Last month, CoinFLEX, short for Coin Futures and Lending Exchange, announced its potential offering of physically-delivered futures for three cryptos, i.e. Bitcoin Core, Bitcoin Cash, and Ethereum. A recent News.Bitcoin.com report revealed that as of today, February 20, 2019, the website has been launched but the actual exchange is still in development.
The world’s first exchange to offer said futures such that investors do not have to worry over management risk. Their ultimate goal has been reasoned as resolving issues that arise from cash-settled Bitcoin futures.
Some of the facets that make CoinFLEX unique include, but are not limited to:
- Physically-Delivered Crypto Futures, which implies that upon the termination of a contract, investors will be issued equivalent digital assets as opposed to cash.
- CoinFLEX is made up of professional trading partners, some of which include Trading Technologies, Crypto Veterans, Alameda Research, Amber AI, B2C2, Dragonfly Capital Partners, and more. As for notable players within the crypto sphere, investors can expect the involvement of Mike Komaransky and Roger Ver.
- Free of in-house trading desk.
- Taker and Maker Fees of as little as 0.03%, which has supposedly been done to support market makers who are looking to provide two-sided liquidity.
- Multi-signature cold storage to ensure that security-related issues do not arise.
- Increased flexibility when it comes to the types of funding investors have access to.
Interestingly, the CEO of CoinFLEX, Mark Lamb has since published a Medium post that explored the differences between traditional and crypto future exchanges as well (https://medium.com/coinflex-official/traditional-futures-vs-crypto-futures-exchanges-9a82987e97e0).
Some of the key arguments that Lamb made regarding the reasons why traditional futures are less preferable include its layers of middlemen, limited liability and contract size.
According to Lamb, traditional futures have anywhere between 2 and 4 layers of middlemen. As per the claims made,
“extensive paperwork involved in onboarding [exists] because futures have unlimited liability, as a result they usually require a customer be a high net worth individual.”
He further adds that this barrier to entry does not exist with crypto futures, as it gives each and every investor equal access.
Next, he stresses that “limited liability” is common among traditional futures. That is, the trader is typically responsible for their accounts, with the exchange conducting checks once or twice throughout the day. This is a problem because if the trader falls into a negative balance, then they owe money to the broker.
Again, this is allegedly rarely witnessed with crypto futures because users’ margin is verified by CoinFLEX on a real-time basis. Given that one’s position takes the wrong turn, CoinFLEX will supposedly liquidate the said position.
Finally, large contracts imply more hassle, which is another reason why Lamb prefers crypto futures, as they are “tiny” in size. Here’s what Lamb seems to promote in terms of what investors can do via CoinFLEX:
“On CoinFLEX, you will be able to trade 0.0001 BTC worth of futures, or $1 worth of Tether/USDC, etc. New traders learning how to trade, make markets, see how prices react to and relate to each other in 2019 should be entirely focussed on crypto trading.”
To learn more about CoinFLEX, check out: https://coinflex.com/