Deribit and Paradigm Launch the World’s First Multi-Instrument Block-Trading Solution for Crypto Derivatives
Cryptocurrency derivatives exchange Deribit and Paradigm, the first institutional-grade OTC communication platform, have launched a joint workflow solution for institutional crypto-derivative traders. This partnership represents the next step in catering to growing institutional demand for crypto derivatives and launches the world’s first multi-instrument block-trading solution offered by a crypto-derivative exchange. Block trading on Paradigm is currently live with some of the most renowned institutional trading firms.

This new block-trading solution will enable institutions to directly negotiate crypto-derivative trades with counterparties of their own choosing, via chat on Paradigm. Once agreed, the trade information will automatically be submitted to Deribit for execution and clearing.

What are Block Trades?

Block trades are privately negotiated, principal-to-principal transactions in futures or options, or spreads and combinations of the two, that exceed certain minimum quantity thresholds. Once traders agree on a price, these transactions are submitted to the exchange for execution and clearing.

In existing financial markets, institutional traders prefer this method of transacting when they believe that there is insufficient liquidity in the order book to execute a large trade at a specific price in a single transaction. In other words, block trades reduce slippage and minimize impact on the market price since the transaction is negotiated away from the order book.

First of its Kind

Previously, no other exchange has offered a block-trading facility for crypto derivatives. Instead, institutional traders privately negotiated large trades via Telegram or Skype and then manually coordinated execution on Deribit’s order book. This approach exposed traders to a significant amount of execution-related market risk, especially for spread and combination trades.
“For the first time, institutions that trade crypto derivatives in large volumes can negotiate privately on the Paradigm platform, after which the trade will be automatically executed, margined and cleared at Deribit and displayed on the public tape as a block trade, eliminating any execution risk associated with the order book” said XBTO Group’s CEO Philippe Bekhazi. “When excellent companies operating in a similar space work together by leveraging relationships and sharing ideas, everyone wins – including, most importantly, the end user.” XBTO Ventures is an investor in both Paradigm and Deribit.

Why we partnered with Paradigm?

In addition to the automated blocking functionality, Paradigm also provides an exceptional suite of institutional trading tools. Some of the most desired tools include automated RFQs, a full audit trail, a directory of potential counterparties and the ability to “approve” specific counterparties before a trading relationship is initiated with them. This workflow offers institutions the opportunity to conduct their own due diligence on counterparties in order to satisfy their own regulatory requirements and firm policies. A full set of features on Paradigm can be found below.

Access for Institutional Traders

Crypto-derivative block trading on Deribit will be available both through the Paradigm system and directly via Deribit’s API. Traders will have access to block trades in Bitcoin (BTC) or Ethereum (ETH) backed futures and options, including spreads and combinations of the two products.

The Paradigm platform is accessible to professional traders, by invitation only. Interested parties should submit a request here or join Paradigm’s Telegram channel for more information. Access is restricted to applicants who have been approved by Paradigm following its internal review process. A full list of territories where Paradigm may not be accessed can be found here. At this time, Paradigm may not be accessed by U.S. persons or IP addresses.

About Deribit

Deribit is the answer to those searching for a professional-grade cryptocurrency derivatives exchange. The founding vision was to create an efficient and fair marketplace that could connect traders of all backgrounds and trading styles. The proprietary matching engine allows for extremely high levels of requests per second, giving traders a smooth experience even during times of high activity and volume.

Launched in 2016, Deribit is among the highest-volume crypto-derivative exchanges in the world. Currently, users can trade perpetual, futures, and options contracts. Furthermore, Deribit remains the only exchange offering European-style cash-settled crypto options and continues to set the standard for the rest of the industry.

About Paradigm

Paradigm is an institutional-grade communication platform that automates price negotiation and settlement workflows for OTC digital asset traders. The firm’s mission is to bring traders together and drive efficiencies in their workflows so that they can focus on what matters most: trading.

Paradigm is a privately funded company backed by XBTO Ventures, Vectr Fintech Partners, Monex Group, and some of the most prominent angel investors in the OTC markets.

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Perpetual Swap is a derivative product similar to a futures contract. However, unlike the traditional futures contract, the perpetual contract has no expiry (hence the name ‘perpetual’).

Deribit launched its BTC perpetual swap in August 2018, and almost immediately it became the most traded instrument on the platform. It is not unusual for the perpetual swap alone to make up 80% of the trading volume in a given day.
However, Deribit is not the only platform providing perpetual contracts. In the article below, you can see what sets Deribit’s BTC perpetual apart from other perpetual contracts in the market.

Funding

Perpetual contracts feature funding payments. These payments are incorporated so that the price of a perpetual contract stays as close as possible to the price of the underlying instrument’s price. If the perpetual trades higher than the index, the longs make funding payments to the shorts and vice versa. This will make the product less attractive to the longs and more attractive to the shorts, thus pushing the perpetual price back to the level of the index. For the funding mechanism to be the most efficient, Deribit has implemented a continuous funding calculation and exchange. This is a crucial distinction from other products in the market. A continuous funding mechanism ensures a more stable price relationship between the perpetual and the index price and avoids artificial volatility during funding times.

Index

It is vital that the index tracked by the perpetual is resistant against any manipulations and outliers in one of its constituents. If it is not, it can force false liquidations that are not caused by the general market conditions. For this reason, Deribit does not include the exchanges with the lowest and the highest prices, thus ensuring that the Deribit BTC Index tracks the real BTC market price.  

Liquidation

At Deribit, we believe in a fair and transparent market. We like to incorporate these principles also in the way we operate. Leveraged trading is a high-risk strategy; however, advanced risk management can decrease this risk. For this reason, we have developed an incremental liquidation system. As soon as an account does not have enough equity to maintain its positions (as assessed by the risk engine), the Deribit liquidation system will start closing small parts of the position in the market. However, as soon as the maintenance margin is lower than the margin balance, liquidation will stop. This ensures that the position is not closed at bankruptcy when the liquidation can be executed at a favorable price. Our insurance fund also gives an extra layer of security, as it is used to cover the negative balance of the bankrupt traders. Until this day, we have not had any socialized losses.

Contract details

 Deribit provides one of the highest market maker rebates in the market. We believe in equality of all market participants, therefore, providing the same rate for all.  Moreover, our subaccount system allows traders to have several separate positions on the same instrument. It is especially useful if the traders want to keep specific strategies separate, without having them averaged into a single position. It is essential if traders wish to have different strategies with various risk profiles simultaneously. If traders want the positions to be netted together on Deribit, they open them on the same account, and it is done automatically.

In the past year, we have listed the Ethereum perpetual and are looking forward to introducing even more products. We are happy to see our customers appreciating our products, and we continue to work hard to give them the best crypto derivatives in the market!   

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On the 24th and 25th of July, we experienced two outages that required unexpected maintenance and restarting of the nodes. For the past two days, our developers have been working extremely hard and have been entirely focused only on locating and fixing this issue. As promised, we would like to let our users know the cause of these downtimes.

The first downtime took place at 16:34 UTC, on the 24th of July, and the second downtime took place at 2:26 UTC, on the 25th of July.

Our development team has identified the issue as a vulnerability in one of the API endpoints, which allowed for a potential DoS attack. This endpoint has been temporarily disabled, while the vulnerability got eliminated.

After the second downtime, we started rebooting our servers. However, when the system was back online, there was no cancel only period. Due to this, some stop-loss orders were triggered, which should not have happened. We have already determined customers eligible for reimbursement, and our customer support team will reach out to you.

We want to apologize to our users who put their trust in us and experienced issues due to this unfortunate situation.

We are continuously working on improving our system, and our top priority is the minimization of downtimes. In the last few weeks, we have been focusing solely on that. We have been working on adding two new nodes and new, very experienced system administrators have joined our team. We take each of these incidents very seriously, and our development team does everything it can to prevent these issues from happening again.

We are grateful for your understanding and hope you continue to enjoy trading at Deribit!

Deribit

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Securing your online accounts has never been more important, and with cryptocurrencies  this should be your number one priority. Cryptocurrencies make it very easy to move huge sums around digitally, and extremely quickly. If someone gains access to your accounts and moves the funds out, there is little to no chance of getting it back so you need to make sure that you are the only person who ever has access.

Thankfully, there are steps you can take to make your account as secure as possible:

Two Factor Authentication (2FA)

When you only have a username and a password, all a hacker needs to gain access to your account are these two pieces of information. As they are static, this alone does not offer very good protection, particularly if you reuse these details somewhere else! 

2FA adds an extra layer of security by requiring another piece of information that changes every 30 seconds. This code is generated using an authenticator app such as Google Authenticator App. This program is completely free to use and you can download it via the Google Play store.

To go that one step further, you could also install the Google Authenticator app itself on a separate dedicated device that is kept completely offline. A cheap phone will do, but one with a camera is useful for scanning the QR codes. It doesn’t need to be powerful at all as it wont even have a sim card in it and you will only be using it for the google authenticator app. Once you have installed the app, put the phone on flight mode and disable wifi.

Some websites offer 2FA via SMS. This is much less secure than using the app because all a hacker needs to do is clone or port your phone number over to theirs to receive the codes by text.

2FA On Your Email

An increasing number of email providers have a 2FA option for logging in. Gmail for example, have been offering this for a while now. 

If your email provider offers this, use it! If they don’t, switch to one that does.

It is also a good idea to remove your phone number from your email account so hackers can not use it to ‘recover’ the account. To prevent a technique called sim-swapping it is also a good idea to remove your phone number from your email account so hackers can not use it to ‘recover’ the account.

To put it bluntly, not using two factor authentication when it’s available; free and adds so much security to your account and funds, is just plain stupid!

Use Unique Passwords

This one should be obvious, but you should be using a different password for every account you have. If you use the same password for everything, all that needs to happen for your information to be compromised is for one of the likely hundreds of websites/services you use, to be hacked.

When hackers steal information from one website, they will try many other sites with the same information. Anyone using the exact same details will have just handed the hackers a master key to their entire online lives. By using the same details everywhere, your security is only as good as the weakest of all those accounts.

Password Managers

Keeping track of all those passwords can be a real pain, and storing them online or on your computer in an easy to access format is not a good idea at all. Thankfully though, there is software out there that will do it for you. These software programs are called password managers. They store each of your login details in an encrypted database. And some of them also now offer 2FA as well. So you just need to remember one log in to this database, and the database remembers everything else for you.

You can also consider using encrypted external hard drives to store the information. This way it’s not even connected to the outside world.

Use Unique Emails

Following on from using unique passwords, using unique emails means that even if another website gets hacked, and all the user information is compromised, this hacker will have absolutely no useful information about you to try on other websites.

When you are choosing email addresses, try to avoid using your full name. By using your full name, you are handing over free information for no reason. Also avoid using predictable variations.

If for example a website is hacked and they have your email address as Mark.Smith.HackedWebsiteName@gmail.com, it’s not exactly going to be difficult for them to guess what your Deribit or any other website email is.

It doesn’t have to be a completely random string of letters, something as simple as M.S.RandomWord@gmail.com would suffice.

Gmail also have a handy feature for using multiple emails from a single inbox. You can read more about this on the Gmail blog here:
https://gmail.googleblog.com/2008/03/2-hidden-ways-to-get-more-from-your.html

By using this feature, you can maintain unique logins at each different website, while taking advantage of the protection 2FA on the main Gmail account provides, and manage the addresses from the same inbox.

As an added bonus using different emails for each site will also help you pin down which websites either sell your data to third parties or have poor security.

Storing Your Login Details

The following information should be treated as highly confidential information:
-Email
-Password
-Original 2FA key
-2FA backup codes
Do not store any of this information in plain text form or on any device that is always attached to the internet. It’s not going to do you much good to have all this security set up correctly if you leave all the keys a hacker needs in a handy text document on your desktop or in a google document online.

Private Messages On Telegram

There has been an increase in the number of users receiving private messages from fake support accounts on Telegram. They are often named things like ‘Deribit Support Team’. These accounts are all fake and the scammers will attempt to get you to either: send them money or hand over personal/login details. Under no circumstances should you do either of these things.

Deribit will never ask you to send us money, and we will never ask for your password/2FA codes. If you are in any doubt simply email us directly at support@deribit.com or ask in the main support chat room here: https://t.me/deribit
In the above chat room, users with ‘admin’ next to their name are Deribit employees.

Deribit – July 2019

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Approximately 10 minutes of downtime is to be expected at Tuesday 18-06-2019 11:00 UTC. There will be a short period where the exchange will remain in ‘Cancel only’ mode, allowing traders to close orders before order matching resumes.

API changes

• COD (Cancel On Disconnect) after closing websocket connection will close all orders opened using that particular connection. This has been changed from requiring all websocket connections to be closed before a user’s orders were cancelled.

• New response field added to ‘private/get_account_summary’ with extended=true parameter: The “referrer_id” field – an optional identifier of the referrer (of the affiliation program), whose link was used by this account at registration. It coincides with the suffix of the affiliation link path after `/reg-`’.

• Calling the endpoints: ‘private/cancel_all’,’ /private/cancel_all_by_currency’ and ‘/private/cancel_all_by_instrument’ will now return the total number of cancelled orders instead of “Ok”.

• New field added to the response of ‘private/get_stop_order_history’ endpoint: ‘last_update_timestamp’

• Added multiple client id/secret management with configurable scope (possibility of creating read-only keys) – More details in the documentation soon.

• New subscription channels added:
  • User.changes.{instrument_name}.{interval}
  • User.changes.{kind}.{currency}.{interval}

These channels will contain a list of the user’s changed orders together with a (possibly empty) list of trades related to those orders and a (possibly empty) list of changed positions related to the given trades.

Interface

• Multiple changes in web UI related to small bugs/inconveniences that were reported recently

• Improvements and changes to architecture should significantly reduce spikes in latency during higher loads.

Deribit – June 2019

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Hereby, we would like to provide an Official Deribit links list:

Main websites

Exchange:               https://www.deribit.com

Exchange Test-net:      https://test.deribit.com/
Knowledgebase:          https://www.deribit.com/pages/kb/index
Deribit Blog:           https://blog.deribit.com/


Mobile app links:       https://www.deribit.com/pages/docs/mobile-app 
Youtube:                https://www.youtube.com/channel/UCbHKjlFogkOD0lUVeb5CsGA 


Telegram Community + support
English:                https://t.me/deribit
Spanish/Español:        https://t.me/Deribit_Spanish 
Russian/Чат:            https://t.me/ru_deribit 
Chinese/中文官方群:      https://t.me/joinchat/GjM6pko6_sL3iSXDdKebAw 
Korean/한국어:           https://t.me/ko_deribit 
Options Quotes:         https://t.me/joinchat/DkFbIEdEzxpgnLqcOlfVRg 
Deribit Notifications:  https://t.me/deribit_notifications 

Email support


General support:        support@deribit.com
Feedback:               feedback@deribit.com
Investor relations:     ir@deribit.com
Business and Press:     info@deribit.com
Technical/API support:  dev@deribit.com

Social media

Twitter:                https://twitter.com/DeribitExchange
Medium:                 https://medium.com/deribitofficial
Linkedin:               https://www.linkedin.com/company/deribit
Reddit:                 https://www.reddit.com/r/DeribitExchange 

Deribit support is available on the official Telegram channels 24/7.

Beware of social media links that are not on this list. Deribit staff will never ask you for your account password or API credentials.

Deribit – June 2019

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When you first start trading options you can sometimes need reminding of some of the details. This is particularly true if you’re new to Bitcoin options as you are using the asset itself as collateral which changes some of the calculations.
We’ve put together a cheat sheet you an use as a quick reference guide to options that covers:

• The difference between puts and calls
• Profit and loss
• Maximum gain and loss
• The difference between buying and selling
• Breakeven prices

Deribit – May 2019

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If you checked the patch notes for the May 7th system upgrade you may have noticed this phrase in the list and be wondering what on earth it means. Well it’s not technically a new order type, however it is a change to how market orders react with our trading bandwidths.

The trading bandwidths

For those unfamiliar, Deribit operates with trading bandwidths in place. What this means is that there is an upper and lower price at which trades can be executed on any given instrument. For example on the Bitcoin Perpetual contract the bandwidth is currently set at mark price +/- 1.5%. So if the perpetual is trading at $5,000, the bandwidths will be $4,925 and $5,075.

What these bandwidths do is stop huge deviations away from the current price of the asset (as defined by the mark price).
There are a few reasons why large wicks like that can happen:

• A large trader trying to push the price around (a stop hunt for example)
• An accidental fat finger
• A cascade of liquidations and/or stop losses

These are usually just deviations away from the ’real’ price. If there is a genuine move in price across all exchanges, then the index will also be moving bringing the mark price and the bandwidths along with it. In this way the bandwidths are designed to only stop unnatural spikes in price.

Market orders and trading bandwidths

Market orders will attempt to fill the order at the best price possible, moving deeper and deeper into the order book until it is completely filled, not caring about the price it eventually reaches. So what happens when a market order that is attempting to fill ‘at any price’ runs into one of these bandwidths that stops orders executing outside a certain range?
The market order is saying ‘I’ve run out of good prices, I’ll take any price’, and the bandwidth is saying ‘you can’t execute at this price it’s outside the allowable range’.

Previously on Deribit the market order would continue to fill right up to the bandwidth as normal, but then any remaining quantity yet to be filled would be cancelled. While this is normal behavior with a bandwidth system, it is not what most traders expect to happen with a stop loss.

New functionality

As of this latest update any remaining quantity will no longer be cancelled, instead a limit order for the remaining quantity will be placed into the order book at the bandwidth limit waiting to be filled.
In this way it still obeys the bandwidth rules, but is also more in line with what traders want their stop loss order to do.

The system as a whole is still protected from big price spikes and traders stops are safer as they will no longer have portions cancelled for hitting the bandwidth. Win, win!

This change was partially the result of feedback from existing Deribit users.

Deribit – May 2019

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In the past two days, we have been experiencing technical issues that required unexpected maintenance and caused system downtime. Our system architecture is something we are very proud of, moreover, we continuously strive to offer the best trading experience and minimize downtimes altogether. However, there are situations that are out of our control. Our clients have always put a lot of trust in us, therefore, we believe in full transparency and would like to explain what caused these issues.

Yesterday we experienced a bug in Erlang itself, which could be described as a DOS vulnerability. This was caused by a bot, that (unintentionally) kept sending a series of requests to our platform in such a way, that triggered this vulnerability and brought all our web nodes down. Importantly, the master (matching engine) node was not affected.
Before we managed to locate and hotfix the bug, we experienced this situation twice. Thus, causing two downtimes in a very short period of time. We did, however, manage to restart our web-nodes in less than 10 minutes each time.
Although the bug is within Erlang itself, we have implemented a workaround in our code and have reported the bug to the Erlang team, which will fix the issue.

You can see this bug report here:
https://bugs.erlang.org/browse/ERL-944

In a separate incident today, our most important web node (which is also responsible for load balancing) experienced a Linux kernel panic when handling an interruption from one of its gigabit network cards.

Please note that all other web-nodes (Hermes and Mercury) and master (Matching Engine) node were not affected. This issue was not related to the Erlang vulnerability and was a technical issue. Due to this, we had to reboot the main web-node, again causing downtime.
We are planning to implement a different type of load balancing system, which will have no single point of failure, thus mitigating the risk of this happening ever again.

We take each of these incidents very seriously, and our development team does everything it can to prevent these issues from happening again. We are grateful for your understanding and hope you enjoy trading at Deribit.

John Jansen, Founder, and CEO of Deribit

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The last few weeks Deribit has undergone some major changes as a preliminary step to our Roadmap of 2019. Here is a short summary of the biggest changes so far:

ETH perpetual and Futures (x50)

• ETH Perpetual and futures derivative contracts with leverage up to 50X

ETH Options

• The first of its kind – ETH options (European style, Cash settled)

New User Interface

• More intuitive, better looking and prepping some backend stuff for UI v3 which will come soon.
• As requested the mark price is now added to the options UI
• All positions, orders and/or stops for all futures and perpetual contracts can be shown together on one tab from now on.

New Chart settings

• User can easily swap between wide or small chart or completely hide it. Orders and stops are visible on the chart and by moving them around the orders can be visually edited.
• Drawings and indicators can be saved on the charts

Reduce-only

• As requested by many of our users we have introduced reduce-only to our orders.

Trigger Last-Price

• We have added the trigger Last Price to our repertoire of stop-order settings

All positions now entered in USD rather than contracts

• To create coherence between BTC and ETH (and any future implementation) we changed the size of the orders to the USD value of the order instead of the former contracts. BTC is traded per $10 and ETH per $1

API v2

• The new API v2 is the tool for the future. Together with the launch of our ETH products we launched a new API. The old API v1 will be supported but will not be upgraded with any future implementation on Deribit.

Media

• Launch of Deribitofficial on Medium
• Launch of r/DeribitExchange on Reddit

Deribit – April 2019

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