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CoinFLEX: A Retrospective on Crypto Derivatives Innovation in 2021 – The Block Crypto

Quick take:

  • FLEX has grown from $0.05 in December 2020 to more than $5 today, representing 100x+ growth
  • Assets under custody hit $1.2 billion
  • CoinFLEX’s repo market went from millions to billions of dollars per day in volume
  • flexUSD market cap reached $370 million and has paid out $17 million in interest to holders
  • CoinFLEX’s automated market maker (AMM+) hit $100 million in assets

CoinFLEX focuses not only on building for the crypto markets today, but also for what will remain true ten years from now:

  • In the crypto markets, end-users care most about liquidity.
  • Most investors are passive, not active, meaning they prefer to “set something and leave it” rather than trade multiple times a day.
  • Passive capital wants the highest possible yield for the least amount of mental effort and risk.

Armed with these truths, CoinFLEX has created products that enable passive investors to earn yield directly from the volatility and leverage available in the crypto derivatives markets without being a full-time professional trader or money manager.

Last year, CoinFLEX saw success in several products: flexUSD, AMM+, FLEXDAO, and the first smartBCH bridge.

With nearly $400 million in market cap, flexUSD – CoinFLEX’s stablecoin – has seen both increasing retail and institutional adoption.

  • Not everyone owns crypto, but everyone uses fiat currency. USD-pegged stablecoins are seen as US Dollars on crypto rails. flexUSD is an upgrade on this concept as flexUSD tokens earn interest while held in wallets or used in some form of activity (DeFi, trading, payments, etc).
  • The flexUSD interest rate (ranging currently between 10-20% APY) is earned from collateralized lending into CoinFLEX’s futures market, a borrow/lend market called “repo.”

Learning from DeFi-borne financial primitives, CoinFLEX created the first automated market making (AMM) model for the futures market. The hybrid CeFi + DeFi model offers:

  • Greater capital efficiency
    On November 10, 2021, AMM+ trading volume reached $1.5 billion with less than 10% of that size ($103 million) in total value locked (TVL). TVL skyrocketed from $23 million at the start of August 2021 and reached an all-time high of $133 million later in the year.
  • More scalable orderbook trade volumes than DEXes, implying more yield
    This implies more yield to AMM+ stakers as the hybrid model bypasses the high gas fees on Ethereum and is not exposed to the risks of onchain front-running.

First exchange token DAO launched by a centralized exchange.

  • FLEXDAO allows for the long-term success of CoinFLEX and incentivizes FLEX holders by providing greater stability to the FLEX market.
  • While initially a staking mechanism, FLEXDAO will expand to become a governance and voting mechanism, allowing its community members to vote on many of the critical decisions impacting the future of the exchange.

First smartBCH bridge
CoinFLEX serves an important role as the first bridge between the BCH chain and smartBCH.

  • Users can deposit BCH on the Bitcoin Cash network and withdraw on smartBCH, vice versa, enabling Bitcoin Cash enthusiasts easy access to DeFi protocols via the smartchain.
  • CoinFLEX has also launched FLEX and flexUSD on smartBCH. flexUSD has become the dominant stablecoin within smartBCH, and holders who use it in the various DEXes and DApps receive the flexUSD yield even while they trade, lend, and stake.

Crypto Yield 2.0
A major theme that will develop in 2022 is the rise of Crypto Yield 2.0.

This means, users will find new ways of sourcing yield directly from the most liquid crypto market (futures) rather than interacting with protocols or centralized intermediaries. This direct, transparent, and market-based solution that CoinFLEX provides will continue to fuel the growth of crypto yield from a multi-billion to a multi-trillion dollar industry.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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