Bitfinex: The Crisis Evaluated Lord of Liquid
Trading for Bitcoin and Ethereum
Crypto-currency markets suffered a major sell-off in Bitcoin and Ethereum after the March 12 financial market crisis instigated by the threat of the coronavirus pandemic to the global economy. When the liquidation crisis eventually ended, Bitfinex appeared as one of the only exchanges that could bear in phase the intense volatility. Ardoino, Chief Technical Officer of Bitfinex, is one of the people at the forefront of this crypto-space goliath. Ardoino is also the CTO for Tether, the most popular stable coin in the world.
Ardoino addresses his journey, the durability and potential of Bitfinex, the stable coins, and the state of Bitcoin’s haven, in this interview.
Journey across the Crypto Sphere
Between 2012-2013 Ardoino began in the Bitcoin crypto space. In London, he had worked in the mainstream finance market. At the point, he had his own company focused on developing highly flexible software as part of computation and distributed systems.
Ardoino was a great fit for Bitcoin, having a background in finance and scalable applications, “I fell in love as soon as I began reading about Bitcoin.” Ardoino said. Ardoino was approached with the chance to enter Bitfinex at the end of 2014 after doing his trials with the pioneer cryptocurrency.
He said, “They were having a matching engine problem. Provided my experience, I offered my assistance in designing the matching engine to be more scalable and we were able to perform 1,000 times the previous amount of transactions per second”
Ardoino quickly started to get dissatisfied with his own London Company mired in mainstream finance. He said, “The old, obsolete protocols weren’t interesting anymore and I wanted to do more about Bitcoin and crypto space. I saw this as an enormous chance to do something that will be significant in the long run – to fundamentally reform the finance structure itself and exploit cutting-edge Blockchain-based technology.
Ardoino became Bitfinex’s CTO in mid-2016 and stays hands-on at the heart of the platform’s development to this day. He said, “I have been working tirelessly to turn the site into what it is today. The stunning GUI, beautifully built and very stable, has everything been a focus for the corresponding engine and APIs, as well as keeping it extremely scalable. This is still, essentially, my job today. Besides overseeing my staff, I continue to function at the heart of the web.
Ardoino was appointed CTO by market capitalization in 2017 for Tether, the largest stable coin. A big project fan said, “It is truly one of the most amazing projects in this field. Everybody is thinking about Tether now, but a community of visionaries and Bitcoin enthusiasts originally built it in 2014. They had this great idea to solve the arbitrage issue, particularly effective arbitrage across exchanges in cryptocurrency.
Ardoino explained, “The prospects for arbitration have been very high, but the challenge is that you have to pass wires across different markets to access those. It was very sluggish and unpleasant-it might take days! To that, Tether was the answer and turned out perfectly.”
Bitfinex stays Liquid amid the COVID Sell-off
Bitfinex is taking advantage of its role as a one-stop-shop for crypto-trading, providing a range of options including spot trading and peer-to-peer financing of up to 5x leverage. The network also provides customers access to a direct, permanent swap deal through its subsidiary, iFinex Financial Technologies Limited, providing 100x leverage. Ardoino emphasized, “The Tether Gold / Tether pair (XAUTF0/USTF0) that we released last month is one such permanent swap pair.”
Bitfinex was managing transactions worth up to $11.8 million a minute during the March 12 and 13 crashes. Ardoino said, “It was necessary because Bitfinex is the most liquid market for Bitcoin and Ethereum, with such strong liquidity, we will offer more large spreads and lower slippage to traders.” He added, “In most other crypto exchanges, market makers will render volume and all quote small sizes near to the top of the text. Liquidity is far more expensive, much more challenging to recreate. Bitfinex is king in this regard.”
The selling off of Bitcoin and Ethereum was so serious it triggered another famous exchange, Huobi Global installing a circuit breaker as a method of protection. Ardoino said there’s no intention to render changes specific to the Bitfinex site. He expounded, “Circuit breakers can hurt our consumer base by cutting off the exchange summarily. Circuit breakers operate because exchanges have a responsibility to introduce them in mainstream financial markets. They can be risky in a young and fractured market, like ours. At the same time, we believe our customers must be informed of the risks of cryptocurrencies trading. We assume that by our vulnerability statements and our terms of service we have expressed that.”
What is Bitfinex intending to update by 2020? Ardoino said, “Bitfinex is targeting a major expansion into new market models, as well as the introduction of more UNUS SED LEO whitepaper apps and goods.”
Notably, Ardoino said in the coming months, “Bitfinex would introduce additional networking functionality to its website and different forms of order. iFinex Financial Technology Limited is also exploring innovative options for derivatives and is looking at sport / political events betting on a controlled platform.
Tether, Stable coin Quantity, and Interoperable Chain
Because of its cross-chain interoperability, Tether (USDT) is the largest stable coin by market capitalization. Ardoino said, “We think Tether will be creative and seek to represent as many groups as possible, such as the Ethereum and EOS Blockchains. We endorse other Blockchains, such as Algorand, Liquid, and Tron, too. We agree that to be complete and very useful a stable coin needs to be the popular ground among various Blockchains.”
As the coronavirus pandemic threatens to severely threaten the global economy, there has been an unprecedented increase in on-chain stable coin operation since 2019, growing more than 800 percent. Stable coin operation build-up typically precedes crypto-market volatility cycles but Ardoino claims the reason is much simpler.
Ardoino expressed how he sees the amassing stable coins, he said, “With the growing uncertainty attributable to the Covid-19 pandemic in both crypto and mainstream financial markets, stable coins will provide easy exposure to personal resources and a fairly stable store of value.” The Financial Stability Board (FSB) recently reported that it would deliver ten guidelines on the regulation of stable coins to an audience of G20 countries, relating to major stable coins, including USDT, USDC, TUSD, PAX, and DAI.
Ardoino was delighted at the latest regulatory regulation, he said, “We welcome the acknowledgment of the role of stable coins in the global economy by the Financial Stability Board, and its acknowledgment of creativity in financial technology in the digital asset area.”
As citizens turn to safe havens in the middle of the economic crisis, a fever pitch has been reached in the debate about Gold and Bitcoin as a store of wealth. Tether Gold (XAU₮) is Tether’s physically assisted gold stable coin. One XAU₮ token on a London Nice Distribution gold bar contains one troy fine ounce of gold.
Explaining the catalyst, Ardoino said, “Tether Gold is meeting the increasing demand in a digital commodity that gives access to the most durable commodity in the world. Tether Gold would encourage consumers to get access to a commodity that is historically called a haven. Tether Gold offers the integrated benefits of both tangible and digital properties, reducing the limitations of keeping gold in more conventional forms, such as high shipping costs and limited access.”
While the underlying actual gold resides in the vaults of the custodian, Ardoino said, “Tether Gold enables the smooth movement of the core economic attributes of gold – such as possession and interest – across the globe.”
Hedging Cryptocurrency Safe Harbor and Bitcoin
Before our interview is complete, we asked Ardoino to attach his two cents to the Bitcoin as a haven story, as well as his hopes for the next Bitcoin halving. He responded, “Neither Bitfinex nor I can make any assumptions pre- or post-halving.”
On the asset type of Bitcoin, he had revealed, “Bitcoin is not a secure haven. Throughout the future, I strongly agree that Bitcoin is a genuinely transparent and robust trading tool. Yet Bitcoin’s present market capitalization can also render it vulnerable to conventional developments in finance.