Crypto futures have taken the cryptoverse by storm. The community response to these levered instruments has been overwhelming and traders are flocking to take positions. Strong customer demand has attracted new exchanges and innovation is happening at a breakneck pace. Latest in this are stablecoin settled futures offered by Delta Exchange, a platform where traders can use upto 100x leverage on BTC, ETH and XRP futures.
Currently all major crypto derivative exchanges require customers to put margin and earn profit in Bitcoin terms. This is a little counterintuitive. When you go short or long Microsoft futures on a stock exchange you don’t need shares of Microsoft to do that. Then why should you need bitcoin to trade bitcoin futures?!
Please Note: This is a Press Release
Major crypto derivatives exchanges behave the same way they did in 2015 and require traders to settle trades in bitcoin. Crypto trading has evolved though and most of the trading today happens against stablecoin pairs. Incumbent cryptocurrency futures exchanges have been slow to react and this is where Delta Exchange is looking to steal market share.
Stablecoin settled futures will bring much needed simplicity to the trading of bitcoin & altcoin crypto. They will allow traders to trade bitcoin and other crypto futures against USDC and earn profit in USDC. All contracts will be quoted in USD but settled in USDC.
These new type of futures contracts are called Quanto futures. Quanto futures are like ordinary futures contracts with the only difference being that these price moves in USD are mapped to USDC for profit/ loss calculation. For this, a predetermined USD-USDC exchange rate is used for margin and PnL computation. This brings a unique advantage, as it allows traders to trade USD pairs for cryptocurrencies without interacting with fiat currencies.
What is Delta Exchange?
Delta Exchange is a cryptocurrency derivatives platform which offers futures with upto 100x leverage on bitcoin and major altcoins (ether, ripple and Stellar lumens). The platform was launched last year and has been received well by traders.
Delta Exchange Trading Terminal
Delta Exchange Trading Terminal
Stablecoin settled futures is not the first innovation that Delta Exchange has come up with. Earlier they had introduced a ‘Convert Currency’ feature which allows traders to switch between different currencies. This is useful when traders want to protect their balances against bitcoin price risk.
How is the liquidity on Delta Exchange and Stablecoin futures?
These new futures contracts do offer a unique value-add for traders but the biggest question is, whether there is enough liquidity to build a sizeable position? The company claims that one can easily take positions worth 0.5-1Mn USD in these contracts.
The exchange has tied up with market makers to provide liquidity in these contracts and there is enough depth on both buyer and seller side of the order-book. The company is also offering attractive fee and incentives to market-makers to provide liquidity.
Offers And Promotions For Traders
Delta Exchange is offering a deposit bonuses to traders to try out their new USDC quanto futures. The company is currently giving all its traders upto 0.01 BTC deposit bonus on their first deposit. Besides this Delta Exchange has started a customer referral program. Those referring customers to Delta Exchange stand to gain a handsome 25% share of the trading fees paid by their traders referred by them.
Founding Team & Reputation
The company has been started by a bunch of Wall Street veterans who have spent time with bulge bracket banks namely UBS and Citibank. The top management team also includes seasoned tech entrepreneurs whose past ventures have been backed by tier-1 VC firms such as Softbank and Sequoia. This gives the company a unique edge in the finance and technology has common advisors with Stellar Lumen, the sixth largest cryptocurrency and ETHLend, market leader in crypto lending.
With stablecoin settled futures, Delta Exchange is trying to do for crypto futures what introduction of USDT did to crypto trading. USDT pairs account for significant share of spot trading in cryptocurrencies. It will be interesting to track the growth of the USDC-settled futures of Delta Exchange and see if they are able to take market share away from BTC/Altcoin settled futures trading.