[ANN] Lykke - Trade Bitcoin, Ethereum, FX and Digital Assets

[tempus]

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

[DJ53]

Guys that is easily explained and a real validation of the Lykke project.

The futures price can be above or below the spot price, when its above the spot price it is what in finance speak we call contango.

https://en.wikipedia.org/wiki/Contango

When an asset is in Contango it usually indicates the market view that the spot price (which is LKK in this case) in the future will move up.

Putting my finance & investment background to good use

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

[mtnsaa]

Guys that is easily explained and a real validation of the Lykke project.

The futures price can be above or below the spot price, when its above the spot price it is what in finance speak we call contango.

https://en.wikipedia.org/wiki/Contango

When an asset is in Contango it usually indicates the market view that the spot price (which is LKK in this case) in the future will move up.

Putting my finance & investment background to good use

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

Awesome, you learn something new everyday. Apparently (it was already confirmed by tempus) but slack conversations from Lykke team also concur that it's all natural/organic trading and demand. I'm not sure how exact are the trading/volume numbers on coinmarketcap but that has been increasing for weeks too.

[tempus]

Guys that is easily explained and a real validation of the Lykke project.

The futures price can be above or below the spot price, when its above the spot price it is what in finance speak we call contango.

https://en.wikipedia.org/wiki/Contango

When an asset is in Contango it usually indicates the market view that the spot price (which is LKK in this case) in the future will move up.

Putting my finance & investment background to good use

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

Interesting! Didn't know "Contango". But I'm not so sure that applies here because if I get it right, Contango seems to be a situation that happens when it's about raw-material with certain costs (carrying, storage, loss) what is not the case for LKK.

[DJ53]

Contango is not just a concept for commodities (although it is mostly used to refer to them). It can also be applied to equity indexes where the storage costs are essentially zero however there is an associated time value of money (risk free interest rate) and possible dividends.

When the interest rate is higher than the dividend the market is in contango. We have been more or less in backwardation since the GFC in 2008 since the interest rates went to zero (or even negative in some countries) while the dividend yields actually rose in some cases.

https://www.quora.com/Are-S-P500-futures-in-contango-or-backwardation-through-most-of-their-history-Why-if-possible

However, you are correct in saying that contango does not apply straight off the bat to Lykke 1-year forward, its a bit more involved. You see the Lykke 1-Y is a future which has an upfront payment whereas futures are usually settled at the expiration. So the cash flow timing is different. On top of that there is an option built into the Lykke 1Y forward, which is the trigger. The option should in theory have a premium the value of which will depend on the volatility of the underlying asset (which is the LKK), as this is used to measure the probability of the asset increasing or decreasing in price over a period of time.

In financial theory, to get the volatility of an asset you can calculate that from the option price and other variables.
However, in practice (in the markets) it works the other way round. What you have is the option price which is derived from the natural market forces of supply and demand and what you do is you back calculate the volatility (in which case it gets called as the implied volatility).

You see by having the Lkk1Y traded on the Lykke exchange, the Lykke team is essentially able to backcalculate the implied volatility. This is a much more accurate number than any volatility derived from theory using the black scholes or binary or any other option pricing model. So the Lykke team has been able to raise funds and at the same time cleverly able to derive the implied volatility - you need that to come up with pricing of other derivatives on Lykke they may need to list on the exchange in the future.

In short, I would expect the price of the LKK1Y to be higher than the Lkk merely due to the time value of money (measure by the risk free interest rate but complicated by the upfront payment) and the premium on the trigger option. Assuming dividend in the next 1 year will be zero which is a reasonable assumption to make for Lykke.

I guess that's how it is supposed to work anyways, however the guys at Lykke will be able to shed more light on the technical details.

Sorry for the long post, couldn't help it. My knowledge may be limited but trying to share what I know
 

Guys that is easily explained and a real validation of the Lykke project.

The futures price can be above or below the spot price, when its above the spot price it is what in finance speak we call contango.

https://en.wikipedia.org/wiki/Contango

When an asset is in Contango it usually indicates the market view that the spot price (which is LKK in this case) in the future will move up.

Putting my finance & investment background to good use

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

Interesting! Didn't know "Contango". But I'm not so sure that applies here because if I get it right, Contango seems to be a situation that happens when it's about raw-material with certain costs (carrying, storage, loss) what is not the case for LKK.

[DJ53]

Tempus, as I mentioned since the LKK1Y is a special Future with an upfront payment and a built in trigger option, actually it would be great if you could just ask someone technical in the Lykke team to explain the pricing model for the LKK1Y.

Might shed some light on why the price would go up more than the LKK itself.

Contango is not just a concept for commodities (although it is mostly used to refer to them). It can also be applied to equity indexes where the storage costs are essentially zero however there is an associated time value of money (risk free interest rate) and possible dividends.

When the interest rate is higher than the dividend the market is in contango. We have been more or less in backwardation since the GFC in 2008 since the interest rates went to zero (or even negative in some countries) while the dividend yields actually rose in some cases.

https://www.quora.com/Are-S-P500-futures-in-contango-or-backwardation-through-most-of-their-history-Why-if-possible

However, you are correct in saying that contango does not apply straight off the bat to Lykke 1-year forward, its a bit more involved. You see the Lykke 1-Y is a forward which has an upfront payment whereas futures are usually settled at the expiration. So the cash flow timing is different. On top of that there is an option built into the Lykke 1Y forward, which is the trigger. The option should in theory have a premium the value of which will depend on the volatility of the underlying asset (which is the LKK), as this is used to measure the probability of the asset increasing or decreasing in price over a period of time.

In financial theory, to get the volatility of an asset you can calculate that from the option price and other variables.
However, in practice (in the markets) it works the other way round. What you have is the option price which is derived from the natural market forces of supply and demand and what you do is you back calculate the volatility (in which case it gets called as the implied volatility).

You see by having the Lkk1Y traded on the Lykke exchange, the Lykke team is essentially able to backcalculate the implied volatility. This is a much more accurate number than any volatility derived from theory using the black scholes or binary or any other option pricing model. So the Lykke team has been able to raise funds and at the same time cleverly able to derive the implied volatility - you need that to come up with pricing of other derivatives on Lykke they may need to list on the exchange in the future.

In short, I would expect the price of the LKK1Y to be higher than the Lkk merely due to the time value of money (measure by the risk free interest rate but complicated by the upfront payment) and the premium on the trigger option. Assuming dividend in the next 1 year will be zero which is a reasonable assumption to make for Lykke.

I guess that's how it is supposed to work anyways, however the guys at Lykke will be able to shed more light on the technical details.

Sorry for the long post, couldn't help it. My knowledge may be limited but trying to share what I know
 

Guys that is easily explained and a real validation of the Lykke project.

The futures price can be above or below the spot price, when its above the spot price it is what in finance speak we call contango.

https://en.wikipedia.org/wiki/Contango

When an asset is in Contango it usually indicates the market view that the spot price (which is LKK in this case) in the future will move up.

Putting my finance & investment background to good use

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

Interesting! Didn't know "Contango". But I'm not so sure that applies here because if I get it right, Contango seems to be a situation that happens when it's about raw-material with certain costs (carrying, storage, loss) what is not the case for LKK.

[Praxis]

So this aims to be a  decentralized exchange  where stake-holders (owners of Lykke coins) benefit from profit (similar to "dividends")?
What do you think is the advantage of this project over other similar ones?
The only reason I'm interested is that the Oanda co-founder is behind this.
I used to trade Forex on Oanda... I loved their platform. Really well done.
Is the only way to get coins now through the smartphone App? Using fiat?

[tempus]

Tempus, as I mentioned since the LKK1Y is a special Future with an upfront payment and a built in trigger option, actually it would be great if you could just ask someone technical in the Lykke team to explain the pricing model for the LKK1Y.

Might shed some light on why the price would go up more than the LKK itself.

Contango is not just a concept for commodities (although it is mostly used to refer to them). It can also be applied to equity indexes where the storage costs are essentially zero however there is an associated time value of money (risk free interest rate) and possible dividends.

When the interest rate is higher than the dividend the market is in contango. We have been more or less in backwardation since the GFC in 2008 since the interest rates went to zero (or even negative in some countries) while the dividend yields actually rose in some cases.

https://www.quora.com/Are-S-P500-futures-in-contango-or-backwardation-through-most-of-their-history-Why-if-possible

However, you are correct in saying that contango does not apply straight off the bat to Lykke 1-year forward, its a bit more involved. You see the Lykke 1-Y is a forward which has an upfront payment whereas futures are usually settled at the expiration. So the cash flow timing is different. On top of that there is an option built into the Lykke 1Y forward, which is the trigger. The option should in theory have a premium the value of which will depend on the volatility of the underlying asset (which is the LKK), as this is used to measure the probability of the asset increasing or decreasing in price over a period of time.

In financial theory, to get the volatility of an asset you can calculate that from the option price and other variables.
However, in practice (in the markets) it works the other way round. What you have is the option price which is derived from the natural market forces of supply and demand and what you do is you back calculate the volatility (in which case it gets called as the implied volatility).

You see by having the Lkk1Y traded on the Lykke exchange, the Lykke team is essentially able to backcalculate the implied volatility. This is a much more accurate number than any volatility derived from theory using the black scholes or binary or any other option pricing model. So the Lykke team has been able to raise funds and at the same time cleverly able to derive the implied volatility - you need that to come up with pricing of other derivatives on Lykke they may need to list on the exchange in the future.

In short, I would expect the price of the LKK1Y to be higher than the Lkk merely due to the time value of money (measure by the risk free interest rate but complicated by the upfront payment) and the premium on the trigger option. Assuming dividend in the next 1 year will be zero which is a reasonable assumption to make for Lykke.

I guess that's how it is supposed to work anyways, however the guys at Lykke will be able to shed more light on the technical details.

Sorry for the long post, couldn't help it. My knowledge may be limited but trying to share what I know
 

Guys that is easily explained and a real validation of the Lykke project.

The futures price can be above or below the spot price, when its above the spot price it is what in finance speak we call contango.

https://en.wikipedia.org/wiki/Contango

When an asset is in Contango it usually indicates the market view that the spot price (which is LKK in this case) in the future will move up.

Putting my finance & investment background to good use

@mtnsaa: The LKK1Y-price results out of real demand. ;-)

 

But how can it be higher than LKK? That doesn't make any sense.

I have no idea tbh.. ;-)

Interesting! Didn't know "Contango". But I'm not so sure that applies here because if I get it right, Contango seems to be a situation that happens when it's about raw-material with certain costs (carrying, storage, loss) what is not the case for LKK.

Thanks! Very interesting! You clearly know much more about those things than I! ;-)

Sergey published an article about the pricing model for LKK1Y - maybe that already helps?

https://www.lykke.com/city/blog/what_is_lykke_forward


But I'll also link your post on the slack.

[tempus]

So this aims to be a  decentralized exchange  where stake-holders (owners of Lykke coins) benefit from profit (similar to "dividends")? 

Yes, once Lykke is profitable and should decide not to reinvest profit the company will pay dividends. The other way to make profit is the possibility of an increasing LKK-price over time of course.

What do you think is the advantage of this project over other similar ones?

I don't know all other projects deep enough to say much about them. But I've looked into some of them and decided not to invest because I'm always very concerned about teams (abilities, experience, honesty) in general and a project like that is very ambitious. And while there are many teams that start with big promises, often also believe in their own abilities (if not it's even intended scam), after some time it often comes out that there is a lack of expertise and experience. That is often a point in which even projects that were started legitimate (with good intentions) become shady because of different reasons (running out of money is one). It needs a lot of different kinds of abilities to not only get a project started and to do a successful ICO but to really develop it.

That said: One advantage of Lykke over those projects that try to do similar things is that there is a really skilled and experienced (and honest!) team behind this one. And it's a big team and as far as I can say: They are never bored. With other words: Since I know Lykke and have some insight I'm even more critical/concerned about some other projects with small teams of "youngsters", because Lykke somehow makes obvious how much it needs to get such a project to success.

What I also like: They focus on being effective. Instead of developing a "Lykke-Blockchain" they use Bitcoin and in future also other blockchains (Ethereum), and instead of doing it totally centralized, what would bring also some disadvantages, they combine the best of both worlds: the high security of a decentralized system plus the performance of a centralized system. In my opinion that is the best approach with the highest potential.

Plus: In comparison to others they are very good in developing user-friendly stuff. Without that the chance to be successful is near to zero in my opinion.

 
The only reason I'm interested is that the Oanda co-founder is behind this.
I used to trade Forex on Oanda... I loved their platform. Really well done.
Is the only way to get coins now through the smartphone App? Using fiat?

Until now the App is the only way, but a web-based-terminal is in development. I think since you like Oanda it's a safe bet that you'll like the future Lykke even more ;-) Fiat is possible but also Bitcoin - other Cryptos will follow. Already added are also Solarcoin and the Time-Token (Chronobank). Next will most likely be Ethereum.

[josegines]

Margin trading was planned at the end of March, does anyone know anything?
thanks

[derclou]

Hi

So i have some LKK1Y, whats the adv/disadv on settling now compared to say in 6 months? Is there any difference? Somehow I don't fully understand it.
Would be nice if someone had an explanation for that.

Thank you guys.

[tempus]

Margin trading was planned at the end of March, does anyone know anything?
thanks

Yes, right. It's always hard to give and hold fixed time frames, especially because Lykke is about multiple projects and priorities in one. IOS seems pretty much finished, and as far as I know Android is also very far developed - I believe the release can be expected soon.

[tempus]

Hi

So i have some LKK1Y, whats the adv/disadv on settling now compared to say in 6 months? Is there any difference? Somehow I don't fully understand it.
Would be nice if someone had an explanation for that.

Thank you guys.

Hi derclou! (your name reminds me of the german version of The Sting: https://de.wikipedia.org/wiki/Der_Clou) ;-) 

LKK1Y-token are forward contracts to receive LKK (company shares). From the moment on you settle your LKK1Y they are locked up for 365 days. After that period you'll get LKK for your LKK1Y (1:1). 

Advantage if you do it now instead of in 6 months: You'll get your LKK earlier since the 365-day-period is always the same once you make the decision to settle them. Disadvantage: You can't sell them during that time.

With other words: If you want to stay flexible, maybe because you're not sure if you want or might need to sell, you can let it as it is. If you are longterm-focused and optimistic about Lykke it would be smart to settle your LKK1Y's to get LKK as soon as possible.

[derclou]

hey tempus, thanks a lot, I get it!

well, that movie might just be the reason for my name (I'm german speaking)

on another note, I don't know if this is appropriate in this thread, but where do you think LKK tokens can go in terms of value?

[tempus]

hey tempus, thanks a lot, I get it! 

Anytime!

well, that movie might just be the reason for my name (I'm german speaking)

Habs mir gedacht! Grüße aus Berlin! ;-) Lykke hat übrigens auch einen deutschen Thread der nicht ganz so aktiv ist, aber falls Du weitere Fragen haben und deutsch Dir lieber sollte: https://bitcointalk.org/index.php?topic=1746281.0

on another note, I don't know if this is appropriate in this thread, but where do you think LKK tokens can go in terms of value?

Sure we can talk about the price! But it's very speculative of course. I think there are two main-factors:

1) Fundamentals and Progress
2) Attention

Lykke is great by it's fundamentals and very fast compared with other projects I know. Bigger attention is missing until now. Number 1 reason in my opinion is: LKK is on Lykke - a very young exchange. That's somehow price-protection but on the other hand it already would get a lot more attention on Poloniex for example.

That said: With all what the team has in the pipeline I'm sure that attention will increase dramatically over this year. It's also planned to get LKK on other exchanges. I'm really unsure what the price could be in some months or by end of the year, but... I expect it to be "higher" ;-)

[belowizard]

tempus, try to get lykke on this

https://cointelegraph.com/news/royal-mint-blockchain-gold-project-gets-bitgo-alphapoint-as-partners

[tempus]

tempus, try to get lykke on this

https://cointelegraph.com/news/royal-mint-blockchain-gold-project-gets-bitgo-alphapoint-as-partners

If I would be able to make that happen I would want a new nick: Magician! 

I've posted it on the slack. Such a deal would be nice for sure!

[Alao]

I'm just checked the app and the ask is gone. But the app says sell is 0. Makes no sense to me...

[tempus]

I'm just checked the app and the ask is gone. But the app says sell is 0. Makes no sense to me...

I also don't know the reason yet but they are aware.

[mtnsaa]

tempus, try to get lykke on this

https://cointelegraph.com/news/royal-mint-blockchain-gold-project-gets-bitgo-alphapoint-as-partners

If I would be able to make that happen I would want a new nick: Magician! 

I've posted it on the slack. Such a deal would be nice for sure!

You know guys, there's a cryptocurrency backed by gold (other than Digix) called Xaurum that hardly anyone knows about.

http://www.xaurum.org/

Seems like a much smaller scale than this project but it's basically the same thing right? I don't know how it actually works, apparently it has positive inflation, meaning that every minted coin is used to purchase actual gold that can be redeemed therefore increasing the overall value of each token.