Want to go long or short on a crypto, with big leverage? OKEx will happily help you out from next week.
The Malta-based OKEx cryptocurrency exchange today announced plans to launch a new derivative product – called a Perpetual Swap – to widen its users options when investing in cryptocurrency beyond its current spot trading (buying in expectation of the price rising) and futures (essentially betting whether the price will rise or fall by a contract’s expiry date) offerings.
In contrast to those types of investment, Perpetual Swaps are peer-to-peer traded derivatives that are similar to futures without the expiry date. This mean that when a trader seeks to open a position – either long (expecting price to go up) or short (price to go down), there must be sufficient contrary opinion to fulfil the requisite number of $100 contract orders. When such a position is taken, traders can hold on to the daily settled contracts for as long as they feel they need (or can) in the hope of achieving the price movement that will bring them profit – or sell them on to someone else willing to take the same position (hence perpetual swap). The profits and losses on open positions will be realised at 10am CET everyday, and then made available for the trader to withdraw should they so wish. Unrealised profits since the last settlement will be visible via the OKEx interface.
These types of swaps are the contract that has ushered the exchange BitMEX to prominence in the last year or so. OKEx will begin its bid to challenge that growth from December 11th.
Like its Seychelles-based competitor, OKEx has also signalled its intention to offer the same high-leverage options that BitMEX does on its XBTUSD (Bitcoin-US dollar) swaps and other derivatives. Traders will have options to borrow up to 100x their investment in the new Swaps in order to boost their trading power – while hopefully avoiding exceeding the limits of their maintenance margins, and thus the kind liquidations that have made BitMEX trading infamous among the crypto-community, powering the #Rekt meme to increased prominence.
With full details available here, OKEx say that their transaction fees will be lower “than other similar products in the market”, with daily settlement allowing profits to be withdrawn daily too. The Funding Fee paid between traders will be calculated algorithmically to keep the contract price for the swaps in line with the spot fee.
Lennix Lai, Financial Market Director of the exchange called the new offering a “key milestone for OKEx.”
The launch of perpetual swap, he said, demonstrated its “continuous commitment to build a complete financial ecosystem on blockchain and crypto.”
Whether or not you think that leveraged trading like this is good or bad for the crypto ecosystem is good or bad – and opinion on BitMEX’s role in effecting the prices in the last year or so is very divided – it looks like it’s here to stay. Also, Malta’s increasing prominence as a home for crypto exchanges is only likely to be enhanced as OKEx steps up to challenge the current incumbent for such derivative products – where it and Binance currently see daily volumes of trading equivalent to $3,000 for every resident of the small island.