How Republic Protocol allows whales to trade without wrecking the market
The whole world has been talking in cryptocurrency for at least the last 2 years but do we know who the big players are in the crypto ecosystem at the moment?
Nope. It’s not those trading in Bitcoins or ETH or even their hard forks. The biggest players in the crypto space right now are the people in possession of at least several million dollars. You can call them WHALES or if you are a fan of old-school ways then High Net Worth Individuals will be your go-to term.
They are called whales because of the attention they bring onto themselves when trading in huge amounts.
Who are these HNWIs?
Mostly, whales are people who were the early holders of altcoins and cryptocurrency hedge funds, Venture Capitalists, investment bankers, and retail investors. Because they got into the trade early, they have now invested their way to millions of dollars.
Interestingly enough, however, it is people like you and me, known as the retail investors who occupy the most of the market. If we were, just for the sake of it, were to arrange the investment groups in terms of owing most market shares hierarchically, it would look something like
Early adopters, holders, crypto enthusiasts and experts > Cryptocurrency Venture Capitalists and Hedge Funds > Retail Investors > Wall Street and Investment Banks
It is rather interesting to know why this is so—because these whales have been unable to get into the crypto space even though they want to. Also, let’s not forget to consider the traditional financial institutions like the pension funds, mutual funds, insurance companies etc. who are the real whales owing to the amount of money they handle which is absolutely nowhere close to where the crypto market currently stands.
Why are the institutional investors getting breached?
In the Consensus Invest held in November 2017 in NYC, the news of throwing around a market cap of $1 trillion was going around. This is because it was an amount agreed upon by the heads of the investment institutions because anything smaller than this amount is an amount too small for them to enter the space feasible.
And this only just the beginning
$1 trillion is a lot of money but not for the heads of these institutions. When you compare the market caps of different financial spaces, the crypto space stands nowhere.
- Cryptocurrency = $550 billion
- Dot Com Bubble at its peak = $3 trillion
- Gold = $7.7 trillion
- Global stock markets = $73 trillion
- Global real estate = $217 trillion
- Derivative markets = $544 trillion
Okay, so you get the idea that these people have a lot of money and they’re making use of it to enter the crypto sphere desperately.
And yet they’re unable to.
A number of reasons can be attributed to this. Let’s begin with the lack of rules and regulations which absolutely allows these loaded heads to invest people’s money wherever they want.
The second reason is that the crypto market is too small compared to the amounts of money they deal in and there is no easy way for these whales to enter the field without ringing a lot of attention.
Moreover, the security and custody of cryptocurrency assets is something these whales aren’t aware of. They simply do not the way in which the crypto world works, how a blockchain operates, and how private keys are to stored securely. However, the next half of this year may see some growth on this front.
But to go back to our second reason, if the whales were allowed to enter the market with an amount of $100 billion, they will be representing almost 20% of the current crypto market right now. This would not only mean things making big headlines but will spark a rise in the prices and cause people to take action to secure their assets.
It is also wise to remember that this isn’t the first time we’re witnessing something like this. We have already experienced effects of a similar kind when Bitcoin futures were introduced which was the only real way in which these investors could make a profit in the crypto space.
But this trend will continue only until the whales get access to the dark pools.
What are dark pools?
Dark pools mean exactly what their name connotes. These are trading exchanges where shares and other assets can be traded using a hidden order book. They are called dark pools because no one has access to the orders waiting to be fulfilled.
What is the point of using a dark pool then?
Isn’t that obvious? Dark pools give whales an opportunity to trade cryptocurrencies without affecting the market prices intensively.
Dark pools have been available since the year 2016 on exchanges such as Kraken and TradeZero and yet these investors have not been able to make their place into crypto space. That is because these exchanges aren’t really reliable and if the investors trade on these exchanges, no security is guaranteed.
Okay, so it’s not that dark pools are the only entry points for whales to enter the crypto space. Another major factor that hinders their entry is Security and Trust. Whales have to be able to trust those they trade with to not screw them over or for exchanges to not get hi-jacked.
Therefore, in order to get into the market, these investors need to cover their assets, on all fronts.
How can that be done?
This is where Republic Protocol enters the picture. Republic Protocol is a decentralized dark pool for the trustless cross-chain atomic trading of Bitcoin pairs, ERC20 tokens, and Ether.
Let’s break down what all of these fancy words mean.
Decentralised: Well, we pretty much know the meaning of that by now but let’s revise, shall we? There is no middleman required to operate the dark pool. Republic Protocol is different from the two exchanged mentioned above because the latter are centralized.
Trustless: this can be deduced from decentralization since it doesn’t require for you to trust anyone or anything. The way the Republic Protocol exchange has been designed allows a user to trade without even needing to trust anyone.
Cross-Chain: the Republic Protocol allows for the trade to happen across differing blockchains.
Atomic Trading: Now, here is something new. This too derives from the decentralization aspect and means that one coin can be traded for another without having to go through an exchange.
So at the bottom of it, what Republic Protocol is going to offer is an opportunity for whales to trade in cryptos without causing havoc in the market.
With Republic Protocol, security is also taken care of which means that whales don’t have to be afraid of losing their money anymore.
What makes Republic Protocol a safe bet?
- The protocol isn’t tied to Ethereum and allows for cross-chain trades.
- Does not entertain any competitors whether internal or external.
- Their token REN has an actual use case. The traders need it to pay the trading fee which is then paid out as a reward to miners who successfully match and execute trade orders. The token can also be used as a preventive measure against external attacks.
The Republic Protocol is a strong project with an even stronger team of advisors. Some of the advisors and partners of the project have been listed here:
- Partnership with Digix Global (first company to issue an ICO on the Ethereum blockchain) who created the DGX token, which is a digital currency backed by physical gold bullion.
- Prabhakar Reddy — Investor and Advisor, Accel Partners
- Dorjee Sun — COO Sentiment, market intelligence agency and trading platform
- Loi Luu — CEO of Kyber Network, which is a decentralized exchange protocol similar to 0x and LoopRing
Republic Protocol has the potential to bring in a new influx of money into the crypto space given that it is implemented successfully.
However, the project is still a work in progress but its daily progress can be tracked on Github. The roadmap mentioned in their whitepaper has a rather realistic strategy and can potentially work in their favor when the mainnet goes live. The project is all set to launch a mainnet operation in the third quarter of 2018 followed by a public and private testnet in the second quarter.
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Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.