We are in a very important stage of the crypto markets and it’s necessary to position yourself well before the real fireworks starts. We have been here with the 2017 major bullmarket and we know how crazy things can get. Coming months will all be about getting your positions as low as possible in projects that will do well in the next major bull run.

We think the biggest uptrend for the coming years will be for fully permissionless (non-KYC) derivatives protocols that are super simple to use and remove all obstacles to get access to leverage.

There won’t be winner takes all, but we do think some derivates protocols will do better because of the following characteristics:

  • To become a core building stone in the decentralised financial system it’s important to be very robust and fully on-chain.
  • Anon developers remove an attack vector since we believe all others will be forced or manipulated into tracking their users and this removes the permissionless nature that is so important for extreme growth.
  • Code, product and users count, not the team/advisors/vc-investors that you often see used in project promotion.
  • Super simple Uniswap-like user interface will be much more successful than complex exchange interfaces only “finance professionals” can use.

Welcome to open finance, a new paradigm.

What is XVIX?

There are multiple parts in the XVIX ecosystem that are important to understand and we believe are revolutionary innovations.

1. An increasing price floor of xvix with no locked liquidity.

2. On-chain leveraged tokens using a completely new method to achieve this.

First is their token model that benefits from volatility and uses this to create continually rising floor price. Anyone can sell their XVIX for ETH at the floor price at any time.

For starters, XVIX is a project with no passive token holders. Specifically, addresses linked to Uniswap liquidity pools (XVIX / ETH and XVIX / DAI) will be excluded. Eligible addresses will have a 0.02 percent negative rebase of tokens held in normal addresses every hour. This pressure creates natural volatility and automatically increases the price floor that benefits both holders and Liquidity providers.

It is from these regular burns that the total supply of XVIX tokens can be projected. In a scenario where no XVIX holder supplies liquidity in Uniswap, the total token supply would fall by 50 percent after six months.

On the other hand, if everyone supplies liquidity to the two Uniswap’s pools, the main source of token burning will be from normal transfers. Here, for every transfer made, 0.50 percent of the token value will be burnt. 0.43 Percent will be burnt while the remainder—0.07 percent will be transferred to the developer fund.

Rebasing Bull and Bear Tokens

Uniswap-like simple interface

Following the successful launch of the XVIX token on Dec 1, the XVIX protocol has released X2 for generalized rebasing of leveraged BULL and BEAR tokens of which each is redeemable at 1:1 for ETH.

The X2 protocol allows anyone to take on long and short positions on the price of ETH/USD, BTC/USD etc. This is done by minting or burning bull or bear tokens using ETH.

The protocol is fully decentralised while remaining manipulation resistant. It does this by settling positions at the lower of the last two prices for bull tokens, and the higher of the last two prices for bear tokens,

Basic Example

  1. The price of ETH/USD is 1000
  2. Alice mints 20 10X BULL ETH/USD tokens for 20 ETH
  3. Bob mints 20 10X BEAR ETH/USD tokens for 20 ETH
  4. The price of ETH/USD increases by 1% to 1010
  5. Alice would still have 20 10X BULL ETH/USD tokens
  6. Bob would now have 18 10X BEAR ETH/USD tokens

In this example, Bob’s tokens decreased while Alice’s tokens have not yet decreased. This is because of the manipulation guard previously mentioned.

Profit Example

  1. Continuing on the previous example, if the price of ETH/USD increases by 1% again to 1020.1
  2. Alice would now have 22 10X BULL ETH/USD tokens
  3. Bob would now have 16.2 10X BEAR ETH/USD tokens

Redemption

Every BULL / BEAR token can be redeemed at a 1:1 ratio with the original token used for minting, in the given examples, this would be ETH.

We took most of the above info from the documentation and we recommend to learn more about this HERE

Differences

XVIX has taken a very different approach from existing protocols like Synlev which we reported about HERE. We very much like both and hope to see both of them attract many users.

  • Both use Chainlink oracles and offer leveraged tokens.
  • XVIX comes out of the gate with 10x leveraged tokens and Synlev currently offers 3x leveraged tokens.
  • However, the non-uniform auto-rebasing in XVIX means the token can benefit from price volatility. Instead, in SynLev, for instance, the isolation of leveraged pairs is mitigation against rapid price movements—that is, volatility. 
  • SynLev’s leveraged tokens are non-transferable, unlike XVIX tokens that are transferable like ordinary ERC-20 tokens.
  • Currently fees are also lower, SynLev charges 1 percent while X2 will deduct 0.4 percent for trades. While higher fees are good for tokens holders, it might hold back traders.

XVIX Markets and Performance

As of writing, there are 168,024 XVIX tokens in circulation, according to Etherscan. Presently, 267 unique addresses are generating 14,695 transfers.

According to Live Coin Watch, each is trading at $7.11. With the aforementioned total supply, the XVIX market cap is slightly over $1.1 million.

XVIX Price Chart

Since listing on Dec 5, the coin has roughly doubled from $3.59 to $7.11, peaking on Dec 8 when it rallied to $10.8.

The most dominant market is the XVIX/ETH market on Uniswap, drawing daily trading volumes of slightly over$102.98k.

XVIX Markets

Short-Term Catalysts

  • There are only two markets for the token in Uniswap; however, after the launch of X2 on Dec 13, other exchanges will follow suit.
  • XVIX market cap is still low (below $1.5 million), less than two weeks after launch, with more updates to be made. This could be an opportunity for savvy investors.
  • The project’s potential is visible. Shortly after listing, the floor rise surged, and more upside is expected. At the time of writing (Dec 11), the token has more than doubled, at $7.11, according to trackers.
  • More coin trackers will support the XVIX token given what it stands to achieve. Coingecko listing is imminent and would immediately help in further marketing the project.
  • The XVIX project has been audited by VIDAR and other independent devs. The protocol’s code has been made public as well following two thorough test networks.
  • XVIX is one of the most innovative in DeFi out there. By combining aspects of CORE and Ampleforth but with non-uniform rebasing, there is flexibility and ease of use improving on current trustless leveraged token trading protocols.

Long-Term Catalysts

  • Their non-uniform rebasing is ingeniously crafted such that whatever happens in X2, there will be no impact on prices since exiting—or dumping the token, only results in burns further reducing total supply.
  • The XVIX project taps and profits from volatility, continuously raising the floor price without profit taking impacting the token price.
  • The X2 is designed to be a system to accrue fees for the XVIX token. Fees will be then split between the Floor Price Fund and Uniswap’s LPs such that LPs will have an independent APR regardless of trading volumes.
  • There are measures in place to ensure no entity hoards the token thanks to XVIX’s idea of discouraging passive holders. Burning on transfers and excluding those providing liquidity in Uniswap’s pool is a win-win for the protocol. 
  • Total supply is flexible but ultimately capped at 200k. This is very low and we expect scarcity to kick in.
  • There are incentives to bootstrap liquidity in the early stages of launch. Despite low fees of 0.20 percent, in the first few days, it will be free to post trades. The X2Fees token mined will also act as fee credits.
  • Combined with incentives, the user interface, judging from the Kovan test network snapshot posted by the team, will be easy to use translating to more users, therefore fees and more tokens.
  • Finally: We think that the dev is fully focussed on building a very innovative and robust product and this is one of the most important features we like to see in a project. Focus on code and building user centered products.