Digital Currency Group owns, well, a group of currency products — be that CoinDesk (the popular crypto blog), the Genesis brokerage, digital asset manager Grayscale, or, most recently, the Foundry crypto mining advisory group. Now, the company has added another currency product to the group: Luno. It’s a growing cryptocurrency exchange aimed at retail investors.
The Block, crypto research and news outlet, released statistics of Poloniex’s market share and it has begun to trend downwards since mid-November.
On November 13th, Justin Sun, founder of TRON and CEO of BitTorrent admitted to being part of the investment group that acquired Poloniex from Circle. This is almost exactly when their market share began to trend downwards.
On one hand, the decrease in users could have more to do with a change in management rather than Sun’s involvement. Even when my local taco place said “under new management,” I had this instinctual urge to never go back, because I liked how it was.
On the other, Justin Sun has an unquestionably controversial reputation because of the impression that TRON is more centralized than they advertise to be, he started a fund to censor journalism and kicked DigiByte’s coin off of Poloniex a day after the founder criticized the exchange.
Immediately after the acquisition, Poloniex purchased TRONs most popular “decentralized exchange.” People joked that you can’t buy a decentralized exchange, but in a recent piece, we clarified that even in DeFi there is no truly decentralized institution. This month, Poloniex also said that there would be no listing fees for any TRON based assets.
Here’s Justin Sun essentially thanking his one company for helping his other out:
— Justin Sun (@justinsuntron) December 3, 2019
Obviously, people who are media trained and keep up with the crypto space daily will understand that Sun is playing 4d chess with all of his businesses. That might be the reason why their market share had started decreasing so quickly. The exchange still might have a fighting chance in the future if they play their cards right.
Now that Sun has merged his projects together, it might be best for Poloniex’s market share to just stop talking about TRON. Eventually, new people will enter the space and others will forget about the affiliations.
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.
This morning, IDAX exchange froze withdrawals and deposits after reporting that the Global CEO has been missing for days. IDAX didn’t go into any further explanation about why funds were frozen, but it is implied that the Global CEO would be able to withdrawal users money at will.
The situation could also be related to China cracking down on crypto exchanges, as IDAX stopped serving Chinese customers last week and it is a China based exchange.
After the news settled, we noticed that IDAX volume is still increasing on their website, by seemingly 1 trillion dollars every 10 minutes. It is possible that they have a ticker inaccurately summarizing their average volume and forgot to turn it off, or it can be a sign that funds aren’t actually frozen.
DeFi fans have taken advantage of this occurrence to vocalize how risky it is to leave money on centralized exchanges.
“The disappearance of the CEO of Chinese crypto exchange IDAX shed a light on the ever-growing problem of crypto exchange centralization,” Cryptoslate tweeted.
By now, “exit scam” is becoming unfortunately common terminology in the crypto space, especially with the looming threat of BitMEX being investigated by U.S. regulators. Exchanges that don’t comply with government regulations simply can’t be held accountable to the same extent that TD Ameritrade would be, which is why decentralization can be so appealing when it comes to crypto exchanges.
In reality, the chances of TD Ameritrade exit scamming is much less likely than any crypto exchange that doesn’t require KYC. Anyone can start a crypto exchange, and for all users know, there might be language in an agreement that can allow them to close the exchange and take all of the funds. Obviously, with enough evidence a scammer would be taken down, but this Global CEO disappeared, just like anyone else could.
Today, Binance announced that they would be increasing leverage available on their futures exchange from 100% to 125%. This beats out FTX, whose leverage was sitting at 101%, mostly so they could say they offered more leverage than BitMex.
Still, Binance has not included cross leverage on their platform which pulls from your wallet instead of liquidating a position. They also do not have a liquidation calculator for users to estimate when they will lose their collateral.
One of the most beautiful things about Crypto is freedom, but with great power comes great responsibility. In order be considered a day trader in the U.S. one must hold over $25,000 on an exchange. After that requirement is met, a trader can use up to 4x leverage.
Not to imply that U.S. regulations are superior, but they are a testament to the conservative perspective on leverage. Even on Discords that center around trading on BitMex you’ll hear the consistent advice of not being over-leveraged.
It only takes 30 seconds to sign up for a BitMex account. Your bitcoin is deposited on the exchange after a few confirmed blocks, your funds are ready to be liquidated. A 100x bitcoin long at 7949 would be given back to the market if price reaches 7911.