position is closed before the fee is charged, then no Funding Fee will be paid. In addition, the Funding Fee only circulates between traders and is not charged by CoinEx.

Conclusion
1.In addition to the PNL of their position, futures traders must also pay Transaction Fee and Funding Fee;
2.Though the Transaction Fee must be paid, traders may reduce the trading cost by avoiding frequent trades or becoming VIP users;
3.When the Funding Rate is positive, the Funding Fee is paid by long traders to short traders; when the Funding Rate is negative, the
   Funding Fee is paid by short traders to long traders;
4.CoinEx does not charge any Funding Fee. Instead, the fee is paid by/to traders. On CoinEx, the Funding Fee is settled every 8 hours.

42

Crypto Discussion / CoinEx Security Team: How to Protect THORChain (RUNE) from Hackers

« on: April 12, 2022, 09:16:19 AM »

According to THORChain’s treasury report for Q1 2022 released on April 1, the chain registered a growth in revenue despite the twofold impact of persistent market sluggishness and highly unstable geopolitical factors. Public data shows that THORChain recorded $2.17 billion in revenue in Q1 2022. THORChain, acclaimed as the “cross-chain version of UniSwap”, gained a foothold in the cross-chain trading market relying on its unique advantages and earned extensive recognition among investors.



Behind all these glamours, THORChain is also deeply troubled by hacking. The chain suffered frequent security breaches since it was launched on Ethereum, a fact that casts doubt on its security. On April 11, THORChain tweeted about phishing attacks, warning users not to interact with [DeTHOR] or other unknown tokens within their wallets, which once again raised concerns about its security issues.



While building a sound security system for CoinEx products, the CoinEx security team also keeps track of security incidents in the blockchain space to help users better understand the security of different projects from the perspective of technical security and mitigate the investment risk. Aiming to improve the security criteria for the blockchain sector, the CoinEx security team has analyzed the security risks of THORChain (RUNE). The team hopes that THORChain could note and mitigate the following risks by optimizing the relevant smart contract codes. In addition, this article is also a warning for users, reminding them to be more aware of asset security and avoid asset losses.

How secure is THORChain (RUNE)?
Through analysis of the contract code and logic of THORChain (RUNE), the CoinEx security team has found the following risks.
To begin with, let’s check out the contract code of THORChain (RUNE): https://etherscan.io/address/0x3155ba85d5f96b2d030a4966af206230e46849cb#code
We can tell that RUNE is a pretty standard ERC-20 token. It should be noted that apart from the ERC-20 interface, THORChain (RUNE) offers an additional interface:



According to transferTo (as shown in the picture above), THORChain (RUNE) uses tx.origin, which is one of the causes behind its security risks. Here, we should explain the difference between tx.origin and msg.sender:
The below picture describes what happens when a regular address calls the smart contract:



In such cases, msg.sender = account.address, and tx.origin = account.address, which means that msg.sender is just the same as tx.origin.
The following is what happens when an account calls contract A, and contract A calls contract B:



When contract A calls contract B (as shown above), we can tell that msg.sender equals tx.origin in contract A.
However, in contract B, msg.sender = contractA.address, while tx.origin = account.address. Therefore, tx.origin is like a global variable that traverses the entire call stack and returns the address of the account that originally sent the transaction. This is the key issue: to date, almost all known attacks against THORChain (RUNE) relate to tx.origin.
Let’s now find out how attackers steal users’ RUNE tokens through tx.origin:

Attack №1: Pilfer a Goat from a Herd
Addresses on Ethereum are divided into external addresses and contract addresses. Transferring ETH to these two types of addresses through external addresses is fundamentally different. The Official Documentation of solidity states that a contract address must implement a receive Ether function before making transfers.
In light of the features of tx.origin, hackers may build an Attack contract:



When the Attack contract receives an ETH transfer from a user, it will “pilfer a goat from a herd” — the contract will steal the user’s RUNE tokens in the process.

Attack №2: Internal Attack
An Internal Attack is a special type of attack. When trying to steal a user’s RUNE through an Internal Attack, the hacker needs to have a medium token. Moreover, the token must also call third-party contracts. According to the transfer records of RUNE on Ethereum, some attackers hacked RUNE through AMP Token transfers.
AMP Token uses the ERC-1820 standard to manage Hook registration and examine whether Hook is registered upon each transfer. If Hook has been registered, then the Hook will be called.
The contract code of AMP Token shows that the final implementation of the transfer is: _transferByPartition. Meanwhile, there are two calls involving transferHook: _callPreTransferHooks (before the transfer) and _callPostTransferHooks (after the transfer). In particular, _callPreTransferHooks is for the from address, while _callPostTransferHooks is for the to address (i.e. the receiving address).
For regular users, stealing tokens from themselves is pointless. Therefore, attackers may exploit _callPostTransferHooks. Let’s now check out the codes of _callPostTransferHooks.



We can tell that the only callback that attackers could exploit is AmpTokensRecipient(recipientImplementation).tokensReceived()

Next, we will illustrate how this call can be used to transfer a user’s RUNE while making an AMP Token transfer.

Step 1: A call contract is needed (as shown below):



Step 2: Deploy the contract to obtain the Attack Address.
Step 3: Call the ERC-1820 contract interface (setInterfaceImplementer) to register the interface.
ERC-1820 Address: 0x1820a4B7618BdE71Dce8cdc73aAB6C95905faD24
Contract interface: setInterfaceImplementer(address toAddr, bytes32 interfaceHash, address implementer)
In particular, toAddr is the receiving address of the AMP transfer, interfaceHash is the hash of AmpTokensRecipient: 0xfa352d6368bbc643bcf9d528ffaba5dd3e826137bc42f935045c6c227bd4c72a
Implementer is the Attack Address obtained in Step 2.
Step 4: Lure a user to transfer AMP to the toAddr to trigger a callback, and steal his RUNE at the same time.

Attack №3: Phishing Attack

As its name suggests, in a phishing attack, the attacker promises to give away incredible benefits to lure users into performing certain contract operations. Here, we will introduce a common phishing attack.

Step 1: The attacker issues an ERC-20 token, and may write it into any contract interface that involves signatures.



Step 2: Create a trading pair on Uniswap or any other swap;
Step 3: Offer airdrops to all users/addresses who hold RUNE tokens;
The initial work of the phishing attack is basically completed through the above these steps. Next, the attacker only has to wait for users to trade on a swap, and users risk losing their RUNE once they perform operations such as approve, transfer, etc.
In addition, in order to further verify the security risk of THORChain contract code, CoinEx has discussed with the security team from SlowMist and PeckShield, two well-known security agencies in the industry. Confirmed by SlowMist and PeckShield, the security risk mentioned above does exist.
So far, we have covered several types of attacks, as well as the security risks that users are exposed to.
How should the project team optimize the contract code to make itself more secure and protect users’ assets?
The only answer is to be cautious about using tx.origin.
How can regular users mitigate risks and protect their assets in the face of attacks that seem unavoidable? The CoinEx security team offers the following suggestions:
For Attack №1: When making a transfer, keep track of the estimated Gas consumption. For a regular ETH transfer, a Gas fee of 21,000 is more than enough. Be careful if the Gas consumption far exceeds that figure.
For Attack №2: Isolate your tokens by adopting different wallets. You can store different tokens in different addresses. Extra caution is needed when it comes to the hot wallet address offered by exchanges.
For Attack №3: Greed is the source of all evil. Do not blindly participate in any airdrop event.
Security has always been a top concern in the blockchain sector. All players, including project teams and exchanges, should prioritize security during project operation, keep users’ assets safe and secure, and jointly promote the sound growth of the blockchain industry.

43

Crypto Discussion / CoinEx Institute | The Security Predicament of Blockchain Assets

« on: April 10, 2022, 08:20:54 PM »

Since the DeFi Summer of 2020, driven by the continued advancement of blockchain infrastructures, DeFi protocols have evolved from Swap to Lend to Yield Farming to increasingly sophisticated protocols, covering AMM (automated market making) Yield Farming strategies based on blockchain derivatives, structured lending platforms built on lending infrastructure, and on-chain lending protocols connecting real-world collaterals, etc.
One of the key factors behind the boom of DeFi innovation is a concept called composability. Most of time, when a new DeFi protocol is released, most of its source code is also made available to the public. This means that source codes of smart contracts from one or more DeFi protocols can be easily composed together to create a new one. They work like Lego blocks — blocks in different shapes can be used to build unique projects, significantly lowering the cost of innovation.
Surprisingly, in light of such massive innovations, the number of DeFi users has not seen any significant growth since 2020. Meanwhile, traditional institutions have not put liquidity into the blockchain space. One of the major causes for this is the security concern of DeFi.


Real-world finance comes with a well-established, secure system. For instance, when moving funds from Bank A to Bank B, cash trucks and armed police officers will be there to keep the funds safe, which is a reassuring process. Moreover, the banks will also be responsible for a client’s property and will offer compensation for any loss during the process.
DeFi, however, differs from the legacy financial system. Smart contracts are immutable by design. They are essentially black boxes that will not send readable logs, so people cannot get a clear view of internal processes. Most smart contract audits don’t help as they focus on known forms of attacks only, rather than new types of flaws that are highly likely to occur. Meanwhile, many DeFi protocols label themselves as a “use-at-your-own-risk” product. This can be scary for regular users and make them have no confidence to put most of their bank deposits into a DeFi ecosystem.
DeFi has not disappointed those who did not trust it. So far, DeFi has seen 82 security breaches, with an initial hacked amount of over $1.8 billion. In particular, flash loan is the most common attack, accounting for 33 cases. One of the security reasons behind a flash loan attack is the lack of the concept of accurate time and a confirmation mechanism in blockchains. We will go through the specific reasons in the following chapters.

I. Time & the Time Network of Computers
Let’s first look at how time works in conventional computer programs.
Time is an essential concept to computer programs. Without the concept of time, it’s impossible to access any TLS-enabled website, create entropy for certain algorithms, exchange secrets, or authenticate Windows licenses. We take timekeeping on computers for granted, but exchanging and keeping track of time is an incredibly difficult problem to solve when it comes to actual operations.
Time is essentially a representation of the universe’s current global state. This means that for any given moment, every single entity must share the exact same value. This is obviously a huge problem for computers: Let’s assume there is a huge, highly accurate atomic clock in the center of the universe, transmitting time data across the Internet. A problem during this process is that transmitting data takes time by itself. When a device receives time data over the Internet and applies it to its own systems, the universe’s global state (time) would have already changed. In other words, it is impossible for a networking device to be perfectly up to date with the actual global time value.
Another problem with networked timekeeping is that we cannot perfectly predict the time required for data transmission — network conditions constantly change, and no one can guarantee perfect reliability out in the wild. Combined with the first problem, this means that the recipient cannot perfectly replicate the time value either, leading to inconsistencies.
The Network Time Protocol (NTP) solves this problem through the mutual verification structure of timekeeping servers distributed across the globe (up to 15 stratums) and by constructing a Bellman-Ford shortest-path spanning tree (which reduces both latency and transfer time inconsistencies). This works perfectly fine for personal computers and centralized services, especially with applications that rely on accurate timing (e.g. encryption programs). Even though timestamps derived through NTP are mere estimates, they are accurate and mature enough for time-critical applications to rely on.


II. Time Mechanism in Blockchain Networks
The concept of time also exists on blockchains. Though some say that blockchain itself is a derivative of the concept of time, a blockchain network’s processing of time is extremely imprecise compared with the 64-bit accuracy of the NTP system. After all, this is also because the service targets of blockchain time are not time-sensitive smart contract applications like DeFi applications. Moreover, it aims to enable the secure, efficient execution of the consensus mechanism. Such a different goal also makes blockchain networks more tolerant of time inaccuracies. In the following paragraphs, we will discuss some popular consensus mechanisms and how they determine time. That said, it should be noted that the confirmation of time on blockchains is so generally imprecise that they cannot carry the financial operations and security checks for on-chain assets that are worth tens of billions of dollars.

1. Bitcoin
Bitcoin features the concept of time because it is required for its Proof-of-Work consensus mechanism. Without a valid timestamp, the network cannot verify whether a particular transaction being mined is trying to tamper with a previous one. Though each Bitcoin block contains a UNIX timestamp, a block time is not an accurate representation of a UNIX timestamp. This is because Bitcoin consensus only considers timestamps as a part of PoW security system, not as an actual tool to measure time on the blockchain.
To quote Bitcoin Wiki, each block contains a Unix time timestamp provided by miners and will be accepted as valid if it is 1) greater than the median timestamp of the previous 11 blocks and 2) less than the network-adjusted time plus 2 hours. Therefore, the difference between block times and real-word times ranges from one hour to two hours.


2. Ethereum
In the Ethereum network, timestamps are also directly submitted by the miners with great flexibility. Simply put, an Ethereum timestamp might be either true or false, and there is no way for the consensus mechanism to confirm its accuracy. According to a post on the Ethereum forum（source：https://ethereum.stackexchange.com/questions/413/can-a-contract-safely-rely-on-block-timestamp/428#428）, several mechanisms can be used to prevent the excessive deviation of Ethereum timestamps: 1) If the timestamp of a block significantly deviates from the real-world time, no one will be willing to generate more blocks with this block as the parent block; 2) The timestamp of the latest block cannot be earlier than the parent block; 3) The block difficulty will be the lowest when the block is not marked earlier than required. These mechanisms could allow miners to voluntarily submit timestamps they believe to be correct. However, when other external incentives exist, the Ethereum network does not have any rigorous mechanism to ensure that miners still submit the correct timestamp. Therefore, the network cannot ensure the proper running of time-sensitive protocols (e.g. yield farming, lending). As such, big institutions will not trust Ethereum with their money.

3. Polkadot
According to Substrate’s document, Polkadot also marks blocks with timestamps that are directly provided by miners. Meanwhile, there are no rigorous mechanisms that confirm or synchronize such timestamps. The document also states that though the time of a block cannot be proven, validators can agree that it is within some delta of their system clock.


4. Cosmos
Cosmos’s Tendermint is the only consensus algorithm that writes time into the consensus mechanism, which equips it with the most robust concept of time. To be more specific, the nodes of a block will vote on the time it has submitted to reach a consensus, and only the timestamp that nodes agree on will be included in the block.


III. The Lack of a Timestamping System in Blocks
Blockchains are not only imprecise in terms of the generation of timestamps but also lack a timestamping system or mechanism within blocks. Real-world transactions are sent and then confirmed one by one, each of which comes with a clear time and sequence. In this way, many false transactions cannot occur or get confirmed. In a blockchain network, on the other hand, transactions within each block are packaged together and are not marked with accurate timestamps one by one.
Although all transactions can be verified after block generation, it is impossible to determine the specific submitting time and sequence of each transaction. This partly explains why many attacks (e.g. flash loans or flash swaps) can be pulled off. If accurate marks of time are provided within blocks as the proof for verification, application protocols could develop more secure and stable algorithms. Meanwhile, owing to its intrinsic characteristics, time is a highly secure consensus network that is irreversible and immutable.

IV. Potential Solutions
The lack of time on blockchains can be solved internally or externally.
Internal solution: A consensus-level confirmation mechanism that checks the block time against the real-world time should be introduced, or an independent time system with greater accuracy should be established.
External solution: Blockchains need a decentralized network that uses an NTP-like time oracle network to add precise timestamps to network blocks and transactions within blocks.
In light of multi-chain collaboration, the external solution might be more suitable. Assuming, for example, Ethereum and Terra have their own clocks, if the timestamps provided by these clocks are different, it will be difficult for us to determine which one is correct during interactions between the two. For example, in a conventional computer network, ultimately, only one master clock tells everyone what time it is. Blockchains also need a master clock.
In the future multiverse enabled by multiple chains, we will face another challenge — the number of clocks on all the different computers is way higher than what is expected. For example, there are gaming clocks, DeFi interest accruement clocks, blockchain clocks, etc. Since these clocks will disrupt the time in the meta nodes, a single reliable source of time will be needed to unify and synchronize all transactions. When such a time oracle network is eventually widely adopted, it will provide an extra security layer, offering additional time confirmations to each transaction, just like what happens in the real world. Time will also become an additional security layer for blockchain networks.

Reference:

1.https://medium.com/@gokhansengun/bilgisayarlar-zaman%C4%B1-nas%C4%B1l-do%C4%9Fru-tutar-78c1203397f0
2.https://en.bitcoin.it/wiki/Block_timestamp
3.https://ethereum.stackexchange.com/questions/413/can-a-contract-safely-rely-on-block-timestamp/428#424
4.https://wiki.polkadot.network/docs/build-protocol-info
5.https://wiki.polkadot.network/docs/build-protocol-info

44

Crypto Discussion / A Beginner’s Guide: How to Trade Futures on CoinEx?

« on: April 09, 2022, 03:59:14 PM »

Many crypto newbies are attracted by the returns of futures trading yet daunted by its complexity. In fact, trading futures is not that difficult. Today, we will teach you how to trade futures on CoinEx through simple, step-by-step instructions. Be sure to read them if you plan to trade futures.


I) Start trading futures on CoinEx & Transfer assets to the Futures Account
1.Visit the CoinEx website, log in to your account, and click [Futures] on the navigation bar.


2. If you are new to futures, please read carefully [Risk Reminder], tick [I have read and agree to accept the risks and liability.], and click [Confirm] to create a Futures Account;


3. If your Futures Account balance is zero, you should first transfer assets into the account before trading. Click on [Assets] on the navigation bar, then [Futures] on the dropdown menu, and next [Asset Transfer], and finally select a coin to be transferred from [Spot] to [Futures];




II) Select the type of futures and the trading pair, and open/close a position
1. Let’s try starting a long position in the BTC/USDT linear contract market on CoinEx. Firstly, you should select the type of futures and the trading pair. Here, the linear contract and BTC/USDT are chosen.


2. Set the margin mode and the leverage, and click on [Confirm];


3. If you believe that the BTC price will rise, you could buy long by entering the Price and Amount on the left side of the picture below, and then click on [Buy BTC]. The order will then be sent into the market. Suppose the BTC price now stands at 47,000 USDT and you predict that the price will reach 50,000 USDT. Then you can buy 0.1 BTC at 47,000 USDT;


4. Once the order is created, you can check information about the position in [Current Position]. When the BTC price hits the predicted price (50,000 USDT), you can [Close All] or [Close Position];


In addition, you can also set the liquidation price through the function of [Take-Profit & Stop-Loss] — your position will be automatically closed when the market price reaches the predetermined price, which effectively mitigates the relevant risks.
It should be noted that CoinEx uses the Mark Price to determine the PNL and liquidation price of a position — forced liquidation will be triggered when the Mark Price reaches the liquidation price. As such, you may add more margin in advance to mitigate the risk of forced liquidation.


Futures trading is not difficult at all, right? CoinEx now features 100+ futures markets, and you may pick one that interests you to start trading.

45

Crypto Discussion / CoinEx Charity Offers Humanitarian Aids & Raises Awareness of Hunger

« on: April 08, 2022, 04:20:17 PM »

The 2021 Global Hunger Index (GHI) points out that nearly 1 billion people on this planet are starving. Throughout the world, around 811 million people are going hungry, and 41 million are on the brink of famine, the report says. In addition, as global hunger increases, food insecurity is on the rise.


CoinEx is determined to eliminate hunger
Hunger is mainly caused by conflicts, climate challenges, and economic declines. The number one driver of hunger on Earth is man-made conflicts. Conflicts tear families apart, destroy infrastructure, and disrupt food production, pushing 80 million innocent civilians to the most extreme levels of hunger. Another factor is extreme weather such as heavy rains, tropical storms, hurricanes, flooding, and drought, which wreak havoc in most vulnerable countries and make life particularly hard in places like Afghanistan, Angola, Haiti, and Syria. Meanwhile, the economic challenges of the COVID-19 pandemic persist and are likely to continue to increase food prices and drive hunger.
Committed to the mission of “making the world a better place through blockchain”, CoinEx Charity, a global charity organization, has launched a $10-million charity fund that will be used to help families living in hunger. Through humanitarian aid such as post-disaster assistance and food/cash donation, CoinEx Charity will contribute to the elimination of hunger.


When disaster hits, CoinEx Charity will be there
In Nigeria, one of the countries most vulnerable to catastrophic hunger, conflicts and poverty persist. The armed insurgency in the country has forced 3 million Nigerians to flee from their homes. Meanwhile, 13 million Nigerians are starving. In December 2021, CoinEx Charity donated care packages to children in a local hospital, distributing daily necessities to help disadvantaged children.
Typhoon Rai hit the Philippines on January 10, 2022, bringing torrential rain, violent winds, landslides, and storm surges that destroyed homes and flooded roads. CoinEx Charity provided disaster relief soon after the typhoon made landfall. It dispatched support teams to the 3 worst-hit areas and gave an emergency donation to the local government. The support teams visited the locals and distributed 300 supply packages that included rice, noodles, sardines, water, bread, biscuits, and other daily necessities to ensure their basic living conditions.
During the Iranian new year in 2022, CoinEx Charity offered humanitarian aid through a poverty alleviation event in a village on the outskirts of Isfahan province. CoinEx Charity staff visited remote, impoverished villages in Isfahan, Iran. They sent their best wishes for the New Year to 100 poor families and donated care packages that included dates, rice, tuna, pasta, soybeans, tomato sauce, oil, and other supplies.


CoinEx Charity hopes to bring love and warmth to people living in pain and hunger due to natural disasters or man-made conflicts through charitable aid, helping them get back to normal lives.
Zero hunger is the key to peace and stability
Hunger and conflicts constitute a vicious circle — where there is a conflict, there is hunger; where there is hunger, conflicts follow. Hunger curbs economic growth and denies generations of people the opportunity to achieve their potential. Solving global hunger is a pressing challenge. CoinEx Charity looks forward to working with other charitable organizations to help achieve the sustainable development goal of “Zero Hunger” adopted by the United Nations. It also calls on countries and other charities around the world to pay more attention to people living in hunger and help more individuals through the power of charity.
Always committed to charitable causes, CoinEx Charity will carry on with the humanitarian spirit and continue to provide food for the world’s most hungry and vulnerable individuals. The organization will advocate for social responsibilities and public missions worldwide through charitable actions, appeal for charitable causes, and promote the advancement of global charity.