3 Things Every Crypto Trader Should Know About Derivatives Exchanges
Futures contracts have become more popular among crypto-asset traders over the past two years, as total open positions in derivatives more than doubled in three months.
Contract volume surpassed that of gold, which is a mature market with a daily volume of $107 billion, which is additional proof of their popularity.
However, each exchange has its own order books, index calculations, leverage limits, and cross and orphan margin rules. These differences may seem superficial at first, but they can make a huge difference depending on a trader's needs.
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Total contract open interest (blue) and daily volume (black). Data source: Bybt
As the chart above shows, total contract open interest has risen from $19 billion to the current $41 billion in three months. At the same time, the daily trading volume has exceeded 120 billion U.S. dollars, higher than gold's 107 billion U.S. dollars.
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BTC and ETH contracts open interest (USD). Data source: Bybt
Notice how CME holds third place for Bitcoin (BTC) contracts, despite only offering monthly contracts. The traditional CME derivatives market also stands out for requiring a 60 percent margin deposit, although brokers may offer leverage for certain clients.
Stablecoin vs Token Margin Contract Comparison
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Order entry for BTC perpetual USDT contracts. Data source: Bybit
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Order entry for BTC perpetual USDT contracts. source. OKEx
In addition to USDT-based contracts, OKEx also offers USDTK pairs. Similarly, Binance perpetual contracts also offer Binance’s USD (BUSD) ledger. So, for those who are not willing to use USDT as collateral, there are other options.
Variable Funding Rate
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8-hour funding rate for ETH contracts. Data source: Bybt
The graph above shows that Bybit and Binance generally show higher funding rates, while OKEx consistently shows the lowest funding rates. What traders need to understand is that different assets or short-term leverage needs may have different interest rates.
Even a 0.05% difference equates to an extra 1% per week in fees, which means that funding rates will have to be compared every once in a while, especially during bull markets when fees tend to climb quickly.
Compilation: Bibabu
Original: cointelegraph
Compilation: Bibabu
