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Wednesday, 03 June 2015 00:00

A User's "One Month Review of Veritaseum 1.2.0 Beta" Featured

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A summary and critique of the Veritaseum Wallet after one month of use. I'd like to note that in regard to the expiry portion of the comment, you can type in any expiry you wish, or use the advanced granular method. The dropdowns are just suggestions.

One Month Review of Veritaseum 1.2.0 Beta

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I have tried out the Demo and Live Modes of Veritaseum 1.2.0 Beta.  I am satisfied with this derivative trading platform and look forward to seeing future Beta versions.

The platform fairly & accurately updates your P&L until contract expiration, and trades are updated periodically in real time to reflect market conditions. 

The platform currently gives you four order parameters to choose from -- "Principal", "Receive", "Pay", and "Expiry."  Other variables that can be modified are "Deviation" from Principal and two advanced variables -- "Collateral" as a percentage of Principal, and "Leverage" as a percentage of Principal.  

"Principal" refers to principal at risk.  "Receive" is what you buy.  "Pay" is what you sell.  "Expiry" refers to the terms of the contract, which currently is one of six time periods between one minute and five weeks.  The Receive and Pay inputs are keyword sensitive;  so for example, inputting the letter "F" gives you a drop down list of eight possible visible ticker's.  Additionally, there is a scrolling list of tickers which match your keyword phrase.

 

The platform allows you to instantaneously display FX conversion rates from Bitcoin to USD, EUR, GBP, and Yuan.  This is helpful in thinking about principal at risk in one's home currency. The transfer of funds to and from the Veriatseum Wallet is seamless.  It took less than three minutes for Bitcoin to fairly & accurately transfer from my Coinbase Wallet to the Veritaseum Wallet.  The transfer is initiated by copying your "Wallet Address" and hitting the send button.

The transfer fee on an unlevered contract is 0.0226 cents.  The transaction fee is 0.0335.  So in total, an unlevered transaction cost 0.0561 cents (USD).  I am not positive if there are breakpoints built into this, as all my trades have been under $100 USD.  I will defer to the software creators on this point.

Leverage fees add significant additional costs.  A $10 USD trade with 2x leverage adds an additional 0.1758 cents in fees.  The same order with 10x leverage adds 0.2361 cents in fees. The same order with 100x leverage add 0.9279 cents in fees.  A bold red font disclaimer alerts you to changes in leverage and a warning stating that "the use of leverage is very risky and can result in a total loss for a trade."

Before the order is placed, a summary of all variables described above, plus maximum profit and loss and principal required, with a disclaimer that "You are about to place an order with these terms.  Your order will be filled by the next available matching order."

Once the order is placed, it does not execute immediately.  This is a distinct difference from a market order.  It is more accurately reflects a GTC Limit order;  which may or may not fill depending on IF there is a counterparty to match the order.  Until your order is matched, it sits in the "Pending" column.  Unfunded orders can be revoked.  Once orders are matched and funded, they cannot be altered until expiration or the have been "Exhausted", meaning the maximum profit or loss limit has been exceeded and the order immediately settles.

Over the course of a month I funded my Veritaseum Wallet with the Bitcoin equivalent of approximately $575 USD funded from my Coinbase Wallet.  I was filled on approximately 125 orders valued in real USD principal of ~$924.68 and collateral of ~$77.76.  My P/L in aggregate was ~$21.58, or a P/L equivalent of 2.15% net of fees.

In terms of trades, I tried out a number of long/short combinations across multiple asset classes, varying the degree of leverage and principal, time to expiration, and deviation from principal.  The trades fairly & accurately represented real time market conditions during the contract length and the contracts settled within a matter of minutes upon completion of the contract term or exhaustion.  Upon settlement, my Bitcoin Wallet was funded with the proceeds of each contract plus or minus the profit or loss of the contract terms.  The "Available Cash Balance" can then be reapplied to new trades, or can be transferred out of the platform wallet to another Bitcoin wallet.

My largest principal at risk trade was for $48.14 USD with 10% Collateral.  The contract was a 10x levered receive MNST/ pay MDLZ with a 1 week expiration.  This also happened to be my most unprofitable trade, as it was exhausted prior to expiration, with a P/L loss of $53.53 USD. 

My experience with this trade caused me to pay closer attention to my ticker inputs, as I had intended on trading receive MON / pay MDLZ, and could have saved a significant amount of principal at risk.  This trade also made me keenly aware that the application of leverage is a double-edged sword that can move for (or against in this case) a trade to exhaustion prior to the term of the contract.

I became more conservative with my principal at risk after this trade, but still made a number of long/short trades based on fundamental and technical factors.  Trades that yielded nominal P/L for me were technical Commodity ETF ticker long/short pairs with one week expiration.  Trades that yielded more favorable P/L returns were fundamental in nature.  

My most profitable set of trades were pairs of fundamentally long versus a fundamentally weak position.  I exhausted fourteen trades with $5.65 of principal at risk each, with maximum contract profit.  Each of these trades were 5x levered with zero collateral, receiving fundamentally strong ticker's and paying  ticker SHAK.  For example, a $5.65 USD principal at risk trade, with 5x leverage to receive TW / pay SHAK with a one week expiration, was exhausted with $5.57 USD profit in approximately two days. 

In summary, the learning curve to get up and running on the Veritaseum 1.2.0 Beta contract exchange platform took me about four hours.  The biggest leap of faith for non-Bitcoin users such as myself is familiarizing the current exchange rate to your home currency (USD for me).  The actual trading platform is simple, but the application of leverage can be deceiving.  

I would recommend that you download and try out Veritaseum for yourself, and make sure that you save backup data periodically on a zip or external drive in case of the theft or crash of your computer or tablet. 

Read 2903 times Last modified on Wednesday, 03 June 2015 21:37

1 comment

  • Comment Link Fox Tuesday, 09 June 2015 03:25 posted by Fox

    I am still a bit confused. Suppose I have taken on a position (say, long stock X/short stock Y) and now I want to close it. How long does it take for a matching order to appear? And isn't there a high risk that the market will be moving against me while I wait?
    I do understand the absence of counterparty risk. Still any transaction involving a stock would have to be registered somewhere - after all, I have to be able to exercise my rights as as an equity holder (proxy votes, rights issues, dividends etc) ?
    Still hard for me to understand how you can trade any stock, bond, commodity etc. without even touching any exchange. I mean, someone must touch it, no?

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