Ethereum Volatility Hedge Hack with the BANKEX Trading App


Hi and welcome to the BankEx Trading Demo. In this screencast, we’ll show you how you
how to use the BankEx Trading Trading application to trade Ethers for dollars. How does the Trading App work? The app is written using Smart Contracts on
the Ethereum Network. In this demo, we will use Rinkeby, a testnet
on the Ethereum blockchain system. This smart contract is built in Solidity and
is available to users so they could review and understand the function of various Etherium
applications. The smart contract has a UI that allows users
to try it out in test mode. To get to the UI, you need to click on the
BankEx link in the demo. To get to the Rinkeby blockchain, you need
to install the MetaMask plugin and log in. Here we have a MetaMask Wallet. In MetaMask this product is available in the
main Ethereum blockchain network, but for our demonstration we will use Rinkeby. To use the demo, your Rinkeby balance must
be positive. Here we see a positive Ether balance in the
wallet. After we log into the MetaMask wallet, we
need to refresh the page. Next, we go to the demo interface. In this interface we can see our balance in
the window here in Ethers to dollars. Next, we see the exchange rate for Ethers
from the automatically updated Bitfinex Exchange. You can also trade Ether to Bitcoin. In this demo version, we can see active orders
and open positions. Here we see that there is an open SELL position
for Ethers to dollars. The open position has the value of $301.51
for 1 Ether. We see the size of the position. The minus sign means the position is open
for sale. We will be hedging the risk of the decreasing
value of Ether against the dollar. This ‘Unrealized Profit Loss’ is a profit
that the user will receive when the position closes. The ‘Realized Profit Loss’ is a realized profit
on an already closed position. The exact amount of money will be added to
our demo user account. Here we see a ‘’close’’ button to
close the position and the event log in the system. We need close the position when we want to
start a new order. Let’s place an order now. Begin by pressing the ‘place order’ button. Next we will see the ‘entry’ window. We can enter a position using two instruments
– ETH to dollar or ETH to BITCOIN. Next we need to choose what we would like
to do – either to buy or to sell. You might want to ‘SELL’ in two cases:
1) when you are relying on the decreasing exchange rate between Ether and dollars and
want to make a profit from this, or 2) when you have Ether and want to know their dollar
value. The user can choose “sell” and input an
order size according to the value of the portfolio to be hedged. The second option, of course, is the ‘BUY’
option. This is for when a user wants to make more
profit from the growth of the exchange rate between ETH and the dollar. This is a classic “Contract for Difference”
tool and it is used when a user doesn’t have open positions in ETH or dollars. In this case, profit or loss corresponds to
an actual trade as if the user had a contract in the real market in ETH or dollars. This is a CFD. This is a kind of analog to certain SWOP trades
in which a user is included in a contract that can deliver profit or loss depending
on the instruments with which the client buys the SWOP. For example, there is a total return SWOP
– this is when a user receives the full exposure for any given financial instrument. After we chose the direction of the transaction,
we need to select an order type. BankEx offers two types of orders: a market
price order and a limited price order. Next is the ‘order size.’ For example, we can add .005 ETH. It is essential that the order size be consistent
with the actual write-off from the balance because we have to use this balance as a guarantee
for possible user losses. When the user closes the position, he will
return the deposit with profits or losses. This deposit is placed with the aid of leverage. Here we can see that the available leverage
is 1 to 2 or 1 to 3. Next, we click the “Submit” button to
create an order. Because the demo works in blockchain, MetaMask
will initiate automatically after the order has been created and it requests to enter
the blockchain system. To make a record of the transaction, we click
“Submit” and mining for the operation will start. The mining of the block begins and we can
see the transaction progress – that is how it’s recorded. This is very important. This way the user can see all his transactions
and this builds credibility of the whole risk hedging system. Finally, we can see here that the size of
the position is consistent with the order that we made when we entered a position. If we want, we can go to the hash of the operation
and here we can see the source of the transaction, that is the address of the user MetMask wallet
who just conducted the operation. We can also see where the transaction will
be sent. Here we see that our transaction was sent
to the wallet of the contract that has the code of this demo version. When we are done, we will get two confirmations
that the operation is complete. After this we can go back to the demo. Take a look here – we see that size of our
position just became .01, which means it was sold. If you use BKX tokens, there will be no Ether
commission for the transaction. And that’s the demo. We’re BankEx, proof-of-asset-protocol. Thanks for watching. Stay tuned for more updates and demos.

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