Interest in futures trading on Kraken is surging. In the past few months, trading volumes on Kraken Futures have grown several times to mark a record $350 million 24h volume in late June.
Our traders cite many reasons for why they prefer Kraken Futures to other platforms. In addition to offering up to 50x leverage and spot trading on a single platform, Kraken Futures offers several unique benefits that are driving massive growth in liquidity.
In this blog post, we walk you through the six main reasons for why you should start trading on Kraken Futures today:
- Revenue Sharing: 30% of fees paid back to traders
- Position Assignment System: Receive unfilled liquidations at favourable prices
- Liquidation Methodology: Our approach saves clients millions
- High Performance: A low latency, high throughput platform
- Linked Spot Market: Seamlessly transfer collateral between futures and spot
- Robust Indices: Enabling fair and transparent trading
1. Revenue Sharing: 30% of fees paid back to traders
Efficient trading can only occur when multiple counterparties are willing to take the other side of your trade. Our Revenue Share Program (RSP), launched in Feb 2019, rewards active traders and those who provide liquidity to Kraken Futures.
With more volume, liquidity, and tighter spreads, traders can get in and out of trades more easily. In true Kraken style, the RSP is open to everyone and provides the same terms to all participants.
The RSP is entirely transparent: we pay 30% of our revenue back to traders, with a minimum payout of $25,000 per week. At the end of every week, each trader’s contribution to the liquidity pool is calculated and their share of the revenue is paid out accordingly.
How much are our traders earning for providing liquidity to our books? Well, in certain weeks we have gone well above the minimum payout and have paid out up to $200,000. Some of our most active traders receive more than $10,000 every week on a regular basis!
By trading on Kraken Futures, you automatically participate in the RSP. You can see a real time estimate of your end-of-week payout by navigating to “Revenue Share” on your trading interface. For detailed information on how the RSP works and how your payout is calculated, please read our RSP support article.
We can’t wait to see how the program continues to grow. Check back for more updates on the Kraken Futures RSP in the future!
2. Position Assignment System: Receive unfilled liquidations at favourable prices
Large price moves in bitcoin or other cryptocurrencies may result in the liquidation of futures positions that fall below minimum margin requirements. Kraken Futures manages liquidations by sending an immediate-or-cancel order to the order book. In most cases, the entire position can be liquidated successfully this way. In the case of particularly large liquidations, however, the liquidity in the order book may be insufficient to liquidate the entire position.
This is where the Position Assignment System (PAS) of Kraken Futures kicks in. The PAS assigns the part of the position that could not be liquidated to another trader on the Kraken Futures platform who signed up to receive such assignments. Traders like to receive assignments because they get positions at a favorable price that effectively transfer all the remaining margin of the party getting liquidated to the trader receiving the assignment. This provides a strong incentive for traders to join the PAS.
Every user can be a participant in the PAS by submitting their assignment preferences through the interface. For each contract type you can choose the maximum assignment size you would like to receive. For example, if an assignment of 200,000 contracts occurs, you may specify that you would like to receive up to 50,000 contracts of this assignment but no more.
Once you receive an assignment, you will get an email notification similar to the one below. This notification will show your immediate profit resulting from the favorable price at which you received the assignment.
For instance, in the below example a trader received an assignment of 104,132 ETH:USD contracts at a price of just $489.1 per ETH. The fair price, as given by the mark price, was $493.2, resulting in an immediate book profit of 1.77 ETH.
3. Liquidation Methodology: Our approach saves clients millions
In futures trading, your position will be liquidated if your collateral falls below your maintenance margin requirement. If this happens, most crypto futures exchanges will take all your remaining maintenance margin, making liquidations very costly to you.
Kraken Futures takes a different approach. Once your collateral falls below your maintenance margin, we will liquidate your position but credit your account with all the proceeds from this liquidation. Over the last 4 months, our liquidation approach saved our traders a whopping $2,500,000 in collateral that would have been lost if they had trading on our main competitors. See full details of our liquidation process here.
4. High Performance: A low latency, high throughput platform
When trading volatile assets with high leverage, the performance of your exchange can make or break your profitability. Ever been unable to get out of a position because of an “Order Submission Error”? When the trading engine falters, it is traders who pay the price. That’s why we built our engine to perform all crucial tasks at lightning speed:
- Margin, mark prices and PnL recalculate several times per second
- Indices calculate once per second based on the CME CF Methodology
- Effective leverage and return on equity (ROE) appear on open positions tab
- Close position at market price in two clicks
- Detailed statistics upon any liquidation/assignment sent via email
- Public trades history identifies liquidations (“L”) and Assignments (“A”)
Our engine’s performance eclipses that of our competitors’ for all important metrics. For instance, we calculate mark prices several times per second as opposed to other platforms that perform this task once every 2 or 3 seconds. This may not sound like a big difference, but if the price moves fast on a levered position, even a second can have a huge impact.
As another example, our engine can handle up to 15,000 orders every second. This allows us to give generous API limits to our users, and you will never see the dreaded “Order Submission Error” message you may have seen on other exchanges.
Finally, to further reduce latency, we enable you to whitelist your IPs, resulting in extremely low latency for any API endpoint. Our latency statistics are not higher than 1-2 milliseconds on average.
5. Linked Spot Market: Seamlessly transfer collateral between futures and spot
When arbitraging between different platforms, a trader typically needs to leave funds on more than one platform to capture price inefficiencies when they arise. Kraken is the first cryptocurrency exchange to offer a spot market alongside a futures market. We allow you to seamlessly transfer your funds between the spot and the futures market to take advantage of crypto arbitrage opportunities. This results in a more efficient use of your trading capital.
Also, Kraken Futures makes use of the powerful and secure crypto transfer infrastructure of the Kraken spot market. This means that you can withdraw your funds from Kraken Futures at any time within minutes if you need them to support positions on another platform. Some of our competitors process transfers only once per day which can be painful if you need your money quickly.
6. Robust Indices: Enabling fair and transparent trading
Another key advantage of trading on Kraken Futures are our robust indices. Indices are used to settle futures positions on the final settlement day, as well as marking open positions to market in real time. You may think that any index does the trick equally efficiently, but a poorly constructed index can enable market manipulation or behave unexpectedly in thin markets or not update fast enough in times of high volatility.
For example, if too few exchanges contribute to the index or the methodology does not correct for outliers, the index might exhibit intra day jumps, resulting in undesired position liquidations.
The indices used by Kraken Futures source data from trusted crypto exchanges only, are overseen by an independent committee and update every second. In fact, our bitcoin index (BRR) enjoys such a solid reputation that it is used by CME Group, one of the longest standing and most trusted futures exchanges in the world, for settling their bitcoin futures. To find out more details on how our indices are calculated, click here.