Perpetual Summer is Coming?
In 10 minutes, Huobi’s $HT formed a long wick on the candlestick chart, and the price went from $3.5 to $0.3, along with this wick, the assets of long traders of $HT futures were just cleared, the biggest one is rumored to have lost more than $2 million, his assets were erased like data in a database, of course, there are beneficiaries of this huge volatility, the beneficiaries may be the exchange or the market maker.
Is it difficult to control such a long wick in a centralized exchange to attack the contract traders? If you look at the liquidity of token pairs on an exchange as a puddle, you will see large and small puddles of different depths. Currently, only the head exchanges have sufficient liquidity, with the top 3 exchanges in terms of asset size accounting for 70% of the entire industry. Other centralized exchanges have very shallow puddles, and while the presence of arbitrageurs can mitigate the huge liquidity differences between exchanges to some extent, however, in the face of malicious attacks and even internal manipulation by exchanges, the price generated by order book is weak, which can be easily controlled, and traders are at an absolute disadvantage when confronting this.
Can decentralization solve this dilemma of traders? The answer is yes, NEST proposes a trading model based on the Martingale network, using system tokens as the standard coin, and the smart contract issues the system tokens to guarantee the financial contract settlement, and the trader’s purchase of the financial contract needs to burn the corresponding value of system tokens, through this burning and issuing mechanism, the liquidity is infinite for the system tokens, and the price of the financial contract, such as futures, is introduced by the Oracle, and the price comes from the weighted average price of several head exchanges with high liquidity. In this way, traders will not have the risk of temporary wicks, while the funds are in their own wallets and under their full control. The disadvantage is that the fees are slightly higher compared to centralized exchanges, but this is part of the decentralized risk compensation, to prevent the system from being arbitrage. And compared to the risk of principal loss, this solution is more friendly for traders. At the same time, the system’s settlement is guaranteed by smart contracts, so there is no risk of non-settlement.
The problem of centralized exchange is becoming more and more prominent, and even the Fud of Binance keeps appearing. Returning to the essence, decentralized trading within the decentralized industry is the general trend.
Summer is almost here, is Perpetual Summer not far behind?