Deribit Review

Big business opportunities are exposed to high risks. There is always an increased volume of volatility directly proportional to asset prices in financial markets, national and international competitions, and accelerated trust in capital markets for long-term funds. Derivatives as a hedging tool help reduce the risk.

What are Derivatives?

A derivative is a financial arrangement or product (asset) whose value is based on another commodity, currency, or security. This security could be equity, a commodity, or a currency. OTC (over-the-counter) derivatives are arranged with minimum regulation while exchange-traded derivatives are traded on a regulated exchange. Forwards, Futures, Options, and Swaps are the most important types of Derivatives.

Crypto trading is an endlessly 24/7 process where the quality of service must be maintained One of the fastest-growing crypto trading platforms in the world, Deribit is professionally dedicated to create a fully liquid marketplace and serve those who believe in the future of cryptocurrencies. Have a look at Deribit Review.

What is Deribit?

Deribit, launched in June 2016 in the Netherlands, is an online cryptocurrency trading platform, specialized in financial derivatives. “Deribit” is extracted from “Derivatives” and “Bitcoin”, i.e. “Deri” from “Derivatives” and “bit” from “Bitcoin”. As an online trading platform, Deribit focuses on futures and options, covers financial derivatives on Bitcoin and Ethereum, and keeps 99% of customers’ funds in cold storage and only 1% in the hot wallet.

On Deribit, you are offered a vast panorama of tradable markets and high levels of leverage. Today, Deribit is a reliable name in cryptocurrency trading because of its high leverage exchange and ‘Perpetual’, a perpetual swap. Unlike traditional futures contracts, Deribit pays every microsecond and keeps the price closer to bitcoin’s market value, avoiding price disturbances.

Looking the future in the eye, Deribit is stuck to its goal to be the avant-garde of the cryptocurrency derivatives market where cryptocurrencies are traded by millions. As an institutional-grade crypto trading platform, Deribit aims to achieve an uninterrupted and smooth trading experience through continuous scaling and advancing system architecture. The key feature of Deribit is its ability to deal innumerable requests multiple transactions per second with ultra-low latency (˂1 ms), the fastest in the business.

Deribit review
Deribit review

How does Deribit Work?

Deribit operates with trading bandwidth limits to protect its traders from unusual and isolated price variations. It is also called circuit breaker protection. These limits prevent traders from mistrading and allow regular trading within the normal range as they do not remain static and move with the price.

Get Started on Deribit

Creating an account is quite easy and simple with Deribit. Just enter your email address, username, password, and country of residence. If your country is not classified in Deribit jurisdiction you cannot get registered on Deribit. You will get a confirmation email. You will have access to your Deribit account by clicking the link in the confirmation email.

Test/Demo Account

Deribit exchange provides a demo platform for its users where you must sign up to test demo features before applying them in production.

Subaccount

To satisfy traders’ needs to separate different strategies, use automated trading software, allocate funds to certain positions, or manage their risk to each portfolio or position, Deribit offers you to create many subaccounts within your Deribit account. The notable thing is that you can access all the subaccounts from the main account but they are considered completely separate. Moreover, losing position on one subaccount does not affect other subaccounts. You can transfer funds instantly and free between any subaccount and the main account.

Subaccount Creation

If you want to benefit from this unique feature of Deribit, press ‘My Account’ from the top-right menu. You will be taken to the account page with several different section tabs. Here you will click ‘Subaccounts’. Click it and it’s done. Your subaccount is created. You can also set up separate login details for separate subaccounts.

Account Protection

One-factor Authentication

One-factor authentication is a risky way to log into a website. Your email could be stolen as the password is the only security factor.

Two-factor Authentication (TFA/2FA)

It is a securer way of signing in as it requires additional information to sign in.

On Deribit 2FA includes:

  • A unique username and password (you know)
  • Smartphone or tablet (you have)

Deribit provides TOTP (Time-based One-Time Passcode) which is valid in 30 seconds.

Deribit Tools

Deribit goes one step ahead to provide its users with up-to-date tools and services for their trading ease.

Deribit Option Discovery Tool

Option Discovery tool is specifically useful for newer options traders. When you enter your market outlook, the Option Discovery Tool gives you some quick suggestions. This tool is designed simple, so instead of trying to comprehend the whole option chain, you can get trade ideas with this tool.

Deribit Option Discovery tool allows you to choose a currency, the direction you think the price (currency) can move, and the expected timeframe of the currency movement. Once you select these options, the Option Discovery tool recommends 3 different options to help you predict your trade.

The options are:

  • Cost
  • Probability
  • Return

The Profit/Loss Chart:

Option Discovery tool also shows you a profit/loss chart. This chart demonstrates profit and loss at expiry.

There is a toggle button under the 3 option suggestions to show advanced suggestions. This button allows selling options recommendations. All the above-mentioned parameters are used to present the advanced suggestions.

Deribit Calculators Tool

This tool offers two types of calculators

  • Trade Calculator
  • Size Calculator

Trade calculator helps you enter trade parameters and observer the calculations such as leverage, stop-loss price, liquidation price, and potential profit. These calculations are also displayed on the chart.

Size calculator allows you to calculate your required balance, BTC position size, or your leverage.

Deribit Metrics Page

Metrics page demonstrates useful charts and stats like:

  • Funding data
  • Futures premiums
  • Open interest data for options
  • Historical volatility
  • Ability to chart any tool against the index

Deribit Position Builder Tool

This powerful tool is built to help you create portfolios and analyze the portfolio profit/loss chart. The portfolios have options and futures positions and show the profit/loss on the chart.

Steps to follow (Default Portfolio)

  • Log in: logging in is not necessary if you just want to construct theoretical positions and portfolios and do not want to share them.
  • Authorizing the application: on your first login, you have to allow the Position Builder to read data from your account. You can cancel this permission at any time.
  • Choose the currency: you can select the currency of your choice i.e. Bitcoin or Ethereum, from the top of the Position Builder tool.
  • Add an option position
  • Add a future position
  • Adapt positions in the positions table

It was all about the default portfolio. You can create different portfolios and save them.

Features

Trading Pages

There are two trading pages on Deribit exchange

  • Bitcoin futures exchange
  • Bitcoin options exchange

You are not trading here real bitcoin as Deribit is a derivative exchange. You are trading Deribit products i.e. options and futures which are based on the bitcoin price.

Matching Engine

‘first come first serve’ is the basic principle of the Deribit matching engine. After passing risk engine checks, the matching engine receives orders in price-time priority. This engine is particularly designed to work on thousands of orders per second and hundreds of orders per second from a single account. You will get a completion report in the order confirmation message if an order is completed instantly. You can also send ‘hidden orders’ and ‘post-only orders’. Deribit matching engine does not grant self-trading and allows limit orders, market orders, and stop-limit orders presently.

Risk Engine

Deribit risk engine comes with high-speed processing power as it can evaluate thousands of orders per second and hundreds of orders per second coming from a single account. When an order is approved by the risk engine it is sent to the matching engine to enter the order book and a message is sent to the client. This whole process takes less than 2 minutes.

BTC Index

Up-to-date prices from Bitstamp, Gemini, Bittrex, Itbit, Coinbase, LMAX Digital, and Kraken are part of Deribit BTC Index. Bitfinex is disabled from the index. To ensure accurate market prices, the exchange rate is measured against an external standard.

Cold Storage

Deribit promises to keep your bitcoins safer as it holds 99% of the funds in cold storage and only 1% are in the hot wallet.

Futures and Options Leverage

  • Leverage up to 100x on futures trading
  • Leverage up to 10x on options trading

Insurance Fund

Deribit insurance fund is set up to cover the losses of bankrupt traders. If you are unable in either position buyer or seller, there is an insurance fund to pay the difference. You will pay a small fee to this fund at settlement.

Deribit insurance
Deribit insurance

Testing Account

Deribit offers two versions for its users.

  • Production version
  • Test version

Deribit helps you better understand its trading system through its demo account. There are no real bitcoins available for the demo account but it operates with all the functionality. The test version on www.test.deribit.com may be a bit different from its production version.

Deribit KYC Requirements

On November 9, 2020, Deribit updated its customers’ requirements. According to the new policy, now you must obtain the verified status before trading if you are a new client.

Required documents

  • Government-issued – ID
  • Proof of residence

You can find more about the verification process and Deribit accepted IDs here. https://www.deribit.com/pages/information/Deribit_KYC_Requirements

Mobile App

Deribit mobile app is available for iOS and Android users. You can download either here.

https://itunes.apple.com/us/app/deribit/id1293674041?l=nl&ls=1&mt=8
https://play.google.com/store/apps/details?id=com.deribit&hl=en

Two-factor Authentication

Deribit is concerned about its users. You can secure your account with Deribit’s two-factor authentication. Email notifications are enabled by default and inform the users of relevant events.

Deribit API

If you want to develop your own bots and trading algorithms, the extensive and functional Deribit API is in your service.

Types of API

  • REST API
  • Websocket API

Affiliate Program

Deribit affiliate program is for those who have a strong following online. You will get a trading commission for the clients you refer. It is beneficial for you and the referrals as well. You can get the affiliate link from the affiliate section of your account.

Products

Deribit Futures

There is no actual sale and purchase of BTC on Deribit as there is no physical delivery of BTC. Deribit Futures are cash-settled. Futures work on the speculation principle. You have to give an idea of the gain or loss of Bitcoin/Ethereum value on the date of contract expiry. When the contract is settled, there is a transfer of gains/losses. Deribit futures are of European-style, which means you cannot offload your futures before expiry.

Deribit indexes
Deribit indexes

Contract Specifications BTC

Underlying Asset/TickerDeribit BTC Index
Contract1 USD per Index Point, with contract size USD 10
Trading Hours24/7
Minimum Tick Size0.50 USD
SettlementEvery day at 8:00 UTC.
Expiration DatesExpirations always take place at 08:00 UTC, on the last Friday of the month. Currently, there are 3 quarterly futures (Expiring the last Friday of March, June, September, and December). A new future with a new expiry date will be added 1 hour before the expiry of the front future.
Contract Size10 USD
Delivery/ExpirationFriday, 08:00 UTC.
Delivery priceTime-weighted average of Deribit BTC index, as measured between 07:30 and 08:00 UTC.
Delivery MethodCash settlement in BTC.
Block TradeMinimum USD 200,000

Contract Specifications ETH

Underlying Asset/TickerDeribit ETH Index
Contract1 USD per Index Point, with contract size USD 1
Trading Hours24/7
Minimum Tick Size0.05 USD
SettlementEvery day at 8:00 UTC
Expiration DatesExpirations always take place at 08:00 UTC, on the last Friday of the month. Currently, there are 3 quarterly futures (Expiring the last Friday of March, June, September, and December). A new future with a new expiry date will be added 1 hour before the expiry of the front future.
Contract Size1 USD
Delivery/ExpirationFriday, 08:00 UTC.
Delivery MethodCash settlement in ETH.
Position LimitThe maximum allowed position is 5,000,000 contracts (USD 5,000,000). Portfolio margin users are excluded from this limit and can build up larger positions. On request, the position limit could be increased based on an account evaluation.
Block TradeMinimum USD 100,000

Examples of Initial Margin

BTC Position sizeMaintenance MarginMargin in BTC
01% + 0 = 1%0
251% + 25/100 * 0.5% = 1.125%0.28125
3501% + 350/100 * 0.5% = 2.75%9.625

Examples of Maintenance Margin

BTC Position sizeMaintenance MarginMargin in BTC
00.525%0
250.525% + 25 * 0.005% = 0.65%0.1625
3500.525% + 350 * 0.005% = 2.275%7.9625

Deribit Options

Deribit Options are determined in BTC or ETH. Like Futures, Deribit Options are also European-style and can be used only at expiry. When the options contract expires there is a cash settlement between the writer and the holder of the contract. The writer of the contract does not transfer any assets but is bound to pay profit to the holder.

Contract Specifications BTC

Underlying Asset/ TickerDeribit BTC Index
SymbolThe symbol of an options contract consists of Underlying asset-Expiry date-Strike price-Option’s type (C – call/ P – put). Example: BTC-30MAR2019-10000-C This is a call option (C), with a strike price of 10,000 USD, expiring on March 30, 2019.  
Trading Hours24/7
Tick Size0.0005 BTC
Strike Price IntervalsIt depends on the BTC price. It can vary between 250 USD and 5,000 USD.
Strike PricesIn-, at- and out-of-the-money strike prices are initially listed. New series are generally added when the underlying asset trades above the highest or below the lowest strike price available.
Premium QuotationWhen denominated in BTC the minimum tick size is 0.0005 BTC. The equivalent in USD is always shown in the trading table, based on the BTC index price.
Expiration DatesEvery Friday, at 08:00 UTC.
Settlement ValueExercise of an options contract will result in a settlement in BTC immediately after the expiry. The exercise-settlement value is calculated using the average of the Deribit BTC index over the last 30 minutes before the expiry. The settlement amount in USD is equal to the difference between the exercise value and the strike price of the option. The exercise value is the 30 min average of the BTC index as calculated before the expiry. The settlement amount in BTC is calculated by dividing this difference by the exercise value.
Minimum Order Size0.1 option contract
Block TradeMinimum of 25 options contracts

Contract Specifications ETH

Underlying Asset/ TickerDeribit ETHIndex
SymbolThe symbol of an options contract consists of Underlying asset-Expiry date-Strike price-Option’s type (C – call/ P – put). Example: ETH-30MAR2019-100-C This is a call option (C), with a strike price of 100 USD, expiring on March 30, 2019.
Trading Hours24/7
Tick Size0.001 ETH
Strike Price IntervalsIt depends on the ETH price. It can vary between 1 USD and 25 USD.
Premium QuotationWhen denominated in ETH, the minimum tick size is 0.001 ETH. The equivalent in USD is always shown in the trading table, based on the ETH index price.
Expiration DatesEvery Friday, at 08:00 UTC.
Settlement ValueExercise of an options contract will result in a settlement in ETH immediately after the expiry. The exercise-settlement value is calculated using the average of the Deribit ETH index over the last 30 minutes before the expiry. The settlement amount in USD is equal to the difference between the exercise value and the strike price of the option. The exercise value is the 30 min average of the ETH-index as calculated before the expiry. The settlement amount in ETH is calculated by dividing this difference by the exercise value.
Minimum Order Size1 option contract
Block TradeMinimum of 500 options contracts

Deribit Perpetual

As a future, Deribit Perpetual is a derivative product and it has no expiry, unlike a future. In this way, it is like CFD trading but Deribit is not a CFD platform. If you want to earn high leverage Perpetual contracts are best for you. The prices of BTC or ETH perpetual contracts rise and fall momently.

Contract Specifications BTC

Underlying Asset/TickerDeribit BTC Index
Contract1 USD per Index Point, with contract size USD 10
Trading Hours24/7
Minimum Tick Size0.50 USD
SettlementSettlements take place every day at 8:00 UTC
Contract Size10 USD
Delivery/ExpirationNo Delivery / Expiration
Position LimitMaximum allowed position is 1,000,000 contracts (USD 10,000,000). Portfolio margin users are excluded from this limit and can build up larger positions. On request, the position limit could be raised based on an account evaluation.

Contract Specifications ETH

Underlying Asset/TickerDeribit ETH Index
Contract1 USD per Index Point, with contract size USD 1
Trading Hours24/7
Minimum Tick Size0.05 USD
SettlementSettlements take place every day at 8:00 UTC
Contract Size1 USD
Delivery/ExpirationNo Delivery / Expiration
Position LimitMaximum allowed position is 10,000,000 contracts (USD 10,000,000). Portfolio margin users are excluded from this limit and can build up larger positions. On request, the position limit could be raised based on an account evaluation.

Examples of Initial Margin:

BTC Position sizeMaintenance MarginMargin in BTC
01% + 0 = 1%0
251% + 25/100 * 0.5% = 1.125%0.28125
3501% + 350/100 * 0.5% = 2.75%9.625

Examples of Maintenance Margin:

BTC Position sizeMaintenance MarginMargin in BTC
00.525%0
250.525% + 25 * 0.005% = 0.65%0.1625
3500.525% + 350 * 0.005% = 2.275%7.9625

Deribit Fees

Deribit fees are lower as compared to a traditional exchange. Deribit has opted for a maker-taker fee model where makers get a discount (rebate) and takers pay a small fee. Moreover, fees deviate per product and are computed as a percentage of the inherent asset(s).

Maker and Taker Orders
MakerA “maker” order is an order that adds liquidity to the order book. A maker order is not executed instantly, rather it is placed in the order book.
TakerA “taker” order is an order that removes liquidity from the order book. A taker order is an order that is executed instantly against other orders upon submission to the exchange.
ContractsMaker FeeTaker Fee
BTC Weekly Futures-0.01% (rebate)0.05%
BTC Futures/Perpetual0.00%0.05%
ETH Futures/Perpetual0.00%0.05%
BTC/ETH Options0.03% of the underlying or 0.0003 BTC/ETH per options contract0.03% of the underlying or 0.0003 BTC/ETH per options contract
 
{Please note: Options fees can never be higher than 12.5% of the options price. For example, if an option is traded at 0.0001 BTC, the taker fee will be 0.0000125 BTC (instead of 0.0003 BTC), therefore 12.5% of 0.0001 BTC.}
Delivery (Settlement at Expiry)
Futures and options deliveries are charged an additional fee. The weekly futures and daily options are exempt from delivery fees.
BTC Weekly Futures0%
Futures0.03%
Daily options0%
Options0.015% – this fee can never be higher than 12.5% of the option’s value.
Liquidation Fees
Liquidations are charged an additional fee. Fees are increased by a percentage of the underlying contract size. The additional fee of the liquidation is automatically added to the insurance fund.
BTC Perpetual & Futures0.5%, (0.5% for maker orders and 0.45% for taker orders will be added to the insurance fund)
ETH Perpetual & Futures0.9%, (0.9% for maker orders and 0.85% for taker orders will be added to the insurance fund)
Options0.19% of the underlying asset or 0.0019 BTC per options contract, 0.16% of the underlying asset, or 0.0016 BTC per contract is added to the insurance fund.

Deposits and fees

Deribit accepts bitcoin deposits only. Deposits are free of cost and are credited after 1

confirmation.

For deposit:

  • Click the ‘Deposit’ button
  • Generate a deposit address to transfer Bitcoin to your Deribit account
  • You will be required 1 confirmation before you start trading

Withdrawals and fees

Deribit offers an instant withdrawal procedure depending on the amount present in the hot wallet, but there can be a delay because of insufficient balance in the wallet storage.

Deribit charges a small percentage on the withdrawals made by the users.

Withdrawal charges are based on the Bitcoin network.

To make a withdrawal the process is much the same:

  • Access the ‘Withdrawal” from ‘My Account’
  • Enter your BTC wallet address and the desired amount
  • You can choose from various priority-level options. These options are linked to the fee you want to pay. Higher priority causes higher withdrawal fees
Deposits and Withdrawals
Bitcoin deposits are credited after 1 confirmation on the network. We do not charge fees for deposits. Withdrawals are processed instantly if the balance in our hot wallet permits so. We keep only a small percentage of coins in hot storage, therefore there is a chance that your withdrawal cannot be processed immediately. If needed, once a day we will replenish the balance of the hot wallet from the cold storage.
Withdrawal FeesDepends on the current state of the Bitcoin network
Deposit FeesFree

Deribit Competitors

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Deribit vs LedgerX

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Deribit vs Crypto Facilities

Deribit vs Bit Trade

Deribit vs Bakkt

Deribit vs Bitonic

9 Total Score
Deribit Review

In short, Deribit is comparatively a fresher in cryptocurrency derivatives exchange. It is certainly not the best pick for amateurs. Still, it needs to be licensed and you are at a risk while using the platform. The platform denies supporting flat payments and accounts are confined to BTC which means users are unprotected against BTC volatility. On the flip side, Deribit is well known for its transparency and it has brought cryptocurrency traders and Bitcoin enthusiasts around its lower fees, reliable products, and funds insurance. If you are a Bitcoin derivative trader and want to play risky and cheap Deribit is a solid choice.

Fees
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PROS
  • Transparency and location information
  • Trading products: Futures, Options, Perpetual
  • Trading fees are competitive
  • No deposit and withdrawal fee
  • High leverage
  • Fund Insurance
  • Fast trading and scalping strategies
  • Demo account
CONS
  • Confusing website design
  • Not beginner supportive
  • Unregulated
  • BTC and ETH exchange platform
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