The financial landscape seems adamant to drift away from the age-old centralized structure to adopt a decentralized structure. Such was the formation of Horizon Protocol – a differentiated exchange in the heart of a decentralized finance ecosystem that facilitates the trading of real-world assets on the blockchain. Horizon Exchange can deliver seamless trading across a variety of assets such as Facebook stock to synthetic oil to Fractionalized NFTs.
Traditional financial institutions and Horizon Exchange vary significantly in features, benefits, and limitations. Assets on traditional finance tied to physical commodities are represented in fiat – in most cases, the US dollar. Horizon Exchange allows users to gain exposure to a host of traditional financial assets ranging from equities, corporate assets, real estate indices, commodities, market indices, physical assets, and unique datasets as well as synthetic crypto assets by staking the platform’s native token, HZN.
These synthetic assets are tied to a liquidity pool whereby holders of Horizon Protocol can stake HZN with financial incentive for driving the ecosystem by providing collateral. Assets on Horizon Exchange are synthetic and are known as zAssets. By backing these assets to a community-based liquidity pool it provides, theoretically, ‘infinite liquidity’ limited by the amount of collateral and no slippage due to there being no need for a counterparty to make a trade.
Comparison table between Horizon Exchange and traditional financial institutions
|Horizon Exchange||Traditional finance|
|Assets||Supports digital assets and traditional assets.||Only supports traditional assets.|
|Profitability and Risk-tolerance||Highly profitable, high volatility, and highly risky.
Managed by the individual.
|Moderately profitable, risks are not that high.
Managed by the individual, advisors, hedge fund managers, regulators, etc.
|Age||Decentralized finance is just in its initial stages of growth.||Highly mature with a stable regulatory environment.|
|Trading hours||Trading available 24/7||Closed at night and during weekends.
Subject to operating hours of business and exchanges.
|Multiple points of entry and less susceptible to malicious attacks.||Single point of entry and susceptible to malicious attacks.|
Benefits of Horizon Exchange over traditional financial institutions
- Exposure to both traditional and cryptocurrency markets — Unlike traditional finance, which will only avail traditional investment assets such as stocks, commodities, and equities, the Horizon Exchange will unlock a diverse universe of both cryptocurrency markets and traditional financial markets. Participants will have access to different profitable markets, and they will have a host of investment options on the same platform.
- Horizon Exchange will expand its portfolio across equities, commodities, market indices, physical assets, corporate assets, and unique data set value. Horizon Protocol plans to use Oracles such as Chainlink, Band, and Phoenix Oracle in order to connect to real-world capital markets and their associated price feeds.
- High trading volatility and therefore high profitability — decentralized markets respond to high asset speculation, which drives the value of a commodity or an asset. Digital currencies are highly speculative. However, this calls for investors also to have a high-risk tolerance. Less risk-tolerant investors prefer traditional markets while the others are more open to cryptocurrencies. The best thing about Horizon Exchange is allowing traders to enter both types of positions, depending on their risk tolerance and in an environment where they can unlock both traditional and digital assets – the possibilities are limitless.
- Unlike traditional markets, you can trade on Horizon Exchange any time of the week. Traditional markets are usually closed for almost 13 hours on weekdays and completely shut on weekends and public holidays. Horizon Exchange is, however, open to trading at any time of the day for investors, either to long or short digital assets.
- Traditional markets are highly regulated and will demand secure approval of traders or trades by regulators. Regulation limits traders and may confine them to only trade within their jurisdictions. The amount of money required to open a position in a traditional market is also high, as regulators might demand a specific capital size before investing. Conversely, the Horizon Exchange provides the ability to trade synthetic assets through its native token, the HZN. One can open a position by simply buying and staking HZN, with no regulatory approvals.
Verdict: Horizon Exchange is your best bet for asset investment over traditional financial institutions
The roadmap of the Horizon Exchange is to unlock an infinite suite of trading tools that extend beyond the average decentralized exchange. Such features include trade histories, stop losses, limit orders, and technical analysis charts. The platform is also yet to launch leveraging, margin, and option trading features.
Horizon Exchange is a better alternative to traditional financial institutions and anyone looking to exchange trade and leverage digital assets and traditional assets under one roof. Horizon Exchange brings users the possibilities of a decentralized exchange and the flexibility of a traditional market.