In recent years, traditional crypto exchange platforms have introduced cutting-edge trading options to promote the trading of digital currencies like Crypto lending, IFO, flexible earning, learn-to-earn, crypto derivatives trading, and much more. Among these, the crypto derivative option is an eye-opening feature in the global crypto marketplace. Exchanges that integrated this functionality made millions and billions in the last year.
The revenue made by crypto derivatives exchanges prompted many startups and entrepreneurs to create a crypto exchange by enabling crypto derivative trading options. To create a secure and well-structured trading platform with crypto derivative options, people started to look for the finest cryptocurrency derivatives exchange development solution that fits their business requirements.
You can get world-class crypto derivatives exchange development solutions from Coinsclone, a leading crypto exchange development company. This article covers everything you need to know about cryptocurrency derivatives exchange development and its importance.
So, let us begin this exciting article with
What is Crypto Derivatives Trading?
Before knowing about crypto derivative trading, you need to know about derivatives trading. In general, derivative trading is a contract that depends on another asset to have a value. It will be conducted between two parties based on the underlying assets. The common underlying assets are currencies, bonds, and commodities. But derivative trading applies to both physical assets & digital assets.
With the regard to crypto derivatives trading, it works the same as derivative trading. But the significant difference is the trading will be happening in the crypto assets. Chicago Board Options Exchange(CBOE) and Chicago Mercantile Exchange(CME) announced Crypto Derivatives trading options.
After the launch of this feature, many crypto exchanges enabled this option to increase their user base and attract global crypto traders. Even exchanges like binance and Bybit are having crypto derivative trading options for their users.
The Crypto derivatives trading feature is accepted between the admin and trader in the form of a contract on two factors. Either they can mitigate the risk in the future, which is known as Hedging. Else the trader can predict the risk & mitigate them, which is known as speculation.
Next, let us see.
Major Types of Crypto Derivatives Trading and its Working Process
Generally, one can perform crypto derivatives trading in two possible methods namely, the lock method and the Options method. The lock method involves Futures contract trading, forward contracts, swaps, etc. On the other hand, the options method involves optional contracts and other associated contracts.
In the crypto space, the lock method is the most preferred type of crypto derivatives trading. So futures contracts, forward contracts, and swaps are the most preferred types in the trading ecosystem. However, two types of contracts are focused on when it comes to crypto derivatives trading. Such as
- Futures contracts
- Perpetual contracts
Let us discuss them in detail.
A futures contract is a prominent type of cryptocurrency derivatives trading. The trade is time-framed and it is done based on the future settlement price along with the date fixation. The date and the amount fixed cannot be modified or changed unless the trade is over. To make it more clear, let us see an example.
A & B are two crypto traders and B wants to participate in future contracts by trading bitcoins. B predicts that the price of bitcoin will increase in the future. So, B fixes the price of 1 bitcoin at $30k and fixes the settlement date. Now A wants to be involved and trade with B. This is known as a futures contract. A and B hereby fix the trade should happen on the settlement date at the predicted bitcoin price level.
If the price of the bitcoin rises above $30k on the settlement date, say $35k. Then B loses the profit by $5k. In case the price goes down at that time of selling, say $20k, then it is a profit for B. Besides, A can be involved in any type of trade before the settlement date and it does not affect B. So in futures contracts, users need to analyze the market and make correct predictions. So that they can earn a profit by futures trading.
This is the working process of crypto futures contracts.
The perpetual contract is far similar to a futures contract. The major difference is, perpetual contracts do not have any time limit for settlement. So this type of crypto derivative trading does not have an expiry of trade and can perform trade whenever the crypto reaches the predicted price limit. Currently, perpetual contracts are based on three functionalities. Such as Initial Margin, Maintenance Margin, and Insurance Fund.
The perpetual contracts work on two margin trading options. Such as the Initial Margin and the maintenance margin. For example, a user buys 1 Ethereum worth $1k. If he/she wants to increase the investment, then the user needs to leverage the amount to 9 times. So that user has 10 ETH for $10k. But here, the user’s Initial investment of one ETH($1k) will be an initial margin.
The maintenance margin will be $9k. If the price of the Ethereum portfolio goes below $9k, then the user would automatically get a Margin call, which is known as a liquidation call. So there will be some options. The user can either liquidate the collateral or can invest further to maintain the margin. Else, the user can call off the trade and get their profits.
In case the price of the asset goes beyond the collateral limit, he/she receives a negative balance. Here comes the Insurance fund to the rescue. The insurance fund helps to pay the debt amount to make the balance Zero. So that the trader can take out the funds from the perpetual contract.
This is the working process of crypto-perpetual contracts. Ok, we have seen what crypto derivatives trading is, its types, and the workflow. These are the basic concepts that a startup should know before investing in cryptocurrency derivatives exchange development. Well, let us dive into our primary topic…
Crypto Derivatives Exchange Development
It is an ideal solution that refers to the complete process of developing a robust and fully functional crypto derivatives exchange platform that benefits the owner of the platform. This solution is mostly preferred by startup people who wish to build a crypto exchange with crypto derivatives trading options. Launching a crypto-based derivatives exchange website or app can help you easily beat the difficult competition that exists in the crypto world.
By starting an exchange with the Crypto derivative trading feature, owners can earn more profits in different ways. Also, they can build a strong crypto community that can not be demolished. Crypto derivatives trading option is preferred by most traders. And without this feature in your exchange, you might fail in gaining new users. That’s why investing in the best crypto derivatives exchange development solution is the smart move to become a successful entrepreneur in the crypto world.
Understanding the need and demand, Coinsclone offers a top-notch cryptocurrency derivatives exchange development solution for startups and entrepreneurs. We Coinsclone – a renowned and professional Cryptocurrency Exchange Software Development Company in the market. We are all set to offer the ultimate white label crypto exchange software to launch your crypto derivatives exchange platform instantly.
Our white-label crypto exchange software is open for endless customization and it’s cost-effective too. So you can personalize your exchange platform with a crypto derivatives option and launch your dream exchange at an affordable cost. The main highlight of employing our ready-made crypto exchange solution is, you can turn your dream exchange business concept into reality within 7 to 15 days. Interesting, right??? And our solution comes with mind-blowing features and security modules which will surely entice global crypto traders & investors.
Next, let us see…
Different Modes Supported in our Cryptocurrency Derivatives Exchange Development
Four different types of modes are available in our crypto derivatives exchange development solution. They are
- One-way mode
- Hedge mode
- Cross margin
- Isolated margin
Let us see the above-mentioned modes briefly…
In one-way mode, your user can perform derivative trading in only one way either a long or short portion. Meaning if a user wants to make profits by using derivative trading’s one-way mode, only one trade can be active at a time. For example, if your user is trading a 10 ethereum and he/she wants to trade 15 ethereum, the trade of 10 ethereum will be closed automatically.
Hedge mode is an alternative mode to a one-way mode. In this mode, your users can choose any number of positions irrespective of their position. Here users can select either long or short positions. For instance, if the crypto market is bearish in a short time frame, the users who were holding long positions can sell off on the expectation that the bearish would continue for a long time to safeguard from more losses.
To perform futures trading or perpetual trading, users must first go with margin trading. Users must leverage funds from the admin to facilitate the order. If the user chooses cross margin and their predicted market goes wrong, the initial amount deposited for margin trading will be started reducing. Thus in the cross margin, both long & short positions would be sharing the position of the unrealized profit or loss.
In the isolated margin mode, users can manage the risk based on the isolated liquidation instead of the entire liquidation. For instance, when the funds in the maintenance margin are at a crossroads, it demands liquidation. Also, through an isolated margin mode, the user can manage to leverage an isolated margin amount to continue and maintain trading.
These are the popular modes that we offer in our world-class cryptocurrency derivatives exchange development solution. Now, let us see…
Business Benefits of our Crypto Derivatives Exchange Development solution
As a crypto startup, you can experience many benefits by acquiring our exemplary cryptocurrency derivatives exchange development service. They are
- Instant deployment (deploy your exchange within a week or two)
- Fully customizable and scalable.
- Affordable solution to build your exchange with crypto derivatives trading options.
- Generate a lucrative revenue by collecting commission fees from your users.
- By providing crypto derivatives trading options to your users, your exchange can easily reach greater heights in the competitive crypto marketplace.
- You will have a great opportunity for grabbing a huge pool of global crypto traders, wealthy investors, and pro traders.
- Better exposure to crypto business markets.
- Launching an exchange with crypto derivatives trading option will help you to have steady investment business growth.
If you want to yield these benefits, get the outstanding crypto derivatives exchange development solution from a trustworthy crypto exchange development company – Coinsclone.
Elite Features of our Cryptocurrency Derivatives Exchange Development Service
Here is the list of outstanding features that you can get in our best crypto derivatives exchange development service.
- Margin trading
- Advanced Order Types
- Auto Deleveraging (ADL)
- Crypto payment gateway integration
- Mobile app for android and ios
- Stop Loss/Take Profit
- Partial Close Orders
- Multi-cryptocurrency Wallet
- Robust Admin Panel and more
By integrating all these features, you can develop a superfine crypto derivatives exchange platform.
Security Features of Crypto Derivative Exchange Development Solution
Enable the following tightened security systems to protect your crypto derivatives trading platform from malware activities.
- HTTPs authentication
- Data encryption
- Two-factor authentication
- SQL injection prevention
- Anti Denial of Service(DoS)
- Cross-Site Request Forgery(CSRF) protection
- Server-Side Request Forgery(SSRF) protection
- Anti-Distributed Denial of Service and more
By incorporating these security modules, you can launch a secure crypto derivatives trading platform
Our Crypto Derivatives Exchange Development Process
We at Coinsclone, pursue the below-outlined process to develop a function-rich crypto derivatives trading website and app.
- Requirements Gathering
- Beta Testing
We hope you’ve gained immense knowledge of cryptocurrency derivatives exchange development with its features, benefits, and other aspects. So, let us wrap up this article with one last section…
Why Choose Coinsclone For Crypto Derivatives Exchange Development?
Coinsclone is a renowned and well-established cryptocurrency exchange development company in the global crypto market. Being an early player in the crypto space, we excel in offering all sorts of cryptocurrency exchange development solutions with utmost perfection. Coinsclone offers glitch-free white-label crypto exchange software in which we will integrate crypto derivative trading options and robust security features to launch a secure crypto derivatives exchange platform. Our premium ready-to-use exchange software is secure, fast, bug-free, and highly customizable. Since it has a high customization scope, you can add your desired features, themes, and other aspects according to your business needs.
Connect with Coinsclone and kickstart your crypto derivative exchange business right away!
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