How to Make Markets on CoinFLEX

When we get new market makers on CoinFLEX, we usually create an instant message chat with our risk team and are available 24/7 to handle any urgent trading issues or problems. We thought it would be beneficial to compile some of the common questions and new things people need to understand when connecting up to begin market-making on CoinFLEX. If you are a market-maker and want to get connected to our team, please join our Telegram and ask or contact us at [email protected]

This is intended not just for the participants in our Flippening MM program but also for the next several hundred market-makers we want to attract to CoinFLEX. The demand to trade physical futures is growing rapidly. Our volumes are $300-$400M per day and we are working tirelessly to improve the product and offerings to attract further growth. We need all the liquidity we can get and welcome prop firms and individual market makers of any size to provide liquidity on CoinFLEX.

Starter Facts

Server location: AWS Dublin.

API Documents and client samples:

Fees you can get as a Market Maker: 0% Maker, 0.02% Taker and if you redeem 100 FLEX Coin everyday, you can reduce your fees by 50%, so 0.01% taker.

Special Access: Every MM that meets our requirements will be on this fee tier. No one has special access to the exchange, and no one trades at a better rate than the 0/.02% we publish.

No in-house trading desk: CoinFLEX has never had an in-house trading desk and does not provide liquidity itself, we merely act as a neutral party matching trades.

Rate Limits: 200 orders per second per user for websockets and 200 per 10 second window for orders via REST. Further info can be found here.

Differences vs other crypto futures markets?

Physically Delivered vs Cash Settled

CoinFLEX futures are Physically Delivered, which means that at expiry, rather than the futures contracts settling PnL between Shorts and Longs based on an index price, anyone who is long a bitcoin futures contract on CoinFLEX, receives a bitcoin. Anyone short, delivers a bitcoin and receives Tether. No formulas or indices will be used, you just deliver and take delivery of the opposing asset. The mechanism CoinFLEX uses to ensure delivery (including from participants we do not know) is called a Margin Ramp Up, where margin requirements change from 5% (20X leverage) to 100% (no leverage, effectively like spot) in the last 48 hours prior to expiry. This means that if you do not intend to hold to expiry you should trade out of any positions and close out of any leverage.

Risk and Leverage Differences

On most crypto futures exchanges, the leverage is implicitly built into the trade, which puts strain on the matching engine because as a prerequisite to the matching engine accepting the order, it must make a check to assess whether the margin balances are sufficient for the order to be accepted. This frequently causes huge overload issues at many popular derivatives exchanges.

CoinFLEX separates out the risk functions and order placement functions which results in massive, architectural scalability increases. The trade-off is that leverage must selected prior to trading, either via the “Leverage Status” section of the Balances page, via the Leverage asset within the trading interface or via API.

Feel free to check out the Conversions and Leverage sections of our FAQ.

Inverse and Quanto Risk vs Linear Risk

When you trade on many derivatives exchanges in crypto, the pricing may be in USD but contract size may be in “USD worth of BTC” which can adjust upwards or downwards (adjusting the size of your position as well, which is in contracts).

CoinFLEX contracts are priced in USDT and represent Bitcoins (or BCH, ETH, etc). If you buy 1 contract, you own 1 BTC worth of risk. If you buy a contract and sell it $10 USDT higher, your PnL on the trade is $10 USDT. The contracts are linear and have no quanto or inverse characteristics about them.

How to Make Markets

Just kidding. You have to figure out how to do this on your own. Buy below fair value, sell above fair value, try to not take too much risk, put in alerts and protections in your system and try to trade as much as possible.

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