Deribit vs. Bitmex Go Head-To-Head in Features, Strengths and Weaknesses
If you’re looking into entering the leverage trading game for cryptocurrencies, choices are limited.
Bitmex is currently leading the pack, but a new challenger has entered the arena in the form of Deribit.
Together, these are two of the biggest exchanges for perpetual swaps on the planet.
What is Bitmex?
Bitcoin Mercantile Exchange, or better known as Bitmex, is cryptocurrency exchange offering peer to peer trades.
Founded in 2014 by HDR Global Trading, it is one of the first to offer margin trading and derivatives for the crypto scene.
They were also dominating the perpetual swap scene for some time before Deribit offered it.
What is Deribit?
Deribit, from the words “Derivatives” and “Bitcoin” is an up and coming player in the leverage trading exchange space. It is mainly focused in future and options exchange, dealing exclusively in Bitcoin.
It also recently launched its own perpetual swap pair to compete with that of Bitmex. Bitmex has its headquarters in the Netherlands.
Differences between the Deribit and Bitmex
Below, we outline a few of their key differences to help you make an informed decision and, ultimately, pick you preferred leverage exchange.
Couple that with a few reliable Bitmex signals or Deribit signals, and you’re good to go!
Deribit charges trading fees ranging from 0.025% to around 0.075%. For swaps, there is a maker rebate of 0.025% and taker fee of 0.075%. Futures are closely similar with maker rebate of 0.02% and taker fee of 0.05%. Withdrawal fees are reasonable, starting at 0.0002 BTC.
Bitmex calls show a similar price structure, with maker rebates of 0.025% and a takers fee of 0.075%. Settlement fees are at 0.05%. Where Bitmex has a higher fee overall is with withdrawals, going as high as 0.001 BTC.
Order Execution and Transaction Times
In general, Bitmex has more trading volumes in a 24-hour period compared to Deribit. Predictably, this makes Deribit process transactions faster than Bitmex. While Deribit can process orders in a matter of milliseconds, Bitmex takes at least 20-40 times that. This becomes even more exaggerated when a lot of trades are happening on the platform at the same time.
Tests conclude an average transaction completion rate of 1,000 orders for Deribit, compared to Bitmex’s 500 orders. Deribit also has the advantage of virtually zero downtimes and no overloading of the system. Bitmex was notorious for going off or shutting down quite a few times, blaming it on alleged “DDoS” attacks (more on this later)
Deribit clearly outmatches Bitmex in the speed department, especially during times of high volume. It’s the newcomer’s biggest advantage over the incumbent.
While both Deribit and Bitmex offer perpetual swaps, they do so in subtle but distinctly different ways, mostly in the way the pairs are calculated and the frequency of these payout calculations.
Perpetual swaps are generally used to get the benefits of futures minus its expirations. Bitmex calculates its swap pairs in a roughly 8-hour interval. At this time, a time-weighted price versus post price representation calculation is performed.
If the resulting pair is at a premium, long position trader pay short position traders. This effectively reduces the premium since it’s not as advantageous to be in a long position. If the pair is at a discount, the opposite happens, attracting buyers and consequently raising the price.
Bitmex makes payouts between longs and shorts every 8 -hour period. Some traders go in and trade seconds before the scheduled payout, and this is all possible with the current setup. This payout gap is arguably Bitmex’s main drawback.
Deribit does things a little bit differently. Instead of gap payouts, Deribit pays out continuously. Active positions receive constant payment based on either a premium or discount on the spot price. This makes Deribit a lot more flexible when it comes to adjusting between deviations (a premium or a discount) and the spot price.
Both Deribit and Bitmex offer leveraging up to 100x to exploit your Bitcoin leverage signals. Bitmex, however, offers both Isolated and Cross margin trading. Deribit only offers Cross margin trading. Bitmex leverage signals are widely quoted globally and many traders have hit the mega-bucks with them.
Leveraging can be expanded further to typify the trader’s preferred trading pattern. Isolated margin trading allows you to only allot a portion of your portfolio as collateral for the trade.
In case you get liquidated, this is the only part of your portfolio that is payable to Bitmex. This might offer more control and risk mitigation. This type is useful for speculative trades and minimizes risk in case the prediction falls flat.
Cross-margin trading, on the other hand, exposes your entire portfolio to be up for collateral in case of liquidation. The trade-off, however, is you can use any position size with your trades.
This option offers the most flexibility but also exposes you to greater risk if you’re not too careful. This is useful for arbitrage opportunities or for traders who are hedging on their existing positions.
While not as crucial in other applications, a streamlined user interface is of utmost importance in a leverage trading program such as this. Leverage trading is all about timing and being able to easily view data and execute orders in an instant can mean the difference between profit and loss. An efficient user interface contributes much to this.
BitMex has the relatively friendlier user interface between the two. The ability to move charts around using a drag and drop interface is a nice touch, as most traders are used to doing this a lot. It’s also very intuitive and everything seems to be in its right place. Bitmex clearly wins this one.
Deribit’s interface is clunkier and more bogged down by too many things going on. Navigation can be tricky, and even the simple act of editing positions requires a lot of clicks here and there.
Both Bitmex and Deribit offers future contracts, although Bitmex just happens to have a bit more. Bitmex has futures for the major cryptocurrencies including XBT (futures and perpetual), ETH (futures and perpetual), LTC, XRP, TRX, EOS, ADA and BCash.
Deribit, being exclusively a BTC exchange, only offers BTC futures and perpetual. It’s one of its biggest limitations as it greatly restricts your portfolio into just BTC. To some traders, this is not a matter of much ado. Bitcoin controls up to 51 percent or more of the total crypto market capitalization and it remains the active industry leader.
Pump and Dump Allegations
Over the years, Bitmex has faced allegations of pump and dump from its many detractors. In fact, it has quite the reputation as among the top exchanges known for doing such.
The incident last August 22 is a prime example. Right after a scheduled system maintenance, BTC suddenly pumped value up by 10%, resulting in some positions being liquidated. On the same day, an alleged DDoS attack caused the same BTC to dump by 5%. Unfortunately, this is not the first time this incident happened.
Bitmex regularly reports these “DDoS and maintenance” issues and some have accused them as using these as fronts for their pump and dump schemes. Bitmex is notorious for its system overloads, and some have pointed out that Bitmex could’ve easily solved this load problem by investing in more servers.
Deribit has not had these kinds of incidents to date since they began, which is welcoming. One can always argue though that Deribit is still relatively new and gets the fraction of the traffic Bitmex has. Time will tell if Deribit will be plagued by similar problems in the future if it reaches a certain size. We’re hoping Deribit continues its stellar track record.
In the end, both Deribit and Bitmex are solid margin trading platforms to get into. Bitmex’s intuitive and flexible user interface, combined with its powerful leverage trading features and numerous futures and perpetual swap pairs make it a powerful platform for seasoned traders.
Bitmex also boasts good liquidity, in fact, one of the best in the industry. Where Bitmex falls short, however, is in terms of the speed of its transactions, frequent overloads, and strong pump and dump allegations.
Deribit leads with lightning fast transactions and order executions, reliable service and advanced perpetual swaps. It, unfortunately, has some limitations.
Working exclusively with BTC might turn off some investors who are looking for a bit of diversity in their crypto investment portfolio. But its biggest flaw is in its user interface, which is clunky and makes it harder to execute trades and compare data.
Bitmex is still the reigning champ in the margin trading scene. On the other hand, Deribit has strong potential. If it continues its stellar reputation and track record and grows steadily, this underdog can soon seriously challenge the dominance of Bitmex in this dynamic and challenging marketplace.
Feature Image Credit: Coinreview.com
Inpost Image Credit: Images provided by the author, webleone.com
DisclaimerThe writer’s views are expressed as a personal opinion and are for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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