How it Works: Thiel-Backed Crypto Exchange for Whales is Live
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How it Works: Thiel-Backed Crypto Exchange for Whales is Live

After Thiel's N26 crypto bank, 'Bullish' is another step in borrowing the best from centralized and decentralized systems.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Prolific FinTech and blockchain investor, Peter Thiel, has set the stage for a new kind of cryptocurrency exchange for the VIP crypto whales. Licensed in Gibraltar, the exchange is now live with a SPAC merger scheduled in the near future.

‘Bullish’ Goes Live but SPAC Merger Is Yet to Complete

As of this Tuesday, another cryptocurrency exchange comes online – Bullish.com, although only for select institutional clients with BTC, ETH, EOS and USDC on current offer. The project was first launched in May as a subsidiary of Block.One. The capital raise was led by Peter Thiel, hedge fund veterans Louis Bacon and Alan Howard, German investor Christian Angermayer, and Hong Kong tycoon Richard Li.

The Chairman of Bullish is Brendan Blumer, as the CEO of Block.One. Blumer described the new crypto platform as one that caters to institutional investors taking advantage of the latest blockchain technologies:

“For years, we’ve been working to develop an exchange infrastructure that’s designed to meet the needs of investors who are seeking secure exposure to digital assets on a regulated platform, and with innovative liquidity and portfolio management options stemming from an entirely new exchange architecture. Bullish is the very culmination of this work and I am very proud of our team for getting us to where we are today.”

One of the prerequisites for the launch happened on November 9, when Bullish got its Distributed Ledger Technology (DLT) license from the Gibraltar Financial Services Commission (GFSC). The license should go a long way in securing the confidence of crypto whales.

Prior to that, in July, Peter Thiel set up Bullish to go public via the increasingly popular SPAC (special purpose acquisition company) funding model. The name of the involved shell company is Far Peak Acquisition Corp. The merger is valued at around $9 billion as it is expected to complete by the end of the year, or by Q1 2022.

At that time, Far Peak CEO, Thomas Farley, will become the CEO of Bullish. Contributing to the SPAC funds were Galaxy Digital, Cryptology Asset Group, and BlackRock.

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What Makes ‘Bullish’ Special?

Similar to Binance with its Binance Smart Chain blockchain, Bullish uses EOSIO blockchain software to deploy its own private and customized trading engine noted for high performance. This is why EOSIO should not be conflated with EOS, which is a public blockchain created by EOSIO software.

With that caveat out of the way, some of the core features of blockchains created by EOSIO are the following:

  • 0.5s block time – the time it takes to validate a new batch of transactions. For instance, Bitcoin has a block time of 10 minutes.
  • 10,000 – 20,000 tps – the speed of the network to conduct transactions. For instance, Visa is able to process up to 24,000 tps, while Bitcoin’s core network is capable of 7 tps. Of course, Lightning Network, as a Layer 2 scalability solution, levels up Bitcoin speed up to 100,000 tps.
  • Scalable smart contracts – because they are written in C++, one of the most prolific and generalist programming languages, there is a greater pool of developers to tap into.

Alongside the EOSIO-based blockchain, Bullish uses automated market making (AMM) and deep liquidity pools, currently set at $3 billion according to the SEC filing. Borrowing from DeFi protocols, this means that institutional investors can partake in a kind of yield farming, as they receive passive fees from lending their staked crypto assets. This also includes margin lending.

Another hybridization at work with Bullish is the use of a Hybrid Order Book. Within the DeFi ecosystem, decentralized exchanges (DEXes) make use of AMMs to provide trading liquidity from liquidity pools. Correspondingly, users are incentivized to stake their funds into liquidity pools, thus becoming liquidity providers (LPs).

Order books are useful to visualize the current state of the market, providing depth of market (DoM) via bid (green) and ask (red) walls. (Image credit: TradingView.com)

In exchange for creating such a decentralized and permissionless exchange, LPs receive interest whenever other traders tap into those liquidity pools. Although some DEXes don’t use order books, but simply peer-to-peer liquidity pools for token swaps, on traditional exchanges, this flow of traders’ asks and bids for swapping tokens is recorded and represented with an order book.

However, if there isn’t sufficient liquidity within liquidity pools for token pairs (ETH/USDT), trades cannot complete instantly. To avoid this and retain order books, Bullish Hybrid Order Book combines all the elements necessary for smooth trading: AMMs, deep liquidity, and a traditional limit order book.

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Do you think crypto exchanges like Bullish will create…bullish signals as more whales take advantage of its exclusive VIP features? Let us know in the comments below.

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