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OKEx and Skew Execs on the State of Crypto Derivatives — Fireside Chat Recap

2020.07.07 OKEx

On July 1, OKEx hosted a fireside chat with OKEx Director of Financial Markets Lennix Lai, VP of Financial Markets Quentin Issele along with the co-founder and CEO of skew, Emmanuel Goh. They shared their insights on the OKEx and skew Dashboard V.2 and had an in-depth discussion about crypto derivatives. 

Below is an excerpt from the fireside chat.

Quentin: Today, the focus is on crypto derivatives, which is one of the biggest areas of expertise for OKEx and skew. We will focus on derivatives from an institutional trading perspective — so, the chat will be technical. We will go into trading strategies, and we will try to cover all the important information for institutional traders. The first question that I have for both of you is that I’d like to get your opinion about what you think is the biggest development in crypto derivatives this year. So, let’s start with you, Lennix. 

Lennix: I think the biggest development this year is that we can see two things: the liquidity of Tether-based futures across all the multiple liquid venues. So traditionally, inverse futures have dominated the market  — I think due to the Bitmex and OKEx. But right now, because of OKEx and Binance, we can see a huge pickup on linear-based futures as well. Obviously, linear-based futures are easier to hedge and calculate the profit and loss, so I’m optimistic about the developments on Tether-based derivative instruments. We can see even in OKEx right now that our Tether-based instruments, perpetual swaps and futures are picking up. And right now, it's at a similar volume with our historical, flagship, token-based futures. Another amazing development is that of options — in terms of the introduction of options at OKEx and also the introduction of options on CME. They did a really good job promoting their Bitcoin options product and having a really big open interest in Bitcoin options. So surprisingly, that development can happen very fast — were talking about just a few months or even half a year. I believe the options market this year will be a true options year for crypto. 

Quentin: Thank you, Lennix. So in your opinion, it's mostly the USDT-based linear products and the options markets. Do you have a similar opinion, Emmanuel? Or is there anything else that you think was the key event for this year?

Emmanuel: I think that is very true what you're saying, Lennix. I think we’ve been calling for a bit of time about margining some of those derivatives contracts with stablecoins so that they are not inverse, and they become linear instruments, which makes a lot more sense. From a credibility perspective, I think that's a welcome development, and we’ve seen that going quite a bit across a number of exchanges, including you guys. And then I think that up to 2017, it was all about the cash market, and the trading was very focused on altcoins and the rise of the likes of Binance. And really, in 2018, the market corrected a lot. We entered this kind of altcoin winter, in a way, and the focus really shifted to futures and perpetual swaps. And I think at this stage, we are starting to see the market maturing a little bit, just like the spot market matured. And for us, it's really clear the next product is options — and you see, this year, the continuous growth in the terms of volumes and open interest. You know, it keeps growing, kind of irrespective of how much activity there is in the underlying market. which I think is quite healthy. I think you guys launched the options market at the start of the year, so now it's a market where there are a couple of players. And this is where I think we’ll see some of the growth in the next year.

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

This recap has been edited for clarity.

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