My experience with the Detoken Smart Contracts

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Avatar for Telesfor
3 years ago (Last updated: 1 year ago)

Update:

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).

Conclusion

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.

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3 years ago (Last updated: 1 year ago)

Comments

I'd like to save this and give it a try if you don't mind me saving it?

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3 years ago

You can do it

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3 years ago

I will try this today, I think this is the best for me since I have some fear of losing about trading. 😁 Thanks for this, very helpful. ❀️

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3 years ago

This to me is gambling. But I like the concept. And the fact that you don't lose your dollar value but BCH.

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3 years ago

I think you are mistaken, gambling is pure chance. Slot machines, lottery, toss coin, winning is based on luck and random. The risk-reward ratio remains the same. However, trading is quite different, there is skill involved and people spend lots of hours and money to study trading. You cannot say the same thing for lottery, slot machines and toss coin. Anybody can do this, even a monkey can play a toss coin and will have a 50% winning rate. In trading, risk-reward ratio is variable. You can mitigate risk by studying technical analysis, correct entry and exit, knowing the general direction of the market, etc.

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3 years ago

Yes, that's true, you can lose BCH when hedging, but for very many the USD value is more important at the moment. Almost everyone calculates in USD. But in fact it is slowly changing, see 1BCH Club.

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3 years ago

I'm still new here and I'm on way into discovering bch and I already know it as a peer to peer electronic cash. It seems convenient to me and I'm excited to used BCh for the future. I find your articles guiding us newbie and I was wondering sir why the bot stop tipping me. Thanks in advance!

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3 years ago

Nice article... Please I need your favour in retrieving my previous wallet.. A new one was created for me without me knowing... And I have a balance if 5.5$ in the old wallet... Please help me out

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3 years ago

Once you have written down the seed of your old wallet, you can import it into the Bitcoin.con wallet as I have described here. https://read.cash/@Telesfor/how-to-integrate-readcash-wallet-into-bitcoincom-wallet-08cbf043

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3 years ago

Oh, I love how you explain it. I will try it for sure. I am a little annoyed by the Bitcoin.com wallet recently, I mean shift.ai they keep disabling the swap.

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3 years ago

Yes, it's annoying. The bad thing about Detoken is that you have to wait 144 blocks and you can't end the contract early.

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3 years ago

Hmmm, yeah that's the drawbacks probably because it's a smart contract not like an exchange but it is still good if it's profitable.

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3 years ago

I need to experience using Detoken because I don't get it unless I experienced it.

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3 years ago

Try it. It's fun. You can bet a little or hedge a little, then the risk is low.

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3 years ago

Yes I tried it yesterday, hedge to be specific and now, this is what it says.

Start value $6.35 = 0.01466716 BCH Current value $6.35 = 0.01438702 BCH P&L -0.00028014 BCH Start price $432.94 Duration 1 day Expires in 89 blocks (~14 hours)

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3 years ago

No matter what the price is, you get $6.35 back. If the price goes down, you will get more satoshis than you locked, if the price goes up, you will get a little less. It pays to hedge when the price falls.

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3 years ago

Oh so it looks like a sell/short in trading? You will still get even the price fall?

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3 years ago

Yes, I think it's somewhat comparable.

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3 years ago

I laughed a little that you think you will lose your BCH if your position won't go as you want. 😁 You might lose all of it if it goes down to -25% and get liquidated, but if not, you will still lose some amount of BCH if your long position prediction was wrong. Currently I'm just hedging, the market for BCH is very risky.

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3 years ago

Now I know that too, but I had no idea about such things before. For me, betting was all or nothing. Like SatoshiDice πŸ˜„ On Detoken it is written :

Bet that the price of BCH-USD will rise over a 24 hour period with 3:1 margin.

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3 years ago

I am not good at taking risks with crypto hence I wouldn't try the "long" hedge will be good for me calculatetively

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3 years ago

"Long" is speculation. With "hedge" you get exactly the same amount back in USD after about 24 hours. In my case it was 5$. Thank you for your comment.

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3 years ago

Am always losing in Binance futures.. I want to try this. Thanks for the info

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3 years ago

πŸ˜™πŸ˜šπŸ˜™

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3 years ago

I am actually enjoying Detoken because it's a little stressful than the others. I have 4 transactions now, 1 long and 3 hedging... As of today, only the long transaction is color green😁

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3 years ago

As the long is valued at 3:1, you will probably still make a profit. Thanks for the tip.

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3 years ago

Wow is that so. Go for the Long then πŸ˜‡πŸ’ƒπŸ’ƒπŸ’ƒ

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3 years ago

Nice article, i might try someday :D

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3 years ago

I always go for long indeed

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3 years ago

Hello Sir I come back! So happy that I did not lost. I just thought so, as It all gone but it is just there and I profit $0.28πŸ˜‡ . I will try the Hedge laterπŸ˜‡

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3 years ago

The best time to hedge is when the BCH price falls. When the price rises, there is no need to hedge.

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3 years ago

Okay thanks for the info so I'll go with the long then? But the BCH is high as of now is it okay? I will wait for it to fall then I will LongπŸ˜…

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3 years ago

I read the article carefully. Maybe I'll try too. Thanks for the great explanation.

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3 years ago

I'm glad you enjoyed it. Thank you for the tip.

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3 years ago

Oh I'm so unlucky with Long. I thought it was all gone my $2.30 now that I read your Article it will come back! I will check it later. Maybe I will try Hedging too. Thank you for sharing thisπŸ˜‡

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3 years ago

You certainly didn't lose everything, even if you were in the minus. Check it. Thank you for tipping me πŸ˜„

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3 years ago

Yeah so happy that I didn't lose itπŸ˜‡ And sharing is caring πŸ˜‡

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3 years ago