coinbase bankruptcy

Coinbase bankruptcy, cryptocurrency meltdown – looking for the right coin and a safe place to trade then look no further. The answer is hiding in plain sight – the coin is called DeFi Coin (DEFC) and the place to trade is new DEX, DeFi Swap. Bear with us while we explain.

Exchanges make the crypto go round

Exchanges are one of the most profitable segment of crypto so you will not be surprised to discover that this is where the big hitters in future crypto returns are to be found.

But didn’t Coinbase and Robinhood exchanges see their stock prices plummet as they announced results that underwhelmed on the back of falling revenues as traders pull in their horns.

That’s all true but you are looking at the wrong sort of exchanges.

Are centralised exchanges missing a trick?

It is one of the most stunning ironies of crypto that the infrastructural gatekeepers of the crypto industry are anything but decentralised. On the contrary, they are highly centralised entities.

Coinbase is arguably one such entity. The US-based exchange has grown at a phenomenal pace because of its easy to use, albeit expensive, exchange app, has literally onboarded a generation of crypto newbies.

Coinbase is no longer just an exchange either. Unlike exchanges in the legacy world, Coinbase is also a market maker. It is also a custodian. And it aspires to be a money lender too, although ran into roadblock on that one, when the Securities and Exchange Commission warned it in no uncertain terms not to proceed with the launch of its Lend product.

And you may have heard that Coinbase recently launched a beta for its NFT marketplace as it looks to bring unto itself some of the minting and trading activity that for now tends to orbit around Opensea.

Cryptoassets are a highly volatile unregulated investment product.

Is the “Coinbase premium” worth the bankruptcy risk?

To be fair to Coinbase it has worked hard to build a reputation for security and trust – the so called “Coinbase premium”.

So even though experienced traders might publicly sneer at Coinbase, they are likely to use it to park funds before moving onto or off less expensive trading venues. That alone speaks to the pivotal role it plays, at least in the US. And the US is still the largest crypto market in the world, so that matters.

But, if like me, you have Coinbase in your portfolio, you will be feeling some pain right now, and it will be one of the reasons why you avoid looking at your profit and loss statement.

However, this is crypto, so you would expect that there would be an alternative to centralised exchanges such as Coinbase.

Well yes there are – decentralised exchanges (DEXs) emerged as key venues for the trading of ethereum ERC20 tokens. DeFi Swap is the newest and you could get in on the ground floor. The initial coin offering craze of 2017 was made possible with the help of DEXs such as EtherDelta.

DEXs like DeFi Swap set to eat the lunch of CEXs – and make super profits

Today, there is plenty of consumer choice as far as DEXs go, with DeFi Swap one of the newest and best. And crypto holders have been flocking to them in droves.

The fees are lower than on CEXs, you get paid for putting up liquidity on the exchanges and you can use them to enter the world of DeFi, where staking and yield farming are available to investors seeking a passive income stream.

Coinbase bankruptcy risk: not your keys, not your crypto

Above all though, it is the fundamental difference of being able to trade without ever having to hand over your token to a “trusted third party” that is the number one attraction of DEXs.

Instead of there being an order book matching buys and sells, buyers and sellers meet each other directly in a peer-to-peer network setting.

The import of that novel approach comes down to self-custody – you remain in charge of the private keys that secure your crypto.

Still, generally speaking, consumers are mostly fairly happy to pay higher trading fees for the peace of mind that Coinbase “just works” and has never been hacked.

Coinbase admits customers assets could be seized by creditors

But those comforting notions were put to the sword after Coinbase announced poor results followed by a filing in line with a new reporting requirement for publicly listed crypto firms.

According to the FT, the filing stated that customer assets “could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors”.

Despite there being ostensibly very little risk of Coinbase going bust given its sizeable levels of cash on hand, CEO Brian Armstrong rushed on to Twitter to deny the rumours of impending doom and the seizure of the bitcoin, Ethereum et al that it owns on behalf of its customers. Armstrong’s intervention didn’t stop the share price falling 23%.

Why you should buy a DEX asset like DeFi Coin (DEFC)

So we think that DEXs are in a good position to be the future of crypto trading and you don’t need to buy shares in a listed company to get exposure.

DeFi Swap has it all, in our opinion. It provides an APR on its native coin DeFi Coin, ranging from 30% (30 days staking) to 75% (360 days).

Liquidity providers are entitled to a share of 2.5% of the pool in proportion to the amount of liquidity being provided.

There is a buy and sell tax by the contract of 10%, but make sure to set the slippage to 11.5% for your trade on the DEX to go through. The tax is designed to encourage long-term holding, with 50% of that amount going back to all token holders. There is also a manual burn policy to underpin token value.

So in addition to maintaining alignment with the dictum “not your key, not your crypto” by guarding your self-sovereignty, you also are a direct beneficiary of the success of the exchange in a way that shareholders are not.

You heard it here first: buy DEFC.

Cryptoassets are a highly volatile unregulated investment product.


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