Will LBank be the next FCoin to explode?

Although it has been nearly 4 months since FCoin's self-disclosure crisis, the news of "a local police station files a case again" from time to time reminds all investors that in the storm with a loss of 7000-13000BTC, many users have not survived, and they are still struggling to protect their rights in order to get their assets back.

In addition to trading mechanism design, mining and the payment crisis triggered a chain reaction, also exposed the deposit currency finance risk: in addition to the user in the platform of financial accounts cannot withdraw money, "the truth" announcement of zhang jian in the same day, a company called ExinOne platform, according to the announcement of some assets exist FCoin financial accounts, the latter currency is not controllable, lead to more currency treasure products had to suspend filling.

These users who had no connection with FCoin became innocent victims indirectly because they bought ExinOne's financial products.

In fact, since the first cryptocurrency financial products came into being in 2013, the types of financial products have long formed diversified combinations such as interest-earning, Staking, lending, and fixed investment, and many platforms have already incorporated financial products into an indispensable part.

It's safe to say that the concept of cryptocurrency financing is not new, but the potentially risky aspects of the business are still noteworthy.

"Black boxes" of cryptocurrency wealth management products

The background of the emergence of cryptocurrency financial products is the illiquid assets generated when users place cryptocurrency assets on the trading platform and do not want to conduct transactions. For the platform, this part of the precipitation and static capital will play a greater role if it can be put to use on the basis of user consent.

Especially for users with low risk tolerance, financial products with simple operation and considerable returns become the choice of asset preservation in a bear market. To meet the demand, many trading platforms have launched a variety of stable financial products. According to statistics, financial products have been launched on trading platforms including Coinan, OKEx and LBank.

It is understood that at present, the encrypted asset financial products on the market can be basically divided into three categories: first, deposit money to earn interest, this kind of products have the advantages of deposit-on-demand, interest by the day and zero threshold. Secondly, it is Staking pledge mining, and the platform will mortgage PoS tokens to the network instead of users and then get token rewards. Third, the loan, the user in accordance with a certain period of time, interest rate loan assets, the maturity to recover the principal and interest.

Compare our familiar Staking, since most PoS project process trival, pledge platform to meet the user needs to get this part of the profits, will help the user through the pledge, voting, authorize, lock and unlock operations, such as in block access to rewards and dividends, and after deducting fees, then this part of the proceeds back to the user.

Although these three types of financial products have different forms of expression, the profit model behind them is the same: the platform is authorized to use user assets, gain profits through a series of operations and divide them, and the two sides are mutually beneficial and win-win.

This is the same as alipay goes online with Yu 'ebao. However, it is also a centralized platform operation, and Alipay is backed by Alibaba. As an encrypted trading platform in the field of innovation, a question needs to be answered: After users buy these financial products, is the security of funds guaranteed?

Where does the safety of financial products come from?

For now, the cryptocurrency market model has taken shape, but challenges remain. It is found that the annual return rate of demand financial products launched by many platforms is basically between 0.6 and 3%, while a small number of platforms offer a return rate as high as 10%.

High yields are behind the high risk. Before that, in the name of financial management, there were a lot of projects or platforms: BTB, coin steward, WoToken and TokenStore. PlusToken, a "wealth management wallet" who ran away in 2018, is the core selling point of smart dog brick arbitrage, claiming to get 6-18% monthly profit when promoting. In practice, it is a way of using new investors' money to pay interest and short-term returns to old users, creating the illusion of making money and thus defrauding them of more investment.

As for the source and direction of the income of financial products on the trading platform, the head of LBank said that at present, the encrypted trading platform basically deals with such funds by arbitrating with quantitative institutions and then distributing the income to users.

Due to the interest-bearing nature of the deposit, the team will set up multiple lines of defense to ensure the security of the principal. In addition, he said that different teams will adopt different strategies for the risk control of the three stages of the capital, namely, before, during and after the capital.

"For LBank, we will first strictly screen the qualifications of institutions, and stipulate that the selected institutions can only trade on the three platforms of Coinan, Huobi and OKEX, and at the same time stipulate that their strategy can only be arbitrage, and" gambling "will never be allowed." 'In order to avoid accidents, we also require institutions to set up' inferior funds, 'which, as the name implies, will be used to make up for any losses or inadequacies in their operations,' he told BlockBeats.

In addition, in the process of fund management, the platform will monitor the net value in real time. Once the risk control line is reached or there is an unreasonable unilateral position, the team will directly conduct the strong leveling operation. "In order to protect the rights and interests of users to the greatest extent, LBank will prepare 10 million USDT as a risk provision, and is currently negotiating with third-party insurance institutions to allow users to purchase insurance for the compensation of assets under force majeure." The person in charge introduced.

It is understood that LBank will launch the "interest-bearing with currency" product in the near future, and the first phase will be open to the equivalent amount of 10 million USDT. Users can obtain profits after successful registration according to the position held by BTC and USDT without affecting the normal use scenarios such as trading and currency withdrawal. Interestingly, once a user registered after the transaction, withdrawals and other reduction operations, the next day to re-release the corresponding quota gap.

We have noticed that the annualized return rate of the latest product is as high as 10% in the recent 7 days. According to the team, "It is mainly because the product is in the promotion period that is so high. It is expected to fluctuate around 6%~8% when the following situation is stable."

Although trading platforms have repeatedly stressed the safety of such wealth management products, users still need to be warned. Because high returns must be accompanied by high risks, the annualized return rate of financial products provided by the current trading platform is generally higher than the current traditional financial management objects. Add in the specificity of the encryption market, and the underlying systemic risks are also noteworthy.

In addition, these financial products are essentially centralized platforms in operation. At the beginning, investors who did not trade on FCoin could suffer losses because of FCoin's thunder. If investors do not properly select the platform, they may not even get their principal back once the team has an accident. As for the current wealth management interest-earning products on the market, the market will eventually screen out which ones can stand out from the fiercely competitive coin interest-earning products.

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