We examined the major crypto exchanges that offer derivatives trading and categorized them into two categories: first-generation and next-generation.Neither of them is superior. In fact, they cater to different needs.
First-generation crypto exchanges were the pioneers of the crypto industry. Notable examples are Binance, Huobi, BitMEX, etc. One of the most common characteristics about them is that they started off as a spot exchange (except BitMEX).
Next-generation crypto exchanges are often designed by professional traders and have a better understanding of trading products. A well-known example is FTX. We would also put ACDX into the same category.
A simple comparison:
BitMEX is in fact somewhere between the two categories. The platform design is very trader-centric. They also invented the popular perpetual swap. But they have no new innovation since then. And they still only support Bitcoin as collateral of their contracts. This may be limited by the infrastructure of the exchange, which brings a lot of inconvenience to traders.
Binance and Huobi may suffer from a similar issue. Although they offer derivatives trading, they may find it difficult to further innovate due to legacy issues.
For example, the user wallet is segregated into spot/margin/futures accounts. It would take a lot of time and costs for the exchanges to upgrade to an advanced approach like multi-asset collateral support.
Instead, they offer a workaround which is USDT-margined futures. It does provide certain more degrees of convenience to traders, but it is still very limited in terms of functionality, unlike multi-asset collateral which solves the fundamental problem.
Another issue we found at first-generation exchanges is the lack of transparency. They are not trying to hide any information deliberately. But there is too much information on their platform.
For example, it is not easy to find contract details or specifications at Binance’s trading interface. You’ll have to dig through the FAQ/Academy to find the information you need.
While contract specifications may not be crucial to casual traders, it is an essential step for advanced traders to study the specifications before placing any trades.
First-generation crypto exchanges are more innovative on supplementary than main products. Last year, the IEO fundraising model accelerated the development of a lot of projects.
However, they aren’t too creative on the main product design. Often we see exchanges mimicking each other’s features instead of developing their own products.
FTX, on the other hand, is the epitome of a next-generation crypto exchange. The launch of leveraged tokens, US presidential election, etc. They strive to offer more innovations that truly meet traders’ needs. And at ACDX, we will do the same with our best efforts.
Put it simply, first-generation crypto exchanges are not built for professionals or individuals who look to step up their trading game. As the development of cryptocurrency trading accelerates, we believe it is important for us to include more advanced features in the platform.
Crypto traders are becoming more and more well-educated on trading. There are also more and more traders from the traditional finance industry looking to join the game. We believe offering a truly professional platform is the only way to drive the crypto exchange industry forward.
That’s why at ACDX, we have a mission of focusing on true product innovation and ensuring that all our trading products are easy-to-use, fair, and transparent.