Crypto skeptic? Now you can short your favourite shitcoins

06 Aug, 2018
by Will Heasman
News
Crypto skeptic? Now you can short your favourite shitcoins

Are you skeptical of crypto? Think it’s a bubble? Want to put a bet on it? Now you can…

dYdX a decentralized startup based around financial derivatives have created a new way to short the cryptocurrency market, with a token! dYdX will create these short and leverage positions for Ether and other tokens based on the ERC-20 standard token.

Techcrunch reports that dYdX founder Antonio Juliano’s initial idea for the company was due to a gap in the market; with little to no action in terms of derivatives:

“The main use for cryptocurrency so far has been trading and speculation, buying and holding. That’s not how sophisticated financial institutions trade” he said " “The cryptocurrency market is probably on the order of $5 billion to $10 billion in volume, so you’d expect the derivatives market would be 10X bigger. I think there’s a really big opportunity there.”.

Clearly, others believe the same as the company recently closed a $2 million funding round led by venture capital, Andreessen Horowitz, joined along by Coinbase CEO Brian Armstrong and co-founder Fred Erhsam.

Effectively the derivate contract is inversely pegged to the price of Ether (or any other token on the Ethereum); The short Ethereum token will then go up or down in price as ether gains or loses. Simply put user will be putting a bet on Ether (or other ERC20 tokens) dumping in value.

Lenders earn interest by providing Ether or other cryptocurrencies as collateral. These are then locked into a smart contract which backs up the short tokens. Users can buy these tokens from dYdX or from an exchange.

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