Deribit cryptocurrency derivatives

Deribit review 

Deribit cryptocurrency derivatives trading platform is one of the few exchanges where you can trade cryptocurrency options and futures on Bitcoin and Ethereum.

Deribit crypto derivatives trading platform was established in 2016 and is headquartered in Amsterdam (Netherlands). The exchange is operated by Deribit B.V. 

The name was obtained by combining the words "derivative" and "bitcoin". The exchange was originally created as a platform for futures and options on Bitcoin, but is better known for its options. 

Deribit was founded by bitcoin enthusiasts and former traders. CEO John Jansen was a trader on the Amsterdam Options Exchange. Together with Sebastian Smyczynski (now CTO), they decided to create an exchange that would have minimal latency and maximum functionality.

The post of marketing director is occupied by John Jansen's younger brother, Marius. Another member of the team is Andrey Yanovsky, lead developer.

How secure is the Deribit exchange? 

One of the most important questions that traders ask when choosing a cryptocurrency exchange is the issue of security. The consequences of using unreliable or unsafe venues are too serious. When analyzing the security of an exchange, we look at several criteria that are either exchange-side security or user-side security.

To date, Deribit derivatives trading platform has never suffered from any vulnerabilities. This does not mean that the exchange is 100% safe from any problems and dangers, but it definitely shows that it uses the right protocols.

When it comes to the security of your coins held on the exchange, the Deribit team claims that 95% of user funds have a cold storage policy. This means that these coins are stored offline in a secure wallet that is protected from air gap attacks. In this particular case, wallets are stored in many different bank vaults. In order to make sure that there are no vulnerabilities in the new code and updates that Deribit introduces, the founders report that they have a fairly extensive bounty program. 

The team encourages white hat hackers to find bugs and get rewarded for them before black hackers find the bugs. They audit their accounts in real time and also have a unique liquidation mechanism that ensures that underfunded accounts are closed. All this is part of the Deribit insurance fund.

Finally, the exchange has a so-called “risk control mechanism” that is vital to the operation of any derivatives exchange. This mechanism analyzes all incoming orders before they enter the order book and meet with the corresponding mechanism.

Deribit derivatives trading is quite safe, as we can see.

User security 

Considering that the user is often the weakest link in terms of account security, Deribit offers a number of features to increase the individual security of the investor. First, all communication with the Deribit server is via an SSL connection. This is what the lock in the address bar of the browser tells us. Be sure to pay attention to this before logging in to make sure you're on the official site and not on a phishing site. Even if your password is stolen, Deribit offers you the option to protect your money by enabling two-factor authentication. It is disabled by default, but we recommend that you enable it yourself when you log in.

You can also enable some other security features in your account settings, including IP pinning. That is, if someone tries to log into your account from a different IP address while you are logged into the system, the session will be terminated. You can also manually set the session timeout. The default timeout for account inactivity is one week, but you can reduce the timeout to one hour.

Naturally, regardless of the level of security of the exchange, it is not very reasonable to leave a large number of coins on it.

Deribit Fees 

Given that Deribit is a trading platform, exchange fees are very important. This is especially important if you trade large volumes of leveraged instruments that may be subject to liquidation.

Exchange fees 

Like most exchanges, Deribit uses a maker-taker model. This means that traders who provide liquidity to Deribit's order book will receive a lower commission (or even a discount) than traders who withdraw it. Is it still not very clear? Let's take a closer look. Typically, you receive a taker fee when you open a market order and a maker fee when you place a “Post Only” limit order.

For Bitcoin/Ethereum futures, there is a 0.02%/0.025% discount for market makers and a 0.05%/0.075% fee for takers.

On perpetual futures contracts, the maker discount is 0.025% and the taker fee is 0.05% for both Bitcoin and Ethereum.

In the case of option trading, Deribit places a cap on commissions. It cannot exceed 20% of the option value. This rule is relevant only for options that are very deep “out of the money” and are very inexpensive. Liquidation fees are the fees that Deribit charges for liquidation orders. Such orders are executed on Deribit accounts where the margin has been depleted. In this case, the bulk of the fees go to the Deribit insurance fund. Insurance fund. This is a fund that protects traders from "socialization of losses".

Fees for deposits and withdrawals 

Deribit does not charge a commission for replenishing an account on the exchange, but the exchange charges a fee for withdrawing funds. This fee depends on the mining fees currently charged by the network. This commission scheme may be slightly different from what you are used to seeing in the market. This is because when processing withdrawals, Deribit charges the user what they think is best for the current state of the network. It may be a little higher or a little lower, depending on the batch processing data.

Deribit mobile application 

Although mobile applications will never be able to match the functionality of web interfaces and desktop client software, they are very useful for traders, as they allow you not to sit at your computers all day. The application can also be useful for monitoring open positions. Deribit of course has its own app which is available for both iOS and Android devices. In addition, the application is very fast as it connects via an API. The app has many handy features. For example, it provides access to both options and futures, and offers users roughly the same windows and order options as the web application.

You can carry out Deribit cryptocurrency derivatives trading anywhere and anytime using the mobile app.

What are cryptocurrency derivatives? 

A derivative is a financial contract about the future price of a cryptocurrency, security, product or service. The subject of such a contract is called the underlying asset. Sellers and buyers of derivatives do not own the underlying assets, but sell and buy the right to execute the contract.

Deribit cryptocurrency derivatives in Malaysia are very popular right now.

Why are derivatives needed? 

Derivatives are needed in order to reduce possible risks and risks and earn on price changes. This is true for both traditional and cryptocurrency exchanges.

How do you make money on cryptocurrency derivatives? 

Traders earn on changes in the price of the underlying asset. Since it is not known what the future market price of the underlying asset is, all bidders assume the risk. If at the time of the execution of the contract the goods have fallen in price, then the seller receives a profit, and the buyer remains at a loss. If the price of the product rises, then the buyer will win.

To increase earnings, a trader can use leverage (a loan provided by the exchange). The size of the leverage is proportional to the deposit that the trader made. Using leverage, a trader can make transactions for large amounts. The maximum leverage is set by the exchange. Most exchanges provide leverage with a commission.

Use leverage in Deribit crypto derivatives trading to increase your profits.

Types of Cryptocurrency Derivatives :

• Futures
• Forwards
• Options
• Swaps
• CFD 

Futures 

A futures contract is an agreement to sell or buy an underlying asset at a specified price in the future (hence the name). For example, you order a rare edition of a book in an online store. It will be delivered in a month, and you will buy the book at the price that you agreed upon when placing the order.

There are also perpetual futures. They do not have a settlement or closing date, so they can be bought and sold at any time.

Futures are popular Deribit derivatives in Malaysia.

Forward 

Forward - an over-the-counter contract for the sale of goods in the future. It is similar to futures, but less standardized. The forward is not traded on the stock exchange, but through OTC. A simple example: you agree to do some work in the future, and your employer - to pay for the finished work.

Option 

An option is a contract that gives the buyer the right, but not the obligation, to buy a product at a specified price. For example: you really liked the coat and you ask the seller to hold the goods until tomorrow, because you do not have any money with you.

You can trade options on the Deribit exchange.

Swap 

A swap is two contracts: the purchase and sale of an underlying asset and the purchase and sale of the same asset in the future. This is a more complex version of the futures. For example, you buy a specific configuration of a car, and at the same time agree with a friend that you will sell this car to him at a higher price.

CFD 

CFD (contract for difference) is a derivative for the price difference of the underlying asset. If during the term of the contract the asset has risen in price, the difference is paid by the seller. If it falls in price, the difference is paid by the buyer. Often such contracts do not initially have a term and are closed by the party that has such a right under the contract.

If you have not traded crypto derivatives before, we recommend that you use the Deribit testnet. There you can create another account or use the same account. After you register, you will be credited with 10 virtual BTC to your demo account. Practice and you will succeed.

We wish you good luck trading Deribit crypto derivatives in Malaysia!