bZx is a protocol on the Ethereum blockchain for 0x-standard relays and on-chain DEXs. The bZx protocol allows DEXs powered by both 0x and Kyber Network to offer shorting and leverage. bZx currently offers the most variety of tokens for lending, shorting, and margin including ETH, ZRX, EOS, BAT, REP, DAI, OMG, REQ, ZIL, LINK, DGX, PAY, and dozens of others. The protocol consists of an open base layer that performs the essential functions of escrow and interest disbursement and a second layer that can be freely built upon to create advanced functionality for the base layer, including ultra-fast margin settlement and pooled lending. Unlike other solutions, the bZx protocol has a functioning high-speed margin settlement system on the second layer, allowing leverage and shorting of even the most volatile ERC20 tokens.
WhaleLend is a VC-backed crypto company based out of Finland. WhaleLend specialize in building programmatic investment products for cryptocurrencies. Their first product is an algorithmic margin lending service which enables people to earn a secure passive interest income on their crypto holding, irrespective of the price movement of the cryptocurrency itself. This is achieved via margin funding on exchanges. The invested assets are protected by a forced margin liquidation mechanism meaning that the borrowers cannot default. You can think of WhaleLend as a high-yield saving account for cryptos, where:
- Interest is paid daily
- Interest rates fluctuate daily
- Interest is always paid in the same currency as your investments (e.g. if you invest in ETH the investor will receive ETH interest)
- The service is also provided for BTC, BCH and LTC
In addition to offering this service to the general public, WhaleLend also provides the product to crypto trading funds to manage their capital inventories, to wallet providers to white label as a bolt-on value-adding service, and to ICO companies to manage their cryptocurrency assets.
A New Era of Liquidity for Shorts and Leverage
Partnering with WhaleLend is a major step forward for the bZx protocol as it solves the chicken-and-egg problem of bootstrapping initial liquidity. Armed with millions of dollars in inventory, WhaleLend can provide practically unlimited liquidity for anyone looking to engage in shorting or leverage. Anyone can still use the bZx protocol to engage in margin lending using platforms such as Bamboo Relay. However, the liquidity from WhaleLend means there will be a steady base for market makers and traders to draw from, allowing the ecosystem to develop and thrive.
Benefits of bZx to WhaleLend Users
Currently WhaleLend provides its services in two different forms: Direct Deposit and API. The Direct Deposit service allows the deposit of funds directly to WhaleLend where it is then forwarded to centralized exchanges such as BitFinex. The API service users to send the funds to BitFinex without intermediaries. Collaboration with bZx means increased security for WhaleLend’s users. By integrating with bZx, WhaleLend now has the ability to provide its services without requiring users to give up custody of their funds. This represents a major evolution in WhaleLend’s product offering.
It is completely possible and simple to use the bZx protocol to lend out your cryptocurrencies directly without any intermediaries. WhaleLend allows users to capture significant additional value with its services.
So how does WhaleLend allow users to capture more value?
- Algorithmic reinvestment: Lending rates have peaks and troughs that can vary significantly. If a user engages in lending themselves, it’s likely that they will lock themselves into suboptimal lending rates. When WhaleLend sees a spike in the interest rate, it can quickly move you into longer term loans, locking its users into the higher interest rate. Over time this results in substantial gains over strategies that blindly take the market rate.
- Set and Forget: With WhaleLend, users don’t have to constantly monitor interest rates and loan expirations. Reinvestment happens automatically at the best possible rate. Often, margin traders will release loans prematurely. If lenders are not paying attention and renewing loans right away, this could result in significant stretches of time where they are not capitalizing on the time-value of their cryptocurrencies. Without WhaleLend, a user wanting to engage in continuous margin lending would need to monitor the lending market several times a day and set up email alerts when the loans expired. Now with WhaleLend, they simply let the automated API handle all the monitoring.