Binance is Currently in the Process of Creating its Very Own Derivatives Platform to Rival BitMEX
- As recent rumors have suggested, Binance is currently in the process of building its very own derivatives platform that will allow clients to make use of ‘perpetual swaps’.
- Owing to this move, Binance will go head-to-head against a number of other popular exchanges such as BitMEX and Derebit.
As per a number of stories that have been circulating across the internet over the past few months, Binance — one of the world’s largest cryptocurrency trading platforms — is looking to enter the altcoin-derivatives market in the near future.
In regards to the matter, it should be pointed out that Bitsian CEO Raakhee Miller and CTO Steven Brucato have recently told a trusted media outlet that Binance is in the process of devising an exchange platform that will provide clients with the option of utilizing “perpetual swaps” — a derivatives offering that is highly crypto-specific in nature.
On the matter, Miller was quoted as saying:
“Perpetual swaps are a crypto invention and I think that’s the nature of the contract that appeals to that side of the world (Asia) for sure.”
What Is A ‘Perpetual Swap’?
For those of our readers who might not be aware of what a “perpetual swap” is, it is a concept that is quite similar to what a ‘futures contract’ represents — except for the fact that these offerings don't have any “expiration dates” attached to them. Not only that, all of the monetary settlements associated with these contracts are carried out once every few hours.
Additionally, it should also be pointed out that the idea of “perpetual swaps” was first brought the mainstream thanks to crypto derivatives exchange BitMEX. However, since their market introduction, other established firms such as OKEx too have made use of these offerings — with many analysts claiming that the above-mentioned firms have already processed a daily derivatives volume of around $2.1 billion.
It is also worth highlighting that both Brucato and Miller are helping Binance build a new matching engine for its derivatives platform. In its most basic form, a matching engine can be thought of as a set of algorithms that are used to match buyers and sellers using a pre-defined coding system.
On the subject, it should also be mentioned that BitMex currently runs its very own matching engine that is not able to process all of the orders that are received by it on a day-to-day basis.
Other Key Points Worth Highlighting
- As things stand, it appears as though BitMEX is looking to offer its clients with options trading in addition to its already popular ‘perpetual swaps’ offering.
- Firms such as Derebit and CoinFLEX too have entered the options and futures trading market over the course of the past 12-18 months.
- According to Darius Sit of QCP Capital, BitMEX and Deribit have centralized the liquidity of their futures contracts — thus Binance is now in an optimal position to “steal some of that existing financial flow”.
In closing out this piece, it should be highlighted that Binance has a really good chance of making its mark within this domain — especially since the firm already boasts of a
“robust clientele that connects to their existing endpoints”.
Last but not least, exchange platforms like BitMEX and OKEx are unregulated and thus their users are exposed to a number of “default and liquidity risks” — a problem that Binance does not face due to its strict adherence to various KYC and AML protocols.