Why we invested in Zignaly
Not financial advice.
Sino Global Capital is excited to announce our investment in Zignaly. In this thesis, we will share our thoughts on the social trading industry and why we believe that Zignaly could revolutionize social trading; lowering the barriers to entry for retail investors into the cryptocurrency market.
Key Benefits of Zignaly:
- Simplified overview for (new) retail users. Zignaly offers a user-friendly interface with a simple and easy to use UI/UX suitable for retail investors and first-timers.
- Engaged customer support. Zignaly focuses on active engagement with its investors and traders to create an active and loyal community.
- Integrations with leading exchanges. Integrated with leading exchanges like Binance Kucoin and Bitmex with more to come.
- Wide range of social trading features. By offering a diverse set of services such as profit sharing, copy trading, signals and bots, Zignaly provides opportunities for all kinds of investors. On a social interactive trading terminal, users can share their ideas and results, as well as brainstorm new opportunities.
- Novel insurance mechanism to protect investors. Introducing a NFT based insurance protocol. Leveraging a drawback percentage and full value formula, Zignaly simplifies the process of investing while mitigating loss for users.
- Plug-and-play trading experience. With Zignaly’s underlying plug-and-play technology, getting exposure to crypto has never been easier.
- Helping Traders monetize their skills in an equitable manner. Zignaly helps skilled traders to increase returns on the strategies they have perfected over years. With its smooth onboarding process, Zignaly allows skilled traders to tap into its 70,000+ users and earn in a fair and transparent manner.
The substantial growth in interest for social trading among investors over the past few years is undeniable. Social trading provides innovative and effective solutions to both active and passive investors who are beginning their foray into crypto. Acting as social networks for traders and investors; users of social trading platforms can get exposure to a wide range of various asset classes without the requisite skill set of a proficient investor or trader. This is made possible via copy trading features whereby the user is able to automatically mimic advanced trading strategies and trades of experienced traders with social tools allowing constant interaction with these traders. Social trading provides many advantages for investors:
- Access to information and a reliable trading environment. Newcomers to trading can easily get overwhelmed by a constant flood of data and information. Social trading platforms can reduce this noise by aggregating all the necessary resources to a single ecosystem for investors and traders; allowing newbies to interact with veteran users.
- Eliminating the learning curve. Becoming a successful trader requires dedication and perseverance. Social trading allows would be traders the opportunity to take advantage of the high returns of skilled traders without the years of experience.
- Low entry barrier, high efficiency. Similar to social network platforms, the only requirement is to sign up. All the relevant information is available on the platform with no additional tools or high-end hardware required to get started.
Social Trading Landscape
Social trading has also gained significant momentum in crypto. This is due to the remarkable growth of crypto as an asset class, with high potential gains and low barriers to entry, more and more retail investors have been enticed into this fast-moving industry. Social trading is seen as a one-stop shop for online investing in stocks, derivatives and crypto - simplifying the investment process and increasing accessibility.
We prepared a summary sheet below to give a clearer view of the existing social trading landscape for both TradFi and crypto providers, as well as their differentiating features.
Demand for and interest in social trading is increasing globally, with trading volume on social trading platforms expected to grow to roughly $35 trillion by 2026.
Naturally, a portion of this volume will flow into the crypto landscape. This is where Zignaly comes in, simplifying the transition from TradFi to crypto.
Overview of Zignaly
Zignaly is a prominent leader in the crypto social trading landscape with customized copy trading options and wealth management services to fully cater to the needs of its users. Newcomers can leverage the advanced trading strategies available on Zignaly’s platform by copying signals and mimicking expert’s trades or investing in a specialized funds maintained by these professional traders. API integrations with prominent cryptocurrency exchanges in the space offer an interoperable, plug-and-play investment environment for users of all skill level and experience.
So far, the total trading volume on Zignaly has reached US$2 billion with over 70K users, US$110 million of linked balances and 5 million positions.
There are some market inefficiencies which make platforms like Zignaly attractive to novice investors:
- Exchanges. Leading cryptocurrency exchanges compete in a red ocean environment, focusing on providing sophisticated services which can be daunting for first-time investors and traders. Zignaly integrates with leading exchanges in a plug-and-play manner, offering the liquidity of exchanges to a blue ocean of new investors that are willing to put their capital to work in a more effective and efficient way.
- High barriers, risk for new investors. There is a high knowledge barrier for beginners as blockchain protocols grow in sophistication. On top of that, scams and volatile prices combined with a lack of experience can amplify the risks for first time investors. Social trading enables users of all kinds to invest without needing to worry about intricate and costly setups. By integrating exchanges with Zignaly, there will be a single central platform making investing more accessible and transparent.
- Expert traders. Experienced traders have spent years honing their skills, however there is no all-inclusive platform available for these traders to monetize their skills beyond their direct trades. Zignaly has created an ecosystem that connects investors and traders of all levels where traders can monetize their skills and establish a trustworthy reputation based on their engagement and performance.
The core features and services of Zignaly include:
- Trading Bots. Zignaly’s trading bot services enable users to leverage signals to trade in a completely automated way. By connecting Zignaly with the signal provider of your choice, users can trade like professionals without having to keep a constant eye on the markets.
- Copy Trading. Copy trading your favorite traders is easy. Investors can maintain their desired balance on the platform and automatically replicate the trading behavior of their chosen trader.
- Profit Sharing. Zignaly’s unique profit-sharing model enables users to invest in top-performing traders to achieve the same results as the experts by paying a percentage of profits as trading fees.
Profit Sharing & Copy Trading
What makes profit sharing unique and more beneficial than regular copy trading is that users are only required to pay a success fee when the positions reach a new high. In this way, both the investor and the trader have an aligned incentive, resulting in optimal execution of the trading strategy from beginning to end.
We illustrate the differences in a table below:
Zignaly’s Security Focus
Safety and security are a priority for Zignaly. To provide a reliable and robust social trading ecosystem, Zignaly has the following safety measures:
- Non-custodial. Zignaly does not hold the funds of their users. They are protected on the exchange side.
- Advanced encryption and secure storage. API keys are RSA-encrypted and stored in a database which is an isolated DMZ with no public access. Zignaly uses a certificate for encrypting and decrypting their API-keys which is separated and kept secure outside their servers.
- 2FA. Zignaly offers 2FA authentication which is required for getting access to a user’s account.
Many newcomers to investing are not fully aware of the associated risks and repercussions of investing. To mitigate common risks, while also protecting new users, Zignaly has constructed an innovative insurance protocol. The investor selects a pro trader and invests the intended capital. In a situation where the trader generates less return than the arranged percentage, the insurance protocol will automatically reimburse the difference, leveraging ZIG coin to provide the underlying protection against losses using NFT based insurance.
Now let’s have a deep dive into the insurance mechanics, consisting of four key elements:
- ZIG Coin. ZIG forms an indispensable component of Zignaly’s insurance protocol, providing users the ability to hedge against volatility and safeguard 10%-100% of their investment.
- NFTs. The in-house Zignaly NFTs system creates a comprehensive tracking system that simplifies the monitoring of inflows and outflows on the platform.
- Fund Value Formula. In order to mitigate significant losses for users, and to provide stable insurance pool liquidity, the Zignaly NFT is presented in conjunction with the fund formula.
- Drawback Percentage. Zignaly’s flexible and dynamic insurance model assesses the risk level of traders in real time. This is based on their historic trading performance as well as market intelligence. The risk is determined by a constantly adjusting formula known as the drawback percentage rate. This aims to gauge risk within the protocol.
- Transfer of Value. ZIG is key for the Zignaly insurance NFTs. Futhermore, users of the Zignaly platform can opt to get paid in ZIG upon completion of insurance. The premiums within the insurance pool are also paid in ZIG, which can be easily converted to stablecoins.
- Governance. ZIG holders will possess voting rights on platform updates and innovative features. Additionally, ZIG will grant early access to novel social trading features on the Zignaly platform.
- Discounted Platform-Wide Fees. Insurance fees, profit sharing services, trade commission rebates are all paid in ZIG.
- Loyalty and Rewards. The implementation of NFTs within the Zignaly ecosystem permits the creation of loyalty and reward focused NFTs which will be available for ZIG liquidity providers, borrowers or lenders.
Risks and Threats
- Regulations & Licensing: Potentially the largest potential hurdle in this space for all participants. Zignaly has already onboarded experienced consultants who are advising on licensing and jurisdictional decisions. To research and mitigate any future regulatory uncertainties, Zignaly is allocating 20% of raised funds to tackle this problem.
- Expert Trader Retention: Another common problem among social trading platforms is trader retention. Acquiring new customers is important, but if the right incentives aren’t in place to maintain investors and traders, users may move to their competitors. To mitigate this risk, Zignaly is working on some innovative initiatives and incentive programs to acquire and retain skilled traders in the industry.
- Competition: As mentioned above, social trading is an up-and-coming but extremely competitive market with many similar service providers. We believe Zignaly stands out from the crowd with an extremely dedicated and receptive team who truly cares about their users. By emphasizing on profit sharing and active engagement with their investors and traders, Zignaly could be the go-to platform in the space.
Future Opportunities & Trends
- Social Explosion: The world has truly gone social. In today’s world, narrative is controlled and driven by social media. Traders and investors want to show off their trading prowess and profits, which is a huge opportunity for Zignaly.
- Crypto Adoption: The 2020 and 2021 crypto bull run has everyone talking about the crypto market with millions of people are entering the industry for the first time. This is where the opportunity lies; providing a hassle free, simple UI/UX platform to these enthusiastic newcomers. As exchanges are seeing more trading volume, the demand for supporting services such as social trading are expected to grow further.
As blockchain and cryptocurrencies evolve and continue their rapid maturity, the need for simple and accessible investment platforms will grow. We expect social trading to become a more prominent industry in the space as more newcomers and passive investors entering the ecosystem. Zignaly will be the first port of call for many investors beginning their crypto journey, as a bridge for investors and traders - providing a social platform for them to communicate, share ideas and execute trades in a trustable, secure and equitable manner. Don’t forget to follow @zignaly.