Every healthy and successful industry has a high financial activity where people can trade with each other on a constant basis. This facilitates having a highly dynamic market in which traders can develop and apply their strategies to achieve the best possible profit.
Therefore, highly versatile financial instruments are certainly something necessary for traders so they have a complete range of options regarding how to move their investments in the most effective way.
One of these financial instruments is future contracts, they are defined as:
“An agreement between two parties – a buyer and a seller – to buy or sell an asset at a specified future date and price. Each futures contract represents a specific amount of a given security or commodity.”
This particular instrument is useful because it allows both parties to set the conditions of their future negotiation. They don’t have to worry about what might happen regarding price movements or any event that could have an impact on the market. In a way, future contracts can offer a certain stability in any industry, even when it comes to cryptocurrencies and its inherent volatility.
The Blockchain Industry, Its Futures Markets and the Impact of Commission Fees
Blockchain technology with all its different cryptocurrencies, is the manifestation of an entirely new industry. Even though it’s very volatile, it has been gaining a lot of worldwide recognition thanks to the amount of innovation that is being created.
Since in this case, people are dealing with a new generation of currencies, traditional financial instruments need to be adapted to leverage the advantages that decentralization makes possible.
In the crypto sphere, exchanges in general, need to charge transaction fees to cover expenses, such as the maintenance of the platform and development costs. This obviously reduces the profit of the people doing these trades. In fact, the impact of fees in trading profits can be so strong that it can even make a profitable trade become unprofitable.
It’s clear that the presence of fees can discourage a lot of traders from participating in transactions where their profit is not capable of covering the corresponding commission. This means the financial activity could be lower, resulting in the market being less dynamic and less active.
So far, charging fees was the only way to make this type of platforms something sustainable. But thanks to the breakthrough capabilities of blockchain technology, it’s now possible to cover these costs without charging any type of fees whatsoever. And Digitex is finally making this idea a reality.
What Is Digitex?
Digitex is the first exchange that will allow its user to participate in cryptocurrencies futures markets without needing to pay any fee for the transactions that they make. In order to participate in this exchange, people will have to first buy a certain amount of the DGTX tokens. This is the native currency of Digitex and buying these tokens is required because every “trader must have a margin balance of DGTX sufficient to cover his potential losses.”
Zero Fees and Sustainability
The strategy that allows Digitex to be a sustainable project without charging transaction fees consists of using their own token sales as a way to gather enough resources and cover every single one of the project’s expenses.
Since this token will be required to participate in the Digitex futures exchange, traders interested in this will buy the token, and then proceed with their trading activity. This dynamic will create a demand for the token, and a self-sustaining economy with the DGTX token as the central part joining all the parties together.
Regarding the management of the resources to fund the project, it’s important to note that for the first two years, the project is going to run with the resources they already received in the ICO (which sold out in just 17 minutes). After those two years, there will be new tokens created that will be sold in the market through a smart contract. These resources will be used to further develop the project. This will be a fully audited event to ensure transparency.
This will allow crypto users to have a new way of trading with futures, and will surely facilitate the developing of more trading strategies to optimize their time and their holdings.
Decentralized Governance in Digitex and Its Impact
Since there will be inflation due to the creation of new tokens, every single individual who has DGTX holdings will have the right to participate in the decision-making process regarding the number of new tokens that should be created when the time comes.
The larger the holdings, the stronger the vote will be from the particular token holder, and clearly it is in the interest of everyone involved to find the best possible balance between avoiding too much devaluation by creating too many tokens, and guaranteeing the project has enough resources to continue with its development in the best possible way.
Given the fact that everyone involved will be able to participate and cast their votes based on what they think is the best, this will ensure that governance is fully decentralized and allow for the optimal efficiency of available funds to take place.
The best possible scenario is to have the increased market demand for the token outweighing the negative effect inflation could have at the price. And this will only be possible if the exchange operates in a proper way and can scale when massive adoption starts to happen.
Nevertheless, the actual percentage of inflation and its corresponding amount of new tokens created will be decided by DGTX holders in the near future. This will certainly make every trader involved become much more interested in the project itself because their own opinions will matter and will be taken into consideration thanks to the implementation of the decentralized voting system.
Users will be encouraged to be constantly informed about the state of the project so they can have enough information to take the best decision for everyone involved. This will avoid having users thinking their needs or interests are being ignored, which is a feeling that might be present in other similar exchanges.
Leveraging Decentralization to Secure Traders Funds
In the Digitex futures exchange, the private keys are not in the hands of the exchange. Instead, the funds are secured by a smart contract in the Ethereum network. This adds a new layer of protection for users because even in the remote scenario that Digitex gets hacked, users funds won’t be lost as Digitex will never have control of those funds in the first place.
The same happens with other circumstances, such as exchanges freezing users accounts for any reason. With Digitex, this simply won’t be possible, which could surely make users feel much safer because their funds aren’t in a vulnerable place.
Besides, since this exchange won’t require any private information typical of KYC/AML (Know your customer / Anti Money Laundering) procedures, the risks of having private information leaked due to hacks is non-existent, allowing users who want to protect their privacy to feel completely secure.
Understanding Digitex’s Key Aspects
- Decentralized Account Balances: As explained before, this feature consists of the fact that users’ holdings are not going to be held by Digitex, but they will be under the protection of a smart contract in the Ethereum network, which means there is an additional layer of security for the users.
- Automated Market Makers: To guarantee liquidity so traders have no problems placing and executing their orders, Digitex will have 20% of the available tokens in the market to provide this liquidity.
- One-Click Ladder Trading Interface: With the goal of providing traders with the most effective and intuitive interface possible, they will be able to trade just by using their mouse or trackpad and clicking just one time to place orders.
- Large Tick Sizes: “In futures trading, a tick is the minimum price increment that a futures contract can move up or down.” There will be three futures contracts (BTC/USD, ETH/USD & LTC/USD), with Bitcoin the ticket size is going to be $5 USD. With Ethereum it is going to be $1 USD and with Litecoin it is $0.25 USD
- High Leverage: Using leverage means trading with more money than what is actually owned. This can increase profits if the trade turns out positive, with Digitex, traders will have available a leverage of up to 100×.
- No Auto Deleveraging: Related to the previous point, when a trader is too high leveraged, some trades might get canceled to protect the money he doesn’t own, in the case of Digitex there won’t be any cancelation, which means people making good predictions won’t get their trade canceled if the counterparty was too high leveraged.
Taking into account everything mentioned so far, it isn’t hard to imagine Digitex ultimately becoming the leader of the futures exchanges in the blockchain industry. I wrote a personal prediction regarding the Digitex position in the market in the coming years:
Digitex in 2019
The exchange is just starting and most users are trying it out with a lot of caution being the new platform that it is. At the end of the year, a lot of people are already accustomed to how this exchange works, are taking advantage of the one-click ladder interface, and the popularity is increasing rapidly as Digitex turns out to be everything people were expecting.
Digitex in 2020
This is the year where the popularity completely explodes, people love to participate in an exchange with no transactions fees and they surely love the higher profits that are now possible. Everyone is already aware of how the one-click interface works, and the market understands the value of the DGTX token, which is why a lot of investors are getting exciting as 2021 gets closer.
Digitex in 2021
In this year, Digitex is meant to issue and release new tokens into the market in order to cover the expenses of the project. After two years of reliable service, Digitex managed to position itself as the futures exchange with the most active user base. Once the new tokens are issued, the market rushes to buy them, resulting in a complete success and allowing the project to continue forward in their path to success.