While DeFi has long been labelled as “Wild West” of crypto, it is the storage of untamed opportunities for the ones who apply proper tactics to uncover them. Since day one, volatility has remained the number-one concern – but the other side of the coin has been the chance to multiply your savings that is hard to contest with on a traditional market. Yet, recent years also exposed the loopholes in crypto regulation and a need of developing a straightforward legal framework for businesses to follow. This grew especially obvious with the CFTC-ruled Polymarket case: following a charge of the protocol with $130 million in traction with a fine of 1.4 million USD, the result was a provision of the clear path for other projects to follow in the binary options industry; this occasion once again re-stated the tremendous significance of legal compliance even on decentralized grounds – the lesson hard-learned for many DeFi operators even today.
Now that the niche of binary trading is proliferating, more trailblazing solutions try to justify the high expectations levied upon them. Among them, Value Network, a multi-chain prediction markets protocol established in 2018 by Artem Levin, founder of the project, supports an important mission: from its start, the project aims to effectively confront the most burdensome challenges causing unrest in the industry. From 2020 onwards, binary options have become the main focus of the project. The lack of transparency the niche has been ill-famed for was a source of a problem, for the idea of conducting binary options trading in the decentralized space has long stirred mistrust among investors. Value Network found a way to repair this: through an automated market-making mechanism on multiple blockchains blockchain synchronized with the veracious Chainlink oracle, Value Network took a proactive step away from the stereotype of the platform’s conspicuous performance, often putting the interests of traders at stake.
To curb the regulatory negligence which formerly was a source of numerous scandals in the space - such being unsolicited offers, price faking software, identity theft and, above all, unregistered transactions, wash traders, Value Network provided a set of technologies to solve that. These include: the open-source code of the project on Github, industrial KYC solution SumSub and claim of rewards sourced directly from smart contracts, even if the UI is down. By its proactive approach, Value Network sets the new plank in adopting the standards set up by CFTC in the aftermath of the Polymarket case. But this is not the sole source of strength for Value Network: to upgrade the platform’s functionality, the project recently announced the referral system that split commissions received from trades and spreads them across referral wallets. In the future, the interoperable nature of Value Network will bridge spillover advantages across smart contracts and underlying wallets, which is going to transform the project into an ambassador of wider DeFi philosophy: creating a unified decentralized space and making it accessible to all.
Being encouraged by the direction followed by Value Network, I reached out to the founder of the project, an accomplished entrepreneur Artem Levin, whose expertise will help me to uncover the latest trends project- and industry-wise.
First of all, could you tell me a bit more about yourself and your professional experience?
Hi, thanks for inviting me here. I’m Artem Levin, I’m the founder and the founder of the Value Network project. My passion for decentralized products and the capabilities of blockchain led me to establish my own project in 2018, which specialised in crypto-backed loans. With the flow of time, and more specifically, in 2020, we decided to concentrate efforts on binary trading options as the growing product in the field. Eight years of my professional experience gave me valuable lessons, and those include the importance of optimization, product interface, and, needless to say, the solid legal stance of whatever my project decides to progress with. The expertise acquired in various aspects of developing a young startup project – namely, development of technologies, marketing and R&D, gave me an invaluable insight into the project’s intrinsic principles of operation, and the importance of relating those with the general industry trends. So yes, I had to become an expert in both.
2. What inspired you to establish Value Network, and what are the main aims pursued by this protocol?
The desire to establish Value Network came, first of all, from recognizing the scale of the problem present in the binary options industry: “scam” used to be almost synonymous with this type of activity. The sad truth is that the lion’s share of all platforms were engaging in the provision of fraudulent services and thus, reaping off the clients by displaying unfair rates and theatricalizing issues with withdrawals. The realisation of a reliable binary options solution was desperately needed. Therefore, in 2020 we took a decision to revive our business and focus on binary options. We are committed to solving the main problem of the Binary options industry by putting the bets against each other on multiple blockchains, which allows users to compete against each other. UI interfaces are made user-friendly and engaging, setting us apart from the majority of prediction markets' platforms.
3. Could you say a few words about the mechanics of Value Network?
Prediction markets is a dynamic form of a derivative - Binary Option. A binary option is a financial exotic option in which the payoff is either some fixed/dynamic monetary amount or nothing at all. It works much better than spot on flat markets.
For example, you have the asset (Bitcoin), the Strike price (100000 USD), Time of expiration (3 months). So you are predicting whether the price of Bitcoin will be higher or lower than 100K in 3 months. The settlement of the markets is made by the open-source smart contract, which checks the Chainlink price oracle at the time of expiration of the markets, and transfers the funds of losers to the winner in the proportion of the pool. If, in the example mentioned above, your prediction was 150$ on HIGHER and other participants predicted 135$ for LOWER, you get 135$ as the return to your 150$ prediction, as you have 100% of the pool. If someone would have joined you on HIGHER with an extra 150$, you would get 67,5$ as your proportion of the pool would be 50%.
4. What are the achievements of the Value Network so far? How has it progressed since the date of its birth in 2018?
Back in 2018, Value Network made the first MVP of crypto-backed loans - the same as Ethlend (AAVE) back in the days. In 2020, we made progress of re-starting a project with a pivot to prediction markets. Fast-forward into 2021, Value Network kicked off the year by launching the operation of MVP on Ethereum. Among most recent news, our project secured a development grant from QTUM foundation, investment support from Expert Dojo and well as got into the spotlight on Binance Hackathon. Now the protocol works on Ethereum, Binance Chain and Polygon, and the total volumes that went trough the protocol exceeded 600 thousand dollars in native currencies of the blockchains.
Since the niche has always been found slightly more controversial – as the Polymarket case clearly showed – I wanted to ground Value Network on the solid principles of reliable market operation. Let’s not disregard the latest referral system update, which adds value to Value Network operation through expanding the scope towards marketing activities and ensuring that transparency is preserved all the way along with the operation.
5. What changes were adopted by Value Network in response to the CFTC-propelled regulations triggered by the Polymarket case?
I would like to mention a few things. First, the Polymarket case had significant consequences over the subsequent operation of all binary trading market protocols. Providing background: CFTC regulator intervened to extend the rule of law over the protocol that, due to the nature of its operation, already classifies under CFTC jurisdiction in technical terms.
Apparently, the regulatory points clarified by CFTC after Polymarket made Value Network re-emphasize its strong sides, namely: operation on open-source smart-contract, ability to withdraw funds even when UI is put down, and, very important, provision of price feeds by Chainlink, a 3rd-party service. All of this leaves no doubt as to whether the operation of Value Network is secure, as user safety is treated as a top priority.
6. Value Network Blockchain-based referral system – what exactly is that?
Value Network Blockchain-based referral system is a system of smart-contracts that settle the split of commissions from the trade volumes on the protocol to referrals. In it, every blockchain wallet is connected to the unique referral link, allowing referrals to utilize the traffic and influence to the real money, instantly, on Value Network prediction markets protocol.
The smart-contracts, making the settlements of the participants, are open-source and available on the GitHub of the project for community review. Now the solution is implemented on the Polygon Layer-2 Ethereum solution. Moreover, Value Network is working on interoperability features for the referrals. (For example, if the link was provided on Polygon, but the trader decided to trade on BSC, so the referral should still be able to receive the commission anywhere).
Value Network Blockchain-based referral system provides a transparent and easy way to see how each marketing channel influences the protocol regarding key metrics - volumes. This is made through a transparent Rewarding tool - split of the volumes on the protocol goes to the referrals. More than a rewarding tool for the referrals, Value Network Blockchain-based referral system allows VC investors of the project to easily check how the marketing funds were allocated and what is the exact efficiency of each marketing channel. Transparent and on-chain. Ultimately, Value Network Blockchain-based referral system allows everyone to see solidly the marketing and tracktion of the project and get rewarded instantly, depending on the marketing influence.
7. How would you characterise the state of the DeFi industry nowadays?
I can say upfront that binary contracts grew massively popular throughout the last decade. Due to the emergence of DeFI and blockchain, this is a fresh opportunity not oversaturated yet, that’s why a lot of engagement is going on. Overall, DeFi has grown up to account for nearly $150 billion Total Value Locked, which is even more substantial when compared to the figure of roughly $2-3 billions only 2-3 years ago. This unveils a vast opportunity stored within DeFi, and the need for its active realisation. Value Network took a proactive stance and stepped in to develop a compliant prediction markets protocol in DeFi, which already reaps rewards of increased customer loyalty.
8. What trends will dominate the DeFi landscape in the coming years – and how does Value Network plan to stay on top of industry development?
From what we can see nowadays, new models of generating financial results is a bespoke leader in terms of business opportunities. This model can further serve as a basis to produce a full-fledged solution and potentially, an ecosystem of services, and I believe it’s in there for the long run. The time will show which direction turns out to be the most profitable; but whichever path Value Network decides to pursue, rest assured of the high-level compliance which is so indispensable in the modern business world.
9. Finally - what are the plans ahead of the Value Network multi-chain prediction markets protocol?
Above all, we are planning to make a close interaction with legal and regulatory experts a part of our project’s DNA. In the long run, this will help us to further enlarge the user base and create a real community around Value Network. Further, the adaptation of a blockchain-based referral system is an essential part of our ongoing efforts to improve the technical functionality of the protocol. We are sure to keep our followers on top of all upcoming developments.