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Deribit

Deribit is a premier crypto derivatives exchange that offers futures, options, and perpetual swaps on Bitcoin and Ethereum. The exchange is a top pick for Bitcoin options trading owing to its professional trading dashboard, deep liquidity, and low latency. With its largest trading volumes in the market, the Deribit exchange dominates the Bitcoin options space with its 85 percent market share. 

In this guide, we will look at the pros and cons of the Deribit exchange and also answer questions such as how to open a Deribit account? How to use the Deribit platform?

Connecting your Deribit Address to ZenLedger For Your Crypto Tax Forms 

As one of the most comprehensive cryptocurrency tax software options on the market, we have import instructions for well over 400+ exchanges

Within ZenLedger, on the Import Transactions page and Exchanges tab, select the Exchange you want to import. Then you’ll see a table that outlines the possible methods. We support a direct API code import for many centralized exchanges, while others may require a CSV import. Decentralized exchanges may require a wallet address.

To import your transactions from an exchange, simply navigate to the “Exchanges” tab of the “Imports” page. Select the exchange that you are looking to import, and instructions will be provided for that specific exchange!

Pros of Deribit Exchange:

  • Excellent trading experience: The exchange has ultra-low latency, meaning it takes less time to settle the transaction and execute the trade.  
  • Supports futures, options, and perpetual: Unlike other leading crypto exchanges that offer only futures contracts, Deribit also offers perpetual swaps and options. 
  • Dominates the market: The exchange dominates the Bitcoin options market with its 85 percent market share.

Cons of Deribit Exchange:

  • Supports only Bitcoin deposits: Users can only use Bitcoin to fund their accounts
  • Regulation issues: Deribit is unregulated, so it might face regulatory issues in the future. 
  • Not available to US traders: This exchange does not allow US citizens and residents and it is also not licensed to operate in the US.

Opening an Account on Deribit

Mainly, you can open two kinds of accounts on Deribit: Individual and Corporate 

For an individual account, you have to undergo a standard identity verification process, which takes a jiffy to finish. After that, you gain complete access to the features and products of the trading platform. The corporate account holders have to go through a more exhaustive KYC procedure for the exchange’s KYC/AML compliance rules.  

The account creation process is fairly simple and you need to provide an email address, create a username and password, and disclose your country of residence. After confirming your email, you get access to the trading dashboard. But, trading is only allowed after the identity verification process is complete. 

For the KYC process to finish successfully, you have to provide information such as your full name, home address, proof of address, birth date, country of residence, and a government-issued ID. To confirm your identity, Deribit will require you to upload a photo from your device’s camera to match it with the government-issued ID. When the KYC process finishes, you can start trading. 

The onboarding process for a corporate account on the Deribit exchange is a bit more complex. The user has to declare the controlling individuals and ultimate beneficial owners (UBOs).

How to Use Deribit?

As mentioned earlier, the Deribit exchange offers futures, options, and perpetual swaps on Bitcoin and Ethereum. So, let’s talk about how to create and manage these contracts on the exchange. 

How to Create and Manage Futures Contracts On Deribit?

Futures contracts are fixed at $10 a contract. Users can find the current BTC index in the screen’s top-left corner. Also, they can choose to place a market order, a limit order, a stop market order, or a stop-limit order.

One thing to keep in mind is that a market order is placed when the order book is outbid. Therefore, to minimize the fee, click the post field at the bottom to ensure that the order is not matched immediately. 

If you wish to book profits immediately from your trades or want to set stop losses, there are three “time in force” buttons to choose from: 

  • Good Till Cancel (GTC): If you select this default option, your unfulfilled orders will remain in the order book until canceled. 
  • Fill Or Kill (FOK): This option permits you to either execute a trade immediately and completely or not at all. 
  • Immediate Or Cancel (IOC): If you select this option then you can execute a trade immediately and the unfulfilled portion of the order is canceled. 

How to Create and Manage Perpetual Swap Options Contracts on Deribit?

Perpetual options don’t have an expiration date and therefore, you don’t need to set maturity data for the creation of an option contract. The order process is nearly identical to creating a futures contract. 

How to Create and Manage Options Contracts on Deribit?

Even though the Bitcoin options market is very new, Deribit provides a way for its users to trade in this space. Traders can create new contracts and place Calls and Puts depending on their trading preferences by simply clicking on a square on the Call or Put side. After you choose a call or a put, you’ll be presented with a trade order ticket that you have to fill out. Here’s how you do this:

First, you have to decide if they want to place a market or limit orders. As you fill out the quantity field, the buy and sell margin is calculated automatically at the bottom of the screen. 

  • At the bottom, you’ll see the “Post Only” and “Reduce Only” buttons.
  • If you choose to click on “Post Only,” your order will be adjusted to ‘always enter the order book as a market order.’
  • If you choose to click on “Reduce Only,” your orders will only reduce the current position. 

The Takeaway

Deribit is a premier crypto derivatives exchange that offers futures, options, and perpetual swaps on Bitcoin and Ethereum. It is the most suitable for professional and experienced traders as it offers fast execution, sophistication, and liquidity. However, its lack of regulatory licensing may concern many traders.