Crypto Assets and Short-Term Hedge Trades
As many blockchain experts are trying to find additional ways to marry crypto with FIAT, our BQT™ team believes in reducing the dependency on FIAT altogether. Every crypto asset has its own unique value and can be used as a negotiating tool to acquire another crypto asset. We think the demand for obtaining them can be fulfilled through a significant supply of various crypto asset holdings as negotiated directly by trader peers.
While it is difficult to implement margin trades and options in a true P2P environment, the BQT™ team has developed an innovative and powerful tool to enable traders to generate short-term hedge trades.
Take a look.
BQT™ Platform: Goals and Hedge Trade System
BQT™’s aim is to build a community and culture of crypto traders utilizing our platform as well as helping and benefiting the trading community. Our BQT™ Exchange Platform provides a secure, interactive and flexible P2P trading environment and a user-friendly interface to manage various types of transactions across many crypto assets. The platform also allows traders globally to negotiate their crypto asset trades directly by interacting with one other and sharing their experiences within the community.
To leverage various crypto asset holdings, BQT™ has introduced the revolutionary Hedge Trade system. Unlike margins and futures trading, the BQT™ Hedge Trade system is a flexible method to acquire assets in the short term through escrow of existing crypto holdings.
Here is an example.
Trader A (Hedge Receiver) carries a BTC holding and posts an offer on the BQT™ P2P exchange providing his BTC into BQT™ Escrow with a 20% premium. He then invites other traders holding ETH to receive his BTC Escrow as collateral for 30 days while allowing him to use their ETH for that period.
Trader B (Hedge Provider) could respond to the offer and negotiate the terms by requesting a higher premium and/or shorter term. Trader C (another Hedge Provider) may also reply but with a different offer, negotiating better terms for the Hedge Receiver.
This is the math for the potential trade.
· Trader A would offer 1 BTC (valued $10,000/USD) with a 20% premium (1.2 BTC / $12,000) into BQT™ Escrow inviting other traders to transfer $10,000 value in ETH (20 ETH / valued $500 USD per ETH) for 30 days.
· Trader B asks for 1.25 BTC (25% premium) and 20 days while Trader C comes back with better terms of 1.22 BTC and a 30-day trade period.
· Trader A agrees to Trader C’s offer and initiates the BQT™ Escrow. He receives 20 ETH from Trader C.
· Escrow is securely stored with BQT™ as the escrow agent and Trader C can feel secure about his trade collateral. He is also in positive territory from the 22% premium received from executing the hedge trade.
· At the end of the hedge trade’s 30 days, Trader A (Hedge Receiver) would have the first option to either transfer back to Trader C (Hedge Provider) 20 ETH with 22% premium (24.4 ETH) or release the escrow.
Note that Trader A has the first option because he put up the 22% premium risk to initiate the hedge trade but at the end, he might benefit due to a significant increase in the crypto currency (BTC or ETH) value and choose to return to the one incurring the most benefits for him.
Now, if the price of ETH doubled to $1000/ETH, Trader A may choose to release BTC Escrow with premium to Trader C, while retaining his $20,000 ETH Holding to undergo an upside profit. In other words, while the hedge provider gains secure premium on the first day of the hedge trade, the hedge receiver is betting on an upside increase of value leveraged from either crypto asset.
Leveraging Crypto Holdings
From this revolutionary approach, crypto traders can leverage their crypto holdings to acquire additional crypto assets without the need of a traditional margin trade.
But there’s more.
For the same example above, let’s add Trader D, who has responded to the same offer but instead of ETH, he may offer XRP, TRX or another crypto asset with better premium and hedge time terms. Remember, one of the BQT™ Platform’s benefits is its ability to leverage many crypto assets either as Hedge Receiver Collateral or Hedge Provider Trade offer.
During the Beta period, BQT™ will list the most currently trading crypto assets and pair them against other ones. It is important to note that as hedge receivers place their collateral offers on the BQT™ P2P Exchange, they may also place initial trade offers inviting hedge receivers to participate on their terms.
For example, hedge provider Trader E could offer a 100 XRP to any hedge receiver willing to place a hedge collateral of ETH of the same value with a 20% premium. He could receive various counter-offers from many traders (Hedge Receivers).
The BQT™ P2P Platform utilizes secure and decentralized benefits of blockchain while delivering flexible functionality for traders worldwide. As our product offerings grow, so will the liquidity and hedging opportunities for crypto traders.