Investment Thesis of KTX.Finance

Trinito
Coinmonks

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The Best Perp DEX in BNB Ecosystem

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- Table of Contents -

What is a Perp DEX?

Introducing the Best Perp DEX on BNB: KTX.Finance

Opportunities for KTX.Finance

1. BNB ecosystem comparisons with Arbitrum, Avalanche, and Polygon

2. Stablecoins comparisons: the $5 billion opportunity

3. Great alliances: ByteTrade Lab incubation and respected investors

4. Ensuring Competitiveness: Dynamic Fee Structure

5. Listing Potential

Conclusion

Links

Disclaimer

What is a Perp DEX?

Perpetual Decentralized Exchanges (“perp DEXes”) are innovative platforms that enable traders to participate in leveraged trading of cryptocurrencies using smart contracts. Without the need to deposit their assets into a non-custodial wallet, a Perp DEX allows users to trade without giving up custody of their assets. Retaining custody of their assets reduces counterparty risk and increases control over their assets.

With their huge successes, pioneer projects such as order-book-based dYdX and oracle-based GMX have proliferated the idea of perp DEX.

Introducing the Best Perp DEX on BNB: KTX.Finance

KTX.Finance is a cutting-edge oracle-based decentralized perpetual exchange built on the BNB Chain. It offers traders a CEX-like experience with low fees, fast execution, and a robust, sustainable financial ecosystem. KTX.Finance aims to bridge the gap between traditional finance and decentralized finance by providing users with leveraged trading opportunities in a secure and trustless environment.

[KTX.Finance Website]

As shown below, KTX.Finance’s product roadmap can be split into two streams:

(1) Structured Products — including Delta-Neutral Vaults, Collateralized Debt Positions, and Option Integrations

(2) Trading Add Ons — including Social Trading and Trading Add-Ons (Complex Orders)

The forthcoming emphasis will be on Complex Orders & Social Trading prior to incorporating structured products. With Complex Orders, traders will be able to open a position, take profits, and adjust stop-loss levels all with a single click. At the same time, traders will also be able to do all that directly from the TradingView Chart. Conversely, this procedure in GMX would necessitate numerous additional clicks for traders.

[KTX.Finance Product Roadmap]

Opportunities for KTX.Finance

  1. BNB ecosystem comparisons with Arbitrum, Avalanche, and Polygon.

KTX.Finance is built atop BNB Chain (BNB). BNB is one of the most popular smart contract blockchains supported by the world’s biggest cryptocurrency exchange Binance. BNB is designed for efficiency and low transaction costs, which allows KTX.Finance to compete with popular platforms built on other chains, such as GMX on Arbitrum(ARB) and Avalanche(AVAX) or Gains Network(GNS) on Polygon(MATIC) in terms of user experience. Even though the new Ethereum Layer 2 chains such as Arbitrum attracted a lot of capital and users, BNB Chain still leads with a higher TVL and a larger user base. As the BNB ecosystem continues to grow, KTX.Finance is poised to take advantage of the BNB ecosystem’s capital and user base.

[TVL and # of Daily Users by Host Chains: BNB still bigger than ARB, AVAX, and MATIC combined]

In addition, despite being the third-largest smart contract chain by TVL behind Ethereum and Tron, there is no clear winner in the perp DEX category in the BNB ecosystem yet. When compared to the overall TVL of the host chain, new and small perp DEXes on BNB have yet to gain a meaningful distance from the pack. Considering the TVL ratios GMX has taken up on its two host chains in Arbitrum and Avalanche, a successful oracle-based perp DEX on BNB could have a much higher ceiling than what has been achieved so far.

[Perpetual DEX TVL on BNB Chain: grass is greener on the other side]

2. Stablecoins comparisons: the $5 billion opportunity

KTX.Finance supports popular stablecoins, including USDT and BUSD, providing traders and liquidity providers with easier access to deep liquidity. By offering multiple stablecoin options, KTX.Finance can cater to a broader user base and enhance its position in the DeFi space.

KTX.Finance’s decision to support USDT as its primary stablecoin for liquidity provision presents a significant opportunity for the platform. USDT’s dominant market capitalization and widespread adoption make it a preferred choice for traders and liquidity providers, ensuring more significant market activity and increased transaction volume on the platform.

In comparison, although USDC is the second-largest stablecoin, its market capitalization is considerably smaller than that of USDT. This difference in market capitalization could prove to be advantageous for KTX.Finance in attracting liquidity and trading activity to the platform. Additionally, with the recent concerns surrounding USDC’s exposure to the failed Silicon Valley Bank, some investors might be more inclined to use USDT as their preferred stablecoin, further benefiting KTX.Finance’s choice to support USDT.

As of the end of April 2023, USDT’s market capitalization was around $81 billion, while USDC and BUSD stood at approximately $30 billion and $6.2 billion, respectively. The distance between the biggest stablecoin USDT and the runner-up USDC widened this year as the US banking woes in March directly impacted USDC issuer Circle’s custodian banks and spooked the USDC holders to either redeem to US dollars or convert to other stablecoins such as USDT.

[Stablecoin Dominance: Gap between USDT and USDC widened]

On further inspection, stablecoins by host chain show how much liquidity KTX.Finance could directly tap into. USDT and BUSD liquidity hosted specifically on BNB is close to $5 billion which is even bigger than that of GMX at around $2.1 billion. This is the liquidity that can immediately flow into KTX.Finance without hopping over cross-chain bridges which is a great advantage from the UX perspective.

[Stablecoin Liquidity on Host Chain: supported by KTX in blue, supported by GMX in white]

In conclusion, KTX.Finance’s support for USDT and BUSD on BNB positions the platform to capture a significant share of the decentralized perpetual exchange market. In addition, This decision will help attract more traders and liquidity providers, ensuring a competitive edge.

3. Great alliances: ByteTrade Lab incubation and respected investors

KTX.Finance has been incubated by ByteTrade Lab, a Web3.0 infra builder and venture studio headquartered in Singapore and backed by Susquehanna International Group (SIG) Asia Venture Capital Fund, and some other leading institutional investors including INCE Capital, BAI Capital, Sky9 Capital, BlueRun and PCG with a 50 Million USD A round financing in June 2022. By partnering with ByteTrade Lab, KTX.Finance benefits from its expertise, resources, and network, enhancing its overall growth and development.

[Incubated by ByteTrade Lab]
[ ByteTrade Lab Ecosystem]

KTX.Finance is also backed by prominent investors as below. These investments provide KTX.Finance with valuable resources and connections, fostering its growth and helping it achieve its vision in the DeFi space.

4. Ensuring competitiveness: Dynamic Fee Structure

Much like the rivalry among traditional centralized exchanges (CEX) in the Web 2.0 era, we firmly believe that decentralized exchanges (DEXes) vie for supremacy based on the very same foundations.

To ensure competitiveness among other DEXes, KTX.Finance has introduced the dynamic fee curve into their opening and closing fees which will be based on underlying asset utilization (Open Interest/AUM).

[Dynamic Fee Structure]

The dynamic fee structure seeks to motivate traders to engage in trading during periods of low Open Interest. This promotes the standardization of trading volume and boosts returns for LPs. This blueprint has been examined and refined by the KTX.Finance team to diminish the protocol’s hazards while still being appealing and advantageous to traders. $KTC token holders will be able to customize various factors (R0, R1, R2) in the future.

[Project Comparison — KTX & GMX]

5. Listing potential

As KTX.Finance gains traction, its token KTC will attract the attention and listing support of other exchanges. Listing on popular exchanges will boost the liquidity and value of the token price. It could also lead to additional exposure, credibility and potentially listing on other exchanges as well.

KTX.Finance strategically positions itself within the Binance ecosystem by integrating key components, such as building its mainnet on the BNB Chain or real yield distribution in BNB to stakers and liquidity providers (LPs). In an official blog post by Binance, CEO Changpeng Zhao highlights the importance of projects that contribute to the Binance ecosystem as a factor when considering token listings.

[Binance Listing Tips from CZ]

There is no way to know whether a token will be listed on a big exchange like Binance in advance from outside. It will ultimately come down to the business decisions of each exchange. However, all things being equal, leveraging the Binance infrastructure and supporting the growth of the BNB Chain will favor KTX.Finance for support and listing by Binance in the future.

Conclusion

KTX.Finance is well-positioned to lead the on-chain derivatives trading scene, offering a secure, efficient, and innovative platform for leveraged trading built by veterans. As it capitalizes on the opportunities within the BNB ecosystem and leverages its strategic alliances, KTX.Finance is poised to take advantage of great opportunities and create substantial value for its users.

Written by SungPil Huh (Head of Investment at Trinito) and contributions from Jiyon Kim (Associate at Trinito) and Eric Yoo (Co-founder of Trinito).

#BTC #BNB #Arbitrum #KTX #GMX #Crypto #Perp #Dex

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Links

https://ktx.finance/

https://www.bytetradelab.io/

https://www.binance.com/en/blog/from-cz/binance-listing-tips-from-cz-421499824684902218

Disclaimer

This is not investment advice and is for informational purposes only. You should not construe any such information or other materials as legal, tax, investment, financial, or other advice. Trinito holds a position in $KTC.

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