A Swiss fintech has launched a token that allows investors to make a profit if the underlying cryptocurrencies decline in value.
Investors in cryptocurrencies need strong nerves given the wild swings in valuation of Bitcoins and Ethers. In September for instance, Bitcoin dropped by 15 percent in a single trading day.
Short Lyci
Hitherto, investors had to rely on derivatives to profit from such declines – for instance on products launched by Vontobel two years ago. But these instruments are fairly risky. Which is why Zurich-based crypto-firm Lykke now launched a new product.
Lykke launched a token called Short Lyci (pronounced as Lucy). Investors in Short Lyci profit whenever the underlying index falls. If for instance the index of 25 currencies declines by a tenth, Short Lyci owners will gain 10 percent, Lykke founder Richard Olsen told finews.com in an interview.
Adding a Brake
Modern investing is akin driving a car without a brake, he said. Short Lyci is a simple way of adding that brake, Olsen added. In the volatile crypto-market, investors can now speculate on rising and falling prices taking an equal level of risk.
Lykke will also make it possible to switch between Short Lyci and its already existing Lyci token. This will render obsolete the detour via the U.S. dollar. The Lyci token costs an inbuilt fee of 3.45 percent per year. Lykke will also profit from market making activities, Olsen added.
