Author: Manh Nguyen Tien

Published on: 2024-04-06

BlackFox and RWAs on Blockchain, why?

Quick heads-up

No tokens or new blockchain projects by us described in this post.

We are experimenting a way to make our trading more efficiently and below are our ideas regarding blockchain.

1. The reality of DeFi

Let’s face it, are you often scratching your head before Blockchain’s economies? Me too.

While many advocate and contribute all-time to get on that train (and that’s great, no offense),
many of us feel the inertia of staying behind. (No wrong on this too)

The latest trend seems to catch our attention: Real-world assets (RWAs).

It makes total sense to me when exploring RWAs topics because I would really ignore if Crypto (even BTC) or NFTs insist on being another special type of asset that people hope to replace Gold, Currencies (fiat), etc. It won’t.

Though I believe that RWAs on blockchain will facilitate more crypto adoption.

2. Why we didn’t start crypto trading

BlackFox did a research on crypto market in 2023.

Here is our official publication: Final Report & Backtest Results.

In addition to that, we tested our system live, real-trading with Binance.

Top reasons for us to not include crypto trading:

  • High trading fees
  • Profits liquidation complexity

Furthermore, traditional finance system has its own advantages:

  • Economics analysis: we think that it’s safer to bet on countries’ development (and related economic data) than Blockchain’s economies

  • Centralized markets: interventions from banks, financial institutions, etc. are necessary for a sustainable trading environment
    (then our job is boiled down to entering the trades on what banks have agreed upon)

Trading currencies is seen to be low-risk and more profitable for us, and EUR/USD is our main pair.

3. RWAs on Blockchain? What would change?

Let’s dive into what blockchain things making us explore DEX (decentralized exchanges) right now.

Recently I’ve found out these interesting projects that may help us involve in trading on DEX:

  • Synthetix: protocol to provide liquidity for a synthetic asset. Think of it like a way to create a financial asset based on RWA that has liquidity on blockchain. Short definition could be: on-chain derivatives.

  • Kwenta: a decentralized exchange using Synthetix. So that the exchange can allow to create a market based on RWAs (step 1 - create the asset with Synthetix, step 2: trade on blockchain).

  • EUR/USD pair on blockchain: a synthetic pair based on real EUR/USD exchange rates (fetched via Chainlink) and has on-chain liquidity thus can be traded, with margin (leverage) as well. On Kwenta.

4. What this means for trading?

At least for us, we’d imagine the following instant optimizations when trading on such DEX:

  • Access to deep and advanced liquidity: leverage, borrowing
  • Lower latency trading & reduced broker’s spreads (or even no spreads)
  • Overall system’s performance upgrades when integrating into DEXs

Most DEXs have API that’ll enable you to implement automated trading with ease, so algo trading will benifit a lot in these contexts. Especially for us which is already algorithmic and multi-account / automated trading by default.

In the coming time, BlackFox will allocate for testing and trading on DEX for better trades execution. This is only equivalent to adding another broker to our trading system. We expect profits boosting and more transparency of the operations.

Financial teams & Investors if interested, contact us via: [email protected].