KuCoin (KUMEX) – arnon samba
Derivatives like Futures Are Conquering the Crypto Market
At the beginning of 2018, the whole cryptocurrency market entered into a bear run and the spot market was shrinking, with price drops for most tokens. That lead to the booming of the cryptocurrency futures market. For instance, CME’s Bitcoin futures contract has increased daily trading volume by 220% since December 2017.
Despite the cryptocurrency derivatives market being slightly over half of the crypto-to-crypto and fiat-to-crypto markets, in the traditional finance world, derivatives are a much bigger market compared to equity. According to Visual Capitalist, in August 2018, the total cryptocurrency market capitalization was approximately $250 billion, whereas the total value of global stock markets amounts to $73 trillion. Furthermore, comparing the stock markets to the derivatives worth $544 trillion, we can truly see that cryptocurrency derivatives are just in their early days.
KuMEX, a Genuine and Advanced Derivatives Platform Goes Live
As more and more crypto exchanges begin to enter the derivatives market, KuMEX, which has been independently developed by a dedicated team, officially launched on July 8th. KuMEX will firstly open the Bitcoin Perpetual Contract (XBTUSDM) which is quoted in USD, denominated in Bitcoin and offers up to 20 times leverage. The platform currently supports three types of order: limit order, market order and stop order.
Compared with other major derivatives exchanges, KuMEX has made many innovations and improvements in creating a fair trading environment and lowering the threshold for investors.
The Bitcoin Spot Index used by KuMEX is the volume-weighted average US dollar price of Bitcoin in 6 exchanges including Coinbase Pro, Bitstamp, Kraken, Gemini, Liquid and Bittrex. Including the figures from more platforms will make the index price on KuMEX more fair and rigorous, avoiding the user’s contract being liquidated because of the low liquidity of the trading platform or the large price fluctuations of one or two spot exchanges.
In terms of the risk management mechanism, KuMEX has an Insurance Fund as well as an Auto-Deleveraging (ADL) mechanism. The Insurance Fund is fully transparent and the balance will be disclosed on the platform on a daily basis. This fund ensures that investors who are forced to close their positions will not lose money that exceeds their position margin. When the Insurance Fund is insufficient, many platforms now adopt a Socialised Loss mechanism, and the Auto-Deleveraging (ADL) adopted by KuMEX can effectively avoid the inflexibility over settlement in Socialised Loss mechanism.
In addition to the more complicated operations and higher risk, another reason for the low penetration rate of derivatives in the crypto world is that major exchanges often set certain investment thresholds. For example, OKex and Huobi’s minimal BTC contract value is 100 USD. In order to allow more retail investors to become familiar with and participate in derivatives investment, KuMEX has greatly reduced the investment threshold. The XBTUSDM contract value is 1 USD, which enables traders to make a more flexible investment. At the same time, KuMEX offers a negative fee for Makers at a rate of -0.025% with a certain amount of fixed commission, encouraging users to provide liquidity to the platform through making the market and earning some commission as an incentive.
Michael Gan, CEO at KuCoin, said: “Compared to the spot market, derivatives are much riskier due to the leverage used, so we are more cautious in providing such services. KuMEX is a derivative trading platform independently developed by our team, and from its inception, we have positioned it as a genuine and advanced financial product, so that all users can trust the platform and trade on it freely, without worrying about the loss caused by any form of manipulation. Following our crypto-to-crypto and P2P OTC platform, KuMEX’s launch complements our ecosystem, allowing us to provide a one-stop service to crypto investors.”
To celebrate the public beta launch of KuMEX, a trading competition has been initiated. The platform will deposit 1 XBT (that is, 1 BTC) into each user’s account for simulated trading. During the activity, KuMEX will prepare 10,000 KCS as rewards for users according to their return rate ranking.
50% Revenue for KuCoin Bonus, Further Boosting Intrinsic Value of KCS
As the native token of KuCoin, KuCoin Shares (KCS) have always played an important role. KCS Holders can get a daily KuCoin Bonus, and enjoy a trading fee discount. With the gradual adoption of blockchain technology, KCS has also begun to expand its use cases, enhancing its intrinsic value. Now, KCS can be used to get a loan on ETHLend, perform real-time transfers through ADAMANT Messenger, and play online games on PlayGame.com. With the recent collaboration with CoinPayments, KCS opened its door to over 2.4 million merchants worldwide.
On KuMEX, KCS will also be the only native token and burning fuel. After the official release of KuMEX, the platform will use 50% of the net revenue from KuMEX for KuCoin Bonus distribution for KCS holders. This move will further enhance the underlying value of KCS. KuCoin recently announced that it will upgrade its KuCoin Bonus Plan in the third quarter of this year, and before its launch, KuCoin will execute the Temporary KCS Buy Back and Burn Plan every week to accelerate the burn process of KCS.
As part of its attempt to lure traders to the new venue, KuMEX will offer rebates to certain traders.
“At the same time, KuMEX offers a negative fee for Makers at a rate of -0.025% with a certain amount of fixed commission, encouraging users to provide liquidity to the platform through making the market and earning some commission as an incentive,” the press release reads.
Furthermore, the platform uses Bitcoin Spot Index that volume-weights the price of bitcoin in six major exchanges — Coinbase Pro, Bitstamp, Kraken, Gemini, Liquid and Bittrex. According to the press release, by using figures from more exchanges, KuMEX hopes to achieve a more “fair and rigorous” bitcoin index price. Meanwhile, rival BitMEX prices its swaps based on data from a pool of three exchanges.
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