What Will It Take to Become a Top Exchange?

Author: Trekk Date: 27 Nov 2018

In surveying the landscape of crypto exchanges, there is no question that some are favored over others by traders for varying reasons. This brings us to ask, what will it take for Digitex Futures to be seen by traders as a top exchange?

In comparing some notable exchanges in the space, it seems that Digitex will be on its way when it goes live in a few weeks for various reasons. Read on to understand some of the features that traders will love about Digitex Futures.

If you are new to trading cryptos, there are two types of exchanges you can trade on — the most common is known as “spot.” This is where you are trading the actual “hard asset” (coin/token).

Examples of spot exchanges are GDAX and Kraken. The other type of trading is “futures.” This is the market that Digitex will develop first. In cryptos futures, traders basically place bets (open contracts) on the future price of the underlying asset (BTC, LTC, and ETH) with the intent to sell or buy at that price. BitMEX and CME are the most notable examples of cryptocurrency futures exchanges.

Plans for spot trading are a part of the Digitex roadmap in 2019 but as the name implies, the futures market will always be Digitex' bread and butter as they say. So, what does Digitex Futures have that will make traders see it as a top exchange? Let's check it out.  

[caption id="attachment_1672" align="aligncenter" width="800"] November 2018 — Top exchanges, according to coinmarketcap.com[/caption]

Some of the Key Components of Exchanges

1. Fees

Whether novice or experienced, in the trading world, the goal is to keep as much profit as possible by using the exchange with the lowest fees. Binance has one of the lowest fees in the market. Considering what other platforms are charging, a 0.1% fee is pretty hard to beat, honestly.

With fees potentially wiping out any profit, they can turn traders off from using an exchange. What would traders do if there was an exchange that had no commission fees at all?

Digitex Futures will allow traders to open futures contracts on BTC, ETH, and LTC with zero-fee trading. When comparing any fee to zero, even 0.1% sounds too high.

2. User Interface

BitMEX may be known by millions, but the user interface isn’t friendly to traders just starting crypto trading, even seasoned traders consider it clunky. On the other hand, Coinbase is seen as the Apple of crypto exchanges for the simplicity of its user interface.

With the concept of simplicity in mind, Digitex developers toiled for months to create their one-click trading ladder. This enhanced tool will totally change the way traders make trades.

Remember the name of the game is speed. After traders’ experience using one-click trade, platforms still using the time-consuming multiple-click trade process stand to lose to the enhanced tool provided by Digitex Futures.

The live price ladder will show price discovery in real time, and with one click a futures contract can be opened or closed. Trading could never be made easier.

3. Volume and Liquidity

Binance went live during the bull run of 2017, and according to Coin Market Cap it is leading the pack in 2018 on the Top 100 Cryptocurrencies Exchanges by Trade Volume (this is the Adjusted Volume 24 hrs list valued at over $1 billion.) For Trade Volume Reported, BitMEX tops the list at over $3 billion. This means the bar for trading volume is set at a decent height for Digitex.

However, considering it took BitMEX ($3.6B) about four years to achieve that volume level and Binance ($1.8B) did about half of that in less than two years, Digitex Futures should have no problem making its own record in the coming years.

The Early Access Waitlist already has over half a million traders ready to take part in the exchange. And it should be noted that the list has grown during a relentless bear market that has seen billions wiped off of cryptocurrency’s market cap... So, imagine what the volume could be in a bull market!

When it comes to liquidity, the general rule is high volume = high liquidity. Just look at the top 10 exchanges and you see how this holds true for trading platforms. Digitex is redesigning the rule to create liquidity for traders by eliminating commissions per transaction. This will encourage a high volume of trades because traders won’t have to worry about losing any profit to fees.

This, combined with the Automated Market Makers, (the trading bots are capitalized with $200 million DGTX and programmed to break even) will make for a new playing field for new and matured traders.

4. Security and Custodial Exchanges

In 2018 we’ve all seen the headlines and heard the numbers about hacks like Japanese based Coincheck at $500 million and $40 million from Coinrail in South Korea. Even though both events only affected the exchange's holding, it still raises concerns about exchanges that hold users’ funds and what best security practices they implement to keep them safe.

Digitex’s approach is simple, the exchange will never hold traders’ funds. Ethereum smart contracts will be used to hold traders account balances. This is blockchain based technology the exchange will use to help traders better secure their funds. By not practicing the traditional role of being a custodial account holder, Digitex isn’t able to freeze, mismanage, or lose traders funds.  

This means users of the platform don’t need to trust the exchange. But if the exchange were ever hacked, bad actors wouldn’t have access to traders’ funds.

5. Reputation and Rumors

In the age of Reddit and Crypto Twitter (yes, it’s a real thing) for the crypto community, someone is always watching and reputations matter. The account holder for the defunct Mt. Gox moved some BTC and Twitter was a buzz in seconds.

Remember when LTC got listed on Coinbase? The rumor mill was hard at work. The reputation of Coinbase was being tarnished by baseless stories spreading like wildfire.

Getting a bad rep based on misperception is something Digitex is working to deal with head-on. By implementing Decentralized Governance by Blockchain, this provides transparency and is fully auditable. Smart contracts will be used for the voting process, count, and storing the results when the DGTX community votes for the issuance of new DGTX tokens.  

6. Leveraging and Deleveraging

Bitfinex allows traders to leverage up to 3.3x which isn’t much when you compare it to BitMex which goes to 100x. For traders, the smallest ticker movement can mean immense profit (or loss). Digitex has chosen to go with leveraging up to 100x.  

More importantly, for a trader on the Digitex Futures, there will be no deleveraging. Even when the house is on the losing side of the bet. This is a practice that is known to annoy pro-traders about other exchanges. Just think about OKEx recently forcing early settlement of all Bitcoin Cash futures contracts and the debacle that caused.

Final Thoughts

What makes an exchange a top exchange? It’s actually the traders. You can have all the bells and whistles, but if the traders don’t use them, then the best cryptocurrency trading tools mean nothing. If your user interface is too complicated or it takes too long for traders to withdraw their funds, they leave.

As the new kid on the block, Digitex Futures isn’t looking to just talk about being a top exchange. The goal is to have the traders refer to it as a top exchange. Why will they do that, you ask?

Remember, Digitex is breaking the mold of what a crypto exchange is by introducing commission-free trading on futures contracts. And giving decentralized governance to the community to influence how the exchange grows is an entirely new concept in the trading world.

The Network Effect is already in play, over half a million eager traders signed up for the waitlist. When the exchange goes live in a few weeks, the new way of trading is sure to catch on, and these will be some of the component’s traders look at.