Global currency trading is one of the largest markets in the entire world. The Foreign Exchange Committee published a volume survey in October 2021. The average daily volume in USD of foreign exchange trading was over $989billion, with monthly averages in USD topping $20trillion [1]. Bringing this market to the world of cryptocurrency has the potential to result in significant benefits to traders and investors. Handle.Fi and their FOREX token aim to do just that.
Handle.Fi
One of the major tenets we at CoinBusters try to follow is to get into small or new projects when they are significantly undervalued. This helps to offset risk as chasing things when the market is pumping can lead to big losses. Small projects can be risky but offer the potential for significant upside. In previous posts we’ve shared some of what we use to evaluate projects. In general we look for a working and established product, a unique offering, and a decimated price. FOREX (Handle.Fi’s token) has all of these. With a market cap less than $2million if realized (according to CoinGecko, although this number is likely low), it could become a gamechanger for your portfolio.
Handle.Fi is a decentralized multi-currency stablecoin protocol on the Ethereum and Arbitrum network. In it, users can borrow multi-currency stablecoins known as fxTokens. fxTokens are collateral backed stablecoins representing a range of currencies. Each of the currencies is soft-pegged to the value of that currency relative to USD. At the time of this writing handle.Fi offers the following fxTokens:
– Australian Dollar (fxAUD)
– British Pound (fxGBP)
– Chinese Renminbi (fxCNY)
– Eurodollar (fxEUR)
– Phillipine Peso (fxPHP)
– Singapore Dollar (fxSGD)
– Swiss Franc (fxCHF)
– US Dollar (fxUSD)
fxAUD, fxPHP, fxUSD, and fxEUR are currently the only active ones, with the remaining being developed currently.
Why we care
The FOREX (foreign exchange) market is the largest financial market in the world. With trading volumes over $6trillion per day [2], it dwarfs even the largest transaction volumes the entire cryptocurrency market sees. Think about that for a moment. This market is so vast and immense that if 1% of it even came to cryptocurrency it would represent > $66billion in volume.
A common reason for traditional finance related activities to enter the blockchain space is because of the decentralized and permissionless nature. Wall Street employs special rules to the rich and mighty and this certainly applies here. The vast majority of the global finance community is unable to physically trade FOREX markets because their local banks and financial institutions do not offer them access to it. Using blockchain technology and pegged tokens removes this barrier to entry for the retail investor. This is incredibly important because the volumes referenced above exist largely without retail activity. For investors looking to gain access to these markets, doing so via the blockchain offers a simpler and more accessible avenue.
FOREX – The opportunity
handle.Fi’s roadmap has some incredibly interesting features in it. Some of these have the potential to drastically increase the use and value of the protocol in the coming months. With the extremely low price at the moment, this is very appealing.
handle.Fi is close to deploying leveraged trading between various multi-currency stables. The volatility of forex trading is far less than what is commonplace in cryptocurrency. This capability is paramount for the platform’s success and is set to launch any day now. Leverage trading becomes a problem on volatile assets, as is seen across the cryptocurrency market through Bitcoin liquidations and the like. When used properly an investor can amplify their collateral, allowing them to potentially see gains as if they had significantly more money invested in the project.
At the moment, fxTokens can only be minted on handle.Fi’s platform through deposited collateral within the application. handle.Fi is integrating with existing money markets to offload many of the headaches that exist with platform development – handle.Fi will generate the tokens but the money markets will drive their own userbases to the protocol.
The real investment play here is handle.Fi’s FOREX token.
Users can stake FOREX tokens for veFOREX, the voting governance token. veFOREX accrues revenue through platform use, namely minting, swap fees, etc. The project is aiming for protocol owned liquidity (POL) in 2022 and has a variety of other fee/revenue mechanisms (liquidations, onramp fees) that will further benefit FOREX/veFOREX holders. The maximum supply of FOREX tokens is actually quite low – 420million.
There is a somewhat higher amount of initial allocations to the seed round and strategic partners than what we generally look for. However, these rewards are released on a known vesting schedule and do not appear to be overly penal from a protocol standpoint. The seed round was around $.07, which is more or less where the price is today. Over 40% of the total supply is reserved for rewards which are likely to be used to attract liquidity after the build of the protocol is complete (still being developed!).
Lastly – a huge component of protocols we look at is who physically is backing them and developing them. The handle.Fi team has a significant amount of real-world experience in the traditional finance sector. The founder has over 20+ years of experience as a broker and trader capturing hundreds of millions of dollars in total managed assets. The venture capital funds backing this project include Gate.io, DEFI Capital and over a dozen more major players in the space. This implies that liquidity isn’t likely to be much of an issue with that type of backing. If handle.Fi delivers on the build out of this product and is able to attract liquidity to operate the platform… watch out.
Small projects are not without considerable risk. As with anything – you need to know what you’re getting into. The gains of small cap projects can be enticing, but the risk is real. handle.Fi is a small project with a lot of work to do and a lot of potential upside.
1 – https://www.newyorkfed.org/medialibrary/Microsites/fxc/files/2021/octfxsurvey2021.pdf
2- https://www.bis.org/statistics/rpfx19_fx.htm
*Note some of the research presented here was taken from some great discussion/threads on social media
