Interview with Richard Olsen, Lykke’s CEO, on Short LyCI
Why is Short LyCI called short?
'Short' is the term that professional traders use for investments that are profitable when the market drops. This is opposed to investors buying 'long' products. ‘Long’ is the term for traders that make money out of price rises hoping that in the long run the asset will continue growing in value. Professional investors have access to financial products that can still make money even if the market as a whole has moved southwards. This is one of the things that maintains the gap between professional investors and regular investors.
However, now ShortLyCI offers regular investors an easy opportunity to make money out of downward price movements; this is a first in the crypto market.
What is shorting assets?
In simple terms 'shorting' means selling an asset at the price now, for example 10 USD, and then buying the asset back in the future, hopefully at a lower price of say 8 USD and cashing in a 20 percent return.
How can short LyCI help users?
ShortLyCI is a token that performs this type of sell-and-buy-back trade in the background without the investor ever having to worry about the complexity of this transaction or managing the risk that comes with it. The investor cannot lose more than he/she invested which would be the case in margin trading. Short LyCI manages all the risk for you. If the user invests 10 USD in ShortLyCI, the maximum risk is 10 USD.
Are there any fees?
Yes. The investor pays 3.45% percent. This is low once you take into account what work we do in the background. Lykke rebalances ShortLyCI minute-by-minute and the user does not have to pay any costly bid or ask spreads.
Difference between LyCI and short LyCI.
LyCI is the ideal investment in the expectation of crypto prices going up. ShortLyCI is the 'antibody' so to speak of LyCI - if LyCI goes down, then ShortLyCI appreciates in price. LyCI and ShortLyCI are brother and sister with opposite signs. So, if an investor expects cryptos to go up then he/she buys LyCI. As soon as he/she expects a reversal of the trend and crypto prices to drop, they will sell LyCI and buy ShortLyCI. These two innovations are the ideal duo to profit from the big price volatility in cryptos, whether the price rises or falls. ShortLyCI is a truly unique product in the whole crypto space that can open possibilities for professional and regular traders alike!
Whether you are looking to trade cryptocurrencies like Bitcoin, Ethereum, Litecoin and Ripple every day or just want to buy and HODL - Lykke allows you to securely buy, sell and store cryptocurrencies and other digital assets with 0 trading fees on the Swiss-based Lykke Exchange. To learn more, visit our website.
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