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An Inside Look at the Rise of Perpetual Swaps in the Digital Asset Sector




By Fran Strajnar, Founder and Chairman of Brave New Coin 

As Bitcoin, Ethereum and other digital currencies gain more prominence around the world, crypto traders, retail traders, and institutional investors alike are all looking for new ways to maximize their investments and leverage the markets. One way they’re doing this is through Perpetual Swaps.

Perpetual Swaps are a derivatives product that allow traders to buy or sell the value of an underlying asset with no expiry date. The underlying asset itself is not traded, which removes custody concerns, and the swap price closely tracks the price of the underlying asset. Perpetual Swaps are similar to Futures Contracts, but without an expiration date. Perpetual contracts also do not require traders to post 100% of collateral as margin, allowing them to trade with leverage of up to 100x depending on the exchange.

LEVERJ, one of the fastest decentralized exchanges in the world and operating with top-notch security standards, recently partnered with digital asset data infrastructure company Brave New Coin to integrate perpetual swaps onto its platform. LEVERJ offers trading for ETH-USD and BTC-USD perpetual swaps allowing for up to 100x leverage. This was a major step forward for crypto perpetuals, but the market is still heating up.

More recently, LedgerX, the first cryptocurrency derivatives exchange licensed by the Commodity Futures Trading Commission (CFTC), announced plans to pursue digital currency perpetuals powered by Brave New Coin’s technology.

LedgerX will use Brave New Coin’s high-frequency BTC and ETH price feeds for its perpetual products, which it intends to submit to the Commodity Futures Trading Commission (CFTC) for its review and approval. LedgerX was the first CFTC regulated cryptocurrency derivatives exchange, and is backed by Digital Finance Group, Lightspeed Venture Partners, Miami International Holdings, Google Ventures, and SV Angel. LedgerX is the first to innovate in US derivatives markets and will be seeking the CFTC’s review and determination that all regulatory requirements pertaining to perpetuals are satisfied, including product, trading, clearing and all other relevant areas.

The digital asset sector has been anticipating the launch of additional LedgerX products, and for good reason. LedgerX has the ability to out-innovate many of the legacy competitors in the space. LedgerX is available to both retail and institutional investors 24×7 and offers physical settlement of all contracts, block trading and algorithmic trading opportunities for institutional investors, and direct access for all traders. Since launching in 2017, LedgerX has cleared over 10 million options and swaps contracts. With LedgerX’s massive reach and regulatory status, it’s clear that it will be a major player in the continued growth of Perpetual Swaps in the crypto sector.

Fun fact: when you ask Amazon’s Alexa for the price of any cryptocurrency, her answer comes from Brave New Coin’s data engine. Exchanges have looked to Brave New Coin to help provide the tools to deliver sophisticated trading products like Perpetual Swaps. It’s technology is used by companies including BTSE, the Toronto Futures Options and Swaps Exchange (tFOSE), Refinitiv, Dow Jones Factiva, NASDAQ, and more.

As the digital asset sector continues to evolve, Perpetual Swaps are likely to remain a mainstay for the foreseeable future. Both digital asset infrastructure providers and exchanges are enhancing their offerings in this arena, setting the stage for 2021 to be the biggest year yet for Perpetual Swaps.

Fran Strajnar is an entrepreneur and technologist in the blockchain and fintech industries. He is the Founder and CEO of Techemy, a holding company for an industry-wide blockchain enterprise ecosystem. Techemy includes Techemy Capital, an investment firm, and Techemy Advisory, which offers end-to-end deal structuring and strategy services. Fran is also the Founder and Chairman of Brave New Coin, a digital asset data company. In 2020, Fran launched BNC Pro, a low-cost, feature-rich digital wealth management platform for cryptocurrency investors. He holds an MBA from the University of Otago and is based in Auckland, New Zealand.

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