March 24, 2023
XETA Capital officially transitioned to an OTC-Only trading system on March 10th, 2023, after migrating from RadioShack DEX. Our decision to depart from RadioShack was based on its failure to meet XETA Capital's expectations of consistency and transparency, which we have upheld since our inception. The reasons for our departure are explained in greater detail in this article.
What implications does this shift to OTC-Only have for our members? Will this change bring any advantages, and what effect will it have on the future of XETA Capital? We aim to address these inquiries in the following sections.
At Risk RadioShack
We recently received news sources indicating that RadioShack may be on the verge of filing for bankruptcy. Seeing how RadioShack is where we held our liquidity and where the $X3TA token was primarily traded, this news was obviously incredibly concerning to the XETA Capital team.
It may come as a surprise, but earlier this year, a U.S. bankruptcy judge ruled that bankrupt cryptocurrency companies have ownership of their clients' deposits. This decision implies that our liquidity would be jeopardized if RadioShack filed for bankruptcy. Consequently, the XETA Capital team decided to safeguard our company and community by removing our valuable liquidity from the platform.
By transitioning to an OTC-Only model, we are shielded from any legal challenges that may arise with a DEX like RadioShack.
Bye-Bye Bots
A 2019-2020 study by Cornell University documented and quantified "the widespread and rising deployment of arbitrage bots in blockchain systems, specifically in decentralized exchanges (or "DEXes"). Like high-frequency traders on Wall Street, these bots exploit inefficiencies in DEXes, paying high transaction fees and optimizing network latency to front-run, i.e., anticipate and exploit, ordinary users' DEX trades."
In essence, the front-running, sandwich, and MEV bots described in the above research paper take advantage of defi communities, including ours, to extract value. As a result, the XETA Capital team had to compensate for the extracted value through open-market buybacks to keep the price relatively stable. By removing the necessity of these buybacks, the team can now allocate these funds toward opening HFT Pools more frequently.
Opting for an OTC-Only system eliminates the risk of these potential sa-bot-eurs, thereby promoting fair and unbiased trading, improving market integrity, and bolstering community confidence.
These benefits ultimately contribute to a healthier and more sustainable crypto ecosystem for our community.
Putting Our Liquidity To Work
The liquidity previously held in RadioShack ($530,000) has been transferred to one of our low-risk, High-Frequency Trading funds. The profits generated by this fund will be utilized for buybacks when required, a practice that has been regularly carried out over the past eight months.
The team will also utilize the profits from the liquidity in our low-risk HFT fund, combined with a percentage of XŌN claim and membership fees and profits from company OTC sales, to address any potential backlog in unsold OTC listings.
Conversely, when OTC listings are light, XETA Capital will list tokens for sale and use the proceeds to further perform buybacks (with a portion going to charity). To further promote transparency, we have made this link available, allowing you to track all team OTC sales.
Other OTC Trading Benefits
OTC trading provides several other advantages to our members, such as:
• Allowing large trades to be performed without affecting the asset's price. • Offering a higher degree of privacy than DEXs, as trades are conducted directly between two parties without being visible to the public.
• Trades are less prone to price slippage, as trades are executed at a fixed price agreed upon by both parties.
$X3TA Token Value
To establish a functional "XETA Economy," the token's value throughout the XETA ecosystem will be determined by considering system growth, inflation, and deflation factors. As of March 10th, the value of $X3TA in OTC, HFT Pools, and LAKEs was established at $60.00 USD, with a daily increase of ~$0.14 until otherwise stated.
The team will determine the value increase by considering various factors concerning the current and future expansion of the XETA economic ecosystem. This calculation will be continuously reviewed and modified as necessary.
Members can locate the price of the $X3TA token on the XETA Capital dAPP.
How to Trade $X3TA Moving Forward
With the decision to migrate to an OTC-only system, where all trading of the $X3TA token will now occur exclusively, any token trading outside the OTC system is strictly prohibited. Trading the $X3TA token outside our OTC mechanism violates our Terms of Service, risking a ban on your wallet and forfeiture of XŌNs and potential returns. Please see this article for more information about outside trading the $X3TA token.
For a step-by-step walkthrough on how to use our OTC system, refer to this article.
As stated in our recent AMA, XETA's team of developers has constructed our own DEX as a backup plan in the unlikely event we face issues with our OTC service. This backup DEX is a forked version of TraderJoe, one of Avalanche Networks' most notable DEX platforms.
The use of OTC-Only offers the added benefit of increased value for listings that may require more than a day to sell as a result of the appreciation of the $X3TA token.
Conclusion
To sum up, this evolution in $X3TA trading is a strategic decision aimed at ensuring the safety of the company and community while enhancing market integrity. At XETA Capital, we remain steadfast in our commitment to bringing innovative solutions to market and maintaining an open dialogue with our members. As we conclude, we leave you with this quote from the great R. Buckminster Fuller: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
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