One downside of trading Bitcoin and other cryptocurrencies is the high transaction fees. Another is that long delays while waiting for the transaction to clear can be the difference between winning and losing in such a volatile market.
A Bitcoin futures and options exchange called Deribit has introduced the Deribit Perpetual, a trading product that tracks the Bitcoin price while enabling cost-effective and efficient trading.
The company claims its trading platform is able to handle thousands of order requests per second, with a transaction speed of around only a few milliseconds per order.
“We have spent the first half year of 2018 building and optimizing our infrastructure in order to deal with enormous volumes,” Deribit CEO John Jansen told me. “We now have an enormously flexible distributed infrastructure, where server nodes can be easily added. Every trading book is replicated on multiple nodes, so if a single node would fail others are standing by to take over.”
The Perpetual product tracks the Bitcoin price and allows traders to take positions without exchanging any Bitcoin. The platform‘s low fees make it possible for traders to take large positions with only a small capital outlay.
“Our fees are basically kept low by relying on volume,” Jansen said. “Since we now do more than $60 million of volume on most days, we now have the revenue base to pay for our expenses and continue expanding.”
The Deribit Perpetual was launched in beta two weeks ago and has already become the most-used product on the exchange and generated a more than 50 percent volume increase.
Charging just 0.075 percent on market orders and paying 0.025 percent on limit orders gives traders up to 100 times leverage with what Deribit calls fair liquidation, which ensures that the closing out of a leveraged trade does not hurt the trader.
If the price moves against a leveraged trade, a position will eventually need to be liquidated to ensure there is always enough capital left in the account to cover any losses. If a position is completely closed out, customers receive any collateral that is left over.
The Deribit Perpetual executes “funding payments“ between the buyers and the sellers of the contract to keep the price of the Perpetual close to the Bitcoin price. Instead of making funding payments once every eight hours, the Deribit Perpetual makes tiny payments on a millisecond basis, thus completely avoiding price disturbances.
“Deribit is available on the web and on mobile devices (iOS and Android),” Jansen said. “So far, we received great feedback for the mobile app, which is perceived as the best-functioning mobile trading app out there by many people. We also offer a super fast API that allows trading programs and bots to directly interface with our trading books.”
So what’s next for Deribit?
“Deribit will introduce futures and Perpetuals for Ethereum and Bitcoin Cash in the next weeks,” Jansen said. “We will also add our products to the popular Trading View app very soon and upgrade our interface. Deribit also is the biggest crypto option exchange in the world. We are working on some interesting new products in that area.”
The Deribit Perpetual was launched in beta on August 14, 2018 and is now available to the public.