CoinIndex.Agency is a blockchain startup that calculates indexes for the cryptocurrency market. In 2018, the company received a $20,000 grant from Google Cloud for annual storage. The co-founder and CEO of the startup Yuliya Sporysh is a real crypto woman, an expert analyst who has background in finance, IT, and PR. We got an opportunity to talk to Yuliya, and ask her about the peculiarities of working with crypto markets and her thoughts about the future of the blockchain industry.
Yuliya, what did you do before you got into blockchain?
I am a sociologist, PhD, but I have been working in tech companies for over ten years. In 2011, I joined the TRDATA fintech project and was running it before founding CoinIndex.
What prompted you to plunge into the crypto industry?
Technological innovation is the driver of growth for many industries, and finance is not an exception. For many years, I worked with banks/financial companies and developers, so it became evident that the blockchain industry and the digital money market were a new blue ocean. That is why my partner and I decided to assay our strength at this market.
How did you get your first cryptocurrency? What coins do you have now?
Oddly enough, I received my first crypto as a gift (smiles). But I can't tell you what coins I currently hold since I don't want it to be "investment advice".
Tell us more about CoinIndex, please.
We started with the idea to create the first index agency for the crypto market. At that time, the market was still quite wild, and there were no benchmarks. Our idea was to make CoinIndex "the crypto S&P" (which has been calculating indices for traditional industries for 135 years).
What exactly is the agency doing today? Who is in your team?
First, we have chosen one major area — working with market data. We know very well how traditional financial markets work and what information market players need. We adapt this knowledge to cryptocurrencies, knowing that market developments and needs are similar (although the speed of development is ten times higher).
Now, we are working on creating a cryptocurrency index provider and data provider for the newest segment of the crypto market — derivatives.
The operating name of the project is ContractMarketCap — similar to CoinMarketCap, but contracts are the units of measure. One futures contract, an option or a swap may have from 0.01 BTC to thousands of coins in it. We also have a promising project in the R&D stage — INDEXProtocol, that uses blockchain and financial data to put traditional financial calculations of indexes, rates, fixings and any other market indicators on the blockchain rails and smart contracts. This helps to avoid any fraud, adds transparency, and makes it impossible to manipulate with the key financial indicators that often affect the entire global economy. (Think of the manipulation and scandal with the Libor rate, that all banks take into account, even when they give you a credit card or mortgage).
There are four of us in the team now, and all worth the weight of gold (smiles).
Tell us more about collecting and processing index data.
When we first tackled this issue, it was difficult to get information, we checked all available sources, and there were differences. So we had to build our own infrastructure to collect data directly from the exchanges. This proved to be quite a challenge, both in terms of software and infrastructure. Google's grant program helped us a lot since we got free access to its cloud storage.
But after the year of building the platform, testing, and collecting data, the industry changed, and now this a not top issue anymore. Many commercial providers have emerged, which allow receiving data for quite a little money. Traditional providers have also changed — cryptocurrency data is already available at Bloomberg and ICE.
And then we faced a dilemma, traditional for startups: if you choose something that several companies are already doing, then you have to be ten times better. Otherwise, you won't survive. Or you need to change and do something that your competitors are not even thinking about.
So now we have shifted our focus to non-publicly available data and are in talks with partners to aggregate this data.
If the availability of data on the top 20 coins is more or less clear, then information about some projects is not easy to find and verify. How do you solve these issues?
Now the problem has shifted somewhere to the top 200, for some coins it is still relevant, though. The main difficulty is obtaining information not about the price, but the number of coins in circulation. Traditional financial market valuation techniques are not always appropriate. And this information is vital for calculations of some key metrics, such as capitalization and indexes that depend on it. The error results in millions and hundreds of millions of dollars. The speed of data updates is another problem: if in the traditional world, stocks are issued once or twice a year, the supply of crypto coins can sometimes change even every second.
We can't receive such data from providers, so this is hard work. Quite often we need to contact a primary source, including a white paper of a project, to find the information on the distribution of coins, to understand what shares are already in the market, who owns it, what is blocked, and why. In other cases, we need to connect directly to the blockchain nodes to get the actual metrics from there (that's where they are checked and valid).
Why is the crypto community so negative about CoinMarketCap?
CoinMarketCap collected necessary financial information from all available sources, without changing nor filtering it. This influenced the quality of the data and cast doubt on the appropriateness of the resource in general. Hence the negative attitude. However, everyone uses it despite everything, and it is more popular today even than the infallible Wall Street Journal and Investing.com. Now they have already paid attention to the quality of information, and put efforts to clear the market. And they have succeeded in this.
What is the profit model of CoinIndex?
Different products have different monetization models. We plan to give a lot of information for free. And our INDEXProtocol project is generally designed as an open-source system, so, any developer will be able to improve it without any restrictions.
We also have free websites with data. But you need to subscribe for API access for direct integration into third-party systems — that's the monetization for us. Also, we do partner projects and customized solutions for large clients.
Who are your customers, and how do you find them? Why are you better than your competitors?
Our clients are sophisticated traders — they can be individuals, professional traders, as well as brokers, analysts, researchers, data providers, and exchanges.
Our main advantage is that we are one step ahead of the others. Of course, great ideas may come to the minds of different people at the same time. However, so far, none of our competitors looks at the market the same way and offers such complex products. For example, the well-known British provider CryptoCompare also analyzes futures data but uses only two exchanges and one tool (BTC). We monitor 24 exchanges, collect data from 13 platforms and 150 different contracts. There is no huge competition at all in terms of indices, so we are planning to become number one in the emerging market.
Will Bitcoin ETFs appear? What consequences will such a decision have?
Of course, they will. In terms of consequences, there are two options: either nothing will change, or this will lead to the qualitative growth of the industry. Which scenario we'll have will depend not on the very fact of their appearance (after all, this is just a financial instrument), but on the type of those ETFs. If it is far from the basic principles, for example, it doesn't provide BTC backup on the depository account, then most likely we (the crypto industry) won't get what we want — I mean an increase in the funds that flow and invest in crypto tools. If it is — on the contrary, it can push the price to increase tenfold. After all, ETF is a tool in which, for example, the New York Police Pension Fund can invest, and it has $400 billion under management.
What do you think of Facebook's Libra?
This is a very interesting project, both on the technical side, structurally and legally. We are slightly afraid that lawmakers will accept this as a threat to global finance and introduce draconian countermeasures. This will negatively affect the entire industry and will require a lot of time and effort to implement the values that underpin cryptocurrency as a socio-technical and economic phenomenon.
Our team is monitoring the project. We were even the first to translate and publish the first articles about the general architecture of Libra and the Move programming language itself.
As for the engineering side, this is a very interesting and powerful project that will develop independently of regulations and will affect the development of other projects, because the entire code base is already in the public domain.
TON or Libra?
These are two different ecosystems with different economic models. Choosing only one system is impractical. It is worth remembering that this is another method of monetizing the company, and you need to make a choice based on your own needs. But our definite opinion is that the implementation of each of the projects will lead to the mass distribution of crypto in general and the appearance of at least a billion people who will use blockchain daily and the services built on its basis (not necessarily related to cryptocurrency). Therefore, both TON and Libra!
What do you think about DEX? Is Initial Dex Offering the next trend?
As developers of a protocol for DEX derivatives, we certainly believe that this is the future. But then again, let's not get off the ground: DEXs won't be the only trading platforms, it is too early to predict death of centralized exchanges.
Although large players are already actively pulling the blanket to their side. For example, every week, our analysts notice several projects that move from the Ethereum platform to Binance, only because of DEX, which is now number 1 in terms of capabilities.
Will we have a crypto hryvnia? How do you feel about Kuna's UAX?
We will surely have one. Mike (Mike Chobanyan, founder of the Kuna Exchange — editorial note) and the entire Kuna team have been working hard for a long time to make this real. I'm sure they are the only ones who can launch crypto hryvnia. Although I have to admit it won't be a real cryptocurrency, it is created without its main features, so it will be a digital payment tool on blockchain.
Does Ukraine need crypto regulation? When and what to expect?
Whether we want it or not, regulation in this or that form will be. The market isn't regulated yet, but the state is currently preparing the Strategy for the Financial Sector Development until 2025, and I think we'll soon hear some news about it.
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