Nowadays, binary options trading has transformed into one of the most popular financial products of the Internet era. Among the most significant driving factors behind this growth is the simplicity combined with high returns if the complex strategy is applied. With the DeFi sector of the crypto industry skyrocketing, retail users based on Ethereum networks like Value Network have experienced significant issues with the cost of making the transactions. Ethereum has already struggled with trading, investing, smart contracts, and dApp usage, since its network is anything but scalable so far.
The situation is growing more and more desperate, especially these days when NFTs also became a massive new trend. The surge of DeFi and its rising market cap, which has recently overcome $100 billion, pushed the price of gas fees even higher. Value Network decided to migrate faster markets - with an expiry of binary options under 3 months to Qtum, according to its recent announcement. We prepared an interview with Artem Levin, the CEO and founder of Value Network, who is excited to comment on the current situation in the crypto industry, elaborate the details of the upcoming partnerships and reveal projects’ future plans. Let’s start!
1) Artem, binary options trading seems to be growing in popularity. Has your company noticed any changes?
A.L: Yes, it has experienced specific changes. During the last decade of 2010-2019, the binary options market grew substantially, and a massive number of companies have engaged in this niche. Unfortunately, most of them gradually became synonymous with “scam” platforms — by providing fraud services that intended to cheat on exchange rates or make it difficult to withdraw funds. It is more profitable for them to make the person go than to let him stay and earn more. As outlined by SEC, much of the binary options market operates through Internet-based trading platforms that are not necessarily complying with the applicable U.S. and global regulatory requirements and may be engaging in illegal activity.
On the contrary, we at Value Network provide decentralized binary options, P2P betting and price oracles — an entirely different paradigm. Thus, our team is starting an utterly distinct niche. Speaking of venture capital investments, I want to hint that our team expects a much higher customer LTV retention rate metrics than in the aforementioned binary options services, where customers are often fooled. It is undoubtedly better for businesses to make money on clients who constantly pay rather than “rob” users and snatch their savings.
Stakes of our clients are settled on smart-contracts by Ethereum and Qtum blockchain, that is why there is no conflict of interests. Value Network gets price feeds from Chainlink or other trusted oracles to ensure accurate pricing information at all times. A significant value offering is the decentralized nature of the platform. Fiat platforms have an inherent conflict of interest between the user and the broker because users are essentially betting against the broker. In contrast, on Value Network, trading is peer to peer and handled on smart contracts.
2) How much in terms of profits do traders earn on average by trading binary options?
A.L.: Speaking of binary options trading, it is worth noting the high entry threshold of this market: there are only several exchanges, including Nadex regulated by the U.S.-based CFTC, where one can buy binary options and then sell them relatively fast and with good liquidity. So it is a good source of income in general.
3) How do trading binary options on Value Network differ from other platforms?
A.L.: First of all, it's worth clarifying that there are three types of platforms we have in mind speaking about this niche: the regulated Nadex, the decentralized and fiat platforms.
We have several competitors in this market, the largest of which in the decentralized sector is Synthetix: a global DeFi platform for various derivatives that issue copies of real assets on the blockchain in the form of tokens using oracles, liquidity balancing, and other mechanics.
People can earn SNX by staking their funds on their smart contracts. Then, new SNX utility tokens are minted. Users can speculate on any real asset by creating synthetic assets that track their real-time prices via oracle feeds. This can be done simply by depositing SNX tokens on the platform.
Synthetix also provides binary options and such newly-popular options as staking. One can choose the level of a binary option, an expiration date plus the required amount of liquidity, and make his own traded market — that is, an unprecedented level of liquidity is achieved. Among other competitors, we can outline BIOPset and PlotX platforms as well.
4) Recently, your company announced migration to the Qtum platform. Do you expect this will solve the current issues?
A.L.: That’s right. But I feel a need to explain this: we stay on Ethereum as the main platform. We do migrate from the Ethereum main net to the Qtum smart contract and Dapp platform as previously announced for part of our markets only.
Ethereum blockchain would still work for the markets with an expiry period of over 3 months, while Qtum blockchain will have all the binary options with an expiry period of less than 3 months. Value Network users will continue to be able to trade options peer-to-peer, predicting future crypto prices and hedging using binary options.
Speaking of commissions, we need to go back and note that the project had originally started in 2018 with an MVP of a crypto-backed loans platform entirely created on Ethereum smart contracts. The market was falling that year, and so we froze the project later in August. When the definition of DeFi appeared on the market in 2019, I became more optimistic about decentralization than ever before. By September 2020, it was impossible to stay away anymore, and the Value Network project was reborn. The cryptocurrency market, however, including Ethereum, was at a much lower adoption level. Over the past six months, transaction costs have increased many times, and the specific interaction with the smart contract of the optimized application started to cost like $ 30 to $ 50 per transaction, which kills all the business logic. Accordingly, the Qtum has a different PoS consensus mechanism and allows you to receive and conduct transactions faster and cheaper.
We at Value network need transparent smart contracts, the interaction between users, oracles, and Qtum has been developing its digital initiatives since 2016. We have reached some agreements with Qtum, and they will directly interact with us on the technical and marketing side.
The project has an extensive community in popular social networks and often updates the blog to inform users about the latest milestones, developments, etc. In addition, Qtum has a live market cap of $1.5 Bln USD (as of the 8th of April 2021).
5) How much will the fees on Qtum cost, in comparison
A.L.: Our new roadmap will be carried out with direct cooperation with Qtum: migration of the current application code and the staking for a new market creation function will be implemented as well as the function tradable bets. On Value Network, users purchase options that are depending on the price of the underlying asset pairs, winning the funds of their counterparty in the event of a successful bet. For example — due to the current market situation it’s possible to make a bet and win up to 35%.
Moreover, our community will be able to trade these options back and forth before expiry. Value Network traders can even create their own markets by staking VNTW — the native platforms’ token and facilitate trading, making a prediction market offering new derivatives correlated with crypto prices.
The third major milestone we are selling is directly tradable bets. When a user places a bet on one side of the bet (YES) or another - (NO), respectively, he receives a QRC20 token that can be traded on any DEX, which confirms the direct decentralization (allocation) of our application. We make pure permissionless DeFi on robust and transparent smart contracts. Users can interact with our smart contracts even without our frontend. This is of great value both in terms of business performance and R&D.
6) Were high fees the only reason for the migration?
A.L.: The cryptocurrency industry has been originally based on specific honorable principles such as loyalty to community members, information sharing, knowledge spreading, and of course, cooperating. Unfortunately, these principles are now being rejected by many market participants. Instead of the initial glorious idea to build Web 3 or create a decentralized Internet, the new ATH (all-time-high) in cryptocurrency rates resurrected the dreams about Lambos again, a huge number of fraudsters came in who invent new ways of capitalizing on cryptocurrency rates. We don’t support such a trend and aim at building transparent decentralized applications. In light of all of the stated above, Qtum showed cooperation and support.
7) What other changes do you expect to see once Value Network establishes itself on Qtum?
A.L.: Migration takes place using a decentralized bridge using atomic swaps technology — it allows to migrate Value Networks tokens from the Ethereum blockchain to Quantum or vice versa. The tokenomics is fully ready and has been deployed in January 2021.
8) Do you plan to return to Ethereum’s network if things change with Ethereum 2.0?
A.L.: The platform will continue to operate on Ethereum as well, which will accommodate a more significant amount of liquidity and rates. Accordingly, markets under three months old will be based on the Qtum blockchain, providing maximum flexibility and reducing fees. We are positively looking at the development of the second version of Ethereum as well — a huge amount of funds has already been locked, which clearly shows the market's optimism regarding all decisions that Buterin's team is implementing. Obviously, changing the engine of a car on the go is not an easy task to do and we understand that upgrading takes time. The Ether community never pushed zealously to such decisions in the previous years. However, the situation has changed and shows that if no appropriate systematic decisions are made soon, Ethereum may become uncompetitive and lose a certain market share.
9) Tell me about the roadmap — are you planning to introduce tradeable bets in tokens?
A.L.: Accordingly, there will be a marketplace of markets. You can select options by various parameters: pair type, expiration level, amount of liquidity, number of participants, and other features — and trade. Options trading not only involves speculation and utilizing various strategies to hedge the risks of complex and private individuals. Trading binary options are not about any instant wealth and all the classic aspects of trading need to be applied: the presence of a robust strategy, strict risk control, etc. Accordingly, all these principles should be applied in trading to avoid losses and adapt your strategy gradually to receive systematic profits on a specific time basis.
We are also aiming to develop the staking feature which will allow users to create their own markets.
10) How do you interact with the DeFi sector?
A.L.: Our team is also very optimistic about the field of decentralized insurance, including smart contracts and the Nexus Mutual model. We still praise DeFi and crypto lending, the development of such products on the Qtum blockchain is now also a high priority, but all the further strategic initiatives will be decided after the implementation of the current plans.
There are ideas on how to do DAO mechanics for our community and use highly-popular NFTs. For example, it has an obvious use case for project management. Having such tokens for the board of directors is an absolutely unique option. Imagine that the decisions can be facilitated very easily. Availability of an option to transfer the position of director for NTF token carries enormous business opportunities!
Further, the mobile version of the application is definitely needed, since the most popular wallets like Metamask and Coinbase experience increasing demand in the mobile segment. And we observe huge mobile traffic to our site so the mobile version should definitely be implemented in the near future.
A high priority of the team’s pipeline is also a referral system made on the blockchain to ensure maximum transparency for each person who contributes to developing the Value Network ecosystem. Accordingly, there is an unprecedented level of transparency and interaction of counterparties in the market.
We understand that the importance of legality and regulation is a vital topic in the modern world and we are also looking in that direction. And the technology itself can become the basis of the regulation. For now, there are no common views amongst the legal watchdogs and no single regulatory framework exists on a global scale. We hope that with further cryptocurrency acceptance this issue will be solved. Our team relies on the flexibility of the regulatory sandboxes to foster financial innovations since it allows legal entities engaged in the development of new financial products and services to conduct experiments in their implementation in a limited environment without the risk of violating the current legislation.
To sum up, I want to remind you that prediction markets have always been there. The emergence of blockchain technology introduced complete and unrivaled transparency to the process. We have now picked the gauntlet to remove the bottlenecks and drive the industry development further.