What led to ARCx’s 2,000,000% rise & fall? What's the price prediction?

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 What led to ARCx’s 2,000,000% rise & fall? What's the price prediction?
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Highlights 

  • ARCx network aims to add credit history to on-chain addresses to make DeFi lending secure
  • Lately, the linked ARCx coin gained some 2,000,000 per cent and then erased all the gains
  • What led to this sudden massive gain and loss? Let’s find out

We all know about travel passports, and now vaccine passports. But here’s the latest thing – DeFi Passport.

Before jumping to what these are, and how the decentralized ARC Governance (ARCX) protocol is acting as an enabler, it is imperative to know what decentralized finance or DeFi is. Traditional finance involves intermediaries that although act as the facilitator, they delay transactions and add costs to them. DeFi uses blockchain to let any two parties, for example, a lender and a borrower, connect without an intermediary.

When parties so connect, distributed ledger enables faster and cheaper transactions.

What is ARCx?

ARCx is a distributed network that claims to provide ‘on-chain identity’. Confused? As stated earlier, the DeFi system is all about give and take of money. In order to infuse confidence in the system, ARCx gives an identity to any party by assessing on-chain activity. This identity is then provided with a credit score.

The network claims that its credit score will enable ‘dynamic terms’ of credit in DeFi. In the traditional financial world, credit agencies undertake this task to help creditors assess creditworthiness of an applicant.

Also read: FB’s metaverse can be a blessing for these 5 blockchain games

What is DeFi Passport?

No, this has nothing to do with travel. It is just to help stakeholders navigate the DeFi space with a sense of confidence. ARCx claims that DeFi Passports will have the credit score of the holder on the first page.

ARCx DeFi Passports will be launched in phases. Hopefuls can use the ARCx ecosystem, which includes a governance token, ARCx coin. Once issued with a DeFi passport, the applicant can borrow at the lowest possible collateral ratios.

Also read: Is Bitcoin better than gold as hedge against high inflation?

What is ARCx token?

ARCx coin is the governance token of the network. Just like Ether, which is used within Ethereum, ARCx token is used for payment of fee within ARCx protocol. The network also claims that token holders can stake their ARCx coins to participate in voting and have a say in the network’s infrastructure design.

What led to ARCx token rise?

Image description: ARCx Coin stats

There were several reports claiming an over 2,000,000 per cent rise in the price of ARCx. It was reported that the price surged from US$0.34 to a whopping near-US$10,000 in a matter of a few hours.

This, however, as claimed by the ARCx protocol developers on Twitter, was a ‘glitch’. It happened when CoinMarketCap indexed the token’s pre-split price. As of now, ARCx is trading at nearly US$0.38.

ARCx coin price prediction

ARCx is in its infancy and there is no reliable historical price data to forecast price in the near-term.

On CoinMarketCap’s list of cryptos by market cap, ARCx ranks #3832 as of now. It means it cannot be compared with the price history of cryptos like Bitcoin and Dogecoin that have very high market cap and trading volume. ARCx price in 2022 will depend entirely on how DeFi Passports and their linked credit scores improve blockchain-based lending. If DeFi credit scores gain traction, ARCx price will likely rise.

 Also read: Top 5 cryptocurrencies available for under $1

Bottom line

Wild ups and downs are a part and parcel of cryptocurrency world. But, in the recent case of ARCx coin, the wild surge was due a technical error. The coin’s future rests on how the DeFi Passport thing makes DeFi lending more secure. This was also a lesson on how technical errors can impact the already volatile crypto market.

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