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2021Q1 Perpetual Contract Market Transaction Data Analysis Report (BMEX)



Foreword Since the bull market broke out in the digital asset market in 2017, it has gradually formed an obvious head effect, and the futures contract market is no exception. Binance, Huobi, and OKEx have undertaken half of the transaction volume of the entire market. As of now, under the background of BTC breaking record highs, the leading status of the three exchanges has not changed. However, what cannot be ignored is the explosive development of a large number of medium-scale derivatives. Compared with giants, medium-scale exchanges focus more on building their own vertical advantages and marketing advantages, especially focusing on competition in the perpetual contract market, which is gradually changing the market structure. Innovative derivatives trading models (such as BMEX), or expanding the types of derivatives it operates (such as FTX), or diversification of operating models (such as Deribit), gradually develop medium-scale derivatives with different characteristics in the market There are also several exchanges that have devoted themselves to developing the market, successfully breaking through the shackles, and becoming the "new giant" in the perpetual contract market. Transaction data can even challenge the three major exchanges. This article will conduct a comparative analysis of the perpetual contract transactions in the entire market and the current representative medium-sized perpetual contract exchanges from the perspective of transaction/position volume, transaction liquidity, transaction activity, capital costs, and margin rates, and select the most promising ones. The second echelon leading contract exchange with the potential to qualify. 1. Overview of the perpetual contract market "The trading volume of perpetual contracts in 2021 is expected to exceed 10 times the total of 2020, and all indicators have set new highs." Affected by the frenzied bull market, global traditional giants have entered the market. As of 2021, 3 On March 25, in the digital asset derivatives market in 2021, the trading volume of perpetual contracts of 50 exchanges tracked by Golden Data has reached 13.4 trillion US dollars, and the trading volume of perpetual contracts alone has surpassed the trading volume of derivatives for the whole of last year The total (12.314 trillion U.S. dollars), only on April 18, BTC plummeted by 10,000 U.S. dollars, and the contract trading volume broke a new high of 300 billion U.S. dollars. BIS Innovation Center: Central Bank Digital Currency and Payment System Improvement is the Key Area of Research Work in 2022: On January 26, the Bank for International Settlements Innovation Center (BIS Innovation Hub) recently stated that it will participate in the Central Bank Digital Currency (CBDC) in 2022 , next-generation payment systems, and new projects in decentralized finance (DeFi). The department also stated that participating in the research and development of CBDC and payment system improvement is still a key area of research work in 2022. Among the 17 projects that have been launched in 2021 or will be launched in 2022, 13 projects involve the above fields, including participation in Helvetia and Jura CBDC research projects in Switzerland, Dunbar CBDC research and development projects in Singapore, and mBridge CBDC research and development projects in Hong Kong, China. (Financial Associated Press) [2022/1/26 9:13:55] At the same time, in such a bull market environment, there is a very interesting data. According to statistics, the number of contract users will exceed the number of spot users in April 2021. This shows that a large part of users are contacted in the form of contract transactions when they first enter this industry. The popularization of contract education and the expansion of pure derivatives exchanges have reached an unprecedented level. The total trading volume of perpetual contracts in the derivatives market in 2021, source: It can be seen that the trading volume of perpetual contracts in the first quarter of 2021 surpassed the trading volume of derivatives perpetual contracts in the whole year of last year. This historic moment is affected by 2020 The impact of the bull market that has continued in the fourth quarter to the present. The 2020 Digital China Innovation Competition Blockchain Track Preliminary Competition ended, and 15 teams advanced: 2020 Digital China Innovation Competition - Blockchain Track Online Preliminary Competition came to an end a few days ago. After nearly three months of online competition, 15 teams from Fujian, Beijing, Shanghai, Zhejiang, Guangdong, Sichuan and other places successfully advanced to the finals. Since the track started online in April, it has attracted a total of 1,006 teams from the fields of politics, industry, academia, and research related to the blockchain. It is reported that during the finals of the 2020 Digital China Innovation Competition, the 15 teams that advanced to the finals of the blockchain track will compete in the final competition, competing for the first, second, third prizes and winning prizes, and competing for a bonus of 720,000 yuan. (Fuzhou News Network) [2020/8/11] Changes in the monthly trading volume of perpetual contracts in the derivatives market in 2021, source: TokenInsight Since January 2021, the trading volume of perpetual contracts has begun to grow explosively, and is still increasing Continuous; From the perspective of monthly trading volume, after the trading volume of perpetual contracts in January and February exceeded the historical trading volume record of US$4 trillion in a row, the market heat in March declined, but it still reached more than US$3.8 trillion , it can be seen that the level of activity is still far higher than that of the same period last year. 2. Comparison of perpetual contract exchanges "The perpetual contract market can be called a red ocean of competition. Product advantages and long-term security and stability of exchanges may be easier to break through than pure market-oriented exchanges." Medium-scale exchanges (quarterly trading volume between 3000- 800 billion US dollars, the exchange with more than 10,000 trading days), will rise in large numbers in 2021, breaking the monopoly of several large exchanges in the perpetual contract market segment. Especially in the B-end business, the three major firms are also extremely jealous. In terms of trading volume, the top three exchanges (Binance Futures, Huobi Futures, OKEX) accounted for 53.79% in the first quarter of 2021, while the total volume of medium-sized exchanges accounted for 34.54% of the market's trading volume. For the remaining small and medium-sized exchanges and decentralized exchanges, the stability of the platform is worrying and will not be analyzed for the time being. It is worth noting that among the perpetual contract exchanges in the first quarter of 2020, BMEX developed from a medium-sized exchange, closely following the three major exchanges. In 2021, the quarterly trading volume of Bybit, Kraken, FTX and other exchanges will be average With more than 800 billion US dollars, it has already broken through the medium scale and has the conditions to become a large exchange. Considering the rapid development and iteration speed of the derivatives market, medium-sized exchanges such as Bitget and MXC follow closely, and the future breakthrough potential can be expected. U.S. Federal Budget Accountability Committee: The overall U.S. budget deficit is expected to exceed $3.8 trillion in 2020: The U.S. Federal Budget Accountability Committee said it expects the U.S. overall budget deficit to exceed $3.8 trillion in 2020 and 2.1 trillion in 2021 Dollar. Government debt held by the public is expected to exceed the size of the U.S. economy by the end of fiscal 2020, the year ending Sept. 30. The committee said it expects the U.S. economy to return to its pre-crisis track by 2025. It is expected that by September 30, the US public debt-to-GDP ratio will exceed 100% by the end of fiscal year 2020. Expectations are based on current legal spending, coronavirus-induced lockdowns and high unemployment. (Golden Ten) [2020/4/14] Trading volume distribution of perpetual contracts in the derivatives market in 2021, source: Jinse Finance Medium-scale derivatives exchanges have various strategies to achieve scale breakthroughs, which can be divided into three categories at present: Innovation The type of derivatives trading model (such as BMEX), or the expansion of the types of derivatives it operates (such as FTX), or the diversity of operating models (such as Deribit). For medium-sized derivatives exchanges, focusing on the experience of mainstream trading pairs is relatively effective in expanding the scale of exchanges. The possible reason is that the depth and price credibility of mainstream trading pairs are the basis for all types of acceptance, and they are also the industry trend vane. Although mainstream digital asset trading pairs are relatively mature, for exchanges, whether it is liquidation, matching, trading, or risk control, doing a good job in mainstream currency contract transactions is still a manifestation of the basic technology and capabilities of the exchange. Voice | Tom Lee: Bitcoin will enter a bull market in 2020: Golden Finance reported that Fundstrat co-founder Tom Lee said in a speech at Blockchain Economy 2020 last week that the most important generation of trade in the next 20 years will revolve around the disruption of the financial industry , the most important of these technologies will be blockchain and encryption. According to Lee, 2020 will be a good year for the price of Bitcoin. He has repeatedly stated that the cryptocurrency community should be very optimistic in 2020, as it is now in the solid start of a bull market. Bitcoin was the best-performing asset of 2019, beating the S&P 500 (which reached its highest level in nearly 25 years). In addition, Lee listed five reasons why Bitcoin will enter a bull market in 2020, including the 2020 U.S. election, Bitcoin halving, geopolitical tensions between the United States and Iran, the spread of the coronavirus, and Bitcoin's return to its 200 in January. above the daily moving average. [2020/2/28] The average daily trading volume of perpetual contract exchanges in the derivatives market in 2021, source: CoinsummerHuobi Futures and other top brands, almost all of the trading volume comes from BTC and ETH related perpetual contracts, while BMEX, which adopts a similar strategy, At present, the transaction volume of mainstream currency contracts accounts for 75% of the total transaction volume, reaching 867.9 billion US dollars. Its mainstream currency contract position ranks seventh in the perpetual contract market, far surpassing, Aofex and other medium-sized exchanges of similar size. Although there is still a certain gap between the overall trading volume of medium-sized exchanges and leading exchanges, considering that Bybit has grown into a leader in a specific field in the same environment, new contract exchanges such as BMEX may have greater room for expansion in the future. Strength faction | He Yingqi: The development of the blockchain industry in 2020 will have a clearer weathervane: In today's golden strength faction, in response to the question of Wang Yichen, a senior reporter from the Economic Daily News Department, He Yingqi, general manager of BTG Homeinn Blockchain The speech pointed out: In 2019, I think the most influential thing is the blockchain filing issued by the Cyberspace Administration of China. Because this shows the country's recognition of the blockchain technology and its expectations for the industry. Keywords for 2019: industrial blockchain, compliance, promotion; keywords for 2020: changes, challenges, opportunities. In addition, he also said that I personally think that there is still a very important time point in 2020, the two sessions and the 14th Five-Year Plan, when the development of the blockchain industry will have a clearer wind vane. [2020/1/22] Firm positions in perpetual contracts in the derivatives market 3. Liquidity comparison "The liquidity and order depth of medium-sized exchanges have skyrocketed, even no less than that of top exchanges. This is surprising. "Liquidity refers to the measurement index that an individual can quickly buy or sell the target without suffering a large price loss (that is, market depth, which can be basically judged from the amount of pending orders for each file, and will also be affected by the influence of current market conditions). For derivatives, liquidity is very important for derivatives investment due to its leveraged contract nature, and it is one of the basic indicators for evaluating exchanges. Traders generally prefer to choose derivatives exchanges with good liquidity. The average daily trading volume of perpetual contract exchanges in the 24h derivatives market, source: Coinsummer In this study, the perpetual contract U standard of major platforms was selected for a sample survey, and mainstream currencies accounted for almost 75% of the total contract market positions From the analysis above, from the analysis of these data, there is almost no big difference in the trading depth of the contracts of the three major exchanges. Do your best. It can also satisfy a single million-level order user. It is not difficult to find the depth of the market for perpetual contract exchanges in the derivatives market. In terms of in-depth layout, large-volume and medium-scale exchanges have come from behind and surpassed the three major exchanges. This is also due to the fact that traditional market makers are keenly aware of When it comes to this big cake, the threshold is getting lower and lower. Users can also get a very good experience in second-tier exchanges. BMEX's total trading volume in the first quarter of 2021 was 1.1 trillion US dollars, which has been closely following the three major exchanges, and the depth of different gears is slightly inferior to MCX and Bybit. On such a basis, BMEX has given full play to its innovative products, such as 2020 contract insurance, thousand-fold contracts, coupled with a strong subsidy market, and has more advantages than others in breaking through the shackles of medium-scale transactions. 4. Funding rate "Medium-scale exchanges have the advantage of funding rate, and BMEX's funding rate is at a relatively low level for BTC/USDT and ETH/USDT trading pairs." The funding rate refers to the market price and spot price based on the perpetual contract The difference between prices, a periodic fee paid to long or short traders. There is no doubt that the market hopes to have a lower funding rate to avoid the influence of unstable factors when making profits. So this is why a large number of users prefer to trade on medium-sized exchanges. BTC funding rate history, source: CoinsummerBinance, Huobi and other large exchanges, the trading pair’s funding rate remained above 0.05% for most of the first quarter, and even exceeded 0.5% in extreme market conditions. Bybit's funding rate exceeded 0.3% several times at its peak. In contrast, the funding rate of exchanges such as MXC has been maintained below 0.03%, and the situation of other mainstream trading pairs is basically similar to that of BTC/USDT trading pairs. However, the funding rate of BMEX’s BTC/USDT trading pair remained unchanged at around 0.005% for most of the first quarter, which was basically the same level as the funding rate of the FTX exchange and lower than other exchanges. BMEX funding rate history BMEX can have such a positive response in the market, the low funding rate is indispensable. 5. Margin rate comparison Some medium-sized exchanges have lower maintenance margin rates. When the position size is appropriate (generally 500k-1000k USDT), the margin required by users to maintain positions is relatively low, and the price of forced liquidation is estimated Also softer. BTC contract forced parity price comparison chart Taking BMEX as an example, the maintenance margin rate of its BTC/USDT perpetual contract trading pair (100X) is 0.5%, and the incremental value of the risk limit is more reasonable, according to the price of BTC 10000USDT, the whole position is long , the liquidation price will be 5-15 dollars lower than all other exchanges in the direction that is more beneficial to users. The margin rate advantage is highlighted. It is also worth mentioning that the liquidation mechanism of leading exchanges generally adopts direct full position takeover, while BINANCE and BMEX adopt step-by-step forced liquidation to gradually release margins. This is crucial for short-term and high-frequency players, giving users more buffer space and further reducing risks. 6. Summary In terms of industry brand status, customer base size, and liquidity, medium-sized exchanges may be slightly inferior. But they all have their own unique way of survival. In such a fierce competition environment, they can always maintain the growth of user scale and consolidate their position. And the new field giants are born under such a fanatical bull market.


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