
Deribit – Bitcoin Futures and Options Exchange - bitconion
https://www.deribit.com/
======
zdkl
"Under extreme market circumstances Deribit could decide to partially or
entirely close winning positions to be able to close loosing positions. This
could only occur under extreme circumstances, for example when the market
moves more than 10% in a 12 hour time frame."

Wait what? I've seen way more than 10%/day volatility on *coin/USD markets
often enough. Has anyone else read through the 'tos'?

[https://www.deribit.com/docs/terms-of-service-and-privacy-
po...](https://www.deribit.com/docs/terms-of-service-and-privacy-policy/)

~~~
tcoppi
When you trade derivatives like this, your main risk is counterparty risk.
Deribit, with things like this and the documentation used to describe their
futures and options offerings, does not inspire trust in them as a
counterparty.

~~~
Animats
They're trying hard not to take on counterparty risk. But the gimmicks they
use to avoid it make their options less valuable.

Unlike a cash exchange, a derivatives exchange with "leverage" (which means
they loan customers money) takes on financial risk. They cannot play in this
game unless they have enough financial strength to pay off when they lose.
And, no, they don't get to use the customer's deposits. Those belong to the
customer.

With "leverage", it's quite possible for a customer to have a negative
balance. Then the broker/exchange has to collect from the customer, or cover
the loss.

They're trying to escape this situation by using an "auto liquidation"
approach, which means that when a customer balance approaches zero, they start
closing out customer positions. This allows customers to game the system. Take
a position, leverage it, and keep a near-zero balance. If the customer wins,
they collect; if the customer loses, Deribit closes out the contract. This
adds a special kind of counterparty risk when buying a contract - even if you
win, your position may be closed out in favor of the counterparty before you
can gain anything.

Deribit makes their own private price for Bitcoin, which is a 30 minute moving
average. This makes the "auto liquidation" thing workable. If the price
changed too fast, and especially if it changed discontinously, auto
liquidation would break. But this creates an arbitrage situation between
Deribit and everybody else.

From the terms: _" In no event will Deribit, or its suppliers or licensors, be
liable ... for any amounts that exceed the fees paid by you to Deribit under
this agreement during the twelve (12) month period prior to the cause of
action."_ Financial services do not work like that. They have much larger
obligations to their customers.

------
eggy
Latency in the micro-seconds range is based on network i/o, distance and
wiring, not frameworks. Microwaves travel over 30% faster than fiber optic
links. Erlang will not affect this part of the equation, however, it should
prove to be low-latency, scalable, reliable, and all the other good stuff the
Erlang/BEAM/OTP system is good at on the server.

Pony lang is looking at competing with Erlang, and to be just as fast if not
faster.

Maybe their hoping to just trade on IEX, 'The Flashboys Exchange' that has the
wire coiled up in a shoebox (I know it's not a shoebox!), so even hackers
can't circumvent the intentional delay it causes.

~~~
gruez
>'The Flashboys Exchange' that has the wire coiled up in a shoebox (I know
it's not a shoebox!), so even hackers can't circumvent the intentional delay
it causes.

Explain? How does hiding the delay hinder hackers?

~~~
papercrane
It's not a hidden delay. It's known to be 350μs. The idea is to prevent anyone
seeing a large order to beat them to another exchange (like NYSE) and doing an
arbitrage there based on that information.

[http://www.nytimes.com/2014/04/06/magazine/flash-boys-
michae...](http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-
lewis.html)

------
repomies691
Should I care if it is erlang-based or basic-based? Why should I use this
instead of some of the existing exhanges?

~~~
sedeki
What other exchanges are there for options and futures?

~~~
STRML
I'm the CTO of BitMEX.com[1], which runs derivatives (futures and perpetual
swaps) on Bitcoin and a few other coins. We've been around since 2014. We run
a full-featured testnet [2] for API testing & trade testing.

The other major players are mostly Chinese. In China, there's OKCoin, BTCC
(previously BTC China), 796, and BitVC, as well as a few minor players. In the
rest of the world, there's us, CryptoFacilities, Coinpit, and now Deribit.

We've been in contract with the Deribit team since 2014 - they appear to be a
solid tech team and they certainly understand the underlying finance.

1\. [https://www.bitmex.com](https://www.bitmex.com)

2\. [https://testnet.bitmex.com](https://testnet.bitmex.com)

~~~
asciihacker
In all earnesty, do you have an interest in your clients making big profits?
Or is it in your best interest that most of your clients lose so that you can
pay a few winners?

Do you have a training program that can help me go from 0 to full-time
derivatives trader?

~~~
STRML
Our interest is in traders continuing to trade - in order for them to do so,
they must like the platform and consider it fast, fair, safe, and open.

As for a training program, I usually suggest babypips.com - condescending
domain name aside, the content is really great.

------
slashdotdash
From their "About us" page[1].

"The exchange is built from the ground up to deliver extreme performance and
is built entirely in the programming language Erlang. This gives us big
technological advantages being able to handle huge amounts of requests with
ultra low latency (<1ms). Erlang is a programming language used to build
massively scalable soft real-time systems with requirements on high
availability."

[1] [https://www.deribit.com/docs/about-
us/](https://www.deribit.com/docs/about-us/)

~~~
curiousssly
"huge amounts of requests with ultra low latency (<1ms)" needs more
explanation because if we had 1 million (<1ms) requests from 1 billion I could
still use same definition.

~~~
zdkl
They mention that number again in their colocation page, I suspect they're
providing their best number based on testing in the same datacenter (yay SXB,
FR)

------
tt293
How is this going to get around CFTC rules on commodity derivatives markets?

~~~
zdkl
> incorporated under the laws of Lithuania
> [https://www.deribit.com/docs/terms-of-service-and-privacy-
> po...](https://www.deribit.com/docs/terms-of-service-and-privacy-policy/) >
> hosted in France
> [https://www.deribit.com/docs/](https://www.deribit.com/docs/) §1.9

Are they even subject to those rules?

~~~
cloudjacker
Naive enterprisers think they are exempt from US Securities laws using a 50
year old concept of jurisdiction inside their head

That's always cute

The CFTC is nice, the SEC will come down hard

~~~
zdkl
Yeah if I fall under a US orgs' jurisdiction as a EU citizen not conducting
business with US citizens as far as I can ascertain, please explain where I'm
naive? This isn't sarcasm, I can't think of a way the SEC would have any say
over the exchange instead of it's potential US clients but would like to hear
it

~~~
cloudjacker
> not conducting business with US citizens as far as I can ascertain

If you make a reasonable [and effective] effort to not conduct business with
US citizens then they will leave you alone. The mere fact that I can access
Deribit undermines their exemption.

But I've seen the SEC charge people with thinner rationale. For example, a
eastern european guy in an alleged insider trading ring only traded CFDs on a
European CFD exchange. The SEC claimed that he would know that the exchange
would have to make corresponding trades and hedging trades in US equities and
therefore he is culpable.

If it makes you feel any better, that particular case hasn't reached a verdict
yet and was insider trading, so if you feel comfortable dealing with
extradition hearings to establish case law in a foreign country or simply not
insider trading on US equities, then you'll be fine.

------
al_chemist
MtGox was written in PHP and it was enough for us! Oh wait...

