CoinFLEX 2.0 is here and with it we bring 250X leveraged spread trading, the first ever Deliverable Perpetuals, the first centrally tradable Repo market and a wide range of new features which we have been working on for several months. We have created a platform for the Borrow/Lend market, the spot market and the derivatives markets to all come together and trade with each other directly. We think this product will have huge implications for any trader of perps, spot, borrower of USD or crypto or passive lender looking to earn yield on assets.
CoinFLEX started out in January 2019 as a continuation of work we have been doing in the space for 8 years. We are absolutely obsessed with derivatives trading, cryptocurrency markets and physical delivery. We created the first physically delivered futures exchange and since operating have consistently averaged 90%+ market share compared to new entrants such as BAKKT and ErisX which have since entered the space. We have reached trading volumes of between one hundred and several hundred million dollars a day, but have not yet toppled the likes of BitMEX and Binance as a dominant venue for trading activities.
Over this past year, we have had a wide variety of feedback around what people like and dislike about the way we handle physical delivery. It’s extremely clear that physical is important, however the way CoinFLEX’s physical delivery was handled is cumbersome as it creates a “margin ramp up” requiring traders to post full margin starting 3 days prior to expiry. Crypto is just about the easiest commodity in the world to deliver compared to gold, oil or corn all are vastly expensive and extremely slow to custody and move.
People understand that delivery is important, the “not your keys, not your coins” message and the “cash settlement creates motive for manipulation” message are both abundantly clear, especially with what we have seen in the funding rates of altcoin perpetuals. What we have noticed though is that physical delivery of a quarterly future is less important than we thought. When people want coins or the cash, they want it NOW.
Deliverable Perpetuals. We have now created the first futures contract in the world where YOU the trader get to pick when you want it to be delivered and expire. This contract functions similarly to a perpetual contract: it is highly leveraged, should trade near spot, and if you hold it forever, you will either pay or receive funding every day. The key difference is that at any time you can opt for delivery and at the next funding cycle (initially once per day) you will receive the exact BTC or USD amount corresponding to your position size.
Interest rates. At the end of the day it all boils down to interest rates. Fixed income is the biggest market in the world, it’s a market that very few traders trade in but it touches every aspect of our lives. If you trade crypto today, you may not realise it but the growing fixed income market makes a huge difference to your PNL.
To quote Arthur from BitMEX, “always choose fixed income. There are exceptions to this rule, but the big dogs trade bonds and credit derivatives. You want risk big enough to blow up the bank”
Crypto interest rate markets will dwarf any other crypto market. CoinFLEX has created a tradable repo market for crypto. In traditional finance Repo is only accessible by banks, not even every bank has access to this market. It is a big boys club where the Federal Reserve and the banks transact “secured financing” trades that allow banks (and customers of banks) to pledge securities and borrow dollars, or pledge dollars and borrow securities. The CME/ICE have tried to create a listed repo or swap product in the past but have never been able to do so, this was because every attempt lacked support from banks, without which their products failed. Why would banks give up access to the Trillion dollar per day Repo market at the heart of financial markets when you can own it all yourself? Repo is ultimately a Today / Tomorrow trade. I sell an asset to you today and agree to buy it back from you tomorrow at a slightly higher price. That price difference becomes an interest rate and all of a sudden, voila, I have used my asset to borrow dollars short term.
CoinFLEX Repo is a Spot / Deliverable Perp market. When you buy Repo what you are inadvertently doing is spending USD to buy 1 BTC and selling 1 Perp. If you opt for delivery of the perp leg of the trade, then at the next delivery cycle you will end up with the USD you started with + the interest rate you collect (the price of the Repo). CoinFLEX is able to offer this because crypto is not a market dominated by banks or the Federal Reserve and we can give access to this market to anyone in the world, not just huge money center banks.
250X Leverage. Spread Markets. When you know a trade is good, do it in as much size as you possibly can. Do not hold back. One of the best trades in crypto today, popularised by crypto funds, prop traders and market makers, is interest rate trading. Someone might buy spot and sell perps to collect funding, or someone might buy perps and sell quarterlies, to bet on the price difference and funding difference between the two. The Perp/Quarterly trade is an interest rate trade, fixed rates (basis on the quarterly) vs floating rates (perp rates move around a lot) and we have created a spread market (akin to calendar spreads on CME) for doing this trade in one market, buying the perp and selling the quarterly or the opposite.
Leverage is one of the most important forces in the world. As Archimedes said “Give me a lever long enough and a fulcrum on which to place it and I shall move the world”. A Perp/Quarterly spread trade may seem boring to crypto degens who do not think of interest rates, but think about the power of 250X leverage on this trade.
Example of a Perp/Quarterly Chart:
This is synthetic Perp/Quarterly spreads elsewhere. Any chart obsessed trader could tell you that buying $60s and selling $70s in huge size would have been a great short-term money making trade. Altcoin perps are intriguing because the added volatility can make for high ROIs. CoinFLEX’s Interest rate derivatives like Perp/Quarterly spread markets are amazing because the size you can do in them is orders of magnitude bigger than Perps, Quarterlies, Altcoin derivatives, spot or any other market in crypto. Where else can you trade anything in crypto with 250X Leverage?
CoinFLEX 2.0 comes with many features, for example:
- Implied engines that connect the liquidity of all our markets together. Perps, Spot, Spreads and Repo all become interconnected through the implied engine.
- FLEX can now be used as collateral to trade futures.
- 2 basis points maker rebates on perp and futures trades gives an incentive to post liquidity.
- No more need to “Take out Leverage” like in the previous version of CoinFLEX.
- Portfolio margin across all futures trades with USD as the margin currency and BTC, ETH, FLEX, etc all to be usable as margin as well.
- Highly flexible and capable sub account infrastructure, API key management, login management.
250X, Repo, Perps are just the beginning of the future of CoinFLEX. We are starting with BTC/USD but the vision of CoinFLEX 2.0 is one of listing deliverable perps on 100+ coins by the end of the year, launching interest rate markets all the way out the forward curve, connecting everything through a powerful margining system and sharing liquidity through the implied engine. Our goal is to be the leading money platform for crypto economic activity, trading, borrowing, lending and more, serving the needs of crypto users large and small around the globe.