With Peer to Peer (P2P) trading, exchanges have found a new way to keep INR in circulation for Crypto traders in India. Three major exchanges announced their P2P products earlier. Koinex and WazirX have launched theirs.
Koinex’s P2P exchange is called Loop – To close the loop of buying and selling any cryptocurrency in India. I have been trying out the exchange since its launch and this is my review of it.
Koinex Loop Review
Before we dwell into it though, a short recap of Peer to Peer exchanges. P2P means trading among two users directly. In a P2P exchange, as a buyer you will transfer the fiat (INR) amount directly into the bank account of the seller on the platform who will in return give you the cryptocurrency. To protect buyers and sellers, the cryptocurrency is held in escrow by the exchange until the money transfer is successfully completed and acknowledged by both buyers and sellers.
Koinex has added an additional security feature – Collateral. Stick around as we will discuss the collateralized assets in detail.
Does it solve a problem?
The first question one must ask about every new product is whether it actually solves a problem? Does Loop? Yes. With RBI closing the banking channel to trade cryptocurrency, P2P exchange keeps the business open. With Loop you can buy or sell Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) with other users on the platform for INR fiat. Then you can use the BTC, ETH, XRP to exchange it for other coins and tokens listed on Koinex’s crypto to crypto market.
To begin with, Koinex Loop is a very bright and white website. I would have liked it better if there was a dark version of it. Koinex stuck to its minimalistic approach with Loop as well. Only a handful of options are available on the site and they are very well spaced with no clutter.
As a user, you need to complete your KYC to trade on loop. All existing Koinex users can directly access Loop but new users can only trade after the KYC is approved.
The first thing Loop will ask you to do is set a username, it is your identity on the platform and advised to not be the same as your own name. You cannot change it later, so choose wisely.
You can check your wallet balances, check your trades (open and closed) and check the current listings (open orders on the orderbook) from the top bar.
In profile, you can setup your bank account details for IMPS, NEFT, RTGS and UPI ID as well. You can set as many accounts as you want. However, while placing an order, you can only choose one account.
Overall, Loop looks simple and easy to trade. For this review I will complete one transaction and explain the features of Koinex Loop.
Buying and Selling Cryptocurrency
During my first test I bought 10 XRP and then sold them for a little loss immediately, the transactions went through smoothly without an issue. But for the article I will try to buy one more time as its been 5 days since the first test.
Listings and Requests:
There are two ways to buy or sell cryptocurrency on Loop. You can either “Create a Listing” or “Request a trade” on a listing. If you wish to create your own offer for buying or selling crypto like “Buy 10-100 XRP at Rs. 32.4 by UPI and IMPS payment”, you can create a listing. But if you already see a listing that you like (someone is selling 10-100 XRP at Rs. 32.4 for UPI payment), then you can click on it and “request” for trade.
I am going to place a request for Buying XRP from existing listings.
Placing a Request
- Select ‘Buy’ and ‘Ripple’ in the ‘I want to’ bar
- The cheapest listing will be on the top of list by default, but it can be sorted as per your wish
- You can even create your own listing.
- Click on Buy on the listing you prefer.
- I will buy 50 XRP at Rs. 32/- with user ‘cryptopp3’
Time to Send a Request
After clicking on ‘BUY’, you have to place the request. For a buy order, you just need to enter the amount of cryptocurrency. Since the minimum quantity required is 50, I placed the order for 50 XRP. Koinex charges no Fees.
Collateral is optional. Cryptocurrency worth 25% of your order value can be put as collateral for a trade. Since the order value is Rs. 1600, the collateral will be Rs. 400 worth of BTC, ETH or XRP. If you try to scam the buyer and are caught in dispute, you will lose your collateral partially. Hence, collateral gives an added edge to the order and are marked with a green check. My wallets are empty so no collateral for me.
Five Stages of Loop
Once you send the request, you have completed one of the five steps in the process for ‘loop to close’
- Sending Request – Completed above
- Approval Pending – Now
- Waiting for Payment Initiation
- Waiting for Payment confirmation
After sending the request, I can either cancel the order or wait for the user to accept/reject the request. User Cryptopp3 accepted my request within a minute.
After approval, the Buyer has to make Payment on the account details provided.
I made the payment, added the transaction reference number and a payment proof (Screenshot of UPI transfer) and clicked on ‘I have paid’. I have the option to cancel the trade even now before confirming the payment.
Important: If the buyer does not click on I have paid after making the payment, the seller cannot release the cryptocurrency. Hence it is important that this step is completed. In my last attempt, the user did not confirm payment until after 2.5 hours. Koinex sends repeated SMS and also calls the user reminding them to make payment and confirm. After 3 hours, the order goes into dispute.
Once I clicked on ‘I have paid’, the seller immediately confirmed the payment and I received the 50 XRP in my Koinex wallet. Once the trade is completed, Koinex asks for a feedback.
For this particular order the buyer recognised me but otherwise you can get away with not sharing anything besides your name and account number on a Peer to Peer exchange.
While the Buy order was smooth and quick, I cannot say the same thing for a sell order. I tried to sell the 50 XRP but not a single request was accepted for an hour and I finally gave up. Now I have 50 XRP that I haven’t sold.
When I asked around, Saurabh, a user said “Easy to use and flawless”. I would agree with it, but when it comes to selling, its easy to use and flawless but very time consuming.
Besides what I showed you, there are a few more features that needs attention.
Once your trade request is accepted or you accept someone’s trade request, you can then start chatting with the person on a chat window. For instance, in a previous order I asked the user if he has UPI ID because I didn’t want to go through the whole process of adding a beneficiary.
As soon as a trader places a sell order request or listing, the amount of cryptocurrency is escrowed. This cannot be used by the seller anymore. The Escrow will only release the crypto when the seller or buyer cancels the order or the order is completed successfully. In case of a dispute, the support staff will make a decision on who receives the cryptocurrency that is escrowed.
Once you place a sell order, you can see the balance go into escrow
Collateral is the unique feature of Loop. As I mentioned earlier, collateral is crypto worth 25% of the order value that you hold to give more weight to your order. Once the order is completed, you get your collateral back. The incentive here is that if you try to cheat a trader, the order goes into dispute and if you are caught cheating, which you will most likely be, you lose your collateral partially.
So if you place collateral that means you are a genuine trader who is not here to pull off a scam because you risk losing your own collateral.
The problem though with collateral is that if everyone starts trading with only collateralized orders, what happens to the people who have no balance on Koinex to put as collateral or new users? Their orders will never be fulfilled. In my personal opinion, Koinex has added collateral for the purpose of reducing disputes that would require support from Koinex 24/7. It has an advantage but is bundled with disadvantage for new users on a longer run.
Another atypical feature of Koinex is Masked calling. Giottus offers masked calling feature as well. The difference between Koinex and Giottus is that you can only call the other trader after your order goes into dispute.
Typically if one step is not completed within 3 hours the order can be disputed. After the dispute is raised, Koinex support team will intervene, check the proofs from both parties and make a decision. However, once the dispute is raised, the traders get an option to make a call to the other user without sharing their number.
Scam Protection and Dispute Handling
Koinex has a support team that handles the dispute on the exchange. Once the request is accepted, the buyer has 3 hours to make the payment, similarly after buyer confirms payment, the seller has 3 hours to confirm if she received the payment. If the buyer lied or seller is lying, the traders can raise a dispute after the 3 hours are completed.
Once the dispute is raised, a dispute manager will look at the proofs submitted, talk to both traders, verify the details and make a decision in favour of either the buyer or the seller. Until the dispute is resolved, neither the buyer nor the seller can access the cryptocurrency.
Koinex Loop solves a problem of buying and selling cryptocurrency using INR in India. It is simple to use, reliable and well integrated with Koinex’s crypto to crypto exchange. However, the liquidity is a problem on the exchange. Despite receiving emails and text messages, the users do not respond to requests on their listings, or the listed orders are not fulfilled for days together.
If I want to buy or sell Bitcoin for 20000 at international rates, it would be difficult to get it done quickly. A lot of P2P exchanges are facing a similar challenge as well. Volumes have dipped across all exchanges, majorly in India due to RBI’s banking ban.
I will do another post on liquidity across major exchanges. So make sure you have subscribed to our email newsletter below.
What do you think of Koinex Loop? Share your experience in the comments section below.