One of the biggest drawbacks to crypto derivative exchanges is that it has been very difficult to trade at a high frequency. Phemex, created by ex-Morgan Stanley executives, aims to fix that problem while offering many standard features available on platforms like BitMEX, Binance and Deribit.
How much faster is Phemex than BitMEX?
BitMEX, the most popular derivative exchange in crypto offers 500 transactions per second, while Phemex can handle up to 300,000. This is a huge deal for hedge funds who invest heavily in technology to gain their edge. It is also one of the reasons that institutional crypto traders are more incentivized to find arbitrage opportunities than run pure trading bots.
Phemex also promises less than 1ms latency. BitMEX does not provide a firm latency time, but research shows that most orders execute with a bit less than 1 second delay. Once again, this is not super important for the retail clicking trader, but when running high frequency bots it can definitely matter.
An application programing interface (API) is what traders use to connect their bots to an exchange. Most crypto exchanges have proprietary API systems which means that for each exchange, the programming can be quite different. Phemex uses FIX API, a standard API used by banks, brokers and hedge funds.
What does it have in store for retail traders?
Here at Cryptocult, we know how much retail traders love unnecessary amounts of leverage, and Phemex meets the 100x standard. Users can also choose to enter cross leveraged positions.
Right now the only trading pairs are BTC, ETH, and XRP against USD, but in the future they plan on adding LTC and EOS. BitMEX only has BTC and ETH pairs to trade against USD, the rest are against BTC.
Phemex doesn’t require KYC, and it looks like users can withdraw more than once per day. Fees are very similar to other derivative exchanges and there are incentives to be a market maker as well.
Essentially, it is the same thing as BitMEX but faster and more institution friendly. There is one major difference that separates it from any crypto exchange but the release is TBD.
“In the future, we would like to provide our users with the option to trade contracts backed by traditional financial products: FOREX, S&P, commodities, etc.,” Jack Tao, founder of Phemex told The Block.