LedgerX Contracts: Bet on Next Bitcoin Mining Rewards Halving Event

LedgerX, a federally-regulated institutional trading and clearing platform for conducting cryptocurrency swaps and options trades, has introduced a new binary contract for bitcoin (BTC).

In an official blog post, LedgerX’s development team noted that their LedgerX Halving Contract (LXHC) will allow users to bet on what they think will be the date of the next halving of bitcoin mining rewards. Every four years, the compensation bitcoin miners receive (for validating blocks of transactions) is reduced by 50% and the event is commonly referred to as “halving.”

Betting On The Next Halving Event

The next bitcoin “halving” event is expected to take place in approximately 473 days from today, or after 68,276 additional blocks have been produced on the Bitcoin blockchain. This, according to data from the Bitcoin Block Reward Halving Countdown. As mentioned in LedgerX’s announcement:

This [LXHC] contract will allow you to get a fixed payoff if the next halving block (#630,000) happens before a certain date and time. If the block is discovered after, the contract expires at zero. The result is an extremely clean binary payoff that is verifiable by all participants — a great demonstration of the value of a public blockchain.

Traditional binary contracts allow people to bet on win/lose types of events - which typically occur in sports games or elections. However, LedgerX’s bitcoin halving binary contract is different because bets are being placed on the outcome of an event that will definitely happen, whereas conventional binary contracts may bet on events which might not occur.

Comparing oil extraction processes and bitcoin mining, LedgerX’s post explains: 

To give an analogy, imagine you are an oil producer such as Exxon Mobile and know that one day in 2020, the number of barrels of oil you extract will go down by half, forever. But you’re not certain which date that will be. This would materially impact planning for investment and operations. Bitcoin miners face this exact risk approximately every 4 years for the block reward that they earn.

LedgerX's Bitcoin Savings Account

In May 2018, LedgerX launched a bitcoin savings account, which allows investors to earn interest on their BTC deposits. The crypto account also allows users to earn 2X the spot price on the product’s purchase date, if the price on maturity (expiration of contract) is approximately twice what it was when the contract was first issued.

Based in New York City, LedgerX has obtained a license from the US Commodity Futures Trading Commission (CFTC) as both a Derivatives Clearing Organization (DCO) and a Swap Execution Facility (SEF). Since launch, LedgerX has been developing crypto-related financial products that are functionally similar to traditional forms of investments. For instance, the basic idea of the LedgerX savings accounts is to allow investors to earn a yield, or return, in fiat currency (USD) on their bitcoin holdings.

In addition to 'HODLing' cryptocurrency, users can earn interest on their bitcoin deposits which is somewhat similar to what traditional banks offer with products like certificates of deposit (CD).

Crypto Market-Maker Altonomy Receives $7 Million in Funding from Polychain Capital

Altonomy, a New York-based cryptoasset trading, advisory, and asset management company, has completed a $7 million fundraising round from Polychain Capital, a leading hedge fund and venture capital firm.

Co-founded by Ricky Li, a former Manager of Research and Product at the CME Group, Altonomy has also received funding from 7 Blocks.

Additional Capital Will Allow Altonomy to Have More Inventory

Commenting on how the additional capital could help Altonomy’s business operations, Li said: 

As a liquidity provider for altcoins, more funding will allow us to have more inventory, taking larger exposure and managing risk more effectively.

Li added that the extra funding would allow Altonomy’s trading desk to provide better services - as the platform would not need to “put constraints” on customers at settlement.

Funds May Be Used to “Source Liquidity for Customers”

Olaf Carlson-Wee, the Founder and CEO at Polychain Capital, remarked:

As a long-time user of Altonomy’s trading services, it was an easy decision for us to invest in their business when the opportunity became available.

Carlson-Wee, a former Product Manager and Head of Risk at Coinbase, also mentioned that the additional funding would help “source liquidity for customers, regardless of token type, order size, market cap, or whether the asset trades on centralized or decentralized exchanges.”

According to Coindesk, Li had suggested to investors in January 2019 that they “liquidate enough ETH so they would have at least two years of runway.” However, Li is now anticipating that cryptocurrency prices may continue to recover - after enduring a long bear market that lasted throughout 2018.

Altonomy Introduces Cloud Service for Crypto Mining

In addition to providing crypto trading and asset management services, Altonomy introduced a new product last year, called the AltMiner. According to Li, AltMiner’s cloud service allows Altonomy’s bigger investors to mine various cryptocurrencies.

Altonomy’s management claims that the AltMiner has a “superior return profile” with the “newest generation of miners, low electricity costs and a secure hosting site.”

During an interview with CryptoGlobe in May 2019, Lee explained how Altonomy’s crypto trading services were developed and their potential benefits.

One of Altonomy’s main services, called electronic execution, allows mining firms, investment companies and crypto exchanges to “enter and exit positions as an outsourced execution desk.”

As a high-frequency market-maker, Altonomy also provides liquidity for various tokens to several crypto spot and derivatives trading platforms.