Category: Launch

Gnosis: Shitcoin or Supernova?

Arthur Hayes

Summer is near, that means it’s time to forget Bitcoin and embrace altcoins. The summer of 2016 began with the DAOsaster. The DAO became the largest crowd-sale in human history by raising $150 million in under one month. A few weeks later, in-built security holes allowed an individual to syphon off one third of the funds invested.

The Gnosis ICO will go down in the history books. Investors purchased $12.5 million Gnosis tokens (symbol: GNO) at a price of $29.85, giving GNO a market cap of $298.5 million. The cap of $12.5 million was reached in ten minutes. Investors subscribed for 4.19% of the total GNO float, the other 95.81% is held by the Gnosis development team. Holy pre-mine!

Pre-Mine Token Distribution:

  • 10% will be used to incentivise the Gnosis team over a period of several years. However, there is no explicit lock-up period.
  • The remaining 90% are held by Gnosis LTD. These coins will be used to incentivise others to build applications on top of the Gnosis platform. 99% of these funds are locked-up for 12 months.

Total Potential Float: 4.19% ICO + 9.58% Gnosis Team + 0.86% Gnosis LTD = 14.63%

Gnosis aims to create a truly decentralised prediction market. This is a lofty goal that many entrepreneurs and teams are working towards such as Augur, a competing Ethereum based prediction market project.

GNO tokens can be used to buy WIZ tokens (no this isn’t the 70’s Wizard of Oz remake featuring Michael Jackson). WIZ tokens are used to:

  • Pay trading fees
  • Create markets
  • Speculate on event outcomes
  • Subsidise markets and participation fees

The Gnosis team is very quick to point out the following:

 GNO tokens are functional utility tokens within the Gnosis platform. GNO tokens are not securities. GNO tokens are non-refundable. GNO tokens are not for speculative investment. No promises of future performance or value are or will be made with respect to GNO, including no promise of inherent value, no promise of continuing payments, and no guarantee that GNO will hold any particular value. GNO tokens are not participation in the Company and GNO tokens hold no rights in said company. GNO tokens are sold as a functional good and all proceeds received by Company may be spent freely by Company absent any conditions. GNO tokens are intended for experts in dealing with cryptographic tokens and blockchain-based software systems.

Instead of the traditional ICO model where a token price and supply are set by the team, GNO tokens were issued via a reverse Dutch auction.

Historically ICO’s are underpriced, and once they list in the secondary market, they moon. This price appreciation benefits token buyers and not the team. In the Dutch auction model, the Gnosis team is the biggest beneficiary because their pre-mined stash is instantly worth a lot more … on paper.

With a $300 million market cap GNO, in under ten minutes, has become the 8th most valuable digital currency. Many think this is scandalous. However, armed with nothing more than a slick website and a promise to deliver, Gnosis right now is proving to be an altcoin heavyweight.

Others believe in the future promise of a truly decentralised prediction market. The centralised online gambling and prediction market is massive. If Gnosis only partially delivers on their mission statement, it will still be bigly valuable.

Whether Gnosis is a shitcoin or supernova is a question that only the market can answer. Because BitMEX is committed to providing price discovery, we have launched the Gnosis / Bitcoin 30 June 2017 futures contract, GNOM17.

Traders can go long or short GNOM17 using only Bitcoin, with up to 2x leverage. GNOM17 begins trading before GNO tokens list on any secondary spot market. Trading on Kraken and or Poloniex will most likely begin in under a week.

GNOM17 Contract Details

BitMEX Launches Bitcoin / Chinese Yuan Futures Contracts

Arthur Hayes

BitMEX is proud to announce the launch of the Bitcoin / Chinese Yuan (CNY) series futures contracts, symbol: XBC.

The first future launched in the series is XBCZ16.

XBCZ16 Contract Specifications

Contract Value: 10 CNY of Bitcoin

Quote, Margin, and Settlement Currency: Bitcoin

Settlement Index: The BitMEX XBT/CNY Index (.XBTCNY)

Expiry Date: 30 December 2016

Leverage: 100x

The .XBTCNY Index is an equally weighted index comprised of the XBT/CNY prices on OKCoin.cn, BTCC, and Huobi.

With the addition of XBCZ16, BitMEX allows traders to go long or short the three major Bitcoin currency pairs, CNY, USD, and JPY.

Spread Trading

One of the most watched spreads is the CNY vs. USD Bitcoin premium or discount. This spread is one of the most important Bitcoin trading indicators.

Traders who wish to bet on the expansion or contraction of the China Bitcoin premium can trade XBCZ16 vs. XBTZ16. XBTZ16 is the Bitcoin / USD 30 December 2016 100x leveraged futures contract. Both contracts expire at 12:00 UTC on the settlement date.

Premium Expansion:

Go long XBCZ16 vs. short XBTZ16.

Premium Contraction:

Go short XBCZ16 vs. long XBTZ16.

To learn more about the Bitcoin / CNY series, please read the XBC Series Guide.

Trade Zcash Futures on BitMEX

Arthur Hayes

zcash-logo

Zcash (ZEC) is the hot new altcoin this fall. Zcash aims to bring complete privacy to digital currency transactions.

“Zcash offers total payment confidentiality, while still maintaining a decentralized network using a public blockchain. Unlike Bitcoin, Zcash transactions automatically hide the sender, recipient, and value of all transactions on the blockchain. Only those with the correct view key can see the contents. Users have complete control and can opt-in to provide others with their view key at their discretion.” [z.cash]

The Zcash genesis block is scheduled to launch on October 28th. After the astonishing rise of Monero over the past few weeks, many traders are equally bullish on Zcash.

ZEC coins will be distributed by mining and earning the block reward; there will be no Initial Coin Offering. As a result, the initial supply of ZEC coins will be limited.

Most traders want economic exposure to ZEC rather than buying, holding, and storing ZEC itself. Futures contracts allow traders to gain long or short exposure without ever touching ZEC.

Zcash funded development partially by pre-selling ZEC coins to investors. A portion of each block reward will be given to initial investors for a period of time. The spot market will be quite illiquid until enough blocks have been mined, and block rewards earned. Initial investors can forward sell their allotment of ZEC by selling futures contracts.

BitMEX is committed to providing price discovery for new and promising digital currencies. We are proud to be the first exchange to allow trading of any kind for ZEC/XBT. The BitMEX Zcash / Bitcoin futures contracts allow traders to go long or short with leverage on the ZEC/XBT exchange rate.

Product Details:

Symbol: ZECZ16
Underlying: ZEC/XBT
Contract Value: 1 ZEC
Quote Currency: XBT
Expiry Date: 30 December 2016 12:00 UTC
Settlement Currency: Margin and PNL are denominated in Bitcoin
Leverage: 2x

Given that ZEC/XBT has not begun trading on any spot market, we do not know which exchange will have the most liquid market. We will make an announcement in early November about which spot exchange will be used for the settlement price.

Announcing The Launch of BFX 2.5x Leveraged Futures

Arthur Hayes

BFX is a notional credit of Bitfinex after the “security breach”, with each token’s face value as 1 USD.

In BitMEX we believe in a free market empowers people and improves price discovery. As a result, BitMEX is pleased to announce the launch of BFXQ16. BFXQ16 allows users who may not hold BFX Tokens or have an account with Bitfinex to trade and speculate on the recovery value of BFX Tokens, while exposing themselves to less counterparty risk by using leverage.

BFXQ16 Contract Details:

  • Payoff: 0.1 XBT per 1 USD
  • The underlying is the Bitfinex BFX/USD exchange rate
  • Margin, profit, and loss are all in Bitcoin
  • Leverage of 2.5x
  • Expires 26 Aug 12:00 UTC, settles on 30 minute TWAP of BFX/USD
  • More details

Traders can go long or short BFXUSD using only Bitcoin. No BFX, USD or Bitfinex account is required.

To begin trading, deposit Bitcoin to your BitMEX account. Then you can place buy or sell orders on BFXUSD.

Announcing The Launch of Ether Classic 5x Leveraged Futures

Arthur Hayes

ETC is a special chain quoting the Ethereum Classic pre-fork chain, which is the chain created by the original Ethereum code as it existed before the hard fork.

ETC has proven a very popular digital currency right out of the gate. As a result, BitMEX is pleased to announce the world’s first Ether Classic futures contract, ETC24H.

ETC24H Contract Details:

  • Each contract is worth 1 ETC
  • The underlying is the Poloniex ETC/BTC exchange rate
  • Margin, profit, and loss are all in Bitcoin
  • Leverage of 5x
  • Expires each day at 12:00 UTC, based on the 11:30 UTC to 12:00 UTC time weighted average price of ETC/BTC
  • More details

Traders can go long or short ETC24H using only Bitcoin. No ETC is required.

To begin trading, deposit Bitcoin to your BitMEX account. Then you can place buy or sell orders on ETC24H.

Trade Lisk With Leverage And Bitcoin

Arthur Hayes

Lisk trading launches Friday, May 27 at 12:00 UTC.

Have you heard of Lisk? It’s the hottest new altcoin. It just completed its Initial Coin Offering, raising US$6 million. The coin is now trading on the secondary market. Trading volumes and the price are surging.

Essentially Lisk is a clone of Ethereum, but the scripting language is JavaScript. Whether you are a super bull or think Lisk belongs in a landfill, BitMEX now offers a way to speculate on Lisk using on Bitcoin.

Introducing LSKXBT

LSKXBT is a leveraged trading product that allows traders using only Bitcoin to go long or short Lisk with up to 3.33x leverage. The leverage will increase as liquidity improves.

Each LSKXBT contract is worth 1 LSK, and quoted in XBT. The underlying of LSKXBT is the Poloniex LSK/XBT exchange rate.

LSKXBT does not have an expiry date. Buyers will receive the Poloniex LSK funding rate (when it becomes available, currently set at 0%), and pay the XBT funding rate. Shorts receive the Poloniex XBT funding rate, and pay the LSK funding rate. Read Swaps 101 to learn more about how it works.

Going Long LSKXBT

If you have some Bitcoin, you can go long LSKXBT with leverage.

You want to go long 10,000 LSKXBT contracts. The current price is 0.0001 XBT. The Bitcoin value of 10,000 LSKXBT contracts is 1 XBT. Because BitMEX offers 3.33x leverage, you only have to put up 30% * 1 XBT or 0.3 XBT to go long 10,000 contracts.

The price increases to 0.0002 XBT. Your profit is (0.0002 XBT – 0.0001 XBT) * 10,000 contracts or 1 XBT.

Going Short LSKXBT

If you have some Bitcoin, you can go short LSKXBT with leverage. There is no need to borrow LSK to short it. That’s one of the main benefits of trading BitMEX products.

You want to go short 10,000 LSKXBT contracts. The current price is 0.0001 XBT. The Bitcoin value of 10,000 LSKXBT contracts is 1 XBT. Because BitMEX offers 3.33x leverage, you only have to put up 30% * 1 XBT or 0.3 XBT to go short 10,000 contracts.

The price decreases to 0.00005 XBT. Your profit is (0.00005 XBT – 0.0001 XBT) * -10,000 contracts or 0.5 XBT.

Start Trading Today

To start trading, all you need is a BitMEX account and Bitcoin. The Lisk market opens tomorrow (Friday May 27) at 12:00 UTC.

Register Here

Start Trading

Swaps 101

Arthur Hayes

 

I Want A Ferrari

I like cars. I would really like to experience the thrill of driving a Ferrari, but I really don’t want to own a car. People who own a Ferrari but don’t drive it often might want to earn some income by loaning out their car.

I would be willing to pay a rate of interest, to drive a stranger’s Ferrari for a short period of time. I am willing to swap an interest payment, for the use of a Ferrari.

Altcoins Are Like Ferraris

Traders love altcoins because they have extreme volatility on the up and downside. Savvy traders can earn substantial sums trading altcoins in a short period of time. However, most traders have no interest in holding or storing altcoins. They just want to participate in the price performance of the coin.

As a result, most altcoin traders prefer to trade on margin. To go long they pledge Bitcoin as collateral, borrow additional Bitcoin and buy the altcoin of their choice. To go short, they pledge Bitcoin as collateral, and borrow the altcoin to short it. In both cases, the traders must pay interest to the lender of Bitcoin or the altcoin.

Just like the Ferrari example above, traders swap interest payments for the performance of the altcoin. Traders have no interest in owning the coin, but they obtain the same economics through a swap.

BitMEX Swap Basics

BitMEX swaps mimic the exchange of cash flows and price performance inherent in trading any currency pair. Every currency pair consists of a base and quote currency. The base currency comes first then the quote currency in any currency pair code. For ETHXBT, ETH is the base currency and XBT is the quote currency.

Imagine you want to buy ETH. You first need to borrow XBT to exchange it for ETH. The person lending you XBT will charge you a rate. Once you have purchased ETH, you can lend it out to someone else.

In this example, as a buyer of ETHXBT, you pay the XBT (quote currency) rate and receive the ETH (base currency) rate. The opposite is true if you wished to sell ETHXBT.

To perfectly replicate the action of borrowing and lending the base and quote currency, buyers of BitMEX swaps must pay the quote currency rate and receive the base currency rate. Sellers of swaps must pay the base currency rate, and receive the quote currency rate.

BitMEX does not operate a lending market for either the base or quote currency, so the rates reference an external third party market.

Buyers and sellers swap interest rate payments for exposure to the underlying asset. Buyers of ETHXBT are long and profit from a rise in price; sellers of ETHXBT are short and profit from a decline in price.

The net of the base and quote interest rates is the Funding Rate. The Funding Rate is charged each day at the Funding Timestamp based on the value of the position. It’s just like a bond. If you hold the bond on the coupon date, you get a payment. If you do not, you get nothing. If you buy ETHXBT and sell it before the Funding Timestamp, you are not eligible to pay or receive the Funding Rate.

Swap Boxes And Arrows

BitMEX Swaps Flow

The diagram above shows the interest payments and performance obligations for buyers and sellers of ETHXBT.

How Are Swaps Valued?

BitMEX intends for swaps to mimic margin trading. Swaps are valued at the prevailing spot price of the underlying asset. For ETHXBT, that is the ETH/XBT exchange rate on Poloniex.

To ensure that the swap’s price does not deviate greatly from spot, each week unrealised profit will become realised at the prevailing spot price. That allows profitable traders to either withdraw their winnings, or either re-leverage them on additional contracts.

Is There Leverage?

Of course, this is BitMEX. Because no physical asset changes hands, BitMEX is able to offer very high leverage on swaps. If two traders wish to trade an ETHXBT swap worth 100 XBT, each side must post at least 4 XBT of margin. If the price declines or rises by more than 2%, the long or short trader will be liquidated. For more information, please refer to the Liquidation document.

How Long Do Swaps Last?

The beauty of BitMEX swap contracts is that there is no settlement date. As long as you can afford to pay the daily funding rate, and the spot price does not touch your liquidation price, you can keep your swap. If you wish to close your swap, trade out of your position in the open market. Buyers close their swaps by sell; sellers close their swaps by buying.

Let’s Trade

ETHXBT is BitMEX’s first swap product. It allows traders to trade the ETH/XBT exchange rate with up to 33x leverage. Traders do not need to own or borrow ETH to trade ETHXBT. Margin, profit and loss are all denominated in Bitcoin.

Trade ETHXBT Today!

 

How To Trade Factom

Arthur Hayes

The hottest new altcoin on the block is Factom (FCT). Factoid is the token used to power the Factom protocol. Although technically incorrect, BitMEX calls the token as Factom. Now that Factom is freely tradable, this post will explain the different ways to express bullish and bearish views on this new cryptocurrency.

Spot Trading

Buying and selling Factom on a spot basis is quite simple. The most liquid Factom currency pair is Factom/Bitcoin (FCT/XBT). Poloniex is the leading exchanges by volume.

Buying Factom

To buy Factom, send Bitcoin to the exchange and exchange it for Factom. This must be done on a fully funded basis (i.e. there is no leverage).

Selling Factom

If you hold physical Factom, you can exchange it back for Bitcoin. Selling Factom you don’t possess is not possible.

Leveraged or Derivatives Trading

For most of the readers of this blog, leveraged trading / speculating presents a more interesting way to trade Factom. With the exception of Bitcoin and Litecoin, leveraged or derivatives trading on altcoins was not possible. BitMEX recognised that Bitcoin traders would like to speculate on Factom with leverage and using only Bitcoin as margin.

BitMEX recently launched the FCT7D, a weekly expiring FCTXBT futures contract. Each FCT7D contract represents 1 FCT. The contract expires each Friday at 12:00 GMT on the FCTXBT exchange rate. All margin, profit, and loss are conducted in Bitcoin. The maximum leverage allowed is 10x.

Buying Factom Futures

BitMEX Factom futures contracts allow traders to speculate on the future value of the FCTXBT exchange rate. A trader who wishes to go long 1,000 FCT, must buy 1,000 FCT7D contracts. The beauty of FCT7D is that it requires Bitcoin as margin. The maximum leverage is 10x. If the FCT7D price is 0.005, the trader must post 0.5 Bitcoin as margin (1,000 Contracts * 0.005 FCTXBT * 10%). If the price rises to 0.006, the profit is 1 Bitcoin = (0.006 – 0.005) * 1,000.

Selling Factom Futures

Short selling, or selling something you don’t possess is usually impossible with altcoins. Using FCT7D, traders are able to placed leveraged bearish bets on Factom as long as they own Bitcoin. For example, a trader who wishes to go short 1,000 Factom, must sell 1,000 FCT7D contracts. Again only Bitcoin is required for margin. If the FCT7D price is 0.005, the trader must post 0.5 Bitcoin as margin (1,000 Contracts * 0.005 FCTXBT * 10%). If the price falls to 0.004, the profit is 1 Bitcoin = (0.004 – 0.005) * -1,000.

Placing leveraged trades, and shorting Factom using only Bitcoin is only possible with BitMEX’s FCT7D futures contract. FCT7D Contract Description

Start Trading Factom Now

How To Roll Daily BitMEX Futures

Arthur Hayes

Many traders and market makers have asked for a way to roll their daily Bitcoin / USD futures contracts (XBT24H) from day to day. Each day at 12:00 GMT, any open position on XBT24H vanishes and traders must go long or short again. For traders wishing to have a constant exposure or hedge over the expiry and settlement period, a way to roll XBT24H contracts from day to day is desired.

BitMEX has now listed a 48 hour Bitcoin / USD futures contract, XBT48H. XBT48H expires every 24H, and becomes XBT24H, which will then expire 24 hours later. XBT48H will immediately re-list every 24H.

Expiry And Settlement

You buy 1,000 XBT48H contracts on T at 12:01 GMT. At 12:00 GMT T+1, the XBT48H expires and your long 1,000 contracts of XBT48H becomes a long position in XBT24H. Your average entry price is not affected.

Rolling XBT24H

Traders can use XBT48H to effectively roll their XBT24H position from day to day with very little market slippage.

Example:

You are long 1,000 XBT24H contracts at $500 and you want to keep your long position after XBT24H expires.

You buy 1,000 XBT48H contracts at $500 and sell 1,000 XBT24H contracts at $500 before XBT24H expires and settles. You now have a long 1,000 XBT48H position.

When XBT24H expires at 12:00 GMT. Your long 1,000 XBT48H position becomes a long XBT24H position, which will expire and settle in 24 hours.

XBT24H_48 Calendar Spread

Once traders become comfortable trading XBT48H, we will list the XBT24H_48H calendar spread. The calendar spread will have its own orderbook, which will make rolling XBT24H contracts even easier and cheaper.

We believe that the addition of the XBT48H contract will help market makers manage their positions better, which will in tern lead to more liquidity on BitMEX.

BitMEX Bitcoin Hedging Futures Reborn

Arthur Hayes

hedge

In the past few months, BitMEX has shifted focus towards speculative Bitcoin trading products. Our most successful product, is the 100x leveraged Bitcoin / USD daily futures contract, XBT24H. We have not forgotten about the hedging needs of the community. In order to increase liquidity in our Bitcoin Hedging XBU chain of futures contracts, we have reduced the maturity and restructured the fee schedule.

The BitMEX Bitcoin / USD Hedging Weekly Futures Contract, XBU7D, will expire every Friday at 12:00 GMT. The settlement price will be based on the two hour Time Weighted Average Price (TWAP) from 10:00 GMT to 12:00 GMT on the TradeBlock XBX Index. XBU7D goes live Friday December 25 12:00 GMT.

XBU7D is called a hedging futures contract because BitMEX guarantees settlement. Unlike the highly leveraged Bitcoin Speculation futures contracts, there are no profit adjustments. BitMEX is able to guarantee settlement because of a conservative margin policy. When placing an order, traders are granted 3.33x leverage (an initial margin of 30%). Traders are margin called once the leverage rises above 5x (a maintenance margin of 20%). BitMEX will use the 20% equity remaining to close out the position at prevailing market prices. BitMEX will close positions until a trader’s effective leverage has fallen below 5x. For more details about the margin policy for the hedging contracts, please read Margin Call and Liquidation.

In order to attract more liquidity, the fee schedule has been restructured. Makers who provide liquidity will be paid 0.10%. Takers will pay 0.30%.