Binance Futures platform overview

In 2021, the entire crypto futures industry has become more competitive than ever ascrypto exchanges strive to offer the latest products and functionality to engage users. There are many platforms to choose from today, but not all exchanges are created equal.

Functionality of cryptocurrency exchanges

Most native cryptocurrency exchanges offer one of the following three products:

Cryptocurrency and fiat trading.
Cryptocurrency trading.
Crypto derivatives trading.

These cryptocurrency exchanges either specialize in fiat and spot cryptocurrency products or crypto derivatives such as futures.

Thus, users on these exchanges cantrade only on a spot or derivative trading platform. This means that users' options for using crypto assets are limited, which makes it more difficult to hedge positions or engage in arbitrage.

If users want to apply strategiesintermarket, they must have multiple accounts on different exchanges that offer the desired products. In these cases, moving funds from one account to another is costly due to transaction fees. In addition, it can be time-ineffective as the transfer of funds is delayed. Hence, on these platforms, traders cannot arbitrage or hedge effectively.

One of the key competitive advantagesBinance is offering users a complete ecosystem for trading cryptocurrencies. Through the Binance Futures division, users have access to both the spot and futures markets.

Unlike other exchanges that offerlimited number of products, traders on Binance have access to over 100 spot markets and over 20 perpetual futures markets that provide trading and hedging opportunities.

Synergy between spot and futures markets

The world's largest cryptocurrency platformBinance provides traders with a ready-made ecosystem to fully utilize their crypto assets and manage the risks of a cryptocurrency portfolio. This is made possible by the integration of Binance's spot and futures platforms.

Given this holistic approach to creating Binance Futures, as the number of traders on the platform has grown, trade volume and market share have grown exponentially:

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In the first six months of Binance Futuresincreased weekly volume from $ 50 million in the first week to $ 16 billion on February 10, 2020. With new products since the beginning of the year, the platform has doubled its weekly volume.

Two key factors contribute to the successful integration of both platforms:

First, Binance Futures allows traders toalmost instantly transfer funds from spot wallets to the futures platform, this helps to extract additional benefits from trading. In addition, traders do not pay transaction fees between spot and futures platforms, unlike other exchanges where traders must have multiple trading accounts to access the futures market. In addition, Binance Futures does not impose any restrictions on the number of swaps between markets. For example, users can enter the futures markets multiple times a day to benefit from intraday price movements.
Second, the Binance Futures team has developedits futures contract, similar to spot trading, making it easier for users to move between markets. Perpetual contracts on the platform have clear pricing rules. Each contract represents only one unit of the corresponding underlying asset. In addition, Binance Futures perpetual contracts are denominated and settled in US dollars, just like in the spot market.

These factors have played an important role in platform integration as users can easily move from one platform to another and have the same trading experience between them.

Arbitrage and real-time market data

Thanks to easy transition between platformstraders can effectively and quickly take advantage of crypto asset arbitrage opportunities. Consequently, inefficiencies between perpetual contract prices and spot market prices are eliminated, resulting in matching futures and spot markets.

Strong volatility can cause differencesbetween markets, then arbitrage users will take advantage of these trading opportunities. On other exchanges where arbitrage is more limited, the futures markets may not reflect the true value of the spot markets.

In addition, Financial Futures supportsusers by providing real-time market data, where the data is updated after every trade made on the platform, rather than every 100 milliseconds. As such, traders on Binance Futures can react to price changes faster than other platforms. It also helps users with arbitrage and hedging.

Cross-collateral

Cross-collateral — this is a new feature withthrough which users can trade futures contracts using crypto assets stored in the Binance exchange wallet as collateral. With this feature, users can use their coins to directly fund orders without having to convert them to margin.

Traders can borrow Tether (USDT) at 0%,using their crypto assets as collateral, thereby eliminating the need to transfer coins to a futures wallet. Currently, only BUSD is available as collateral for this feature, more tokens will be added in the future.

Cross-collateral is a welcome featurefor traders on Binance, allowing more flexibility in choosing how to open futures positions. This feature gives traders more access to the futures platform, which expands the Binance ecosystem.

The growing supply of altcoins on Binance Futures

Since the beginning of the year, Binance Futures has been actively expandingnumber of perpetual futures contracts so users can hedge existing positions and better manage their risk. The platform currently offers 21 perpetual futures contracts, with the latest addition being VETUSDT.

With a growing portfolio of futuresBinance Futures contracts is becoming the preferred position hedging platform for crypto traders. This is evident in the volume growth in the perpetual altcoin markets over the past two months.

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Less than two months before the beginning of 2020 the volumeof trading on perpetual contracts for altcoins has closed the gap with the BTCUSDT contract. Prior to this, BTCUSDT contracts dominated trading volumes, accounting for over 70% of the total Binance Futures volume. With the emergence of new perpetual contracts, users have the opportunity to participate in the latest bullish momentum in the altcoin market.

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In aggregate, open interest on perpetualaltcoin markets grew from $20 million to $191 million — growth more than 10 times in 2 months. Since the start of the year, open interest in altcoin perpetual contracts has rapidly increased from 10% of total open interest to 40%.

Output

Binance has created an ecosystem for tradingcryptocurrencies, integrating spot and futures platforms to provide a seamless and holistic trading experience for their users. The strong synergy between spot and futures platforms is made possible by two key features:

Ease of transferring funds between platforms.
Intuitive futures contract design.

Additionally, Binance Futures continues to expandecosystem, adding new features such as cross-provisioning — a feature that allows users to use their cryptocurrency to fund positions on a futures platform.

A growing ecosystem is clearly keya competitive advantage of the Binance Futures platform, as evidenced by the growing open interest and trading volume in the perpetual altcoin markets. Binance Futures will continue to develop innovative features to improve access to its futures markets as well as further develop the entire ecosystem.

Link to register on the official Binance Futures website with an activated 10% discount on all trading fees https://www.binance.com/.