The Bulls are back (a bit) and the ref-
In 2018 the Security Exchange commission blocked several Bitcoin Exchange Traded Funds (ETFs) citing that the risk to investors would be potentially too high. While the SEC did not entirely dismiss the idea of Bitcoin ETFs in the future they argued the market was yet to mature enough for ETFs. After the stalling of Bitcoin ETFs albeit momentary, cryptocurrency derivatives are increasingly coming to the fore. One of the companies that are strongly involved in this evolution is BitMEX and therefore other derivatives exchange pop out everywhere trying to copy their successful model. In this article, we conduct an in-depth review of the features and workings of the ByBit derivatives exchange as an example for all the other ones
What is ByBit?
ByBit is a worldwide platform that allows retail traders, professionals, investment institutions and enthusiast to participate in cryptocurrencies derivatives trading. The platforms aim at combining the best of traditional assets and digital assets to create a safe, reliable, fair and user-centric exchange for crypto-derivatives. The exchange largely focuses on trading the pairs of BTC/USD and ETH/USD. The platform is one of the most robust networks with an impressive rate of 100,000 transactions per second.
Claim: Handles a massive amount of transaction per second.
BitMEX Comparison: This would basically mean no Overload issues like on Mex, which would be neat of course.
Reality: I doubt ByBit really expecierenced the traffic and server load BitMEX did. So this has yet to be proven.
ByBit is registered as a cryptocurrency exchange in the British Virgin Islands and its headquarters are based in Singapore. The founding and management teams are comprised of financial executives and blockchain investors.
Claim: The project also boasts of highly competent professionals who are in charge of research and development within the company.
BitMEX Comparison: Hey, we have Arthur here. Frankly, I prefer to have money on a BVI based exchange, than on the Seychelles.
Reality: The company registration is OK. The team can be checked on LinkedIn. However, this information has to be verified.
In her bid to standardize financial regulations in the crypto-space, ByBit is driven by three major core values of promoting: transparency, innovation, and user support. So far, the innovation point is not yet clearly visible to me, but let’s check for the features.
The Features of ByBit
Perpetual contracts are financial derivatives that are designed to be a compromise between spot contracts and future contracts. On one hand, spot contracts require immediate settlement, while on the other hand, future contracts are settled on a specific date in the future, like for example TRX or CARDANO on BitMEX. Perpetual contracts adopted by ByBit, therefore provide a simple and efficient trading option for traders to hold positions for as long as they desire. This results in more opportunities for financial gain. However, just as known, funding rates apply.
BitMEX Comparison: ByBit covers only Bitcoin and Ethereum perpetuals and no further altcoin futures like BitMEX. Funding rates apply on perpetual contracts like on ByBit.
The crypto-space has been constantly facing accusations of price manipulations, where exchanges have often resulted in intentionally deflating or inflating prices for malicious gains. To counter this, ByBit uses the dual-price mechanism to protect investors from manipulation and uses mark prace AND last traded price. For instance, if the price of ETH plummets from $180 to $40 as a result of attempted manipulation, the Mark Price will remain at $180, effectively protecting the traders from liquidation since the mark price is the sole trigger for liquidation.
Claim: Basically, this would mean you get less wicked out.
Reality: Could not find any user feedback until now. To be observed.
Mark to Market.
On ByBit a contracts prices are usually tethered to the last traded price using a mechanism called funding. Funding is exchanged between long and short positions every 8 hours, thus making the last traded price marked to market every 8 hours.
BitMEX Comparison: Exactly the same.
ByBit offers up to 100 times leverage on perpetual contracts, this is way above the 3-5x and 5-20x leverage offered on spot trading and future trading respectively. Traders are also able to adjust the leverage and margin of an open position, hence increasing flexibility. However, while leveraged trading can lead to massive returns it can also lead to equally massive losses. ByBit offers 100x Leverage on both perpetual contracts.
BitMEX comparison: OMG! A Difference: On ByBit you can use 100x Leverage on ETH (BitMEX has a maximum on 50x for ETH))
Comprehensive contract loss mechanism.
With comprehensive contract loss, ByBit is able to determine who bears what cost when positions cannot be liquidated at bankruptcy. Unlike socialized loss systems where all profitable traders share the loss, ByBit uses the deleveraging system. Users are ranked according to profit ratio and effective leverage and the more profitable and higher leveraged traders(risky traders) are de-leveraged first.
BitMEX comparison: Mirror, Mirror on the wall. We have a twin here.
ByBit Fees, Deposit and Withdrawal
Every trade on ByBit has two main parties a marker who places the order and the take who takes the markers order. Takers are charged 0.075% on each order, makers on the other end receive 0.025% on each trade. However, in comparison with BitMEX which also offers derivative trading one can argue that the fees are fair since the fees are identical.
When withdrawing BTC from the ByBit trading platform, you will have to pay 0.0005 BTC. This is 40% lower than the global industry average BTC withdrawal fee (0.0008 BTC) and thus also a very competitive withdrawal fee.
ByBit does not accept fiat deposits and hence first-time cryptocurrencies holders ought to first buy either BITCOIN or Ethereum from entry-level exchanges like Coinbase.
BitMEX Comparsion: Innovation! You can deposit/withdraw in ETH. At least something new!
How to register on ByBit.
If you are not bored to death by now by the copycats of ByBit, or you finally found a use case for your ETH, you might consider registering. ByBit is also very easy to satisfy when it comes to customer data – there is almost none needed. You can register either using your email or phone number. Your phone or email will then be verified via either a text, call, or email and you are now ready to set up. Upon filling all the required fields you are now free to begin trading.
It is important to note that ByBit does not accept traders from the US. This is largely a result of stringent regulatory requirements by the SEC. The SEC imposes strict obligations on any companies that wish to accept funds from US-investors.
BitMEX Comparison: Same same, no different.
Order Types & Trading
If you ever wished for BitMEX with a Binance theme, ByBit is your way to go! Very funny mashup, that might confuse you in the first place, when you are used to using both of the other exchanges on a regular base. ByBit offers the usual three order types that traders can choose according to their trading needs. Like on the most exchanges you can choose from limit order, market order, and conditional orders. The friendly interface allows users to adjust leverage, commission price, and a number of contracts. Orders can also be executed until close, immediately canceled or canceled completely. The platform also allows users to take profits or stops loss at certain positions of the trade.
Interesting spots: Truly interesting are two things here, which sets ByBit apart from BitMEX. On one hand, you have a currency dropdown in the upper right area, which lets you choose between BTC and ETH for your trade. The second and even more interesting difference is the conditional order. On BitMEX you have these kinds of orders only for stops. If you’d place the same orders without the conditional order engine on BitMEX they would execute against the market order book, on ByBit they become active once certain price conditions are met.
Yet another boring Conclusion
Overall, ByBit seems like a really reliable and robust platform for conducting derivatives exchanges. The platform not only has unique features that are not available with many exchanges but also has a vibrant and committed community behind it. As the need for cryptocurrency derivatives continue to rise the popularity of the exchange is also going to increase.
This is the conclusion your average blog would write to lure you into doing the clicky-clicky thing with their affiliate link. The real conclusion is: It is basically the very same offering as BitMEX in a Binance dress. Are there really less “wick-