BitMEX, a cryptocurrency derivatives exchange have recently announced the launch of its first optionality product. The project is being called UPs and DOWNs and marks a significant milestone in the product development history of the platform. The company already offered futures and swaps before and now with the addition of options to their platform, the company is moving closer to offering all types of derivative products for the crypto industry.
Why UPs and DOWNs?
UPs is Upside Profit Contracts, and DOWNs is Downside Profit Contracts which is analogous to call and put options in traditional exchanges. The liquidity profile of Bitcoin derivatives trading has changed dramatically over the past 12 months. The BitMEX XBTUSD Perpetual Swap is now the most heavily traded instrument in the entire crypto trading industry. Currently, the average daily volumes have already exceeded billions. The time is just right for non-linear products like options as linear products like Swaps and Futures have become sufficiently liquid.
A new record for the XBTUSD swap: 655,000 Bitcoin traded in the last 24 hours. $6.3B in total value traded on BitMEX in this period. Thanks to all our traders, and please be patient as we scale to handle this unprecedented volume. pic.twitter.com/8wHTnzPRvU
— BitMEX (@BitMEXdotcom) March 9, 2018
Hi @CoinMarketCap. You seem busy, but we just wanted to remind you: XBTUSD is the most liquid Bitcoin trading product in the world. You disqualify it from the list, asserting we are a "market with zero fees". That is not true. Care to correct it?
— BitMEX (@BitMEXdotcom) April 27, 2018
Regarding the launch of the product, their CEO and co-founder Arthur Hayes says: “Before non-linear products like options are viable, linear products (Perpetual Swaps and Futures) must be sufficiently liquid. Given the liquidity profile of XBTUSD and the quarterly Bitcoin / USD futures contracts, we now believe there is sufficient liquidity in order to launch a successful options product.”
BitMEX had been under scrutiny for their overload issue and critics have pointed fingers regarding the launch of UPs and DOWNs to escalate similar problems.Their plan is to continue to launch and test new products within reason so that in a year’s time they have another successful product.
BitMEX has responded to the demand of the growing crypto industry. The demands of such products are increasing due to the growing sophistication in this industry.