As per a press release dated December 19, the cryptocurrency exchange OKEx which is based out of Malta has launched a new crypto derivative product. OKEx, which is the second-largest cryptocurrency exchange has launched a new Bitcoin derivative product named as “perpetual swap.”
The USP of this particular product is that there is no expiry date. The absence of any expiry date allows positions to be held for an indefinite period. This allows crypto traders to speculate on the future value of OKEx’s bitcoin (BTC) to U.S. dollar (USD) index
OKEx is currently the world’s second-largest exchange by adjusted daily trade volume, seeing over $1 billion in trades.
To simplify, a perpetual Swap is a peer-to-peer, virtual derivative contract that will enable users to speculate the trend of the price of digital assets. Its mechanism is reportedly very similar to a futures contract, but with no expiry and daily settlement
Each swap contract has a notional value of $100 equivalent in BTC, the exchange said in the press release, and further added that traders could either profit from either by having a long position to profit from an increase in bitcoin’s price or having a short position to profit from the decline in bitcoin’s price.
This new product will offer leverage up to 100 times when compared to the other products that offer up to ten times, which OKEx believes can help in reducing the trading cost. The Settlement time will be at 04:00 and 16:00 UTC every day, while the traded price of a perpetual swap contract is “closely anchored to the spot market price,” said the exchange.
Other benefits include less transaction fees, daily-settlements of closed positions, fast-withdrawals of realized profits, and a “tiered margin” system, a feature which will allow the traders with open positions to adjust their leverage according to their risk appetite and market conditions, and “mark price” mechanism to help traders avoid unnecessary liquidations at times of high volatility
Lennix Lai, Financial Market Director of OKEx, said: “The launch of perpetual swap demonstrated our continuous commitment to building a complete financial ecosystem on blockchain and crypto. With the new offering, investors and traders can select the products which best fit their trading and hedging strategies.”
He further also cautioned the traders to avoid over-leveraging their positions and to keep in mind the underlying risky nature of the cryptocurrency market. He recommends practicing robust risk control strategies which are “equally crucial in trading.” The exchange said it plans to add swaps between different cryptos in the future.