Binance is Finally Rolling Out Its Long-awaited Derivatives Arm
Binance acquires crypto derivatives exchange to offer options, futures and perpetual contracts
The world’s largest cryptocurrency exchange announced on Monday that it has acquired JEX, a cryptocurrency trading platform that offering both spot and derivatives trading services. The acquired firm will be rebranded as Binance JEX and offers derivatives products to Binance users, including futures, options, and the much-rumored perpetual contracts, according to a company statement. The exchange will also offer perpetual futures based on the BTC/USDT pair with up to 20x leverage.
In tandem with the acquisition, Binance has launched two futures trading platforms for user testing, one of which was developed by the JEX team. Participating traders for the two platforms can vote for their favorite platform, and get a chance to win free BNB – up to 10,000 tokens. Binance will review the winner and decide the final futures trading platform.
“We think open competition is a great way to test out the products’ usability. Through the competition, we hope to fully review the two products in terms of market feedback, scalability and liquidation model design. It’ll help with the ultimate decision making,” a Binance spokesperson told The Block.
In February, The Block first reported that Binance would enter the derivatives market. More details about the derivatives platform were revealed to The Block in May, including that the exchange was looking to offer perpetual swaps to rival BitMEX and building a matching machine to power the platform. In July, Binance also announced the official launch of its margin trading services.
With the debut of its derivatives platform, Binance is entering one of the most heated markets in the cryptocurrency trading space. Established brands in the derivatives market such as Deribit and BitMEX are on a roll recently, with BitMEX’s insurance fund up by 50% since the beginning of 2019 to over 31,300 BTC and Deribit dominating around 95% of the total cryptocurrency options trading volumes. CoinFLEX, which specializes in physically settled futures contracts, has raised $10 million and launched a market-making incentive program to expand its market share.
Confronted with the fierce competition in the derivatives space, Binance may have to count on its popularity in the spot market to win an edge, according to market maker Autonomy co-founder Ricky Li.
“Given the huge existing customer base on spot and margin trading, it will be relatively much easier for Binance to build initial liquidity than other competitors, which is the most difficult part of starting up an exchange,” said Li.