X8 AG commences with the development of the native user portal.
PRICE DISCOVERY IN THE CRYPTOCURRENCY EXCHANGE ECO-SYSTEM
It has been almost since the beginning of blockchain that participants in the market have used cryptocurrency exchanges for trading and transacting their digital assets. These exchanges enabled quick access to the market to almost anyone, many times, even without identification. The number of exchanges grew quickly, which in turn gave to the prices of the digital assets an opportunity to find an equilibrium more efficiently.
Despite this, significant discrepancies between the prices of the same digital instrument remained. One could buy and sell Bitcoin in two different exchanges and obtain a different price. Arbitrage trading strategies were a natural development in this environment, where investors tried to take advantage of such circumstances and make a profit out of it. Currently, a good part of the crypto market price discovery still functions based on this mechanism. While adding more exchanges can contribute to a reduction in market price uncertainty, this process depends on the law of diminishing returns. The efficient way for the development of the market can include only so many exchanges before adding more of them outweighs the aforementioned benefits due to increasing complexity of the marketplace itself.
AIMS OF THE X8 PROJECT’S USER PORTAL
The X8 project set out to develop a stable coin solution. In the context of digital assets, a stable coin’s main feature is price stability. Price stability is inevitably linked to how precisely the price of any stable coin moves in reference to the assets backing that stable coin. In the cryptocurrency exchange environment this link is somewhat blurred. This means that in such environment investors have difficulty knowing the exact internal value of a stable coin and they have to follow a general consensus created by the market. Investors need to rely on the market mechanism to tell them the precise value of the unit of a stable coin on any particular cryptocurrency exchange. There is little they can do to verify if the price reflects the value of the assets behind a stable coin.
One of the aims of the development of the X8 user portal is to address this particular issue. Regardless of how users would decide to use or transact stable coins among themselves, the information about the price of one unit would always be available through the user portal. X8 will work toward optimizing this functionality so that the information of the price would also be updated on a continuous basis, thus removing the uncertainty about the previously stated discrepancy of prices in the open market.
The project will work to combine several mechanisms in order to comply with the legal requirements as regards to KYC/AML. At the onboarding stage we plan to have integration of a facility capable of connecting the user interface to more than one KYC provider. The aim of this is to increase redundancy on the one hand and also to allow for cross-checks on the other. Maintenance of the user base integrity on a frequent basis is another reason for taking this approach. Smart contract design is also planned to work in conjunction with these features, where each user address will be verified before allowing the user to freely use stable coins. The design of the stable coin will therefore follow the Dual Smart Contract principle in which one part of the smart contract will serve transaction purposes while the role of the other part will be to confirm the identity and the eligibility of the counterparties before the transaction process would be allowed.
In addition to the above, the project aims to include further controls in the system. One of them will be a blockchain monitoring and analysis tool, the purpose of which will be to enable an ongoing evaluation of risks associated with each particular user address. Our objective is to prevent scenarios like scams, frauds and illegitimate use of the products. With the assembly of these features, we aim to discourage bad behaviour within the overall system and comply with the provisions of the Anti-Money Laundering Act (AMLA). In specific cases of a breach of rules the system will be able to block such activity and enforce corrective measures.
BENEFITS FOR THE USER
The portal will generally be focused on providing a user-friendly stable coin product experience. Users will be able to access the X8 user portal through our website. The design will be optimized for both mobile and desktop users.
For the time being and from the perspective of technical development the technology will enable users to obtain stable coins via FIAT currencies or the main cryptocurrencies such as Ether and Bitcoin. Definitive instrument coverage will depend on the overall compliance for each conversion route. The project will inform its followers about the instrument coverage to be supported by the portal.
The portal will also include a utility function which will allow users to deploy their X8X utility tokens in order to benefit from reduced fees as per the Whitepaper of the project. Users will be able to manage their utility reserve within the portal. For users who will register without the X8X utility tokens, the utility token requirement will be processed automatically by the user portal.
One of the main benefits for the users in this design is that they will be able to participate much more directly in the stable coin system. This means that user activity will be a key driver of the minting/burning process for the stable coin. The underlying price of stable coin units obtainable through the user portal will directly reflect the changes in the reserves of the stable coin. This means that the price of the stable coin as presented in the user portal will be the benchmark price that will enable the most reliable and effective entry and exit for all users.
The development of the user portal started in July 2021. The starting phase of the development focuses on the upgrade of the Smart Contract design and the compatibility of the new Smart Contract with the payment processor that has already been developed. In parallel, the wireframes and the front-end layout are also a part of the initial development phase, which is currently underway.
After the completion of the first phase the user portal will reach the point of alpha deployment for testing. During the second stage we will be adding more features to the portal including, but not limited to, price table charts and graphs for easier monitoring of activity within the system. The community will be invited to cooperate and provide feedback during this stage.
The first two stages are planned to be completed during the autumn of 2021. In the final stage we will be looking to thoroughly test and stress-test all functionalities and prepare the user portal for deployment and probably announce some further features. The development of the user portal will continue also after this point and will focus on adding more features to the portal that will be in line with the long-term vision of the project.