Deribit is designed to process thousands of requests per order with a transaction speed of around one millisecond per order. The Dutch-based cryptocurrency exchange is an alternative service to the more established BitMEX. BitMEX stands for Bitcoin Mercantile Exchange. Both are peer-to-peer trading platforms that offer leveraged contracts that are bought and sold in Bitcoin.
Deribit’s newly launched trading engine has been designed to show consistent performance with every volume. John Jansen, CEO of Deribit, explains more about the new platform and how it differs from its competitors.
Digital Journal: What does Deribit Perpetual do?
John Jansen: The perpetual is a very efficient trading product that tracks the Bitcoin price and that allows traders to take positions without exchanging any Bitcoin. It features very low fees, just 0.075 percent on market orders, paying 0.025 percent on limit orders.
The perpetual allows traders to take large positions up to 100 times as large as the capital outlay without any margin interest being charged. Our platform also allows trades to be executed within a couple of milliseconds without any of the overload issues that have been challenging other exchanges.
DJ: What are the limitations of Deribit Perpetual?
Jansen: A current limitation of the Deribit Perpetual is that it is only available for Bitcoin. Through our social media channels we have received many requests for Deribit Perpetuals tied to other crypto currencies than Bitcoin. Therefore, we will introduce perpetuals based on Ethereum and Bitcoin Cash in the next weeks.
DJ: How is Deribit Perpetual different to BitMEX?
Jansen: We spent the first half year of 2018 designing and implementing a system that can facilitate high speed trading under all circumstances. We now have a system able to deal with at least 5000 orders per second. This ensures our customers can trade quickly even when the Bitcoin price is moving a lot.
The Deribit perpetual makes continuous payment in order to keep its price very close to the Bitcoin index, instead of only every 8 hours. If the Deribit perpetual is traded at a premium then traders in the long position pay traders in the short position which makes going long less attractive and reduces the premium. If the Deribit perpetual trades at a discount, then traders in a short position pay traders in a long position which will attract buyers and raises the price. Paying interest continuously immediately corrects the price and makes the entire product more transparent.
DJ: What other advantages does Deribit deliver?
Jansen: Another important advantage of the Deribit perpetual is the liquidation mechanism. Traders on Bitmex lose their entire position when the liquidation price is reached. At Deribit traders receive any collateral that is left over after a liquidation. The liquidation mechanism for the Deribit perpetual also tries to bring the position of traders back into compliance by closing the position on an incremental basis.
DJ: How do you intend to market Deribit Perpetual?
Jansen: The Perpetual seems to fulfill a large demand and a lot of new customers have started trading on Deribit since we introduced it on the 14th of August. In fact the volume of our exchange has risen by more than 50 percent thanks to the perpetual. We are reaching out to new customers through Twitter, Youtube and people also like that they can talk to management in our Telegram group, however most people seem to find us via word of mouth.
