CoinFLEX Issues New Tokens Backed by a Crypto Whale

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DeFi
CoinFLEX Issues New Tokens Backed by a Crypto Whale

CoinFLEX, in response to its liquidity problems, has found an original solution to avoid the financial catastrophe: an unknown crypto whale has provided their personal guarantees to protect from potential market liquidations.

Cause of the Problem

CoinFLEX faced serious financial difficulties last weeks just as many other crypto derivative trading platforms and even some centralized exchanges. CoinFLEX announced that it had to temporarily suspend the withdrawal of funds, appealing to extraordinary market conditions that prevent it from fully meeting its obligations. CoinFLEX stressed that it did not have any counterparties connected to 3 Arrows Capital or other lending firms. However, it was still unable to restate users’ confidence, resulting in the collapse of CoinFLEX capitalization and its token’s price.

As the crisis affected a large number of firms in the industry, and the panic stimulated the users’ demand for withdrawals due to the growing concerns about their crypto funds’ safety, almost no traditional methods were available for CoinFLEX to restore its financial stability within the minimum timeframe. Therefore, the reliance on an anonymous crypto whale able to provide the required resources and support the project appears to be highly effective. Such measures can allow restoring the financial and operational stability within the industry as well as enable to reverse the negative capitalization trend.

New Approach by CoinFLEX

CoinFLEX has announced that it is issuing new rvUSD tokens to cover its outstanding debt by relying on financial support provided by an unknown crypto whale. Investors have become able to freely swap their tokens into USDC. Moreover, if the process of repayment takes more than 15 months, they may either use the combination of USDC and FLEX coins or wait for some extra time in order to receive the full amount in USDC. In any case, such a scheme can allow effectively fulfilling all CoinFLEX financial obligations within the following months, even if the overall situation in the crypto industry does not improve.

In addition, CoinFLEX has declared that all rv USD token holders will receive the 20% interest rate per annum compensation to account for the additional time required for them to receive their requested funds. On this basis, the platform should be able to restore its full operations effectively as the number of its FLEX reserves and stablecoins as well as the financial support provided by the crypto whale should be sufficient for covering 100% of all obligations. The most important aspect is that CoinFLEX may successfully overcome the current crisis conditions and remain among the leading derivatives trading platforms in the future.

CoinFLEX: Market Perspectives

The long-term competitive positions of CoinFLEX depend on the following major factors: the demand for derivatives and trading platforms in the future; users’ satisfaction with the solution offered; and the sufficiency and availability of funds for successfully fulfilling all obligations. While at the present moment it is difficult to make precise estimates of the actual implementation of CoinFLEX initiatives, such a plan may be comparatively efficient if the crypto whale provides the announced support for the following several months. The situation with other trading platforms and lending firms may still be significant in this context.

The major risk factors that may prevent CoinFLEX from fully restoring its market positions refer to the damaged reputation and crypto enthusiasts’ avoidance of centralized exchanges due to the concerns about the safety of their funds. The dynamics of its FLEX token will also indicate the actual demand for its services and users’ confidence in the platform’s potential to successfully overcome all major problems. Technical analysis may be used to determine the key support and resistance levels that may affect the FLEX price dynamics.

CoinFLEX Issues New Tokens Backed by a Crypto Whale - 1
Figure 1. FLEX/USD Price Dynamics (3-Months); Data Source – CoinMarketCap

The major support level is at the price of $1.25 which prevents CoinFLEX from the ultimate collapse. There are the following two key resistance levels that should be overcome to restore the proper financial stability: $2 and $4. If users’ confidence can be effectively stimulated, CoinFLEX may experience the positive dynamics of the demand for its services and its token. Only after the price level of $4 is exceeded, the proper financial stability can be achieved. The following several months will be critical to determining whether such a plan can be successfully accomplished.

Dmytro Kharkov

Holding a Master’s Degree in Finance (Distinction), Dmytro Kharkov has proven expertise in Business Analytics, Data Analysis, and the crypto market. He has completed online courses on Machine Learning and Data Science from the leading universities and online schools. He closely monitors the latest crypto analytics insights from Glassnode, IntoTheBlock, Santiment, etc.