With the recent introduction of CBOE and CME Bitcoin futures to allow institutional traders some exposure to Bitcoin, Quedex looks to be the cryptocurrency counterpart, offering Bitcoin futures and options on a Bitcoin-centric platform.
Quedex is different because traditional Bitcoin derivatives are products for those that want to be insulated from Bitcoin on a regulated fiat exchange. One big difference is that while traders are at a permanent risk when in a short CME future position, Quedex short sellers will never get margin called if they are fully collateralized, since the platform operates 24/7.
Quedex differs from offering a full range of Bitcoin-denominated derivatives focused to the crypto economy, as well as security and risk management to match.
Quedex stores all bitcoins in offline vaults, with all withdrawals checked manually and secured by multi-signature technology, where numerous keys are required to approve of a transaction.
Qudedex’s website states that they utilize a 3 of 5 multi-sig wallet, with different people in the company (no external party holds a key) holding one key. PGP is used for end to end encryption on orders as well as messages, on both the web app and the API to ensure the utmost security for users.
Since Quedex offers up to 25x leverage for margin traders, it has implemented a risk management system. Quedex calls this system an “innovative auction-based bankruptcy prevention mechanisms”, that makes negative balances impossible.
Options are arguably the more attractive offering, since futures only allow traders to speculate on the price. Options allow the trader to simultaneously protect themselves from downside risk, and preserve profit potential in both bull and bear markets.
“Quedex bitcoin options have even more potential to be the hedging tool of choice for the bitcoin miners, as buying a put option allows them to fully retain the growth potential of bitcoin and without touching fiat money.”, Matt Wywial explains.
While options have been available in Bitcoin since 2011, the experience hasn’t been consistent, causing frustration and hesitation from traders to delve in the derivatives market. Quedex looks to solve this by offering a stable platform on which to use options:
“It is very important that the options are consistent with the prevailing inverse futures standard. Only that way active traders can easily hedge their option positions with futures or apply put-call parity in options arbitrage”, Matt Wywial, Cofounder of Quedex, explained.
“Quedex is the first one to offer bitcoin-denominated futures and options consistently, each with $1 notional amount”.
Quedex is currently offering free trading until January 31st, 2018, maximizing profits on margin trades, allowing traders to make the most from longs or shorts from volatility.
Quedex looks to be regulated under Blockchain & DLT regulations starting in January, and is located in the European Union member state of Gibraltar, which is very friendly to Bitcoin and Blockchain operations. Despite this, account creation is still extremely simple and intuitive.