The digital currency exchange KuCoin, backed by IDG, announced the public beta introduction of its dedicated platform for derivatives trading, KuMEX, officially on Monday 8th July. According to the official press release, KuMEX will be initially opening the Bitcoin Perpetual Contract (XBTUSDM). It is quoted in the United States Dollars and offering up to 20x leverage. At present, three kinds of orders are supported: stop order, limit, and market order.
Divulging further details, KuCoin said that as it wants to offer fair trading pricing to investors, the KuMEX platform utilizes Bitcoin Spot Index. This index offers average USD prices of Bitcoin (BTC) that is volume-weighted in as many as six crypto exchanges that include Bittrex, Coinbase Pro, Kraken, Bitstamp, Gemini, and Liquid.
Inclusion of more platforms’ figures will also allow the contracts of the users to avoid being liquidated, whether it is due to the trading platform’s low liquidity or spot exchanges’ big price fluctuations. If that was not all, KuMEX also provides risk protection to some level with a completely transparent fund. The platform will be disclosing the balance of this fund every day. Per the announcement, the insurance fund will make sure that those investors who’re pushed for closing their positions won’t lose money which surpasses their position margin.
Also, in case this insurance fund isn’t sufficient, KuMEX adopts an ADL system (Auto-Deleveraging) that can efficiently evade any instance of inflexibility on the settlement in the socialized loss mechanism.
On top of that, KuMEX is also offering a comparatively lesser threshold for investment than other providers in order to drive in retail investors in the crypto derivatives arena.
The value of the contract XBTUSDM is one USD, letting the traders make flexible investments. Simultaneously, the newly-launched platform also has the negative fee on offer for Makers at -0.025% rate with certain fixed commission.
“It would encourage users to provide liquidity to the platform through making the market and earning some commission as an incentive.”
According to Michael Gan, the CEO of KuCoin, derivatives, compared to the spot market, are significantly riskier because of the used leverage. Continuing further, Gan said,
“KuMEX is a derivative trading platform independently developed by our team, and from its inception, we have positioned it as a genuine and advanced financial product, so that all users can trust the platform and trade on it freely, without worrying about the loss caused by any form of manipulation.”
Post the official unveiling of the KuMEX platform, 50% of its net revenue would be utilized for distributing KuCoin as a bonus to the KCS (KuCoin shares) holders, as stated in the press release.