Bitcoin Futures Need a Decentralized Solution to Improve Market Liquidity

The Bitcoin futures market has grown by leaps and bounds in recent years. Speculators and investors want exposure to the world’s leading crypto asset. New platforms are emerging to provide some much-needed competition in this space.

Comparing a Few Dozen Players

To date, there are just  a few dozen different service providers exposing users to Bitcoin futures. Most of these companies are active in the cryptocurrency industry in one way or another. The top trading platforms are all centralized, which adds a layer of convenience for newcomers. Experienced users, on the other hand, do not like to put their faith into external parties all that much.

Looking at the current platform ranking by volume, Huobi, Binance, Biki, OKEx, and BitMEX are the market leaders. All of these platforms are more than capable of generating several billion dollars in daily trading volume. It is a very competitive space already, as the established platforms tend to make it difficult for newcomers to gain much traction.

Liquidity Needs to be Improved

Although the top trading platforms generate decent liquidity, the remaining competitors don’t necessarily pull their weight. Overall, the Bitcoin futures industry generates just over $7.44 billion in daily trading volume. This pertains only to platforms active within the cryptocurrency space, however.

External providers, such as CME and CBOE, are not included in these rankings. That is because they primarily provide data pertaining to the number of contracts traded, instead of actual volume. Both companies are doing a good job, noting 11,473 and 139.503 in contract volume yesterday. The demand for exposure to Bitcoin is not slowing down, by the look of things.

Can New Players Succeed?

Based on all of the data above, one would almost think that new players have no chance of succeeding in the Bitcoin futures segment. That is far from the case, as the cryptocurrency industry continues to attract a lot of positive attention. Unlike most traditional assets, Bitcoin is capable of gaining value.

It is an interesting time for companies looking to venture into the world of Bitcoin futures. Those who are looking to enter this space will need to offer something unique. A decentralized approach would certainly work wonders, albeit it is not easy to achieve.

Analyzing AAX Exchange

Speaking of decentralization in the Bitcoin futures world, there is one platform providing such an approach. Known as AAX, the platform is designed to either buy crypto, engage with spot trading, or venture into the world of Bitcoin futures. All of these options are provided in a completely decentralized manner, creating a very different user experience.

With support for other 20 fiat currencies to buy Bitcoin, AAX has the potential to rival various centralized exchanges. Furthermore, the platform has 20 different spot trading pairs, with new listings being added every single month. Last but not least, the futures market has a few interesting trading pairs, but those will likely be expanded upon in the future as well.

To provide an optimal trading experience. AAX uses a low-latency trading engine. This ensures that orders can be executed quickly, and at optimal prices. A benefit not to overlook when dealing with volatile assets such as cryptocurrencies. It is thanks to features like these that the platform has recently been able to double its user base in quick succession.

Speaking of platform growth. AAX has noted a strong increase in its overall volume and liquidity as well. Primarily the BTC/USDT futures contract is of great value to traders from all over the world. One of the keys to success is the very low trading fees for futures contracts. In fact, AAX charges the lowest fees of any platform in this space.

AAB Is Not Just an Investment Token

Similar to other platforms in the Bitcoin futures space, AAX has its own token. Known as AAB, it provides a lot of benefits and utility to token holders. Achieving a reduction in trading fees is something that frequent users will always be looking for. Moreover, the token has been integrated in what can best be described as a native DeFi solution.

That DeFi solution goes by the name of AAB Plus. It is a savings service that any token holder can explore to either earn regular rewards, depending on the formula one prefers. The option for accumulating rewards in either AAB tokens or USDT is of great interest. It allows traders to explore a lot of different options, and switching between plans is equally possible. A key selling point is how all of this can be achieved without paying any fees.

Conclusion

No one can deny that the overall Bitcoin futures volume has increased significantly in recent months. Part of that demand is fueled by a higher Bitcoin price. Succeeding during the coronavirus pandemic has proven incredibly difficult for most assets and commodities. Other than Bitcoin, only gold and silver have proven to be worth their salt.

For the industry as a whole, a decentralized trading platform is direly needed. Not having to worry about whether a company’s decision may effect one’s positions or overall profit removes a key barrier to entry. Given the growing volume across new platforms such as AAX, the future certainly looks interesting for Bitcoin futures trading in general.