Coinflet approach Repo market.
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Last week, we explained derivatives, repo, leverage, perpfutures. This week, let’s dive deeper.
What is flexUSD?
flexUSD is an interest bearing stablecoin that will lend in CoinFLEX’s repo market and pay interest on the blockchain every eight hours.
With this entrance into the borrowing, lending and stablecoin space, CoinFLEX seeks to bridge the gap between the $22B of stablecoins currently in the market that pay 0% interest and borrow lend desks, derivatives and DeFi projects that tend to have yields higher than 10% annualized.
How does Repo work?
Every eight hours, a repo buying and selling happens like an auction.
The auction determines the interest rate. It is different every day.
For example, I have 10 BTC. I want to sell it for dollars. We have a Dutch auction which means if we look at the net buyers and sellers, we will look at equilibrium prices based on liquidity. Then all the transactions happen at one price. Even if this is a large order book, you will not lose out when bidding too high or too low because it will suit the balanced price that everyone should pay.
As users, they set a price and then the system will find the equilibrium price. Very simply you will do click here to place your money and fill in the amount of collateral. Example 10 BTC and I want to offer a loan now. The system will then supply the repo to you and dispose of it at the equilibrium price of the auction every 8 hours.
What flexUSD is doing is combining derivatives, covering various futures contracts and Repo is a short term loan product coded into flexUSD and that is how we get flexUSD.
The difference between the Repo value and the underlying asset is called Basic, it determines the difference between the spot price and the futures price. Usually, in crypto space, the futures contract value is often higher than the daily price because of leverage. Individual clients almost always use leverage to open positions they like.
when opening a position, if you make a profit every 8 hours, we make the decision to check the interest and prorated payment for all flexUSD holders so that you can keep it in your cold wallet. you will still receive prorated interest without having to deposit flexUSD on the platform. It is such a huge advantage while sleeping that you can get interested in your savings on on-chain investments.
In terms of scalability because we are based on what is going on globally the derivative market and represent it through borrowing and lending. This is extremely scalable.
Defi has led us, and that will be the launchpad for us to increase profits. Currently, our margins are in the range of 2-3% of transaction fees. The peak reached 18% profit.
Here is how I see tokenisation in Defi. There is really a lot of experimentation and new mechanisms. We then use these mechanisms to develop and expand and apply them to the capital market. And to encode values from various derivative instruments and turn them into a product that individual investors can use. That is the greatest value tokenisation can bring to individuals, and this despite its elimination of middlemen and the opening of finance to everyone and that is what flexUSD does.
We can create flexUSD by having to hold USDC first and then you can deposit USDC into contracts and generate flexUSD.
It is always 1: 1 so you can mention exchanging it 1: 1 with flexUSD holdings on Coinflex. We also have support on the BCH, XRP and Erc-20 networks, and we will roll out more on EOS and other blockchains.
As d5 groups begin to accept flexUSD, we hope to be able to convince CRV’s community and move through flexUSD groups so you can deposit USDT, TrueUSD. I also hope to support BUSD, HUSD, or whatever stablecoin these groups require. You can deposit that money into the pool, get 1: 1 after deducting the transaction fee and slippage, then withdraw flexUSD, use it for your purposes. We have two different ways of getting flexUSD.
flexUSD is anchored 1: 1 to USD and by holding flexUSD the user can make extra profits.
It doesn’t matter when you tokenise USDC to flexUSD, it is deployed automatically into Repo market, that is why you know you can either start by sending USDC to us, encrypt them or you can go to someone else who has done the process on Curve, give them TrueUSD and withdraw flexUSD.
Essentially, Coinflex is the only place where you can encrypt stablecoins together because obviously on d5 platform, you have transaction fees and slippage. But users have choices depending on what they use it for.
If I put 10 USDC in Coinflex and make 10 flexUSD. During that time I earned two values of interest. The system automatically pays you interest for two years for USDC and we pay in flexUSD to you on-chain, every eight hours, at market rates.
We also pay the BCH network interest – which is a super network because it is incredibly cheap and we can send payments multiple times, so we’ll pay flexUSD into all your Erc20 wallets, concurrently using Use some algorithm so that your flexUSD balance will grow equal to your yield.
For flexUSD on erc20 versus flexUSD which exists on the BCH network and XRP is exactly the same
You can send back flexUSD from the networks to Coinflix and withdraw to your Erc20 wallet. You can interact with all of the blockchains we support.
CLOB (Nasdaq) vs AMM (Uniswap)
CLOB = central limit order book. What they use in Nasdaq, Binance, Coinflex, Bitmex.
AMM = autonomous market maker. What they use in Uniswap, Bancor, Curve.
CLOB is where you have market makers buying and selling, to complete the order. Buyer (seller) puts their order in, then the market maker goes to the CLOB, see the price they want to buy (sell) at, and sells (buys) at that price.
AMM is where you have a liquidity pool and trade against that liquidity pool. Check out the previous episode for more details.
Which is better? It depends. With CLOB, the platform and market makers are responsible for managing order books to ensure that they appear in order, to ensure the integrity of the platform and the safety of all customers. With AMM, you trust the transparency of the code.
Tokenisation actually brings a lot of benefits beyond just providing spot rates and repo markets.
In the Defi space, there have also been many derivatives by encoding the value of all future products, in addition to complex mechanisms that users do not need to actually use their structure. . This is where we, as Coinflex, offer Repo products that have a very short shelf life and people can swap assets for different use cases every eight hours.
For example, I need dollars, in case I’m a BTC miner I have a big electricity bill to pay. Instead of selling bitcoins, I can use the repo to get instant cash and then the transaction ends the next day. It is basically a funding mechanism.
Repo is a product for perpetual futures trading, repo borrowers or lenders really do not need to understand the structure of the contract, they only need to grasp important basic information such as maturity date, real price current or cost of repo purchase. All we are doing is taking these positions and fitting it in the order book and allowing people to mortgage the property and receive the cash with interest. Those are the products that we launched a few months ago and they have traded well.
On Coinflex, more than $500 million in Repo trading volume has been traded over the past 24 hours. But what we did realise is that encryption actually coated Repo with an interesting layer and created a new idea for the flexUSD we launched.
When flexUSD compares to other stablecoins like USDC, USDT, TrueUSD and yes yes, none of them pay interest on the base level (for example, when the money is in a wallet). Instead, users must deposit their money on supporting platforms, like Coinbase, to receive interest. But they usually pay interest with the money you save, not in cash. So you have to take a few more steps to get cash.
We realised that this is basically going to be a perfect encoder into the repo, we take the user’s USDC and encode it to flexUSD. This gives you the flexUSD number when you give us USDC to deploy this USDC into the Repo product. Every eight hours, you earn a market-related interest rate on your USDC. The interest rate is determined by the market.
Also, now you can take flexUSD and use it for other purposes. The simplest thing is that you can simply keep it in your personal wallet and receive passive income, you can use it to trade collateral to trade derivatives on Coinflex and other exchanges. Other supported. Coinflex is making flexUSD a widely accepted stable digital currency.
Currently, we are working on integration into Curves and Aave. When these communities accept flexUSD, users can use them in liquidity pools and earn profits returned to users from those pools. It is our idea that users can profit from Repo products through USDC and flexUSD interest through tokenisation, etc.
flexUSD is a very different product from the products and services that we have today. However, there are always risks that flexUSD users face.
Risk is on Coinflex’s smart contract when you are sending and receiving USDC. Obviously, if users combine many different functions of the platforms, they also face additional risks. And users must be aware that they are swapping risks between smart contracts.
Other risks you face, including derivatives on centralised exchanges. The history of derivatives exchanges has always had the same risks as decentralised derivatives, the counterparty risk is probably the first one you should consider. You need to know the market entry, you know who the investors are, you know if we are comfortable sending our assets elsewhere, and that is also the question you should ask with any exchanges. use not only us.
We can know before the products in mainstream finance will enter the Defi space, from centralised to decentralised, such as the Uniswap mechanism.
And in order to allow all these different features to happen, you have to consider that the risk can be centrally located from within the technology supplier. And we can turn this risk into market risk instead of opening up a decentralised exchange and balancing all of these transactions.
For example, the conversion from flexUSD to USDC and USDT is easy on the Coinflex platform. This can minimise counterparty risk by transferring it to others. In other platforms, exchange rate delays cost us. Coinflex offers a 1: 1 fixed anchor solution between stablecoins with flexUSD, giving users flexibility.
Coinflex has a fixed income product and this can be a very important one because
• First, the institutional players or the traditional financial players understand and we just encode them. • Second, we can structure them internally with all the other Defi products available to make the product more productive.
Currently, the method you are using is flexUSD and put it in Curve so you can earn interest on flexUSD, earn interest on both Curves and even get CRV tokens. The three different types of yield returns in different ways, almost like making a product, like flexUSD, that is structured into a fixed income bond like an asset. With all the risk assets available and you can create another Defi-related high-yield product just know the mix of products.
We design some new products that will actually be launched on the Curve because Repo happens very quickly overnight, we also have a fixed mortgage loan rate. Now we are looking at some of the ways to code decentralised and eye-loaning with this interesting tool around. Also, we’re doing another very interesting thing, by tokenising decentralised debt.