Launched under the motto of championing the revolution of social trading with the help of blockchain technology, the HedgeTrade platform’s fast rise in 2019 took many in the crypto scene by surprise. As of August 2019, the currency was found among the top 50 cryptos, propelled by the promotion of the HedgeTrade decentralized application (dApp).
The app was specifically designed to provide users with cryptocurrency trading analyses, predictions and, as a bonus, educational content. Its main goal is to serve as the bridge between newbies and experienced traders who are often separated by huge knowledge gaps when it comes to social trading. With HedgeTrade, the more experienced users are provided with a platform which allows them to share their knowledge and acquire some HEDG tokens in the process for providing accurate information.
At the same time, the less experienced users are able to purchase the trading predictions, packaged in the form of so-called blueprints, which are further secured by the HedgeTrade smart contracts. In time, the knowledge acquired in this manner should allow these users to engage in professional trading themselves, particularly with the help of the market tools provided by the HedgeTrade for pros and beginners alike. The token sale for the project took place in late 2018, under the auspices of the Rublix company which offers financial technology products paired with the blockchain implementation. Key personnel behind this enterprise includes Dave Waslen (CEO, co-founder), Peter Danihel (lead developer, co-founder) and Frank Danihel (COO).
What Is HedgeTrade Trying to Achieve?
While primarily concerned with cryptocurrencies, HedgeTrade aims to increase its coverage to various fungible assets as well. Its goals are largely shaped by the perceived shortcomings its developers identified with the existing prediction trading systems:
- HedgeTrade seeks to improve on what the traditional trading systems can offer in terms of their usefulness to both regular and novice users. While the prospective traders are free to seek advice from various people promoting themselves as experts, they are actually putting their financial fate in the hands of few persons, with little or no guarantees. Here, the most inexperienced traders suffer the highest risk, as the ins and outs of asset trading are not learned overnight. Instead, HedgeTrade seeks to unify experienced and prospective traders and have the predictions safely secured on the blockchain. This is combined with the system of incentives which can make the professional advisors stand firmly behind their advice. If the prediction is proven to be right, the person who made it stands to earn proceeds from the purchasers. In case of incorrect predictions, the users who purchased the prediction are compensated from those who made the prediction.
- As the HedgeTrade seeks to democratize access to the trading expertise, it creates an ecosystem based on the win-win situation in which the users of various profiles enjoy a high level of protection against manipulation and unplanned financial losses. Today, traders who offer advice and access to their data-based predictions are in no way bound by the accountability concerns towards those who seek their services, other than their interest in preserving their reputation. This created the need for the HedgeTrade to offer a secure and fair play environment which not only minimizes the risks for the users, but restores their faith in trading as a business practice. As the hedge-type investments are often exposed to harmful price movements, HedgeTrade platform seeks to counter these price fluctuations by providing the users with an opportunity to lower this risk. This is done by gaining access to the trade data generated by the very community built around the platform. In that process, barring the door to less scrupulous traders should help HedgeTrade gain a transparency edge over the traditional trading platforms, which is further enforced by the blockchain’s reputation as an immutable and tamper-resistant record keeping platform.
- Finally, HedgeTrade is uniquely designed to meet the needs of the crypto market as a whole, which should allow it to tap into the potential of a booming financial technology. The HedgeTrade platform developers hope to see their creation ride on the wave of popularity of peer-to-peer trading options which gained prominence with the rise of blockchain. With HedgeTrade, the users should rely less on brokers and third-party financial institutions, allowing them to try their hand at trading without having access to significant funds and regardless of their geographical place of residence. In time, these benefits should propel HedgeTrade and similar platforms to the forefront of the blockchain-powered digital economies.
How Does HedgeTrade Work?
HedgeTrade operates based on the interaction between the blueprints and smart contracts on one hand, and the community members on the other. In this manner, the platform delivers unity of its technological and human capital, all made possible with the help of the blockchain technology.
- The key concept the HedgeTrade revolves around is a blueprint. It is defined as a specific prediction that has been made by a user on a particular financial instrument. Blueprint creation is made possible with the support of the HedgeTrade system, which stores them and performs their evaluation upon the expiry of the date they are relevant for. Once the expiry takes place, HedgeTrade will designate a specific blueprint (prediction) as either correct or incorrect, and distribute appropriate rewards to the prediction makers or the blueprint purchasers accordingly.
- Created blueprints are sent to the HedgeTrade’s smart contracts which are deployed on the blockchain. As such, the saved predictions as well as the creator’s earlier performance record remain resistant to tampering or modifications.
- Upon the creation of a blueprint, users are required to state two target price values, one of them being the entry one and the other the exit value. These will be appraised in relation to a pre-defined date by the HedgeTrade Oracle, which functions as an automated system that appraises the trade results based on the provided information. Evaluations are made based on the external information provided by third parties. In any case, the rewards in case of correct prediction come in form of HEDG tokens sent by any user who purchased a specific blueprint.
- Blueprint purchasers who feel that a particular prediction has some value for them are also entitled to payment in case the purchased prediction is proven to be incorrect upon its expiry. The compensation in HEDG tokens is paid to the initial ten users who purchase a blueprint.
- HedgeTrade features a ranking system called the HedgeTrade Ranking and Score, in which the traders are ranked transparently based on their trading history, the rate of successful predictions and the quality of information they provide. In this manner, HedgeTrade aims to weed out the less reliable blueprint creators and provide the buyers with an easily verifiable system which promotes transparency.
- Creation of a blueprint does not entail an obligatory minimum stake in HEDG tokens. In turn, blueprints submitted without a stake will not be made available/visible for purchase in the HedgeTrade’s Blueprint Market. Yet, they can still improve a creator’s general HedgeTrade Ranking and Score.
HedgeTrade’s Underlying Economic Model
Despite being concerned with information related to trading, no actual trading with cryptocurrencies or other assets in the manner resembling cryptocurrency exchanges is currently possible on the HedgeTrade platform. The reason for this is the fact that HedgeTrade is all about providing access to information, not to specific assets. The only thing resembling genuine trading is the one done with HEDG tokens, which takes place in the following situations:
- HEDG tokens can be purchased with BTC
- HEDG is needed when submitting a blueprint for evaluation and sale
- When a user purchases an actual blueprint featuring information on trading
- In case the system evaluates a blueprint as correct or incorrect upon its expiry. There is also a neutral state of a blueprint which happens if the entry point value was not reached within a set amount of time.
The payout system is organized along the following lines:
- In case a blueprint is deemed successful, HedgeTrade will charge a 50% commission fee on the total amount HEDG tokens that users spent to buy a blueprint, while the rest goes to the blueprint creator.
- In case a blueprint is evaluated as successful but it lacked buyers, a 5% commission fee is charged on the total amount of staked HEDG tokens.
- If a blueprint is considered unsuccessful, a 50% commission fee will be charged on the total amount of HEDG tokens that the creator staked, with the rest being sent to the users who bought the blueprint.
HEDG Token Availability
HEDG tokens are not available for direct purchases or exchange operations from the HedgeTrade Platform. Instead, they can be acquired on it by depositing BTC into a user’s account wallet, followed by using these funds to buy HedgeTrade blueprints that may entail payments in HEDG tokens.
An alternative option is to buy HEDG tokens from one of the cryptocurrency exchanges which support it, such as CoinTiger, STEX, and other markets.
As of August 2019, the currency’s market cap was valued at USD 255 million. At the same time, some 288 million HEDG were found in circulation, out of the total planned supply which is capped at 1 billion tokens.