Deribit Review: Futures and Options Trading for Bitcoin and Ethereum
- Deribit is a futures and options trading platform for cryptocurrency
- The platform offers up to 100X leverage for Bitcoin futures and 50x leverage for Ethereum futures
- Launched in 2016 and has a solid track record
Deribit is a futures and options trading platform for Bitcoin and cryptocurrency. In addition, it is one of the very few places where you can trade cryptocurrency options.
The exchange offers up to 100X leverage when trading Bitcoin futures and up to 50X for Ethereum futures.
Deribit was launched in 2016 in the Netherlands, at which time it was registered as Deribit B.V. However, the Deribit platform has been based in Panama since February 10, 2020 since new regulations introduced by the European Union would require the exchange to demand detailed personal information from its customers.
The exchange boasts a very experienced team as their CEO John Jansen was previously a trader on the Amsterdam options exchange and their CTO Sebastian Smyczýnski is a highly experienced programmer.
Although Deribit is a global exchange, it is not available to users from the United States and Canada.
The pros of trading cryptocurrency with leverage on Deribit:
- A very liquid exchange that processes over $200 million in trades per 24 hours
- Facilities to trade options as well as futures
- 100X leverage for BTC futures and 50x leverage for ETH futures
- Attractive fee structure
The cons of trading cryptocurrency with leverage on Deribit:
- Not available to US or Canadian citizens
- Only Bitcoin and Ethereum are supported
Deribit features review
Deribit has a wide range of features that users can use for trading on both their futures and options markets. It integrates TradingView charts into their platform to allow traders to have professional-level trading tools for analyzing markets. Furthermore, the user interface is very slick and designed to be as easy to use as possible.
One of Derbit’s attractive features is the fact that the exchange has a very low latency that is <1ms. The exchange actually claims that this is the fastest in the industry, and allows you to place trades with little to no slippage.
Deposits and withdrawals
All transactions on the platform are processed in BTC. They are also settled in either Bitcoin or Ethereum, depending on which type of trading you are doing. The platform only accepts Bitcoin and Ethereum deposits and doesn’t charge a deposit fee.
Withdrawals come with a fee that is equal to the blockchain’s mining fee at that time. Additionally, as only 1% of cryptocurrency stored by Deribit is held in hot wallets, withdrawals may take some time to process.
ETH contracts are cash-settled meaning that you get ETH back once you close a trade that has a profit.
Types of contracts and fees
Deribit offers both fixed expiration futures and perpetual future swaps contract. This means that you can either trade the underlying asset as an option or as a traditional market via the perpetual swaps.
The fee structure is different depending on what type of trading you are doing. For Futures contracts, the contract size is $10 and the maker fee is -0.02% with the taker fee set a 0.05%. For Options trading, the contract size is 1 BTC and the maker fee is 0% with the taker fee at 0.04% of the contract size. For both BTC and ETH options, the maximum fee is capped at 12.5% of the price for the option.
For each type of trading, Deribit provides the typical order types that include Market, Limit, Stop-Limit, and Stop-Market orders.
Currently, the exchange only offers futures and options contracts for Bitcoin and Ethereum with no other cryptocurrencies on the exchange. Bitcoin futures can be traded at 100x leverage and Ethereum futures can be traded at 50x leverage. For options, each cryptocurrency can only be traded at 10x leverage.
Deribit helps protect its traders through an insurance fund which is used to pay the profitable traders even if the losing traders are liquidated and bankrupt. It is basically a pool of cash that ensures that profitable traders will always be paid out, making it an attractive place to trade.
The insurance fund receives its input from the liquidation fees from losing traders.
Deribit takes the security of its exchange very seriously and for this reason, it stores over 99% of its BTC in cold storage. This means that there is only around 1% of the exchange funds left in hot wallets for hackers to attempt to steal.
Deribit also employs a very extensive bug bounty program, which invites hackers to find exploits in the code for a reward each time the exchange pushes any updates.
Furthermore, the actual website for the exchange uses SSL communication, which should be expected for any major exchange today.
In addition to this, users can also set a 2FA and utilize IP pinning as well as setting session time outs to improve user security.
Deribit has a mobile app that is available to both android and iOS users. It is connected through the API, which makes it quicker than most other exchange-based mobile applications.
The mobile app allows you to access both the futures and options exchanges to place and manage orders.
Is Deribit a safe exchange to use?
Although it only has a few years of trading experience, the exchange is very safe to use when we consider the lengths they go through to keep the exchange secure.
However, in October 2019, Deribit did suffer a flash crash after they suffered a problem with the BTC index calculation mechanism causing the price for BTC to tank on the exchange, triggering a cascade of invalid liquidations. The team eventually went on to reimburse over $1.3 million to all the users that were affected by this flash crash and they have implemented fixes to prevent the same problem from happening again in the future.
There are a plethora of other futures exchanges that a trader can choose from which offer a wider range of cryptocurrencies to be able to change other than just Bitcoin and Ethereum. However, the majority of these competitors do not offer options trading, which makes Deribit truly unique.
Here are some of the main platforms that can be used as alternatives to Deribit:
- Binance Futures
Deribit review verdict
Deribit is a great and safe exchange for you to place your futures and options trades with a competitive fee structure. The team’s response to the October 2019 flash crash proves that they place a lot of importance on the exchange’s reputation, which is a great sign when choosing an exchange to trade on.