Gate.io, a high volume and global cryptocurrency exchange with over 3.5 million users, is launching a new feature called the Observation Zone for emerging crypto coins. In a press release on Jan 27, the exchange said the goal is to encourage rational investments by reducing investor exposure to risky digital assets.
Vigilance to Minimize Risks
The Observation Zone is a place for investors to keep tabs on new crypto projects before making any financial commitment.
By watching, researching the project, users will have a thorough understanding of their value proposition and mission statements, reducing portfolio risks.
Limits on Investment for Retail Traders
All new coins will be visible under the Observation Zone.
However, there are changes in how ordinary traders will financially interact with these projects.
Gate.io is, as an intervening step, is raising entry barriers. Retail and ordinary users won’t double down on new crypto coins under the Observation Zone if they hold $30k worth of the same coin. Additionally, holding limits are now being reset higher to “help them cool down” even as they track new coins.
However, Gate.io further clarified that professional traders executing trades via APIs or are VIP Level 6 or above aren’t restricted. Accordingly, they can make purchases of any amount of all coins, including those in the Observation Zone.
Caution after DeFi Rug Pulls and Code Exploits
The decision from Gate.io, an exchange that describes itself as fair and maintains high standards, comes after months of rug pulls and contract failures in DeFi.
The open-source and democratized nature combined with easy and unlimited minting via standards as ERC-20 in Ethereum or IRC-20 in IOST, for instance, is a leeway for scam artists to abuse the system.
Contract exploits and rug pulls, especially in the burgeoning DeFi space, has seen investors lost millions.
Commenting, Marie Tatibouet, the CMO at Gate.io, said:
“The boom of DeFi projects driven especially by decentralized ecosystems across the global crypto space has brought new projects at a fast-pace into the world. Most of the new projects, in general, are still highly risky, with high volatility and probabilities of team exit, project failure, contract code bug, and more such flaws. This new feature will help our users reduce the risks.”
As reported, Gate.io had listed over 45 DeFi projects, including Uniswap (UNI) and Ampleforth (AMPL), by November 2020.