This is a guide for market makers and algorithmic traders looking to take advantage of the fee structures of different derivatives exchanges in order to make a low risk, consistent return.
If you are an algorithmic trader that understands crypto derivatives, this guide is for you!
Most crypto derivatives platforms have what is known as a maker-taker fee structure which actually pays a rebate to “Maker” orders or passive orders that are not immediately filled. This rebate is often 2.5 basis points (or 0.025%) of the value of the trade.
CoinFLEX is unique in that the fees are a flat 3 basis points whether you are making or taking liquidity.
Let’s examine our “taker” rate because by redeeming our native exchange token — FLEX coins, you can make it 1.5 basis points to, the cheapest taker fee in the entire industry.
But it’s even better than that.
Because FLEX Coins, are paid to “Takers” based on their % of volumes, the net effect is that the FLEX coin creates a rebate rather than a fee for taker volumes. We can calculate the value of the rebate by looking at CoinFLEX’s daily volumes, the issuance of FLEX Coins and the price of FLEX Coins.
CoinFLEX volumes right now are around $300-$400M per day. FLEX Price as of the time of this article is around $0.43 and the number of FLEX being released every day (as we are in the first cycle of issuance) is 233,333 FLEX (or $100,333 USD worth).
V (volume): $350M
P (price): $0.43
FI (FLEX issuance): 233,333
(P * FI) / V = 0.028% or 2.8 basis points.
That’s the value of the FLEX you would receive for any taker volume. Post fees this is a 1.3 bps rebate.
One easy way to take advantage of the fee differences between exchanges is that any time the prices are similar (when accounting for things like Tether/USD price), simply place Maker orders at the bid on the Rebate-Paying exchange and then if and when your order is filled, immediately hedge out the risk by selling or shorting futures on CoinFLEX.
You’ll then need to reverse the trade at equal to or the same differential between the two to lock in your profit. Ideally, you could wait until there’s a better pricing opportunity within the established range to buy one contract and sell the other.
This is an opportunity in crypto where you can make money by buying and selling at even effectively the same prices.
If you want to juice the trade even further, join our market making program to lower your maker fees to 0% and your taker fees to 0.02% (post FLEX redemption, 0.01%).