Due diligence: Beaxy

by on under General
14 minute read

This article has been updated after the initial publication. The edit notes are at the end of the article.


Hello there, you most likely don’t know me. That’s already a great reason to do your own research, but hear me out. You might get some insight on US based cryptocurrency exchange called Beaxy Exchange and its utility token Beaxy (BXY). I also wanted to do a write-up of this because some of my friends have been asking about cryptocurrencies and my take on it. Which is not too surprising given the ongoing bull market. I think the cryptocurrencies are going to be a big thing, bigger than they are now. However it’s pretty difficult to place your bets on the best projects, although at this point BTC and ETH are quite solid options. But the thing is, if cryptocurrencies are going to go on, where will the markets be? Yep, (cryptocurrency) exchanges. What if there would be a potential exchange which is built for retail and institutional level of trading and it is possible to get a percentual slice of their revenue? And to add to that, it’s relatively cheap to secure your position currently. This could be Beaxy Exchange - if that sounds good, keep on reading.

Before going into details I want to point out that the beef of this all is the utility token BXY. I’ll just go through the highlights of Beaxy Exchange to give you a better understanding what it is about. Please note everything is based on public information which can be rather limited from time to time when dealing with private companies. Anyhow, here it is, my due diligence or a research of Beaxy.

Founding

Beaxy Exchange was founded in 2017. They had planned a 24 month development phase before the initial launch. I didn’t find good sources for total funding and backers, but it looks like by the launch in 2019 they had secured around $8 million in funding. That could be via ICO (Initial Coin Offering) of Beaxy Token held in 2019, which resulted in pretty much the same amount in total.

Beginning, Beaxy 1.0

When Beaxy was first released it was built on huge hype as The Binance Killer. There were tens of thousands preregistered accounts before the actual release date in 2019. After all, the exchange was going to go live in 43 states in the U.S. and 185 countries.

After the initial launch in 2019 the exchange struggled with multiple issues, mainly due to a lack of experience from the management. For example their strategy with market making - they trusted the hype will bring enough people who build the markets, but unfortunately that’s not how it works. You have to be more organized and ensure there will be liquidity through market making. Due to this and other issues, there were discussions about Beaxy’s solvency.

As things started to look bad, Artak Hamazaspyan the CEO of Beaxy disappeared from publicity, missing some PR events and such. There was a period of few weeks not hearing anything about him. Meanwhile the exchange trading volume and BXY token price plummeted. Token price fell more than 50% in a week - and much more later on.

Rebrand, Beaxy 2.0

Shortly after the events described above, ownership changed. There was a very large independent investor who took over Beaxy from the previous management team. The ownership moved from Beaxy Digital Ltd to Windy Inc. Primarily this meant the management was replaced.

They announced version 2.0 and the initial goal was to address the missteps made earlier. Including these highlighted features:

  • Improved UI and brand design
  • Enhanced back-end technology
  • Easy-to-use mobile applications
  • Healthy order books and a usable exchange design

> Read more

Basics

Here’s some notable things about the exchange

  • Beaxy Exchange is FinCEN (Financial Crimes Enforcement Network) Registered Money Services Business
  • Based in Chicago and they are offering crypto trading to Americans who have been shut off from major exchanges like Binance and Kucoin (because of regulations)
  • Built for institutional level of activity
  • Next level transparency by integrating to Dragonchain (soon completed in production). Every single pending, rejected, filled, replaced, expired, suspended, canceled, and executed order will be recorded on chain
  • Safety via Curv - This custody service is the same used by top financial institutions around the world
  • Free and easy to use AI-powered technical analysis signals (provided by Autochartist, a third-party who are experts in the field, unaffiliated with Beaxy)
  • Innovative and unique mobile app feature Trender, which is basically Tinder for trading. It is built on the aforementioned signals and makes them even easier to use, if possible.
  • Soon to be released wide support for fiat: USD, EUR, GBP, JPY, CAD and AUD

Integrations

In addition to basic trading functionalities they are working on integrating trading bots. In practice this means robust APIs, which could be used for other purposes too. Bots are mainly used by advanced traders and institutions. I think these are integral part of increasing and maintaining trading volume and healthy liquidity. This far they have announced they will support Gunbot, Hummingbot and Autonio. The integrations are in the state of polishing; almost ready for production use.

The aforementioned APIs are regular web APIs - basically REST and websockets. In addition to those, they have announced an integration with MetaTrader 5 (MT5) forex platform. This integration will not be using the regular APIs, but instead a FIX (Financial Information eXchange) API. FIX is a protocol which enables low latency communication and is used widely for example in NASDAQ. As Cooper, Beaxy’s Head of Customer Service, described in the latest AMA in terms of internet connections “REST and websocket APIs are like your cable connection and the FIX API is the trunk line your ISP is using to connect to the larger system”. Anyhow, the integration will be quite exciting businesswise, because Beaxy will be the only cryptocurrency exchange integrated into MetaTrader platform. This will give pretty nice exposure to Beaxy and helps in bringing trading volume to the exchange.

Beaxy Black

Beaxy Black is the VIP program for traders to incentivize trading via perks. Most notable perks are the rewards. You can receive up to 30% back from your trading fees and in addition based on your leaderboard position you can receive BXY.

So basically you could think those rewards as lowered trading fees.

Beaxy Token (BXY)

Basics

  • Max total supply 500 million tokens
  • Estimated circulating supply 100-200 million (locked up tokens held by employees, the treasury, etc. are not counted)
    • Unfortunately cannot find public announcement or post about this, but this has been commented somewhere by the team. They’ve also said they are not planning to release all of the 500 million tokens (for example because of the burns)
  • Lowered trading fees
    • based on your trading volume and/or how much you have BXY in your balance
    • if you enable “Pay with BXY” feature - your trading fees will be paid with BXY at lowered rate
    • Read more about fee structure
  • Possible circular economy: people buy BXY -> people pay trading fees with BXY -> used tokens end up back to market after Beaxy sells them
    • Though some of the used BXY will most likely end up as rewards for Sapphire tier (more info below)

The new team (Beaxy 2.0) has also expressed desire to lower the token supply. One of the programs related to this was called Beaxy Blaze, where they will burn 250,000 BXY tokens when average daily volume surpasses 2.5 million USD across the exchange. However, unfortunately, this program was cancelled because of too low volume.

Loyalty program (STK)

So in addition to lowered trading fees you can join the loyalty program by staking (locking up) your BXY. Why would you do that? Well, now we are getting to the main part of this whole write-up. Because the Diamond Tier is epic. But before jumping into that, let’s take a look at Sapphire Tier.

Sapphire tier (released) - you can stake 30,000 - 999,999 BXY and gain 1-12% annual interest rate, based on the time you are staking (1-12 months). Related to this, few days ago they tweeted “63,671,142 $BXY tokens are locked in STK, with 49,875,838 locked for 12 months”

Diamond tier (coming soon) - when you stake 1,000,000 BXY or more you will gain a percentual slice from their revenue. Holy crap! They will pool up 7% of their revenue from trade fees and distribute that between the members of Diamond tier. Daily. There is pretty much always an amazing potential if you have a chance to get percentual slice of revenue; when the revenue grows, so does your slice.

Ok let’s do some math here. Please keep in mind this is completely theoretical… Let’s say you’ll get to the diamond club by accumulating exactly one million BXY. For simplicity’s sake let’s use average trading volume of 10,000,000 and average trading fee percentage of 0.15. This would yield a daily rewards pool of $1050. I’ll add couple of scenarios here based on the aforementioned values. Obviously all of this is just guessing and throwing in rough estimates. I’m not quite sure what would be a realistic amount of staked tokens in Diamond tier, but it’s pretty safe to say there will not be over 200 million (which is already way too high to be realistic in my opinion).

Total stake in Diamond tier Avg. daily volume Your BXY stake Your daily slice
100m BXY $10m 1,000,000 $10.5
75m BXY $10m 1,000,000 $14
50m BXY $10m 1,000,000 $21
25m BXY $10m 1,000,000 $42

Here’s an official writing about the loyalty programs: https://beaxy.com/blog/revolutionizing-crypto-loyalties-and-rewards-the-stk-standard/

note that holding the tokens is not same as holding shares of the company. You will not get any slice of the actual company.

Growing userbase

Growing the userbase is of course a crucial part to get things rolling. Especially attracting active traders. They’ve of course been working on their SEO and overall marketing and they’ve discussed it in their AMA sessions and other channels. From the things mentioned before, trading incentives and bot integrations are a good way to lure new traders.

Beaxy also has a very nice referral program to help to grow their userbase. You will receive 30% of trading commissions from your referrals. For lifetime. I think that is rather lucrative deal to get your friends and acquaintances on board. So without further ado, only for you my friend - here’s my Beaxy referral link ;)

Summary and takeaways

There’s a lot of stuff coming up from the exchange. For example the transparency through the Dragonchain integration - Beaxy will be the most transparent financial service in the world, it will bring nice publicity. I’m also looking forward to bot integrations and more details about the forex integration. These will be a good base for consistent trade volume and new traders. I guess I have to add, because some people think bots are evil and magical money making machines, but the reality is they are just tools of human traders. If you don’t know how to trade, you shouldn’t use bots - also bots are not something to frown upon. Oh, almost forgot to highlight all the mentioned trading incentives, which will be really nice combined with the bots.

Beaxy is following regulations and acting upon them (FinCEN registered company), which is a good thing in my opinion, because this industry will be more regulated. Some people have been surprised by this and were crying about it when they got caught on e.g. market manipulation. Also, there will not be additional expenses and development time when the regulations kick in. They are ahead on this.

The price of the token has been pushed down heavily by the negativity gained through the initial launch and negligible trading volume. Even if comparing to other utility tokens is not wise and realistic it could give some guidelines on what’s possible. Here’s comparison to the leaders:

  • Beaxy Token (BXY), total max supply 500 million, current price $0.012 (Exchange launched in 2019, current ADV $0.1-0.2 million)
  • Binance Coin (BNB), total max supply around 170 million, current price $130 (Exchange launched in 2017, current ADV $27 billion)
  • Huobi Token (HT), total max supply 500 million, current price $12.9 (Exchange launched in 2013, current ADV $8 billion)
  • KuCoin Token (KCS), total max supply around 170 million, current price $2.7 (Exchange launched in 2017, current ADV $800 million)

Before you get too excited of this hidden gem, I have to say this is a HIGH RISK investment. Do not ever invest more than you are willing to lose. Yes, you probably have heard that before, but this really is HIGH RISK. We can take a look at the people who invested in the ICO of Beaxy Token with price being $0.041 - when Beaxy hit the bottom, it was $0.00152 - a whopping -96.3% decrease…

…but then again things look quite promising from here. Most of the startups (all industries) fail during the first year, Beaxy has been around longer. Development is consistent, new features and partnerships have been coming in. They have also mentioned the success of the exchange is not dependent on the token price, which is quite obvious at this point, but important to note they have enough funding and cash flow. Also I think the trading volume will increase and be much more consistent when the bot integrations are completed. By the way, the highest peaks of ADV during this year have been $17-21 million (?).

In case you are interested in hopping on Beaxy, please consider using my referral link: https://click.beaxy.com/goto/track/?affiliateid=15505. Yeah, referral links are still there and I think it’s a great way to grow the userbase. If you do plan to get BXY and hold, remember that you can help its success by participating in trading on the exchange. Trading volume is the most important indicator of exchange’s success. Even if the success of the exchange is not dependent on token price, the token price is dependent on the success of the exchange.

At this point you probably know I’m bullish about this exchange and the utility token. As a user I know everything is not perfect, but they are working hard and doing the right things. What’s your thoughts, did I miss something or is there flaws in this writing? I’d like to hear.


Disclaimer if you are going to trade on low volume markets:

Some people have tried using stop loss and OUO for risk management on low volume markets. This is something you should consider twice before using in low volume markets. They can be triggered when market makers are reorganizing their orders because there might not be other resting orders in the books on expected levels.


Edit notes

  • 2021-03-22
    • Added more information on MetaTrader 5 integration
    • Added “Growing userbase” section
    • Added a disclaimer regarding low volume markets
investing, cryptocurrency
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