The paid membership service “Simetri” launched by Crypto Briefing, a crypto-asset research organization, released a report stating that the on-chain hedging protocol Whiteheart, as an automated contract for crypto-assets and stock-chain hedging, has the potential to become a basic module in the DeFi field.
Written by: Crypto Briefing, Translated by Crypto Asset Research Institution: Leo Young
Whiteheart is an on-chain hedging protocol designed to help DeFi users protect the value of ETH and WBTC holdings.
Whiteheart was initiated by the developers of Hegic in November last year and plans to launch on the mainnet in March this year. This project has the potential to become a basic module in the DeFi field, and we believe it will explode rapidly.
Introduction
The cryptocurrency derivatives market has only just begun. This may be another fast-growing field outside of NFT.
In the traditional financial sector, the derivatives market is several times larger than the spot market. But in the field of encrypted assets, the derivatives market is far from taking shape.
At the same time, the volume of open contracts for Bitcoin and Ethereum has grown tremendously. Since July last year, this market has grown more than tenfold. As in other markets, as institutional funds enter the cryptocurrency market, we expect the derivatives market to grow rapidly.
This is why we always pay attention to Hegic. Although Hegic is a mediocre performance in our portfolio, we have always been confident in it because of the continuous growth of users and transaction volume.
Simetri published Hegic’s report in November 2020, please refer to:
” Simetri Special Report: On the Potential of Hegic with Bright Liquidity to Dominate the DeFi Options Track “
Accordingly, Whiteheart is listed as our special selection project this month.
Whiteheart is one of the projects in the Hegic ecosystem, developed by anonymous developer Molly Wintermute. Wintermute’s capabilities are widely recognized by the crypto community. Once Hegic was launched, she herself was quickly selected as one of Cointelegraph’s “Top 100 People in the Crypto World”.
Whiteheart launched by Wintermute is a new financial basic module in the DeFi field (also known as “Lego Blocks”), that is, the hedging automation contract on the encrypted asset and stock chain. If successful, automated hedging will save a lot of events and money, greatly simplifying risk management.
The project raised 13,000 ETH through the initial joint curve offering (IBCO) in December last year, and was originally scheduled to go live at the end of February this year. However, due to platform security audit requirements, the launch time was postponed to March this year.
After the announcement of the postponement of the launch, some investors sold Whiteheart’s native token WHITE. In our opinion, selling prematurely and rashly is a good buying point for us. The short delay did not change the fundamentals of the project.
In view of the fact that the price of WHITE has fallen from the highest price, we believe that it is suitable for potential investors to participate in the project. In addition to solid fundamentals, a very good price opportunity is one of the reasons why Whiteheart entered the March selection.
What are the highlights of Whiteheart
As mentioned above, Whiteheart is expected to become a new financial basic module of DeFi. With Whiteheart, users who hold WBTC and ETH do not need to worry about price drops.
How can I hedge positions through put options?
Whiteheart uses DeFi to provide traditional put options. For example, using software supported by a decentralized agreement, a put option buyer has the right to purchase an asset at an agreed price within a certain period of time, but is not obliged to exercise the right.
This function is needed in the field of encrypted assets. Currently, to hedge ETH or WBTC positions, users need to have in-depth financial knowledge and have to endure difficult-to-use software.
Whiteheart is a simple alternative with low professional requirements. Let’s show the beta application below.
Exchange coins at Whiteheart
If you want to buy a put option, you must first hold or buy ETH or WBTC. Whiteheart integrates decentralized exchanges such as Uniswap. The following shows the purchase of ETH through Whiteheart using Uniswap.
Source: whiteheart.finance
Trading on Whiteheart Hedging Contracts
To purchase a put option, you must first purchase a hedge contract for the asset. Take the following figure as an example. If the price of ETH is lower than US$522.66 in the next 14 days, the holder can exercise the hedging contract to obtain the price difference between the exercise price and the market price.
Source: whiteheart.finance
After purchasing a hedging contract, there are two situations. As asset prices rise, the hedging contract expires and becomes invalid. If the price drops, you can execute the contract and recover part of the investment income.
Whiteheart takes the initiative to hedge
Source: whiteheart.finance
Growth roadmap and catalyst
The platform is still in the testing period. The project code has been audited by Paidun. According to the audit, the project code was rigorous, and the problems identified by the security audit company were immediately confirmed and resolved.
We expect the project to be released no later than this month. After the launch, integration with DeFi will be the main growth factor.
If a decentralized exchange like Uniswap or Sushiswap integrates Whiteheart, it will attract a large number of users. The team has already started to establish relationships with these top decentralized exchanges.
We expect Hegic and Whiteheart to add supporting trading assets in the medium to long term, which is another growth catalyst.
Whiteheart roadmap source: twitter.com
WHITE token holders directly benefit
WHITE’s token economy is simple and straightforward. There are a total of 8,888 WHITE tokens, which are currently in full circulation.
This is the obvious advantage. At present, there will be no market sell-off that takes a hundredfold profit and lightens up the market as in most early projects.
In fact, Whiteheart’s IBCO investors have not made much profit yet. If someone sells it, it’s already sold out.
Another powerful fundamental aspect of WHITE is that token holders will receive dividends from protocol fees.
According to the white paper: the handling fee is shared in proportion to the pledge of WHITE, and 30% of the handling fee is pledged with WHITE tokens for dividends. 30% of the handling fee is allocated to Whiteheart’s liquidity providers. 20% of the handling fee is allocated to HEGIC pledge (WBTC pool pledge and ETH pool pledge share 10%). The 20% handling fee is allocated to Hegic liquidity providers (WBTC pool liquidity providers and ETH liquidity providers share 10%).
The platform fee income is still unpredictable. If the project management party attracts a large number of transactions, this continued dividend will be considerable.
In fact, after the project goes live, even if the transaction volume is small, I expect that long-term holders will begin to pledge tokens and receive fee dividends, which will make the tokens out of circulation. This will reduce the circulation of tokens and have a positive effect on the price of WHITE.
risk
There are multiple risks in this project. The first is security risks. Although the platform is audited, no one can guarantee that there are no loopholes. In addition, if Hegic has a security risk, Whiteheart will be directly affected, because Hegic’s liquidity pool provides put options.
Even if it integrates with decentralized exchanges such as Uniswap, it is not expected that there will be a large trading volume soon.
In the transformation stage from proof of concept to system integration, investors may lose patience, which will adversely affect the price comparison.
Ethereum’s scalability and high gas fees may also slow down growth. At present, transaction costs are high, causing retail investors to stay away because of high fees.
The good news is that Optimistic Rollups may be deployed on Ethereum. If the deployment is successful, this problem may be partially resolved.
in conclusion
Whiteheart’s use cases and market positioning are simple and clear, and it has the potential to become the financial basic module of the Web3 DeFi ecosystem.
The project aims at the exponential incremental market and provides a simple solution to the existing hedging position problem. In terms of ease of use and practicality, no alternative products can match.
If Whiteheart can integrate decentralized exchanges as advertised on the website, it will quickly acquire users and gain an unshakable leading position in this niche market.
The current market value is 31 million U.S. dollars. With its contribution to the DeFi and encrypted assets field, we think the value is completely underestimated. In the future, the mainnet will be launched, and the launch of the pledge may stimulate short-term growth.
This is our WHITE project of the month.