Author: Isabelle Yeo
On September 8, 2018, the experts of blockchain – Bibox & Duo Network- gathered at Singapore Management University (SMU) to discuss on the controversial issues of the industry and the innovative solutions that the companies could provide. The event was hosted by Bibox to provide useful and actionable insights for all players in the industry.
Bibox, an artificial intelligence (AI) enhanced encrypted digital asset exchange, kickstarted the event with a presentation from Guojie, Liu, the managing director of Bibox Exchange. Unlike the mainstream exchanges, Bibox Exchange uses artificial intelligence (AI) in a token review, user and risk management to set themselves apart from the competition. The top-notch exchange in the world is also exploring on the implementation of 3rd party custody service and digital asset insurance.
Currently, the exchange houses over 194 cryptocurrency pairs. Guojie, Liu emphasises the need for providing diverse and quality blockchain to the investors for growing the community. He added:
“To achieve that, we have an experienced review team and stringent screening criteria. We don’t just leave it like that. We then monitor projects comprehensively on a long-term basis to reduce investment risk for our platform users.”
Baidu and Bibox have partnered up resources to build the Blockchain Research Centre; the centre is a cross-industry effort to study the applicability of Fintech. With increasing volume of exchanges, Bibox is committed to a collaborative business approach to contribute towards a sustainable long-term growth of the industry.
DUO Network is similar to a structured fund but created specifically for the world of cryptocurrency. The structured fund is a type of fund that combines both equity and fixed income products to provide investors with both capital protection and appreciation. Similarly, DUO Network is a system of tokens and smart contract that provides an income generating stable token and a leveraged capital gain token backed by a market-proven model.
Let’s do the math
During an email interview with Jerry Li, the CEO of DUO Network, stated that DUO Network is created to solve price volatility issues through derivatives structure – option pricing theory. According to the academic white paper, the Tranche token can be created by depositing Ether into Beethoven (smart contract) and has a dual-class split structure. Upon receiving the ether, Beethoven will split the tranche token into class A coin (Income Token) that behaves like a bond and received regular coupon payments, while the class B coin (Leverage Token) is entitled to the participation of leveraging underlying cryptocurrency. Initially, the ratio of the split would be 1:1 and the initial net asset values of Class A and B coin will remain at $1 due to interest parity rule.
Subsequently, there would be an upward or downward reset when ETH/USD has hit the predetermined upper/lower price bound. Consequently, during a downward reset, the users will have fewer number of class B tokens but in higher value as ETH is released to stabilise the coin. This is illustrated in the following figure:
The future of Dual-class coins
As the technology is continuously evolving, the competition in blockchain is intensifying. Jerry said that in the face of competition, we believed in the game theory of first mover advantage.
He further commented:
“If our idea of dual-purpose coin is validated first, we believed that many would follow this track. Thus, we intend to set the standard of collateralised derivatives by proposing collateralised autonomous token (CAT).”