KuCoin has unveiled a new platform that offers crypto derivatives trading.
The IDG-backed crypto exchange announced Monday that their KuMEX trading venue is now in public beta. Its initial offer is a bitcoin perpetual contract (XBTUSDM), which is quoted in dollars and with up to 20x leverage.
KuMEX uses a bitcoin spot index that draws data from six exchanges—Coinbase Pro, Bitstamp, Kraken, Gemini, Liquid, and Bittrex—to calculate a volume-weighted average of bitcoin’s price in US dollars.
KuCoin said this would help make pricing more fair and rigorous, plus it helps contracts avoid becoming liquidated due to low liquidity of severe price fluctuations in one or two spot exchanges.
KuMEX has also launched an insurance fund, the balance of which would be disclosed each day to preserve full transparency.
If the insurance fund turns out to be insufficient, KuMEX has also instituted an auto-deleveraging system that it said will be more flexible compared to settlements made using more standard loss mechanisms.
“Compared to the spot market, derivatives are much riskier due to the leverage used, so we are more cautious in providing such services,” said KuCoin CEO Michael Gan.
“KuMEX is a derivative trading platform independently developed by our team, and from its inception, we have positioned it as a genuine and advanced financial product, so that all users can trust the platform and trade on it freely, without worrying about the loss caused by any form of manipulation.”
Lower investment threshold
KuCoin is also offering a lower investment threshold than other providers to drum up investor interest in its platform’s crypto derivatives.
“The XBTUSDM contract value is 1 USD, which enables traders to make a more flexible investment,” KuCoin explained.
“At the same time, KuMEX offers a negative fee for Makers at a rate of -0.025% with a certain amount of fixed commission, encouraging users to provide liquidity to the platform through making the market and earning some commission as an incentive.”
Following KuMEX’s full launch, 50 percent of its net revenue will be assigned for distribution to KuCoin token holders.