Hedget Research Report
Hedget is a decentralized protocol for options trading. By putting up collateral, users can create and trade different option series on chain. Decentralized option products allow users to hedge risk. The protocol supports Layer2 on existing blockchains like Ethereum to enable faster, cheaper, and more complex transactions. Hedget believes that with the growth and maturity of decentralized finance sector, the risk-mitigating DeFi protocols like decentralized options are necessary building blocks. Hedget Foundation issues HGET token as platform token for governance and other utility purposes.
It was reported that on August 25, 2020, Chromia has launched Hedget, a decentralized options trading protocol. At present, Hedget has completed the institutional round of financing. The main investors in this round are NGC Ventures, FBG Capital, D1 Ventures, Alameda Research, and we will introduce these powerful investors below.
NGC Ventures: Founded in late 2017, NGC Ventures is a blockchain technology venture capital fund set up by professionals in technology, traditional capital market, management consulting and other fields. As one of the owners of the largest institution in cryptocurrency industry, NGC’s investment portfolio includes Top blockchain projects like Zilliqa, Bluzelle, Certik, Oasis LABS, paypal Finance, Algorand, Elrond, Skale LABS, Avalanche, xDai, etc. NGC has offices in Singapore, San Francisco and Shanghai.
Alameda Research: Alameda Research is an investment institution founded by Sam Bankman-Fried, the founder of the decentralized exchange Serum and FTX. Hence Hedget has the strong support of both exchanges, and will launch its IEO on FTX.
D1 Ventures: D1 Ventures fouces on cryptocurreny assets investment and consulting. D1 Venture supports the future of the crypto economy by its assistance in organic market construction, global market intelligence and insights, strategic consulting, and meme technology. D1 Ventures has invested in Graph, Thorchain, Tellor, Nest, and Near.
FBG Capital: Founded in 2015, FBG Capital is a digital assets investment company founded in Beijing, and has invested in top blockchain projects like Oin, Sperax, FTX Exchange, and Dapp.com.
Together, these four investors have invested and incubated Algorand, Skale LABS, xDai, Oin, Sperax, FTX Exchange, Near, Nest, Serum and other projects brilliant both in technology and rate of return on investment. These investors can also guarantee Hedget’s capital, technology, and operation in the future.
Hedget vs. FTX vs. Deribit
Since there are not many successful decentralized option exchanges, we choose FTX, a decentralized financial derivatives exchange, and Deribits, a centralized options exchange to compare with Hedget, a decentralized options exchange. By comparing the current circulation market value, total market value, and market share of option trading of the three exchanges, we can learn Hedget’s market potential in the future.
FTX: Founded in May 2019, FTX is a global-leading, secure, innovative, efficient, and professional digital assets derivatives trading platform created by and for traders. At present, FTX has listed more than 70 contract trading pairs and 6 index contracts, and its only platform token is FTT.
At present, the total market value of FTX Token is $386,370,518, and the circulation market value $19,125,340. The chart below shows the changes of its total market value since its listing. From August 31, 2019 to August 31, 2021, the market value of FTX has increased by 10.6 times, from $33,271,664 to $386,370,518 in one year.
Deribit: Deribit is an internet-based BTC future and option trading platform. It’s founded by CEO John Jansen in 2016 with its based in Amsterdam, the Netherlands. Deribit has not issued coin/token yet. In the last equity sale, Deribit platform was estimated at $350 million. Providing various future and option trading services, Deribit is an innovative and mature centralized options exchange, and accounts for 80.6% of the options market.
Compared with FTX token (FTT), the total issuing amount of Hedget token (HGET) is 10 million. Which means if Hedget’s market value reaches that of FTT, the price of each HGET can be $386,370,518/10,000,000=$38.64. Even if Hedget’s total market value only rises to half of FTT in the short term (since token’s initial circulation is rather few, this is the estimated total market value of full circulation), the price of each HGET can rise to $19.32, nearly $20. In my opinion, we can be optimistic about the price of HEGT which is empowered by such strong investors and the hot DEX concept.
When compared with Deribit, a centralized options exchange, since Deribit has not issued platform token/coin, they can not be compared in circulation nor total market value. However, by comparing the market condition and the current valuation of the decentralized financial derivatives exchange FTX and the dectalized options exchange Deribit, we can predict the future market performance of Hedget exchange and the price of HEGT.
At present, Deribit dominates the options market with 80.6% and FTX with 7.7%, however, FTX has a total market value of $386 million, which is higher than that of Deribit which is estimated to be $350 million. From the comparison we can learn:
1.Investors’ confidence in the future of option DEX and CEX.
2. Investors’ preference and high evaluation for DEX (the soaring MINI, the hot CRV and BAL all prove this point).
Therefore, when Hedget with a stronger investment background and more powerful functions comes online, Hedget token (HGET) will perform better than FTX token (FTT). Over a period of time, when investors discover the advantages of DEX against CEX (just as it takes some time to realize the advantages of Uniswap), the market share of decentralized options exchange like FTX and Hedget will grow rapidly and become much more higher than the current 7.7%. And we can expect a much better price of HGET then.