But WandX is less than one week from going live on their trading platform, and their github is filled with all kinds of exciting goodness like options contracts, and you’ll need to buy WAND to use their platform. WandX’s platform allows you to create, buy and sell baskets of cryptocurrencies: it’s a decentralized exchange that allows you to make your own ETFs of ERC20 tokens!
Roadmap for 2018
WandX looks like it will be the first DEX to offer on chain put options, which is going to be a game changer for token holders.
This team has been quietly chugging away, with a nano-cap of $5.9 million on coinmarketcap. If you want to be able to use their platform once options trading is available, you’ll need WAND to do so, and it is very inexpensive right now.
This is not meant to be investment advice. Do your own research before using complex instruments like options.
Creating a More Robust Investing Platform on Ethereum
An incredibly important feature WandX is bringing to the ethereum blockchain is this: the ability for a nontechnical user to create an ERC20 token.
The ERC20 token is one of the basic staples of the ethereum blockchain. There are 48 ERC20 tokens listed under “Token” on etherscan.io, and over 10,000 ERC20 contracts written on the blockchain. The standard allows for tokens to be more easily traded between DApps and gives a framework for developers to begin their projects with more direction. It’s secure and relatively simple.
But ERC20 tokens aren’t easy to create for less technical users. I’m currently incapable of writing one, although I understand portions of the code.
I can literally have all of my cryptocurrency not just on one blockchain, but in one ERC20 token. That’s powerful.
Why This Matters
The prevailing investment thesis of the past year has been based upon Joel Monegro’s USV post on Fat Protocols, a must read for anyone who is buying cryptocurrencies for speculation or investment. In Fat Protocols, Joel argues that the value in cryptocurrency will gather at the protocol level-this would be BTC, ETH, Steem, NEO, and any other blockchain that can host apps and DApps. For Joel (and presumably the fund he recently started), the best ROI is in these tokens, where one has broad exposure to the market but diversification of risk.
If they are right, and app tokens are where a great deal of value will accrue, then using WandX to create ETF baskets of these will be a great way to diversify across tokens without holding just the underlying blockchain token. One could put together a basket of tokens in an area he is confident about: say, blockchain gambling or “tokens with underlying price-to-book value exceeding their current market value”, or any combination that they believe in, and suddenly one has a sector conveniently covered.
Be fearful when others are greedy, and greedy when others are fearful
The “fat protocol” thesis has become such gospel to the cryptocurrency community, with the flipside “95% or more of ICOs will fail” as a major belief of that gospel. That distinction is worth investigating further, as it is parroted around by people as if it is self evident.
It’s this “certainty”, coupled with sub ICO trading of recent tokens, that makes this the perfect time to begin intelligent accumulation of ERC20 tokens. The market “price” of many tokens is affected by skewed sentiment-not a change in the underlying value. If you had hoped to use an ERC20 token, or done your due diligence one why a particular token may be useful to you one day, this is a good time to consider buying some on sale. There are even some app tokens that are currently trading below the book value of the ETH and BTC they hold.
WandX makes it easy to build your token portfolio, which you can then place on their decentralized exchange and sell. If you decide to hold the token, you can, at any time, call a function that will distribute all the individual tokens into your wallet. WandX allows you to build an investment tower out of Legos and break it back down into individual blocks, which is especially helpful considering the ability to “use” tokens in DApps.
The Cuban Collar
WandX is also going to be making futures contracts and options available. This means I could make a basket of stocks that also hold options contracts within it, stabilizing the price over time. The most immediate use for this is for early investors in ICOs and founders who have their tokens locked up for a period of time. If one is concerned about a market crash before they can unlock them, purchasing some put options and reducing (or removing completely) downside risk is a smart move.
The Cuban Collar is one of my favorite stories of smart investing. When Mark Cuban sold Broadcast to Yahoo, he was unable to sell his Yahoo stock for a number of months. He used the options collar and “sold” his upside to protect his downside, and wasn’t greatly harmed by the 90% drop in value that Yahoo took before he was able to sell his Yahoo stock.
Without options, Mark would not be a billionaire. Even better, by selling the upside and buying the downside, this was basically cost neutral!
Wouldn’t you love to have the ability to lock in some of your ETH or BTC gains, especially after 2017?
WandX allows investors the opportunity to do exactly that.
Crowdsale is live!
If you’re excited about what WandX is bringing to the ethereum blockchain, you can support them by buying into their crowdsale. Check out their token sale page for more information, and of course do your own due diligence on the team and product before you put your money into it.
 “App tokens” is a good describer of most ERC20 tokens.
 I am not an investor, so if you decide to do something like this consult a professional who knows all the ins and outs of options collars.
 This article is not meant as investing advice and I am not an investment professional. I merely point out a product that is available and invite the reader to look at possible uses of it.
In 1990, the world’s first Exchange Traded Fund (ETF) was released.
Since then, over $2 trillion is managed in ETFs, which are an incredibly popular market. An ETF allows investors the ability to buy a related group of stocks or bonds in a convenient and low cost manner.
The ICO craze of 2017 has now surpassed $3 billion! The ERC20 token standard was created less than two years ago, and there are dozens (hundreds?) of startups that have created ERC20 tokens to fuel their project. My ethereum wallet has nearly two dozen! I have enjoyed the opportunity to be a part of this growth sector, participating in the ups and downs and (sometimes insane) twists of this exciting market.
Those ups and downs, however, discourage many from buying ERC20 tokens. But what if there was a way to easily hedge an ERC20 token purchase by using a ready made basket that included more well known cryptocurrency such as BTC and ETH? What if there was a way to buy a group of ERC20 tokens that are competing in the same space, to ensure you could get a piece of the winner and less downside risk?
A look at the prototype you can play with on the Ropsten testnet
With WandX, anyone can create their own mix of cryptocurrencies. This is incredibly powerful, as it allows for a bottom up creation of products that mimic the ETFs found on the stock market. ETFs have made it incredibly easy to buy baskets of equities divided into sectors, size and many more factors. The success of the product is reflected in the aforementioned $2 trillion plus market
There are two major ways this will be used by early adopters of WandX: hedging volatile tokens with more trusted coins, and making bundles of tokens that track groups of tokens centered on a common market sector or theme.
Let’s look one by one at each example.
ICO fund hedging
Many ICOs raised the majority (or all) of their funds in ETH or BTC. There has not been a sustained 80% drop in value of ETH or BTC since ICOs began heating up, but being 100% backed by these two tokens is extremely risky. Startups that raised a great deal of ETH may want to hedge their stash, and WandX will allow them to do exactly that. Instead of holding 10,000 ETH and watching the market swing wildly every day, a startup could put that into a portfolio using the WandX protocol that holds 25% DGX gold (less volatile than BTC or ETH), 25% Maker DAI (another stable coin), 25% of the native token, and 25% ETH.
Do you really want your startup’s funds to be this volatile?
Equal portions of this portfolio would be sold every month to keep the lights on and pay employees, with far lower price fluctuation and easier planning. Companies that routinely sell ETH once a month are vulnerable to an aggressive competitor shorting ETH before the expected sell date and therefore reducing the company’s stash unnecessarily.
With WandX, anyone is able to choose the exact mix of assets that works for them.
Diversification is a very good way to lower risk. As new tokens and platforms are released, it can be incredibly hard to follow and determine which will be the winners and which will be the losers. There is no S&P 500 equivalent broad market fund available right now for cryptocurrencies. With WandX, users can create their own ETF tailored to their desires. They can even sell that fund on the WandX’s decentralized market to others who may want that same mix of cryptocurrencies!
Here is a great example given on WandX’s page that demonstrates making a new token that is a combination of 50% BTC, 40% ETH, and 10% of an ICO token that is far riskier. This fairly simple example shows how WandX can simplify one’s portfolio. After creating this, one can either resell it on the WandX decentralized exchange, or break it up into its separate tokens again if desired. With one click of the mouse, one token becomes three again! This instant liquidity is an excellent feature that will help ensure rational pricing on the WandX decentralized exchange.
Let’s walk through another example. Say a user believes that payment tokens are going to be a major feature in the years to come, but isn’t sure which token to invest in. One option is to buy each token separately in equal amounts. This is a little cumbersome, and results in three separate coins to keep track of. Instead, using WandX, a user could create a basket holding Tenx, Plutus, and Tokencard, three companies competing in this space. This basket could be called “PayDApps” by the creator. The “bet” made is now on a specific sector in the blockchain, rather than specific tokens.
Furthermore, I can call a function on that basket at any time, and get those coins delivered into my wallet, allowing me to use their unique functions as necessary.
As more tokens are created, there will be more ways to bunch together groups that reflect shared attributes.
Beyond the Blockchain
Moving forward, WandX will go beyond Ethereum’s ERC20 tokens and allow for trading of tokens across blockchains. This will be incredibly useful! I’ve personally not had time to research into privacy coins, for instance, and don’t want to have to hold wallets in Monero, ZCash, and Dash, which is cumbersome and hard to keep track of. WandX will be incredibly useful down the road when it allows me to create a basket of privacy coins like this that will help me track the sector easily and with less risk than if I held one.
Of course, competition and decentralization are powerful tools. With WandX, somebody might focus on creating interesting cryptocurrency baskets to sell for WandX tokens, as a sort of blockchain John Bogle. Those of us who value our time would happily pay a small premium to get a basket of tokens that can be instantly liquidated into one address (currently, WandX only allows ERC20 tokens, but will grow beyond that in the future) if necessary, or held indefinitely as a group, to be resold on the market if desired.
WandX is easy to use, and doesn’t require programming knowledge. This walk through of the beta is helpful. The ease of use will encourage more people to adopt the platform and create their own tradable baskets.
Consider: right now, I have a few separate retirement accounts investing in the stock market, bitcoin, steem, ethereum and ERC20 tokens, and more. All of them have separate interfaces and require separate logins. WandX is going to bring these divided sectors together! You can check out their post on putting loyalty points on the blockchain
WandX will then act as a decentralized platform to create, buy, and sell these tokens to users. Will you be the blockchain’s John Bogle?
This article is the first in a series of active collaborations between the team and me. My voice and opinions remain independent.
 I realize that many users of Mt Gox didn’t trust it for quite a while before it imploded, but were stuck using it as few alternatives were available at the time.
 Other future plans include physical items such as wine and whisky.
2017 has been an exciting year for Ethereum, as ICOs have proven to be an incredibly successful way to raise capital. Markets-both centralized and decentralized-have grown as tokens for platforms demonstrate their value to users and entrepreneurs. The cryptocurrency space is rapidly developing into a mature, sophisticated market.
As markets mature, there is a need for more sophisticated trading tools. WandX is a decentralized platform on the Ethereum blockchain that will give participants the opportunity to create and trade derivatives on the blockchain, create portfolios of cryptocurrencies that help hedge risk, and create markets for tokenized assets on the blockchain. This article will focus on how WandX will allow users to create and trade derivatives.
Derivatives are well known by finance professionals and investors, but often scorned by the public. Options contracts are not used by most retail investors, and a high percentage of options expire worthless. They’re extremely volatile-offering high risk and high reward to speculators, yet serve a very important purpose to the market.
Farmers and oil producers are two examples of commodity sellers who buy futures contracts to ensure optimal price forecasting. Futures allow a farmer to have a guarantee he can sell his crops at a certain price. Farmers use these to hedge their income, meaning they’ll pay a small amount of money to ensure they don’t go broke if the price of their crop drops quite a bit, but neither will they get as much extra cash if the price rises a lot. Here’s an example of corn futures.
Speculators bring information to the market in the form of bidding. This information leads to price discovery, allowing parties to plan with greater confidence on the future of various assets.
This is the magic of markets: the opportunity for multiple parties to interact, exchange information and risk, and both come out ahead. WandX is bringing this capability to the blockchain!
WandX not only allows the buying and selling of options, but also the creation of them by users!
With options on blockchain tokens, people will be able to trade risk and better plan their futures.
Those who are paid in bitcoin currently have been enjoying a rapidly appreciating asset, but it is unlikely bitcoin will rise indefinitely. During periods of high volatility, bitcoin paid employees will be able to use options to stabilize their earnings, just like farmers do with futures. WandX will help startups and individuals to plan their spending more effectively, focusing less time on price movements, and more time on their core competencies.
WandX wants to put the derivatives markets onto the blockchain-not just cryptocurrencies, which is a much needed market, but “real world” derivative products backed by physical assets. This could include more “conventional” items such as whisky or art. On the more futuristic end of the spectrum is WandX CEO Abhinav Ramesh’sMedium post describing the possibility of energy markets using WandX to trade futures in carbon credits or create markets for recyclable plastic. This is the future that blockchains can bring us!
Finally, this is not investment advice! WandX is creating a very cool product using the decentralized powers of the blockchain, and I look forward to their team making some great products. The links below will help you get more acquainted with the project and even ask questions from the team.