BitMex, the world’s largest cryptocurrency derivatives platform, is dumping two Ripple (XRP) contracts in favor of a Ripple USD (XRPUSD) quanto swap.
The new directive will take effect from Friday, Jan 31, 2020, while the details of the new XRP/USD quanto swap will be availed tomorrow, Jan 24, 2020.
Like ordinary perpetual contracts, there is no expiry or settlement, and the price of the swap mirrors that of the tracked XRPUSD index.
Two XRP Derivatives to be Delisted at BitMex
The two BitMex’s XRP Up and Down contracts, XBT7D_U105 and XBT7D_D95, respectively are unique to the platform, exposing investors to the underlying asset’s volatility, allowing them to tap profits when prices are rallying or conversely gain when prices were dumping.
In a UP contract, a buyer only pays a premium on the trading day in expectation of receiving the difference between the strike price and the settlement price on expiry if it is positive. Else, if the difference is negative, there is no payment. The inverse is true for a DOWN contract.
According to a notice from BitMex, the two contracts will be settled as usual but no new contracts will be listed after that.
“As an ongoing effort in improving our offerings and experience for users, effective Friday 31 January 2020 at 12:00 UTC, all UPs and DOWNs contracts will be delisted. Existing BitMEX UP and BitMEX DOWN contracts will be settled at that time as usual and no new contracts will be listed from that time onwards.”
What is a Ripple (XRP) Quanto Swap?
A quanto swap is designed purposefully for traders to speculate on the prices of XRP/USD without necessarily depositing USD. Towards this end, XRP will be quoted in USD, but the settlement will be done in another third, foreign currency at a particular rate.
This way, the ramp reduces exchange rate risks, especially on investors who cannot buy the desired asset in their homeland currency. In this arrangement, risks including funding rates are factored in, and losses/gains made by the asset is mirrored by the derivatives product.
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