Techniques and Methods for ABIT to Break Through the “Scramble” of Derivatives Exchanges
No doubt, 2020 is a “contract year”.
With the wealth creation effect of altcoins gradually weakening and the growth of the spot market encountering bottlenecks, the transaction volume of mainstream currencies led by Bitcoin in the entire market has further increased. The exchanges seem to hope that the contract function can bring them stable cash flow income in the bear market. After all, for derivatives, as long as there is volatility, there is transaction volume, and the transaction fee is relatively higher.
Of course, for the industry, this means that the cryptocurrency trading market has entered a new stage, and to some extent, it also means a major reshuffle. A large number of inferior project parties will lose their position in the market. The emergence of new projects on the spot market will be slower, while derivative products will continue to iterate and evolve rapidly. The cryptocurrency trading market will learn from traditional finance industry and gradually become more mature in terms of ecological structure and product design.
Industry data shows that by the end of 2020, the derivatives trading market will reach twice the size of the spot market. With the huge market prospects, many new entrants are eyeing this huge and tempting wealth cake.
ABIT launches
ABIT was established in Australia in 2019. It is licensed by AUSTRAC, and complies with relevant Australian laws and regulations.
In October 2019, the ABIT beta version came out, which quickly accumulated more than 100,000 registered users, with a KYC ratio exceeded 50%. More than 30 qualified projects chose to launch on ABIT.com. At present, the users come from 82 different countries and regions in the world. According to KYC statistics, the top five countries and regions are: Indonesia, Malaysia, Hong Kong (China), Taiwan (China), and Australia. The current user scale is still in stable and rapid growth.
Despite the impact of the pandemic, ABIT’s product development is still proceeding in an orderly manner. According to reports, ABIT official version will be launched in May 2020. Compared with the Beta version, the official version of ABIT will be upgraded in all aspects, including:
- Functions of the spot trading (coin to coin), system will be improved. The matching performance, user experience, response speed have all been greatly enhanced;
- Perpetual contract function will be added, which will support both token-based contract and USDT-based contract, both cross margin and isolated margin, as well as various models of order placement;
- The Derivatives Cloud will be launched, supporting the embedding of ABIT derivatives functions into other exchanges, to generate universal depth and liquidity with ABIT business customers;
- Additional functions and third-party services will be improved, including credit card purchases, on-chain data monitoring (on the transaction page), etc.
Obviously, the focus after the ABIT official version launches will be on derivatives trading. However, with the top exchanges in great advantage and the converging of product functions, the market is somewhat tired of the derivatives story. It is not easy for ABIT to get ahead in such a competitive environment.
Regarding this, ABIT principle said: “We are very confident in the functions of our upcoming contract trading function. As an experienced team, we feel certain that we can achieve a high level in the industry whether in system matching performance, index marking reliability or the depth and liquidity.”
Looking at the entire market, it is precisely because of the high requirements contract trading posts in regards to the trading experience and the depth of the market, there are not many exchanges that can manage to develop and operate independently. It is common to see that many exchanges’ contract function module is actually supported by Contract Cloud service providers. Therefore, real opponents are not that much.
“Our Derivatives Cloud can also provide technical support for other exchanges. As long as we can guarantee that ABIT products are of first class, our B2B service will expand rapidly in the current market.”
Basic Skills for Contract Trading
It is well known that for any exchange to succeed in the contract trading industry, the basic skills must be solid: security, performance, transaction depth, user experience, branding, etc. These basic skills are requirements as well as protections.
The recent cryptocurrency market is rather extreme, especially on March 12th, it drove all time high and hit record-breaking crash. In addition, crypto derivatives produced a new all-time high of $600 billion in monthly trade during March. Faced with such an extreme market, even some first-tier exchanges suffered issues such as system downtime. As an emerging exchange, the pressure on ABIT can be imagined.
“The framework of our entire system is service-oriented and uses distributed microservice clusters to achieve load balancing and high availability. The order matching algorithms on ABIT adopts a full-link matching and requesting mechanism. The matching efficiency for spot trading has reached 200,000+ TPS/s while 10,000 TPS/s for contract trading matching. For an emerging exchange, the performance of ABIT is extraordinary. “ABIT principle said.
ABIT also has a mature monitoring system overseeing the overall performance of ABIT system, including hardware, network, service, client end, operation indicator etc. When abnormal signals are detected, corresponding responses will be triggered according to the risk rating, to address issues in time.
Another factor of a good contract trading service, is that the depth of market needs to be enough. ABIT chooses to aggregate cross-border traffic through ABIT Cloud (Derivative Cloud and White Label Exchange). Currently, ABIT has pre-signed 20 global ABIT cloud partners, and this number is expected to reach 40-50 in Q2 2020. All these clients have no direct rivalry with ABIT because of different geographical segmentations.
Finally, ABIT also improves the user experience through rapid iteration of products. “Although the functions of the exchanges on the market are converging, the product design is not mature. For example, the slippage phenomenon in the order copy function is very serious. In the version we are about to launch, it will definitely solve the pain points so that these products can be implemented on a large scale. In two months, we will launch a brand new gameplay that has never been seen in the market. “
Admittedly, the first-tier exchanges have absolute advantage in terms of user size, but at the same time it means that they are relatively cautious in implementing new products and features. At the current stage, it is easy for ABIT to move towards the clear structure design. After catching up with the derivatives functions generally available in the market, they can continue to update with new well-designed product functions to confront with the top exchanges.
Platform Token Ecosystem
As an important part of exchanges, the development of platform tokens has been a hot topic since 2019.
The value of the platform token mainly composed of two aspects, one is the use value and the other is the holding value. Creating deflation is one way to increase holding value. Equally important is the continuous improvement of the cash flow and profitability of the exchange. Meanwhile, the use value depends on the constant creation of usage scenarios in the exchange’s ecological expansion. The competition between platform tokens, in ABIT’s view, is essentially the seizure of funds, users and high-quality resources during the development of the exchange.
ABIT’s platform token AB has clear plans in both areas. In terms of use value, AB is the only token of ABIT’s entire exchange ecosystem. The usage scenarios can be divided into Customer end and Business end. The C-end application includes holding AB to get transaction fee discount, using AB as contract collateral, and to participate in platform voting etc., while the B-end application includes holding certain amount of AB to join ABIT Super Node, to become OTC acceptors, or brokers. In addition, customers who purchase ABIT Cloud services will receive preferential discounts when paying by AB. The idea behind designing the token economy, is that both C-end users and B-end partners, when using AB, can get discounts that exceeds AB’s current price.
As for the profitability value, it is closely related to the business development of ABIT. Apart from the monthly repurchase and burning, by holding AB, users will also be eligible to participate in IEO discount purchases, obtain project airdrops, and participate in numerous exclusive community activities.
Due to compliance considerations, ABIT will not distribute direct dividend for the time being, but will take a considerable portion of operating funds to benefit AB token holding community, such as transaction gifts etc.
“Our overall operating ideas is to continuously motivate users to hold tokens through keep on creating reasons for them. When platform users really get benefits and gains from holding tokens, and when the platform is developing positively, the value of AB will naturally climb to a large extend. It is a virtuous cycle. “ABIT principle said.
Rule of victory
In fact, with the increasing attention of international organizations such as FATF and J5 to cryptocurrency transactions, and the gradual improvement of relevant laws in the United Kingdom and the United States, as well as the Chinese government’s crackdown on illegal digital currency transactions, the access channels for cryptocurrency exchanges keep narrowing down. With the shrinks of the stock market, all exchanges will gradually fall into a “traffic dilemma.”
For the emerging exchanges today, the ability to decide life or death will be—the ability to break the existing market and pull in new traffic. ABIT has two advantages in terms of user that.
One is the ability to develop new markets in new regions. ABIT’s main market is in the Asia-Pacific region. In this market, many countries have just completed the regulation and compliance legislation. For example, Indonesia has just started issuing cryptocurrency trading licenses at the end of 2019, and India only lifted the ban on cryptocurrencies a few weeks ago. These are markets with hundreds of millions of people. With the cross-cultural business and operation team, ABIT will open up the cryptocurrency trading market in these countries and regions with localized and refined market development.
In addition, ABIT also has cross-border drainage capabilities and plans, such as to attract investors from other trading markets. The group of derivatives traders are different from spot traders-a large part of the derivatives traders are cross-border investors, who are also foreign exchange investors, CFD investors or US stock investors.
“The number of these investors in the relatively ‘traditional’ financial sector is enormous. We also came from traditional financial industry and have a deep understanding. With the support of the continuous product design and the strong operations of the platform, we have strong confidence to constantly break the border and attract more cross-border investors. “