Decided to cover this highly anticipated project in lieu of the recent FTX IEO announcement (been a long time since we've seen an 'IEO', right?).
Specifics of the Announcement
Before we start looking into $HGET, its merits, etc., let's take a quick look at the IEO announcement by 'FTX exchange' for $HGET.
Interesting Disclaimer For U.S. Citizens
In case you're unable to read the small print below the 'HGET IEO' promo poster in the screenshot above, I have it re-published below - take a look:
"THE HEDGET IEO AND HGET TOKENS ARE NOT BEING OFFERED IN THE UNITED STATES OR TO ANY U.S. PERSONS. IF YOU ARE LOCATED IN, INCORPORATED OR OTHERWISE ESTABLISHED IN, OR A RESIDENT OF THE UNITED STATES OF AMERICA, YOU ARE NOT PERMITTED TO PARTICIPATE IN THE HEDGET IEO OR TO PURCHASE ANY HGET TOKENS."
To be clear, there's nothing weird about declaring a prohibition on token sales for United States citizens given securities laws (although one could simply hire a lawyer and just go forward with a regulation fundraise) - but what I found curious is that only the United States was mentioned.
Typically the United States is Mentioned in Tandem With Other Sanctioned / "Rogue" States (per U.S. declarations / U.N. Council Resolutions)
Specifically, I'm referring to nations such as:
- North Korea
- Russia (sometimes)
And other jurisdictions that the United States' + other Western nations prohibit engaging in commerce with.
If anything, its probably more important to avoid distributing tokens to citizens in those territories as that could be perceived as a attack on the 'state' (let's not get too deep here).
What Does the Exclusion Mean?
There's a fear that the SEC or some other financial regulatory agency in the United States will come after the distributors of $HGET for this token sale.
And it wouldn't be surprising if they did, since IEO launches fall pretty squarely within the framework of a securities' offering. But that will be $HGET's problem to deal with, if and when the SEC gets to them (disclaimers don't mean shit - but the person's head that will be on the chopping block is FTX Exchange, not $HGET).
Why Should We Care About $HGET Token?
Because OTC traders and other 'degens' care about it a lot.
We spied on this project a couple of weeks ago in the Discord and noticed that it was popping up frequently among OTC traders (underneath chats operated by the 'Exonetwork').
Below is an example:
Notably this buy offer was made over two weeks ago from the time of writing (the IEO is still a few days away as well).
What This Means
Typical Binance / Huobi / FTX shenanigans (the fact that this project is launching on FTX Exchange just further reinforces the ties between that cabal of exchanges).
Ok, So What is $HGET? (Slightly Technical)
We're going to attempt to get a little more technical here.
Bear with me.
Let's start off with their website (see below):
The premise is...interesting.
Check out the mini-elevator pitch below:
"The future economy is built on cryptocurrencies, but they are very volatile and at the moment risky investments. Hedget introduces decentralized options – you pay the smallest possible premium to secure your positions against unexpected price movements."
Upon first glance, I'm not getting struck with any 'aha' moment epiphanies on how this protocol will make the markets less volatile for traders (huh?), but let's proceed forward with an open mind here.
Take a look at what they wrote here in this next section on their website (this made me roll my eyes):
"Options and other derivatives have been tried in a decentralized manner, but have struggled due to lag in settlement and other technological limitations that come with blockchain. Digital financial tools greatly rely on relational databases due to complex business logic that requires advanced querying, something that blockchains simply cannot do – that is, until Hedget came along."
Translating in Laymen's Terms
When users interact with Decentralized Finance projects to 'hedge' / 'stake' their assets (in exchange for synthetic derivatives), the underlying protocol in question providing those derivatives must ensure that they are able to liquidate said user out of their position before losses on their staked asset exceeds their collateral.
If the loaned amount for a protocol exceeds collateral (i.e., if traders are unable to pay their 'bills'), then that entire project & ecosystem becomes insolvent unless some sort of outside intervention takes place (ah, don't you just love how refreshingly "different" blockchain is compared to 'legacy finance'? [sarcasm]).
How Can This Happen?
Great question. After all, if the protocol is in possession of the collateral you pledged, how can it still come behind?
Shelling This Out
If there is a major, violent move downward for one of these assets that a DeFi protocol is allowing users to borrow against (collateralize), then it is incumbent upon that DeFi protocol to ensure that those positions are liquidated before the losses on said assets exceed the value of the synthetic derivative issued in exchange.
Otherwise, those synthetic derivatives lose all of their value because they won't be backed by anything (thus, rendering the protocol insolvent unless someone comes to 'bail it out' - traditional legacy finance style).
The Issue Probably Isn't Really Blockchain
This is a volatility / markets related issue.
Ethereum was never designed for this wildly unexpected use case (i.e., being able to liquidate traders out of their collateralized positions before their losses exceed the value of whatever borrowed synthetic derivative they obtained).
This doesn't point to a througput level, perhaps - but in reality, if Ethereum is to be leveraged as a quasi trading desk on blockchain, then it needs to be capable of rendering millions of transactions in minutes (akin to Visa).
I say this because HFT (high-frequency trading) strategies among other bot-driven market activities would necessitate this througput.
Back to $HGET
According to $HGET's team (or their website, at least) - they've managed to manifest a blockchain protocol that will pick up the slack where Ethereum has fallen short.
This Appears to Be the Same Pitch From 2017, Just Re-Packaged For Ethereum
Remember the supposed value proposition of new blockchain projects in 2017?
For a while, every new project claimed to have "figured out" the ultimate solution to blockchain (namely, Bitcoin's scalability woes).
These projects were, in essence, a polite consortium of video game players agreeing on which individual should be allowed to transact with their arbitrary, one-dimensional illiquid game currency.
This was where the segway into 'Proof of Stake' protocol proposals began (and with it, the steep descent in the quality of blockchain project from then on - landing us here at this point...trapped with 'DeFi').
Rest of the Site is Fluff
Still included the screenshots below for what its worth:
Sorry, screenshot (singular ; that's all that's on their website).
Formidable Ecosystem Partnerships
We'll get back into how this project is 'DeFi' and where it may fit in the ecosystem among other established DeFi protocols in a second.
For now - let's take a look at the list of purported partners that have already invested in this protocol.
See below (from the same $HGET website we've been scoping):
NEO Global Capital? Fenbushi Group? (Almost feels redundant saying those two VC firms side by side), and Chromia?
Those Entities Translate to Binance, Huobi & OKex
I've shelled out why this is before, but just in case those revelations were missed, I will take the time to shell out the relationships between $HGET's partners and the aforementioned exchanges.
Starting With NGC Ventures
We're starting with them because their ties to Binance are, by far, the strongest (and the relationship is far from intuitive, too).
Examining a Recent CoinDesk Shill
Why do we care about this promotional piece?
Because it contains some useful information (as well as names) that will be valuable leads for us later on.
Private Investment Amount - $500k
According to CoinDesk:
Sidenote: This project does not possess its own blockchain - it uses Ethereum instead
This is a record skip for me because $HGET is proposing that the can alleviate on-chain congestion on the Ethereum protocol with a token that's being launched on that very same protocol.
But - we'll carve back into the 'technicals' in due time. For now, let's see what other useful information can be gleaned from the CoinDesk article we were just looking at.
As true scholars and students of the game, we're going to annotate this article a bit.
Finally - we've found the 'differentiator' for this protocol.
They're going to allow traders to 'hedge on positions of debt taken up on lending protocols in the DeFi space'.
Interoperable Ecosystem Designs Are Moonshots in DeFi
Wanna know what Synthetix, Chainlink, $MKR and $YFI have in common?
They're used in other ecosystems apart from their own (i.e., $YFI can be used with 'balancer', $SNX can be farmed to yield 'sUSD', which can then be included among other stablecoin assets within yCurve's "basket", Chainlink is trying to partner with as many projects as blockchain journalists can announce before 2020 is over, etc.).
Think of it Like Your Favorite Music Artist Doing a 'Cross-Genre' Feature
We know why this happens - to attract fans that perhaps would have never heard that artist's music otherwise (and also to guarantee a base of listeners by virtue of the collaborating artist's loyal fanbase that will listen to anything they put out like the loyal stans they are).
That analogy / anecdote carries to blockchain as well.
What I Mean Here
Chainlink and other protocols have benefited from the repeated exposure through other communities by virtue of their 'partnerships'. Likewise, the partnering projects also benefit as well - creating a mutual, win-win whenever there's a partnership between the two entities.
This Increases Public Perception and Sentiment of the Project's Legitimacy
Without being condescending, its clear that most tradres and individuals in the blockchain space don't have a complete grasp of what it is these projects claim they can achieve (and that's not something one can expect of 'Joe Blow').
So to compensate for this lack of requisite expertise to 'audit' the veracity of projects in the blockchain space, traders place weight on 'partnerships' and collaborations with other perceived "legitimate" entities when assessing the competency of a given blockchain project and/or its team.
While this strategy is logical - it carries very little water in the blockchain space.
Juicier Information From CoinDesk
Check out this screenshot below:
Okay, awesome, so we now know that:
- Roger Lim seems to be involved in a potentially hands-on role. This is worth observing as Roger Lim is a co-partner / founder of NGC Ventures alongside Da Hongfei (remember him, from $NEO? Same folks).
- Chromia is Intimiately Involved in the Launch of This Protocol: This really piqued my curiosity since I have leaked employment agreements / consulting contracts between Origin X Capital & Chromaway (the entity responsible for creating Chromia). Notably, Sandra Wu was the point person to broker those deals as well - and Roger Lim has also been publicly listed among the 'board of directors' for Origin X Capital too [doubtful that he's still listed there publicly now, but I've already archived the relevant references].
- "Chromia also invested in the seed round"; so this is essentially Chromia's project. Which means that the ties do exist between $HGET and Binance (I think a listing there in the near future is intuitively obvious imo). And if not Binance, then Huobi / OKex (or perhaps, both).
There are a few other linkages that we could excavate right now in this brief report, but I'm going to leave that where that is).
Woops - almost forgot - the Binance whitepaper!
Yes, Binance Exchange Had a Whitepaper
And it has a ton of interesting information on it.
Guess Who Has Board Seats?
Yup! None other than our man, Da Hongfei (NGC Ventures) + former Huobi & OKex execs too, of course (since Binance is a symbiotic extension of the former named entity - Huobi).
Hopefully This Information Was Known
If not, then you're welcome.
Make sure to save that document if you're not a Librehash Member (if you are, then this is already hosted on the files app for you to access freely at your discretion).
What This All Means For $HGET
The hype train will certainly be in town.
However, I'm a little apprehensive about this project for some reason.
Binance + Huobi have had a shit track record over the past month with their launches.
What I mean by this
Obviously, there have been a ton of bangers this year among the DeFi space - but it save launched on Huobi + Binance recently have ended up as 'pump and dump' schemes - with the price spiking up 300-700% at listing before eventually posting a net negative ROI relative to the token's price at opening.
And, in my opinion - when that happens - that's it. The 'whales' (or whatever you want to call them), more than likely decided to exit in that move ; they've already made their money hand over fist.