{"id":15817,"date":"2018-12-05T05:20:00","date_gmt":"2018-12-05T13:20:00","guid":{"rendered":"https:\/\/coincentral.com\/?p=15817"},"modified":"2019-01-17T00:47:14","modified_gmt":"2019-01-17T08:47:14","slug":"what-is-a-perpetual-swap-taking-a-look-at-the-new-okex-launch","status":"publish","type":"post","link":"https:\/\/coincentral.com\/what-is-a-perpetual-swap-taking-a-look-at-the-new-okex-launch\/","title":{"rendered":"What is a Perpetual Swap? | Taking a Look at the New OKEX Launch"},"content":{"rendered":"<p class=\"graf graf--p\">On December 3rd at the Grand Hyatt Hotel in South Korea, Mr. Jay Hao, the CEO of OKEX, announced the upcoming launch of a new product. The new product is a special type of futures contract dubbed <strong class=\"markup--strong markup--p-strong\">perpetual swaps.\u00a0<\/strong>The product officially launches on December 11th, 2018. The product release affords OKEX an opportunity to capture a valuable new market. It also provides OKEX the chance for a new beginning.<\/p>\n<h3 class=\"graf graf--h3\">Negative Publicity and New\u00a0Markets<\/h3>\n<p class=\"graf graf--p\">OKEX has been in the news a lot recently. Unfortunately, the news\u00a0is never good. Most recently, OKEX future contracts came <a class=\"markup--anchor markup--p-anchor\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-11-19\/furious-traders-slam-crypto-exchange-for-fiddling-with-contracts\" target=\"_blank\" rel=\"noopener\">under fire<\/a>\u00a0during the hard fork of Bitcoin Cash. From a public relations perspective, OKEX really needed to clear the air. The large public relations campaign for the launch of perpetual swaps is the Malta-based cryptocurrency exchange\u2019s attempt to put a new foot forward.<\/p>\n<p class=\"graf graf--p\">Not only does OKEX have a chance to get future contracts right, but also it has a chance to capture some of BitMex\u2019s lucrative futures business. According to the analysts at TokenInsight, most of the transactions on BitMex are boutique futures contracts called <strong class=\"markup--strong markup--p-strong\">perpetual contracts<\/strong>.<\/p>\n<h3 class=\"graf graf--h3\">What is a Perpetual Swap?<\/h3>\n<p class=\"graf graf--p\">BitMex offers perpetual contracts. OKEX offers perpetual swaps. The difference between the two is essentially marketing. Except for the difference in <strong class=\"markup--strong markup--p-strong\">funding<\/strong>, a perpetual swap is effectively OKEX\u2019s version of BitMex\u2019s <a class=\"markup--anchor markup--p-anchor\" href=\"https:\/\/www.bitmex.com\/app\/perpetualContractsGuide\" target=\"_blank\" rel=\"noopener nofollow noopener\">perpetual contract<\/a>.<\/p>\n<p class=\"graf graf--p\">Perpetual contracts are <strong class=\"markup--strong markup--p-strong\">futures contracts<\/strong>with no expiry or settlement. Futures contracts are essentially bets on the future state of something. These things are typically commodities, like <a class=\"markup--anchor markup--p-anchor\" href=\"https:\/\/www.investopedia.com\/terms\/p\/porkbellies.asp\" target=\"_blank\" rel=\"nofollow noopener noopener\">pork bellies<\/a>. However, on cryptocurrency exchanges like BitMex and OKEX, futures contracts are bets on the future value of a cryptocurrency (like BTC, LTC, BCH, EOS, ETH, and other very liquid cryptocurrencies). Futures contracts are, therefore, derivative financial instruments, or <strong class=\"markup--strong markup--p-strong\">derivatives<\/strong>. Their existence is derived from some other financial instrument.<\/p>\n<h3 class=\"graf graf--h3\">Expiration and Settlement<\/h3>\n<p class=\"graf graf--p\">Typically, futures contracts expire and need to go to <a class=\"markup--anchor markup--p-anchor\" href=\"https:\/\/institute.cmegroup.com\/courses\/introduction-to-futures-html\/modules\/get-to-know-futures-expiration-and-settlement\" target=\"_blank\" rel=\"noopener nofollow noopener\">settlement<\/a>. At settlement funds are credited or debited from the trader\u2019s account. Perpetual swaps do not expire and therefore do not go to settlement.<\/p>\n<p class=\"graf graf--p\">Prior to providing the opportunity to enter into perpetual swaps, futures contracts on OKEX would expire within a week, two weeks, or one quarter.<\/p>\n<h3 class=\"graf graf--h3\">Margin and Leverage<\/h3>\n<p class=\"graf graf--p\">In order to make the bet, the trader needs to make a deposit. That deposit is called the <strong class=\"markup--strong markup--p-strong\">margin<\/strong>. It is typically the collateral for making a much bigger bet. The ratio of the value of the bigger bet over the margin is called <strong>leverage<\/strong>.\u00a0For example, on a 50% margin (or \u201c2x leverage\u201d), the trader can borrow funds from a lender to enter into a futures contract for $100 when they only have $50 to deposit.<\/p>\n<p>Like BitMex, OKEX allows traders to leverage up to 100 times the margin on deposit.<\/p>\n<p class=\"graf graf--p\">Incidentally, $100 is the actual <strong class=\"markup--strong markup--p-strong\">face value<\/strong>\u00a0of OKEX\u2019s perpetual swap. This means that one of these special, non-expiring futures contracts is redeemable for the BTC equivalent of $100 at that point in time. A swap could also be redeemed in ETC, or any other cryptocurrency eventually allowed by OKEX.<\/p>\n<h3 class=\"graf graf--h3\">Funding<\/h3>\n<p class=\"graf graf--p\">When the trader borrows funds from a lender for a contract, they are receiving a loan. On OKEX, the loan for the perpetual swap is provided by the OK PiggyBank. The OK PiggyBank is a peer-to-peer lending service.<\/p>\n<p class=\"graf graf--p\">The OK PiggyBank will lend traders up to 100 times the margin. Traders are not required to take a loan. However, if they do, their contract is <strong class=\"markup--strong markup--p-strong\">leveraged<\/strong>.<\/p>\n<p class=\"graf graf--p\">Once the contract is leveraged, the trader must pay interest on the amount borrowed. Payment is due every 24 hours on OKEX. This payment is called <strong class=\"markup--strong markup--p-strong\">funding<\/strong>. On BitMex, funding occurs in fixed 8-hour intervals.<\/p>\n<h3 class=\"graf graf--h3\">Conclusion<\/h3>\n<p class=\"graf graf--p\">Even the Chicago Mercantile Exchange (CME) and the Chicago Board of Exchange (CBOE) allow speculators to trade Bitcoin futures. Futures contracts on Bitcoin are not new. However, OKEX has to improve its service and might even need this new product to survive.<\/p>\n<p class=\"graf graf--p\">OKEX\u2019s perpetual swaps are competitively priced. Those traders that provide liquidity to the exchange are generally <a class=\"markup--anchor markup--p-anchor\" href=\"https:\/\/www.bitmex.com\/app\/fees\" target=\"_blank\" rel=\"noopener\">better off<\/a>\u00a0going with BitMex. Those that aren\u2019t will enjoy OKEX\u2019s lower <a class=\"markup--anchor markup--p-anchor\" href=\"https:\/\/support.okex.com\/hc\/en-us\/articles\/360020149012-I-Introduction\" target=\"_blank\" rel=\"noopener\">fees<\/a>.<\/p>\n<p><span style=\"font-weight: 400\">[thrive_leads id=&#8217;5219&#8242;]<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On December 3rd at the Grand Hyatt Hotel in South Korea, Mr. Jay Hao, the CEO of OKEX, announced the upcoming launch of a new product. The new product is a special type of futures contract dubbed perpetual swaps.\u00a0The product officially launches on December 11th, 2018. The product release affords OKEX an opportunity to capture<\/p>\n","protected":false},"author":118,"featured_media":15907,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"iawp_total_views":1,"footnotes":""},"categories":[1],"tags":[13611,21852,21849,21851,21850],"class_list":{"0":"post-15817","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news","8":"tag-cryptocurrency-exchanges","9":"tag-derivatives","10":"tag-futures-contracts","11":"tag-perpetual-contracts","12":"tag-perpetual-swaps"},"wppr_data":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is a Perpetual Swap? | Taking a Look at the New OKEX Launch - CoinCentral<\/title>\n<meta name=\"description\" content=\"BitMex offers perpetual contracts. OKEX offers perpetual swaps. 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