At around 10:47 pm on October 15, 2020, Beijing time (Filecoin network block height reached), the Filecoin mainnet finally ushered in the launch of the mainnet after three years. This long-awaited moment of highlight has also ushered in the enthusiasm of global exchanges-one after another has cast olive branches and is the first to list Filecoin.
On October 10, OKEx officially announced: “OKEx will launch Filecoin transactions as soon as the Filecoin mainnet is launched (expected on October 15th), and open deposit and withdrawal services. For detailed time nodes, please refer to OKEx official website announcements. “; Subsequently, Huobi Global also issued an announcement to support the launch of Filecoin simultaneously…
The support of many exchanges will expand Filecoin transactions, which will further promote the rapid growth of IPFS/Filecoin and promote the development and prosperity of the blockchain industry.
In general, there are four main types of investors investing in Filecoin from the secondary market: spot, futures, contract and ETF . Among them, futures, contracts and ETFs are privileges that only popular projects have. At present, many exchanges have launched FIL futures. I believe that contracts and ETFs will be launched soon.
So how do we distinguish between spot, futures, contract and ETF, and then invest in a way that suits us?
Spot: Exchange acceptance is the main consideration
Spot trading is a currency trading market with real-time delivery and settlement, which can be understood as commodities or securities in traditional industry financial transactions. The spot market is delivered in real time, and cash (corresponding to mainstream digital currencies) is spot, so the price on the spot market is the real-time price at the time of delivery, which accurately reflects the transaction intentions of both buyers and sellers. Generally, the trading pairs that highlight prices are FIL/BTC, FIL/USDT etc.
For the spot market, what should we pay attention to?
- Exchange security. Because the exchange is centralized, no matter what kind of spot project is traded, it is necessary to ensure that the currency of the project is cashable. The main criterion is: whether it is a leading exchange or a trusted exchange based on other methods;
- FIL acceptance ability identification. Because many exchanges sell futures and spot goods in advance, but in fact they do not have sufficient acceptance capacity. Therefore, in order to ensure that users can achieve smooth withdrawals, it is necessary to find an exchange that participates in Filecoin fundraising or cooperates with miners to ensure sufficient The ability to accept, otherwise it is just trading numbers, and the secondary market is likely to be manipulated;
- Whether FIL withdrawal is enabled. Some exchanges only open deposits, but do not open withdrawals, and their liquidity is not connected to the entire market. This will cause FIL price fluctuations to be only a stand-alone operation, which is more likely to be manipulated by the exchange, and the recharged coins are also sold at low prices. risk.
Futures: delivery cycle and method are the key
The futures market is a prospective contract trading market. What is traded in this market is not the spot money (corresponding to mainstream digital currencies), but the mutual transfer of contracts. There are currently three types in the FIL futures market: 6 months, 12 months and 36 months after the mainnet launch. After the contract expires, the contract terms need to be honored for spot trading. Prices in the futures market are closely dependent on price movements in the spot market. The following are the matters needing attention in futures exchanges:
- FIL acceptance ability is the prerequisite. Futures do not have the urgency of spot trading and are not timely, but they also need to have sufficient acceptance capacity during the delivery period;
- FIL redemption time period and method. Because FIL 6, 12 and 36 are released in different cycles, the exchange will have different release methods for the futures. The beginning, end of the month, daily, one-time or several releases will lead to user benefits and risks. different. Due to the different release methods of exchanges, the futures prices on different exchanges will be different, so users need to understand the delivery cycle and method before they can correctly recognize the benefits and risks;
- FIL futures trading volume and turnover rate. In addition to the above delivery cycle and method that will affect the currency price, users also need to understand the actual amount of futures released by the futures (that is, the number of futures contracts that can be traded). Because the futures are in a closed state before delivery (cannot communicate across exchanges), the total trading volume of FIL futures and the volume of FIL futures on different exchanges are different, which will directly affect the turnover volume and thus the price. If an exchange has a large total FIL futures trading volume and releases a small amount of FIL futures in the market, it will lead to a higher turnover rate and make FIL futures prices higher than other exchanges;
- FIL futures are oversold. If FIL futures are oversold, once the exchange fails to make up the FIL at the delivery time, users will also be unable to withdraw FIL.
Contract: Early high risk and return
Contract transaction refers to the agreement that the buyer and seller will agree to receive a certain amount of FIL at a specified price at a certain time in the future. The exchange will be divided into weekly, monthly and perpetual contracts according to the type. Users can choose to buy long or sell short contracts by judging the rise or fall in futures contract transactions to obtain the benefits from price rises or falls. The following are considerations:
- Spot is the main impact factor. Contracts are mainly affected by the spot market, and the early FIL supply is likely to be in short supply, leading to large fluctuations in the market spot market, which directly affects contract fluctuations. For speculators, if the leverage is high, margin needs to be added under large fluctuations to prevent the contract from instantaneous liquidation;
- Exchange contract credibility. Because the exchange is centralized, there will be some real trading practices that manipulate or affect the contract, causing users to be unable to operate smoothly at critical times, leading to liquidation. For example, in the big market of Bitcoin, many times users are unable to cover or close positions, which leads to the phenomenon of long and short explosions.
ETF: Low Liquidity Fund Index
ETF is an open-end index fund, an open-end fund listed and traded on an exchange with variable fund shares. Its compliance threshold is relatively high, and it is difficult to see a legal FIL index fund in the short term. However, many crypto asset exchanges currently set up their own ETF trading sections, mainly for mainstream projects. Based on the popularity of FIL, I believe that many exchanges will set up FIL index funds in the future.
There are two mainstream ETFs on cryptocurrency exchanges (take triples as an example): 3S and 3L. 3S means triple short, 3L means triple long, and its fluctuation is directly linked to spot fluctuations. That is, the spot price rose 1%, 3S fell 3%, and 3L rose 3%.
- The pricing of exchange ETFs is immature. Some exchanges will cause the index to fall under extreme conditions due to unreasonable pricing. At this time, the exchange will enlarge the price parameters and reduce the bargaining chips. Such an operation may mislead the early investors who purchased ETFs on the price judgment, so the current ETF exchange is more suitable for mature investors to participate;
- The ETF transaction depth is low and it is difficult to reflect the real market in a timely manner. ETF trading users participate relatively little, and the depth is relatively shallow. At present, the main counterparty is the exchange, so there will be a centralization phenomenon under some market conditions, and the actual ETF fluctuations are difficult to accurately link to the real spot price;
- Early FIL ETFs are more suitable for short-term investment. ETFs triple the spot price fluctuations. Under turbulent market conditions, ETFs should focus on short-term investments; under unilateral market conditions, long-term investment returns are higher. From the early FIL supply and demand situation, price fluctuations are relatively large, and short-term investment is more suitable.
In general, users can invest according to their own investment preferences. The more stable investments are spot and futures, mainly to identify whether the exchange has sufficient acceptance capacity; the risky and high-yield investment methods are contract trading and ETF , Will face the risk of severe market volatility and the centralized operation of the exchange. At the same time, the FIL will be volatile in the initial stage, so the risk is greater.
