The Digitex 'No Commission' Futures Exchange - A Blockchain Based Evolution for Futures Trading?

ura-soul (75)in #digitex • 6 years ago (edited)

The Digitex trading platform is due to go live pretty soon and is described in it's white paper as being a hybrid evolution of centralised 'futures' trading technology with blockchain technology - bringing the best of both together to produce no-commission transactions, decentralised currency accounts and a variety of other bonuses.. Let's take a look...

What is futures trading?

Wikipedia defines futures trading, simple, as being:

In finance, a futures contract (more colloquially, futures) is a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other.

Digitex primarily appears to be focusing on financial instruments, but states they can also support any commodity trade - just like other exchanges.

What is Digitex Futures?

The creator of this venture was a trader in London's stock exchange who says he was frustrated with paying commissions on trades, which meant missing out on opportunities in some cases. As blockchain technology evolved he realised there was a way to create a trading exchange that takes the best parts of decentralised cryptocurrency exchanges and merges them with the traditional world of centralised futures exchanges. While most exchanges (even cryptocurrency exchanges) remain centralised and operate from computer hardware that is owned and operated by the company involved, this poses a risk for investors and traders - since it is a single point of failure and if the company goes bust or faces a major hack, their funds may disappear. Digitex's novel approach solves this issue by ensuring that, like existing decentralised exchanges such as Bitshares, the trader's money is not held by the company - in fact, the funds are held in smart contract accounts on the Ethereum blockchain.

This means that traders don't have to worry about the risk of the exchange failing or being hacked, plus also the possibility of funds being taken from the exchange by government edict.

By leveraging the ethereum blockchain's features in conjunction with a centralised exchange system that benefits from the low latency needed for transaction processing to be viable in the high speed futures trading markets - Digitex can provide unique benefits that haven't existed elsewhere before (to my knowledge).

Additionally, Digitex offers a new crypto token (now listed on CoinMarketCap and briefly present in the top 100 there today) that is used for all transactions on the exchange and which is used to produce profits for the company that allows them to offer another unique feature - 'zero commission fees' for trades! The idea here is that the benefits of holding the DGTX token will be such that traders will desire it and as the company holds many of them and produces more through inflation (beginning two years after launch), the price should rise sufficiently to pay for the needs of running the company - keeping trades commission free. This sounds like it works something like the way that Steem has an inflation pool (aka rewards pool) that allows key functions of the system to operate and as long as there is a balance between the amount produced and the desirability of the token then all is well.

Digitex also offers a form of decentralised governance whereby all token holders can vote on relevant issues, such as how much inflation to produce - which amounts to the ability to reign in or support the company's expansion in the future - much like holding traditional shares in a company.

Here's an introduction to the company from the CEO - Adam Todd:

The White Paper

You can read the white paper for the project here. I have read through the majority of it and it sounds to be produced by a competent thinker who clearly has experience in the field (unlike quite a few white papers I could mention!). One point to note is that it was published in early 2018 and included a projection of what the token might be worth as a result of various levels of trader adoption of the platform and as of today, the DGTX token is already worth in the region of the top end of what was projected to be likely several years from now.. And the platform is not even through Beta testing yet!

A variety of the functions of the system are introduced, including the peg system that (like steem's SBDs) is intended to provide a stable mechanism for traders to rely on when buying and holding the DGTX tokens that must be used to trade via the system. As I understand, the Digitex system allows traders to lock in the price they pay for their tokens at the time they buy them, meaning that they won't lose out if the tokens drop in value while they are trading (they also won't make any profits from the price going up during that time either).

The benefits of decentralised, blockchain based accounts are spelled out:

1. Digitex cannot freeze or seize a trader’s funds for any reason, such as outside pressure from authorities, creditors, KYC / AML regulators etc. Digitex can and

will resist this pressure legally and without consequence because the exchange simply does not have access to a trader’s funds.

2. Digitex cannot mismanage the trader’s funds in any way by using those funds for other purposes because the exchange does not have control of or access to

the private keys of the trader’s DGTX tokens.

3. Digitex does not hold any private keys and so is therefore not a hacking target. In the unlikely event of a security breach of the exchange, Digitex does not hold any funds that can be stolen.

As are the long list of features and benefits of the system:

1. Zero Trading Fees

2. Decentralized Account Balances

3. Highly Liquid Futures Markets

4. Automated Market Makers

5. Digitex Native Currency

6. Token Issuance Revenue Model

7. Bitcoin, Ethereum & Litecoin Futures

8. One Click Ladder Trading Interface

9. Large Tick Sizes

10. High Leverage

11. No Auto Deleveraging

12. Sub-Millisecond Order Matching

13. Off-Chain Price Discovery, On-Chain Settlement

14. Decentralized Governance by Blockchain

15. Complete Privacy

16. Blockchain Driven

Complete Privacy?

Traders on Digitex can start trading immediately without needing to submit their name or any identifying documents of any kind. As an offshore exchange that accepts only DGTX tokens, Digitex is not bound by intrusive, ineffective and pointless KYC / AML regulations that intrude on our users’ privacy and which put them at risk of identity theft by making the exchange a target for hackers seeking personal information. The best way to protect our users’ personal data is not to collect that data in the first place.

Some might see this as a risk and others as a benefit, depending on their positions regarding a variety of the factors involved! It is certainly refreshing to hear of such alternatives being presented though, in a world of top-down control and domination of so many things!

Trading Profit

Examples are provided that show that it will become possible to make trades that would otherwise be impossible on competing platforms, such as GDAX, Bitmex and Kraken. The commissions of other platforms make a variety of trades completely financially non viable, but by leveraging a zero fee system, Digitex opens many doors for traders that simply could not be opened before.

Token Air Drop & System Launch

The Digitex system is due to launch in the near future and they have a waiting list of over 150,000 people waiting to use their new platform!

As part of their launch and marketing process, they are offering an airdrop of between 1000 and 100,000 DGTX tokens to new users, which will be awarded based on the number of new user referrals that each user generates.

Unlike other airdrops, the tokens are not said to be offered in a guaranteed way, since the offer is in the form of a marketing contest - however, at least the tokens air fairly likely to be available and be distributed from this airdrop!

The first live demonstration of the Digitex platform is due to take place at the Malta Blockchain Summit in early November, so expect to see a whole lot more about it in the press then. You can read this blog from Digitex for more on that.

From what I have seen, the interface and system looks pretty impressive and well thought out, so I'll be keeping an eye on developments of this and might cover more aspects of the system in future posts. I enjoy seeing novel uses of blockchain technology that disrupts legacy systems and chips away at the limitations we have inherited!

Learn More

Digitex has an active subscriber based in their Telegram channel and they will happily answer any questions you have. Other social networks are also being engaged:

- Website: http://www.digitexfutures.com

- Twitter: @digitexfutures

- Facebook: @digitexfutures

-Telegram https://t.me/digitexfutureschat

- Reddit https://www.reddit.com/r/DigitexFutures/

#futures #zerofees