The encryption financial market continues to strengthen, Bitcoin hits a 15-month high.

The cryptocurrency market has been performing strongly recently, with Bitcoin prices reaching a new 15-month high, breaking the $12,000 barrier and continuing to rise. Meanwhile, Ethereum has also performed well, surging quickly over the past month, and at noon on June 26, it briefly surpassed $331. The overall trend for the top 100 cryptocurrencies by market capitalization is upward.

On Monday, the U.S. Commodity Futures Trading Commission approved the first Bitcoin physically-settled futures product. This news further stimulated the already heated market sentiment.

Recently, whether it is Facebook releasing the Libra white paper or JPMorgan starting to trial the JPM Coin, it shows that more large institutions are entering or preparing to enter the cryptocurrency market. This means that more funds and users will flood into this field, and encryption financial tools will become indispensable for both new and old players.

Encryption Wealth Management

Cryptocurrency wealth management is a relatively new subfield in cryptocurrency finance, with most products starting in the latter part of the 2017 bull market. According to a TokenInsight report, as of March 2019, there are hundreds of active cryptocurrency wealth management products, and the number of new products has significantly increased since the fourth quarter of 2018. Classified by issuing entities, they can be divided into three categories: exchanges, wallets, and professional wealth management platforms, which also have business overlaps.

From the perspective of product attributes, they can be mainly divided into three categories: debt wealth management, dividend wealth management, and node wealth management. The debt type mainly obtains interest spread income through platform lending; the dividend type mainly distributes dividends through platform leveraged trading, quantitative funds, and other methods; node wealth management includes node delegation and PoS continuity.

Head Product Sorting

exchange

The financial products launched by the exchange mainly fall into two categories:

1. Deposit coin to earn coin model, for example, if a trading platform offers an annualized return of 0.026%-2.7%, supporting mainstream coins such as Bitcoin, Ethereum, etc.

2. Staking model, where a trading platform can provide customers with an annualized return of about 6.6% after deducting management fees.

financial management platform

Representative platforms include PayPal Finance, providing interest-earning management for digital currencies, with an annualized interest rate of about 12%.

wallet

Some wallets also offer financial services, such as Cobo providing an annualized interest rate of 1.2%-40%, with fixed and flexible financial products having annualized interest rates ranging from 12%-14% and 1.2%-5%, respectively. The annualized returns from Staking in the PoS part range from 6.5%-40%. Cobo has completed three rounds of financing, raising over 100 million RMB in investment.

Kcash offers both demand and fixed-term financial products, supporting three currencies: BTC, ETH, and EOS, with an annual interest rate of 4%-8.8%. The company has completed three rounds of financing, securing tens of millions of RMB in investments.

Due to tightening regulations and the volatility of cryptocurrencies, encryption wealth management still presents uncertainty. In contrast, the encryption lending sector has seen the emergence of well-known companies such as Maker DAO and Genesis Capital, attracting more attention.

encryption lending

In the current encryption financial products, lending is quite prominent in terms of both enterprise scale and product richness. At present, the forms of cryptocurrency lending products are becoming increasingly complex, with a single product potentially integrating multiple functions such as stablecoins, token appreciation, and leverage. There is also a certain integration between centralized and decentralized lending products.

Top Product Overview

Centralization

Genesis Capital is the largest centralized cryptocurrency lending institution. According to its first-quarter report, the new cryptocurrency loans added during the period amounted to $425 million, bringing the total loan amount to $1.53 billion. Genesis mainly borrows tokens from large investors at an interest rate of 4%-5% and lends them out at an interest rate of 6.5%-7.5%. The company also offers a fiat loan service with an interest rate of 10%.

Genesis is backed by the blockchain investment firm Digital Currency Group, which has invested in or holds stakes in leading institutions such as CoinDesk, Grayscale, and Circle.

BlockFi is another competitive lending institution with a diversified business model: on one hand, it offers cryptocurrency-backed dollar loans with an annual interest rate of 4.5% and a collateralization ratio of about 50%; on the other hand, it allows customers to deposit Bitcoin and other assets to earn up to 6.2% annual interest. BlockFi has completed 4 rounds of financing, raising $60.4 million in investment.

Decentralized

In the field of decentralized lending, Maker DAO, Compound, and Dharma rank in the top three. As of June 4th, the locked value of cryptocurrency on these three platforms is approximately $404 million, over $20 million, and over $20 million, with collateralization rates of around 480%, 400%, and 210%, respectively.

Since its establishment in 2014, Maker DAO has completed 3 rounds of financing, raising $27 million, with major investors including Andreessen Horowitz. Compound raised $9.2 million, and Dharma raised $7.12 million.

In addition, EOSDT in the EOS ecosystem is also worth noting. According to data, the project has locked approximately 2.69 million EOS, worth 19 million dollars, ranking fourth among similar products.

Encryption Derivatives

Compared to encryption wealth management and lending, cryptocurrency derivatives bring more possibilities to the market. It is estimated that the future market size of cryptocurrency derivatives could reach trillions of dollars.

Cryptocurrency derivatives generally include futures, forward contracts, options, perpetual contracts, etc. Some viewpoints believe that prediction markets also belong to this category.

Derivatives Trading Service Provider

Currently, both native encryption exchanges and traditional exchanges are entering this field:

Native encryption exchanges such as certain trading platforms, certain trading platforms, etc. are launching more diversified products.

Traditional exchanges such as CME, Bakkt, Erisx, and LedgerX are also making their moves. CME's Bitcoin futures trading volume exceeded $8 billion in May. LedgerX has recently been approved to offer physically settled Bitcoin futures contracts. Bakkt will test similar products in July. These physically settled contracts may increase institutional demand for hoarding Bitcoin.

Derivatives Products

dYdX is a decentralized finance derivatives protocol that supports margin trading and lending with up to 4x leverage. The project has secured $12 million in funding.

In the prediction market space, Augur is one of the earliest established projects, having raised $5.3 million in funding. Gnosis and Bodhi both launched in 2017, receiving over $10 million in funding support. Guesser and Veil are emerging projects that have attracted the favor of well-known investment firms, including Sequoia Capital.