Crypto

Deribit: Bitcoin Options & Futures With Millisecond Latency

Deribit, the crypto asset derivatives exchange is probably one of the premier exchange platforms originating from the Netherlands – which has a robust crypto culture. The exchange offers Bitcoin Futures, and Options Contract trading, on a framework that executes transactions with a mere millisecond of latency – virtually none, if you think about it.

Founded in 2016, by Sebastian Smyczýnski (Chief Technology Officer), John Jansen (Chief Executive Officer), Marius Jansen (Chief Operating Officer,) Deribit is a privately held company. However, this will come to change in 2021, as the exchange platform announced in January of 2020. In order to not fall under a jurisdiction subject to the European Union’s latest Anti-Money Laundering Directive (AML 5), the firm has begun the process of relocating headquarters to South American state, Panama.

The exchange, designed by Bitcoin enthusiasts, has -attached to it – some pretty nifty (there is no pun here) bells and whistles. Deribit enables traders hailing from over a hundred global territories to trade Bitcoin Options & Futures with up to a 100x leverage. Unfortunately, the only market available is Bitcoin, but that’s because the exchange is Bitcoin focused. Deposits, Withdrawals, Leverage Collateral ante-up, and other transactions are all conducted in Bitcoin.

The Platform

The Deribit Bitcoin derivatives exchange offers a web based trading interface,which is quite easy to navigate, even for a novice. The platform’s layout enables the traders eye to, almost intuitively, go from depth chart, to order-book, to trade window , any manner one prefers. The platform also features a mobile platform, available on both mobile operating systems, Android, & iOS – for the on the go trader. 

The platform enables a number of risk mitigation oriented trading options, for both it’s Options, and Futures markets. Just to be clear, the platform allows a modest 10x leverage for most markets, but the margin jacks up to 100x when trading Futures contracts. Deribit even offers an option for traders to live-test their strategies on their simulated trading, they even give you Whale status, by fronting you 10 fake Bitcoin, so you can really go to town. 

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The platform has also made great effort toward being accessible in whichever way a user is comfortable. In addition to a mobile and web client, the exchange’s tech team has also made an API available, which plugs into trading bots.  95% of user value is also safeguarded by a cold-storage custody system. 

Deposits & Withdrawals are pretty straight forward, if you’re familiar with crypto transactions,that is. Deribit how’s the extra step towards avoiding transactions being intercepted by hackers, generating an address every time a user wishes to make a deposit. Regarding withdrawals, the user is offered different priority levels, which come at different rates, so it comes down to urgency, and how much a user is willing to lose during withdrawal – still a great feature if one is racing to catch a trade on a different platform (arbitrage, anyone?)

Contracts

The Futures contracts on the Deribit platform are quite standard, with a monthly expiration date, similar in format to popular Bitcoin derivatives exchange, Bitstamp, Kraken, or Bitfinex for that matter. Contracts go for $10, a pop and can be rigged with Market, Limit, &, Stop orders. 

Fees

Deribit’s Options contracts, however, are presented in the European fashion – can only be executed upon execution. 

The exchange’s Maker fees will set the user back 0.00% of the trade value, while Taker trades carry a charge of 0.05%. For withdrawals, Deribit only charges a network fee, which depends on how urgently you’d like the transaction to go through. 

Maker & Taker trades that provide liquidity also enjoy a rebate on the exchange, said rebate depends on the contract one is trading. Perpetual contracts carry a rebate of 0.025%, while taker fees cost 0.075%. Futures contracts will also return the user, 0.02% in fees. Options contracts on, on the other hand, will set one back 0.04% of underlying or 0.0004 Bitcoin per contract. Fees are capped at 12.5%. 

We’re talking derivatives here, so expect a good number of traders to be liquidated.Traders who take a spanking in the Futures market will incur a liquidation fee of 0.35%. Perpetual contract liquidations will cost the user 0.037%. Options liquidation charges are set at 0.19% or 0.0019 BTC per contract. Liquidations for both perpetual and futures markets carry an additional 0.30% fee which is added to the exchange’s insurance fund, while 0.15% of options liquidations is allocated to the fund.

Conclusion

Pros 

  • Transparent and openly communicative team
  • Futures and Options trading 
  • Attractive trading fees
  • Zero deposit, or withdrawal fees
  • Up to 100× leverage

Cons

  • Not regulated
  • All transactions are BTC based
  • No fiat option
  • Targeted at seasoned traders

Deribit is a solid exchange platform, offering high opportunity for traders to make a profit, while mitigating risk. The interface is sleek and simple, and the fees are tailored to the high volume trader. Though the exchange is very communicative, and offers exceptional support staff, the fact that it remains unregulated in a time of fraudulent platforms could work against it .More assets being available would be a great touch, especially if the base asset on exchange was a stablecoin. 

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Ash Bonga

I'm a marginally adequate digital assets trader and writer specializing in blockchain and the crypto sphere. Occasional contributer for Bizznerd.com
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