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Delta NewsFebruary 10, 2019

Delta Exchange launches stablecoin settled futures

Jitender Tokas
Chief Business Officer
February 10, 2019

Delta Exchange has listed the World’s first stablecoin-settled futures on bitcoin and leading altcoins.

There are several advantages in trading crypto futures which are not available in spot trading (i.e. directly buying or selling cryptocurrencies). These include:

  • ability to go both long and short, and hence potentially trade profitably in all market conditions
  • ability to employ leverage to amplify trading gains and
  • trade with lower trading fees.

As things stand today, most cryptocurrency derivatives exchanges accept margin only in bitcoin. An oft ignored consequence of this feature is that regardless of what crypto a trader is betting on, she is long bitcoin. Delta Exchange is challenging the status quo by introducing cryptocurrency futures that are margined and settled in USDC. Backed by Circle and Coinbase, USDC is a stablecoin that is pegged to the US Dollar. Consequently, USDC settled futures are quite similar to US Dollar settled futures.

How stablecoin-settled crypto futures add value to traders

Margin is the collateral in a futures trade. The profit/ loss from a trade will either add to or subtract from the margin. When margin is in bitcoin, then the dollar value of the margin changes due to both trade profit/ loss as well as bitcoin price. Since most traders think of their net worth in dollar-terms, the impact of bitcoin volatility on margin value is usually unwanted. Keeping margin in USDC solves this problem elegantly as only the trade profit/ loss impacts the trader’s net worth.

Stablecoins have already revolutionised spot cryptocurrency trading. The market share of crypto to crypto trading was minuscule before the introduction of USDT. The exponential increase in USDT market cap and USDT pairs trading is a testament to the intrinsic demand for stablecoins in crypto trading. Delta Exchange believes that introduction of USDC-settled futures will address this need in crypto futures trading and will provide a major fillip to cryptocurrency derivatives trading.

Mechanics of stablecoin-settled futures on Delta Exchange

Delta Exchange has listed USDC settled futures for bitcoin (BTC), ether (ETH) and ripple (XRP). These futures belong to a special class of derivatives known as quanto futures. For these futures, the margin and settlement currency is USDC. However, the price of the contracts is quoted in US Dollars.Delta Exchange allows only bitcoin deposit and withdrawals. However, traders can change BTC to USDC in a couple of clicks using the ‘Currency Converter’.

The currency converter feature is also useful to users that are trading the bitcoin settled futures on Delta Exchange. Any trader can make his non-trading balance immune to bitcoin price volatility by converting it to USDC. This ability to ‘sit out in stablecoin’ is also something that is unique to Delta Exchange.

About Delta Exchange

Delta Exchange is a marketplace for trading of cryptocurrency derivatives. The exchange currently lists futures on bitcoin (BTC), ether (ETH), ripple (XRP) and stellar lumens (XLM), that allow up to 100x leverage and are settled in USDC or BTC. The founding team of Delta Exchange comes Wall Street firms like Citigroup and UBS and has raised money from the likes of Softbank and Sequoia for their prior entrepreneurial ventures.

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