In a recently published annual report on Bitcoin mining for 2019, TokenInsight spoke about mining-related financial products that are available today, and how they might change in 2020. According to the report, ‘diversified financial products will be launched in the future, paving the way of fierce competition in 2020.”
TokenInsight also pointed out how the risks involved with cryptocurrencies due to their volatility are much higher when compared to the traditional equity market. Without the proper tools to manage that risk, cryptocurrency’s financial market is, “inefficient, lacking appropriate risk management and thus limiting the proper price discovery channels.”
The report also showed how, at present, the lending products available on the market are relatively diverse, with interest rates and collateral rates varying greatly between products. For example, Beibao Finance provides Bitcoin lending products at an annualized yield of 14.782%, while NEXO provides the same at just 5.9%.
Further, the report predicted that there will be an increasing number of mining-related financial products launching later this year. However, it also noted that only a limited number of participants, such as institutions, or those having a good understanding of the instruments, will utilize them due to their complexity.
“On average, the lending products on the market yield more than 10% while the collateral ratio is generally between 50%-60%.”
TokenInsight also predicted that the market will start to see more and more structured financial products on the market, products such as Bitcoin variance swaps, non-directional structured products, and Bitcoin structured options products to help miners mitigate the risk that they are exposed to.