Deribit Compare Perpetual Contracts Against Competitors

Deribit Compare Perpetual Contracts Against Competitors

Now in its second year, Deribit’s Perpetual Contracts have proven one of its most popular products on their platform. In a newly released blog post, they have outlined the pros it offers against other big-name competitors in the same field.

Their contracts have been available to traders since August 2018 and are described by Deribit as their “most popular product”. Stating that their perpetual swaps can make up for 80% of the trading volume on their platform at any given time.

Of course, this is great for them, but how does it fare in comparison to other similar products on the market? Well, the platform has taken it upon themselves to compare their perpetual contracts against well-known firms, Bitmex, OKEx, and Crypto Facilities. Let’s take a look at the details they have outlined.

Funding

The first element Deribit touched on was the funding payments of these platforms, which, as per Deribit, “are in place to keep perpetual contract stays as close as possible to the price of the underlying instrument’s price”

What Deribit points out for their platform is that due to a continuously funding and calculation process, which occurs every millisecond, it helps to avoid artificial volatility and maintains a stable price relationship between the perpetual and index price.

Other platforms are noted as taking considerably longer in doing so. With OKEx and Bitmex doing so every 8 hours under different conditions, and Crypto Facilities doing so every 4.

Index

The accuracy of the index and its rejection to manipulation helps to prevent false liquidations not based on general market conditions. To ensure Deribit index is as accurate as possible, it rejects the use of lowest and highest prices and instead, tracks the real-time BTC price.

They use their own Index, which is compiled from 6 different exchange platforms, BitStamp, Gemini, Bitfinex, ItBit, Coinbase, and Kraken. From whom they take the best bid and best ask price before calculating the mid-price via EWAP (equally-weighted average price). Other platforms use fewer platforms as a comparison, but EWAP is still in place.

Liquidation

In terms of liquidation, Deribit’s incremental liquidation system limits risk. This system comes into place when an account can no longer maintain the equity on their position. When this happens, it will begin closing down small parts of the position in the market at the rate of 12.5% of the position size.

This then stops when the maintenance margin is lower than the margin balance to prevent closing at bankruptcy and allowing for liquidation execution at a favourable price. This paired with an insurance fund also provides extra security. It is Deribit’s claim that due to this, they “have not had any socialized losses.

Other platforms have different methods of how they handle liquidation, with OKEx using a socialized loss mechanism, Bitmex using auto deleveraging and Crypto Facilities using a three-step procedure. The latter though has no insurance fund, lower max leverage and higher initial and maintenance margins.

 Contract Details

Deribit offers one of the highest market maker rebates and allows traders to have several separate positions on the same instrument. The latter option opens up more strategies to traders and also allows for various risk profiles all in play at once. With the option to net them all together via the same account automatically.

In terms of Min Tick Size, Contract Size, Maker Fee and Taker Fee it is widely varied across the board, however. With the only significant difference being the Leverage Adjustment, with Deribit offering a Main/Sub Account, while the others opt for either Cross, Fixed or Isolated margins.

Summary

As they have highlighted, there are various benefits to opting for Deribit for your perpetual contracts over their competitors. Plus, with the inclusion of the Ethereum perpetual alongside other new products and updates, they are set on providing a top crypto derivatives trading service.

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