Digitex Futures exchange and Bitmex exchange are both cryptocurrency derivatives exchange. A derivative is a financial asset whose value is backed by an underlying asset and in this case, the price of cryptocurrency. The value of bitcoin derivatives is determined by the price of bitcoin on exchanges. Although Bitmex has already launched their exchange and have good trading volume while Digitex intends to launch their exchange in Q4 2018, Digitex futures exchange challenges Bitmex in many ways.
Digitex futures exchange has revealed everything we need to know about their exchange including their platform features and revenue model. The CEO of Digitex futures, Adam Todd will give a keynote speech and present a live demo of the Digitex platform at the upcoming Malta Blockchain Summit on the 1st and 2nd of November, 2018. People who are privileged to attend the event will have a sneak peek into how the trading interface would look like.
Bitmex exchange and Digitex futures exchange differ in a number of ways and I will pick each feature where they differ and compare them in this article.
Collecting trading fees from traders is the usual revenue model for most cryptocurrency exchanges. Bitmex charges a maker and taker fee of 0.025% and 0.075% respectively. Maker fees are generally lower than taker fees because traders add liquidity to the market by placing maker orders. Example of a maker order is a limit buy order below market price or a limit sell order above market price. Taker fees are paid when the trader removes liquidity from the market by placing an order that executes immediately such as a market order. The idea is that takers are removing liquidity from the market so they are charged a little higher than makers.
Although a 0.075% taker fee may look small at first, it is not exactly small. Bitmex fees apply to the trader’s entire leveraged position, not just their margin. For instance, when using a $1000 trading capital with 100x leverage, the fees will be calculated as (100 × $1000 × 0.075 × 2) = $150. A whopping $150!
On the other hand, Digitex does NOT charge commission fees or transaction fees. Digitex is a zero fees futures exchange. Instead of charging traders for providing liquidity, Digitex team invented a better revenue model to help them implement zero fees while maintaining the exchange. The Digitex team built a token based exchange where all transactions are done using the Digitex token (DGTX).
The more traders join the platform, the more the demand for the DGTX token which is definitely going to drive up the price. Starting from 2021, new tokens will be minted annually depending on the price of the DGTX token and how much will be needed to maintain the platform. The amount of tokens to be minted will be decided by DGTX token holders using a decentralized voting system where 1 dgtx = 1 vote.
Traders require a trading interface that supports speedy submission and execution of orders so that they do not miss out of price actions. Trading on a slow interface could be very frustrating.
Bitmex uses a conventional trading interface that is mostly suited for old-timers. Their trading interface looks a little outdated when compared to other exchanges.
Digitex provides a one-click ladder trading interface that allows traders to quickly submit orders in just one-click ladder trading interface that allows traders to quickly submit orders in just one click.
The trading interface is built in a way that bids and offers move up and down on a central price ladder. This enables traders to see all the market actions at once.
Tick size is the minimum price change between different ask and bid prices of a futures contract. For instance, if the tick size of a futures contract is $2, then the price will move up or down in $2 increments. Bitmex offers a tick size of $0.5 while Digitex offers ten times of bitmex tick size, which is $5.
Providing a large tick size increases liquidity because it gives traders incentives to place more orders since they stand to make more gain. Digitex $5 tick size eliminates unnecessary fractions (noise) and allows futures contracts to be displayed on the trading interface without constantly disappearing from the screen.
Bitmex only accepts deposits and withdrawals in bitcoin which gives no room for flexibility. Also, considering bitcoin’s high transaction fees and the time it takes to confirm transactions on some occasions, this choice is not really the best for traders.
Digitex Futures exchange does not hold the funds of traders. Instead, they provide a decentralized independent smart contract built on the ethereum blockchain. Hence, deposits and withdrawals are done on the ethereum blockchain using DGTX tokens. Ethereum network fees are significantly lower than that of bitcoin and relatively faster. Allowing traders to hold their funds on a decentralized wallet puts them in full control of their funds hence, Digitex cannot freeze their funds. It also protects Digitex from bearing the risk of securing funds especially in the unlikely case of a hack attempt.
Auto deleveraging is the act of liquidating a trader’s position and closing him out. Bitmex uses this feature to protect themselves. When Bitmex liquidates a trader’s position, it is taken over by the Bitmex liquidation engine.
Digitex does not support this feature. Digitex does not close out traders’ winning positions to protect themselves from losses. They believe that traders should not miss out profitable moves that they correctly predicted.
This is another interesting feature of Digitex Futures exchange. Digitex exchange has the features of a centralized exchange and a decentralized exchange. Digitex combines a centralized order matching engine with decentralized account balances to build an optimal exchange. Traders will be able to submit and execute trades in sub milliseconds without having to trust the exchange with their funds. Digitex programming language facilitates real-time trading and enables it to handle price spikes with low latency. Digitex trading platform is highly scalable and built to accommodate millions of users.
Digitex futures exchange will give Bitmex a run for their money. Digitex provides optimum trading services that will make it the trader's favorite exchange.
The main features that make Digitex Futures exchange stand out are shown below:
Digitex has an airdrop program of 1000 DGTX tokens for early users who are among the top 5000 people with the highest referrals. Do well to join the waiting list and be one of the top users who will gain early access to the Digitex exchange. For more information on Digitex Futures exchange, kindly visit the website and the social media handles:
Website: http://www.digitexfutures.com
- Twitter: @digitexfutures
- Facebook: @digitexfutures
-Telegram https://t.me/digitexfutureschat
- Reddit https://www.reddit.com/r/DigitexFutures/
- Join the waiting list: http://digitexfutures.com/get-early-access
Whitepaper: https://www.digitexfutures.com/whitepaper/Digitex-Whitepaper.v.1.1.pdf
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Well done angel @sussan