Detoken to Shut Down Operations on September 4, 2021
A much better and more comprehensive system BCHbull was created as a replacement.
First of all, I have to tell you that I am not a trader and that for me terms like long or hedge are, or more precisely were, foreign words. I have not speculated on any trading platforms so far and have no idea about them. That's why I received the information about the Detoken platform with quite a bit of indifference. I registered (someone here has described how to do this), had a quick look, understood little and that was it. At some point I read a bit more about it and decided to give it a try.
On Detoken, there are two variants of smart contracts at the moment, Long and Hedge. At first I wanted to try out Long. I transferred some mBCH from my Bitcoin.cim wallet to the Detoken wallet, which was about $2.40. The amount arrived immediately in the Detoken Wallet. Then I clicked on Long, entered the total amount (Max), clicked on Start and confirmed. My Smart Contract has been concluded.
Since I have no experience with such things, I thought I had made a bet. On Detoken it is written "Bet that the price of BCH-USD will rise over a 24 hour period with 3:1 margin". I thought I was betting that after 24 hours the price will be higher than the moment I signed the contract ($408.33). I thought if I won I would get three times the stake, which is about $7. If the price goes lower after 24 hours, I will lose everything - I thought.
The next day, after about 20 hours since signing the contract, I logged onto Detoken and was very surprised to find that my contract was about to expire. What the hell? I thought the price was compared after 24. But that's not true. The contract lasts 144 Bitcoin Cash blocks. It's not exactly 24 hours. It can be less but also more. After 20 hours, just before the last blocks were to be mined, before the contract expired, the price was just below the starting price. So I was in the red. But the price rose continuously. There were still one block to be found, so about 10 minutes left. The price went up and up. 406, 406.50, 407, 407.50. The last block was found at the price of 407.97 (a little below the start price)- I lost my long position.
Too bad. So little was missing. My attempt to bet with Long failed. My $2.40 is gone now - I thought. I was a bit sad and closed Detoken website.
The next day I wanted to try hedging. I wanted to transfer some BCH again. When I logged on to Detoken, I got a pleasant surprise. My $2.40 was there! How was that possible? I was happy, but I didn't understand what was happening. I looked it up and found out. I did not lose everything but only 1024 satoshis (less than $0.01). I lost so little because the start price and settle price (price at expiry of the contract) were almost identical. So it works quite differently than I thought!
The profit or loss on a long depends on how big the difference between the start and settle price is. A leverage ratio of 3:1 is used. For example, when I conclude Long Contract with 1 mBCH and after 144 blocks (i.e. after 20 to 28 hours) the BCH price has increased by 5%, I will get back 1.15 mBCH after the contract expires (1 + 0.05 *3). As the price of BCH has risen, the profit in USD is even higher. Unfortunately, this also works in the opposite direction. If the price falls by 5%, i will get back correspondingly less. You are taking a risk with Long.
Next I tried the hedging. I transferred a little BCH to have $5 in the Detoken Wallet and entered into a hedge contract. I started with the price of $408.23. Now that I knew the contract wouldn't expire exactly after 24 hours, I looked into Detoken much earlier. On that day, however, it took much longer to mine the 144 blocks. After 26 hours the contract ended and the price rose to $409.07.
I was in minus again, with 2482 satoshis, but the dollar value did not change. I got a little less BCH, but exactly $5 back. When hedging, you always get the same amount back in USD, no matter how the price changes. This is very helpful for those who are afraid that their BCH will lose value. You can hedge against price loss also by buying USDT in the Bitcoin.com wallet, but the price in Detoken is better and you don't need a confirmation (at sideshift.ai, which uses Bitcoin com, you have to wait for a confirmation).
With Detoken you can conclude smart contracts in the Bitcoin Cash blockchain. They are safe, no one can cheat you, because nobody keeps your money. Only you have access to your BCH. Your contract is executed by the programmes in the blockchain. Long is something for risk-loving speculators. Hedge is for people who want to be sure that their BCH will not lose value.
It's a bit of a shame that you can't end the smart contracts early, but it's just a contract. When you sign a contract, you have to stick to it. I have secured my account with two-factor authentication and imported my seed into electron cash to be able to access my wallet even if the Detoken website does not work. Someone described how to do it here.
Please note that Detoken is prohibited in many countries.
Detoken is an example of legitimate smart contracts, as opposed to smart contracts like Forsage which are scams.
I'd like to save this and give it a try if you don't mind me saving it?