Deribit – Bitcoin Futures and Options Exchange(deribit.com)
deribit.com
Deribit – Bitcoin Futures and Options Exchange
https://www.deribit.com/
30 comments
When you trade derivatives like this, your main risk is counterparty risk. Deribit, with things like this and the documentation used to describe their futures and options offerings, does not inspire trust in them as a counterparty.
They're trying hard not to take on counterparty risk. But the gimmicks they use to avoid it make their options less valuable.
Unlike a cash exchange, a derivatives exchange with "leverage" (which means they loan customers money) takes on financial risk. They cannot play in this game unless they have enough financial strength to pay off when they lose. And, no, they don't get to use the customer's deposits. Those belong to the customer.
With "leverage", it's quite possible for a customer to have a negative balance. Then the broker/exchange has to collect from the customer, or cover the loss.
They're trying to escape this situation by using an "auto liquidation" approach, which means that when a customer balance approaches zero, they start closing out customer positions. This allows customers to game the system. Take a position, leverage it, and keep a near-zero balance. If the customer wins, they collect; if the customer loses, Deribit closes out the contract. This adds a special kind of counterparty risk when buying a contract - even if you win, your position may be closed out in favor of the counterparty before you can gain anything.
Deribit makes their own private price for Bitcoin, which is a 30 minute moving average. This makes the "auto liquidation" thing workable. If the price changed too fast, and especially if it changed discontinously, auto liquidation would break. But this creates an arbitrage situation between Deribit and everybody else.
From the terms: "In no event will Deribit, or its suppliers or licensors, be liable ... for any amounts that exceed the fees paid by you to Deribit under this agreement during the twelve (12) month period prior to the cause of action." Financial services do not work like that. They have much larger obligations to their customers.
Unlike a cash exchange, a derivatives exchange with "leverage" (which means they loan customers money) takes on financial risk. They cannot play in this game unless they have enough financial strength to pay off when they lose. And, no, they don't get to use the customer's deposits. Those belong to the customer.
With "leverage", it's quite possible for a customer to have a negative balance. Then the broker/exchange has to collect from the customer, or cover the loss.
They're trying to escape this situation by using an "auto liquidation" approach, which means that when a customer balance approaches zero, they start closing out customer positions. This allows customers to game the system. Take a position, leverage it, and keep a near-zero balance. If the customer wins, they collect; if the customer loses, Deribit closes out the contract. This adds a special kind of counterparty risk when buying a contract - even if you win, your position may be closed out in favor of the counterparty before you can gain anything.
Deribit makes their own private price for Bitcoin, which is a 30 minute moving average. This makes the "auto liquidation" thing workable. If the price changed too fast, and especially if it changed discontinously, auto liquidation would break. But this creates an arbitrage situation between Deribit and everybody else.
From the terms: "In no event will Deribit, or its suppliers or licensors, be liable ... for any amounts that exceed the fees paid by you to Deribit under this agreement during the twelve (12) month period prior to the cause of action." Financial services do not work like that. They have much larger obligations to their customers.
Latency in the micro-seconds range is based on network i/o, distance and wiring, not frameworks. Microwaves travel over 30% faster than fiber optic links. Erlang will not affect this part of the equation, however, it should prove to be low-latency, scalable, reliable, and all the other good stuff the Erlang/BEAM/OTP system is good at on the server.
Pony lang is looking at competing with Erlang, and to be just as fast if not faster.
Maybe their hoping to just trade on IEX, 'The Flashboys Exchange' that has the wire coiled up in a shoebox (I know it's not a shoebox!), so even hackers can't circumvent the intentional delay it causes.
Pony lang is looking at competing with Erlang, and to be just as fast if not faster.
Maybe their hoping to just trade on IEX, 'The Flashboys Exchange' that has the wire coiled up in a shoebox (I know it's not a shoebox!), so even hackers can't circumvent the intentional delay it causes.
>'The Flashboys Exchange' that has the wire coiled up in a shoebox (I know it's not a shoebox!), so even hackers can't circumvent the intentional delay it causes.
Explain? How does hiding the delay hinder hackers?
Explain? How does hiding the delay hinder hackers?
It's not a hidden delay. It's known to be 350μs. The idea is to prevent anyone seeing a large order to beat them to another exchange (like NYSE) and doing an arbitrage there based on that information.
http://www.nytimes.com/2014/04/06/magazine/flash-boys-michae...
http://www.nytimes.com/2014/04/06/magazine/flash-boys-michae...
Pony does indeed look fantastic, but every time I look at it I keep getting a feeling that it's slightly too "academic" to be really ready for getting actual work done. Could be just me...
Pony is quite the opposite of academic in the sense that the creator of Pony, Sylvan Clebsch worked in industry for 24 years. Industry people are picking up Pony for just that. His PhD seems recent back-to-school stuff - amazing.
From the QCon London site: "Sylvan Clebsch is the designer of the Pony programming language. He has worked in industry for 24 years, on fintech, milsims, video games, peer networking, VOIP, identity management, crypto, and embedded OSes. He is currently working on distributed Pony and writing up his PhD at Imperial College London." [1]
Personally, it looks good, but I am not an OOP person. I prefer Erlang's, or LFE's (Lisp Flavored Erlang) syntax.
[1] https://qconlondon.com/speakers/sylvan-clebsch
From the QCon London site: "Sylvan Clebsch is the designer of the Pony programming language. He has worked in industry for 24 years, on fintech, milsims, video games, peer networking, VOIP, identity management, crypto, and embedded OSes. He is currently working on distributed Pony and writing up his PhD at Imperial College London." [1]
Personally, it looks good, but I am not an OOP person. I prefer Erlang's, or LFE's (Lisp Flavored Erlang) syntax.
[1] https://qconlondon.com/speakers/sylvan-clebsch
Should I care if it is erlang-based or basic-based? Why should I use this instead of some of the existing exhanges?
What other exchanges are there for options and futures?
I'm the CTO of BitMEX.com[1], which runs derivatives (futures and perpetual swaps) on Bitcoin and a few other coins. We've been around since 2014. We run a full-featured testnet [2] for API testing & trade testing.
The other major players are mostly Chinese. In China, there's OKCoin, BTCC (previously BTC China), 796, and BitVC, as well as a few minor players. In the rest of the world, there's us, CryptoFacilities, Coinpit, and now Deribit.
We've been in contract with the Deribit team since 2014 - they appear to be a solid tech team and they certainly understand the underlying finance.
1. https://www.bitmex.com
2. https://testnet.bitmex.com
The other major players are mostly Chinese. In China, there's OKCoin, BTCC (previously BTC China), 796, and BitVC, as well as a few minor players. In the rest of the world, there's us, CryptoFacilities, Coinpit, and now Deribit.
We've been in contract with the Deribit team since 2014 - they appear to be a solid tech team and they certainly understand the underlying finance.
1. https://www.bitmex.com
2. https://testnet.bitmex.com
In all earnesty, do you have an interest in your clients making big profits? Or is it in your best interest that most of your clients lose so that you can pay a few winners?
Do you have a training program that can help me go from 0 to full-time derivatives trader?
Do you have a training program that can help me go from 0 to full-time derivatives trader?
Our interest is in traders continuing to trade - in order for them to do so, they must like the platform and consider it fast, fair, safe, and open.
As for a training program, I usually suggest babypips.com - condescending domain name aside, the content is really great.
As for a training program, I usually suggest babypips.com - condescending domain name aside, the content is really great.
https://www.cryptofacilities.com/
https://www.bitmex.com/
http://www.teraexchange.com/
Crypto Facilities is building a trusted BTC index with CME, so I guess there is interest in crypto derivatives
https://www.bitmex.com/
http://www.teraexchange.com/
Crypto Facilities is building a trusted BTC index with CME, so I guess there is interest in crypto derivatives
You should because it will be slow
Next project will be to write a basic powered Dogecoin exchange, because I hear that's what all the cool kids do.
From their "About us" page[1].
"The exchange is built from the ground up to deliver extreme performance and is built entirely in the programming language Erlang. This gives us big technological advantages being able to handle huge amounts of requests with ultra low latency (<1ms). Erlang is a programming language used to build massively scalable soft real-time systems with requirements on high availability."
[1] https://www.deribit.com/docs/about-us/
"The exchange is built from the ground up to deliver extreme performance and is built entirely in the programming language Erlang. This gives us big technological advantages being able to handle huge amounts of requests with ultra low latency (<1ms). Erlang is a programming language used to build massively scalable soft real-time systems with requirements on high availability."
[1] https://www.deribit.com/docs/about-us/
Their website is using the standard boilerplate angular version of a 'dashboard' theme from Metronic.
And their API console page took 7.02 seconds (on FIOS connection) to fully load the DOM.
And their API console page took 7.02 seconds (on FIOS connection) to fully load the DOM.
"huge amounts of requests with ultra low latency (<1ms)" needs more explanation because if we had 1 million (<1ms) requests from 1 billion I could still use same definition.
They mention that number again in their colocation page, I suspect they're providing their best number based on testing in the same datacenter (yay SXB, FR)
How is this going to get around CFTC rules on commodity derivatives markets?
You're really not. I created Bitfuture two years ago, which did exactly what this site purports to do. Derivabit did the same thing. Writing a platform that does this isn't that hard, getting legal approval is the main hurdle followed by having sufficient money in your market to make it liquid. Derivabit and I both decided to hang it up two years ago when Tera Exchange seemingly made it over the fence and got provisional CFTC approval, but that didn't stop them from being sued and settling [0].
Good luck staying off the radar. I think it's an insurmountable chicken-and-egg problem. If you are going to have enough money to fight your way through the inevitable jurisdictional battles you would have had to start this pre-Mt. Gox to get big enough to survive.
On another note - no one actually wants to hedge their Bitcoin. They are buying it as a highly speculative instrument already, even the players with supposedly large transactional demand for it.
0 - http://www.cftc.gov/PressRoom/PressReleases/pr7240-15
Good luck staying off the radar. I think it's an insurmountable chicken-and-egg problem. If you are going to have enough money to fight your way through the inevitable jurisdictional battles you would have had to start this pre-Mt. Gox to get big enough to survive.
On another note - no one actually wants to hedge their Bitcoin. They are buying it as a highly speculative instrument already, even the players with supposedly large transactional demand for it.
0 - http://www.cftc.gov/PressRoom/PressReleases/pr7240-15
> incorporated under the laws of Lithuania
https://www.deribit.com/docs/terms-of-service-and-privacy-po...
> hosted in France
https://www.deribit.com/docs/ §1.9
Are they even subject to those rules?
Are they even subject to those rules?
>Are they even subject to those rules?
Derivative trading is regulated by https://www.lb.lt
Derivative trading is regulated by https://www.lb.lt
Naive enterprisers think they are exempt from US Securities laws using a 50 year old concept of jurisdiction inside their head
That's always cute
The CFTC is nice, the SEC will come down hard
That's always cute
The CFTC is nice, the SEC will come down hard
Yeah if I fall under a US orgs' jurisdiction as a EU citizen not conducting business with US citizens as far as I can ascertain, please explain where I'm naive?
This isn't sarcasm, I can't think of a way the SEC would have any say over the exchange instead of it's potential US clients but would like to hear it
> not conducting business with US citizens as far as I can ascertain
If you make a reasonable [and effective] effort to not conduct business with US citizens then they will leave you alone. The mere fact that I can access Deribit undermines their exemption.
But I've seen the SEC charge people with thinner rationale. For example, a eastern european guy in an alleged insider trading ring only traded CFDs on a European CFD exchange. The SEC claimed that he would know that the exchange would have to make corresponding trades and hedging trades in US equities and therefore he is culpable.
If it makes you feel any better, that particular case hasn't reached a verdict yet and was insider trading, so if you feel comfortable dealing with extradition hearings to establish case law in a foreign country or simply not insider trading on US equities, then you'll be fine.
If you make a reasonable [and effective] effort to not conduct business with US citizens then they will leave you alone. The mere fact that I can access Deribit undermines their exemption.
But I've seen the SEC charge people with thinner rationale. For example, a eastern european guy in an alleged insider trading ring only traded CFDs on a European CFD exchange. The SEC claimed that he would know that the exchange would have to make corresponding trades and hedging trades in US equities and therefore he is culpable.
If it makes you feel any better, that particular case hasn't reached a verdict yet and was insider trading, so if you feel comfortable dealing with extradition hearings to establish case law in a foreign country or simply not insider trading on US equities, then you'll be fine.
Also, the SEC doesn't charge people that merely gain access to unregistered and noncompliant exchanges. So the "US clients" would never create liability for themselves.
The majority of the SEC's compliance statutes are levied on businesses that offer any product labelled a security. This is a well distinction defined and quite broad and very difficult to play wordgames with. Its just unfortunate that registration is so expensive.
The majority of the SEC's compliance statutes are levied on businesses that offer any product labelled a security. This is a well distinction defined and quite broad and very difficult to play wordgames with. Its just unfortunate that registration is so expensive.
By existing for two weeks
MtGox was written in PHP and it was enough for us! Oh wait...
Wait what? I've seen way more than 10%/day volatility on *coin/USD markets often enough. Has anyone else read through the 'tos'?
https://www.deribit.com/docs/terms-of-service-and-privacy-po...