Essential Features Of A Crypto Derivatives Exchange

Essential Features Of A Cryptocurrency Derivatives Exchange

June 23, 2021 leave a comment

Cryptocurrency derivatives trading is rapidly gaining po必利勁 pularity among cryptocurrency enthusiasts all over the world. It can be conducted independently between two parties or more securely through crypto exchanges. Not many crypto exchanges offer the option of derivative trading. Binance, OKEx, Huobi Global, Bybit, Coin Tiger, etc… are the top cryptocurrency derivatives trading exchanges out there today. So what exactly is a cryptocurrency derivative trading exchange and what are the essential features of a cryptocurrency derivatives trading exchange? Let’s have a look.

Read more on CryptoCurrency Derivatives Trading – A Complete Guideline Services

What is a Cryptocurrency Derivatives Trading Exchange?

Derivatives are contracts among two parties to trade an asset for a decided price on a fixed date in the future. In cryptocurrency derivatives trading, a deal is agreed between two parties for a price for a cryptocurrency on a specific date in the future. On that date, the cryptocurrency has to be traded for the decided price in the contract, no matter what the current price of the crypto is.

For example, imagine you have agreed on a contract with a friend to buy 20 Bitcoins for 40,000 per Bitcoin, in a month. So a month from today, you have to buy the 20 Bitcoins for 40,000 even if the price has dipped or soared. Similarly, your friend has to sell you the Bitcoin for the decided price even if Bitcoin’s value has increased or decreased.

Cryptocurrency derivatives trading can be done customer to customer or via centralized or decentralized cryptocurrency exchanges. Exchanges that support crypto derivatives trading are called crypto derivatives exchanges.

Derivatives trading is commonly used to decrease the risk involved in cryptocurrency trading rather than gain profit. This is a sensible move considering the volatile nature of cryptocurrencies.

Features of crypto derivatives trading exchange

Now we know what a crypto derivatives trading exchange is. Let’s have a look at some of the features a crypto derivatives trading exchange should have.

Security

Security is the primary feature of a crypto derivatives exchange. Due to the increasing number of cybersecurity issues in crypto, traders prefer platforms with optimum security for their investment. So, it is essential to provide traders with a highly secure and stable platform.

Transparency

Transparency is important in any platform that handles money like a crypto derivatives exchange. The exchange must be open and transparent about the trading policies, fees, and dispute resolution policies. Traders must be instantly informed when any changes are made to the policies.

Liquidity

Sufficient liquidity is a feature that traders often look for in an exchange platform. The greater the liquidity, the easier and faster it is for trades to be completed. Increased liquidity also prevents price volatility up to an extent.

Fees

This is one of the most significant features of a cryptocurrency derivatives exchange. Certain exchanges give traders a floating fee which lowers in the event of an increase in trading volume. Ensure that the fees in the exchange are standard and beneficial to traders.

Leverage Trading

Leverage trading allows traders to borrow funds from the exchange to secure better positions and earn larger profits. Traders can make big money trades without having significant funds themselves. The option of leverage trading, combined with an effective risk management process, enables traders to expand their profits. Certain exchanges go to the extent of allowing up to 100 times leverage, so the traders can earn 100x profits on the amount they initially invested.

Advanced trading engine

Your crypto derivatives exchange should be powered by an advanced trading engine. This will enable traders to either go long or go short on multiple cryptocurrencies and help them very much in increasing their margin of profits. In addition to the advanced trading engine, the exchange should also have an intuitive user interface and admin panel.

Secure wallet

A secure wallet integration in your crypto derivatives exchange will make sure that your customers will not have to move their crypto coins to another exchange every time they have to trade. This will make the process significantly faster and could serve as an incentive for traders to do more trading, thus improving your profits.

Crypto and fiat support

Your crypto derivatives trading exchange should support a wide variety of currencies, including fiat and crypto. Have a scalable structure in place that enables you to add new and emerging currencies instantly. The crypto industry is still in the initial phase and you can logically assume that a lot more digital currencies could emerge before the market becomes steady.

Develop your Cryptocurrency Derivatives Exchange

Cryptocurrency Derivatives Trading is a game of risk management. Traders and exchange platforms can benefit hugely from cryptocurrency derivatives trading. Create your own exchange for cryptocurrency derivative trading with Cryptosoftwares. This Cryptocurrency Derivatives Exchange will have all the essential features discussed and facilitate the sale, bidding, and purchase of securities, contracts, and options.