Deribit - Bitcoin Futures & Options Exchange is first platform in the world offering plain "vanilla" European options as well as bitcoin futures with margin. It is fastest, most technically advanced bitcoin exchange to date launches. Basic purpose of the exchange is
- to trade plain European style cash settled options on the Deribit BTC index, with margin and up to 10x leverage;
- to trade futures that settle on the Deribit BTC index, with up to 100x levrage.
Deribit also offers futures and options on altcoins, but you cannot trade them directly using bitcoins (you have to buy the altcoin first).
All funds held in an account will be considered as available margin. Equity and margin will fluctuate in the market as prices change. If the maintenance margin in an account is higher than equity in an account a margin call is triggered. A users position will be incrementally liquidated in small steps (maximum 10 contract/margin call) until equity is higher than maintenance margin
From advanced features helping entering the market, the platform allows placing volatility orders, where the Deribit price engine continuously updates the price of the order as to keep its implied volatility fixed. With this feature basic market making is already possible for any trader that opens an account.
Deribit has real-time risk management with incremental auto-liquidation: If an account has a maintenance margin higher than its equity, the Deribit risk engine will liquidate its position in small steps, providing maximal protection for all parties involved. Liquidations are small and instantaneous, again ensuring fairness for everyone. Deribit aims to never have socialized losses. Its risk management system is built such way that it is extremely difficult to go bankrupt even if one would try to do so. Also Deribit insurance fund to cover bankruptcies is replenished constantly.
Index and Delivery Price
Deribit has one of the most transparent from bitcoin price indexes – Deribit BTC index. Currently the Deribit BTC index is made up the latest prices from Bitstamp, Gemini, Bitfinex, Itbit, Gdax and Kraken. From those 6 exchanges Deribit retrieves continuously best bid and best ask prices and calculates the mid price. Then the highest and lowest price are taken out. The remaining 4 exchanges are then each for 25% accountable for the BTC price index. So at all times there are a maximum of 4 exchanges making up the BTC price index weighting each 25%. Bitfinex seems to be permanently excluded from the calculations.
There is a stats page dedicated to the price index where you can see at any time which exchanges are actually part of the index at this very moment. If the system doesn’t receive any signal from an exchange for more than 3 minutes, this exchange will be taken out of the index calculation. The price used for settlement and delivery of contracts will be calculated as the time weighted average of the Deribit BTC index over the last half hour before expiration. The Deribit BTC index gets calculated every 6 seconds. So the final delivery price is the average of 300 index prices taken in the last 30 minutes before expiration.
Platform and API
The platform is built on the Erlang/OTP stack prepared to a high load (e.g. like Whatsapp, prepared for a huge amount of concurrent users, ultra low latency and updates without downtime etc). All its data is streamed in real time, through websockets, to client browser as well as it is possible to trade via REST, Websockets API or FIX bridge (see API Docs for more info). The platform can handle hundreds of trades per second from each account, which makes it possible for market makers to quote on all options available on the platform.