Digitex Ltd, a world-first commission-free non-custodial futures exchange with its own native DGTX token unveils a liquidation model that benefits active traders and marks a first for the cryptocurrency industry.
All futures exchanges must have a mechanism in place for liquidating positions and guaranteeing that the exchange can meet its liabilities in the case of high leverage traders getting caught out in volatile markets.
The Digitex Liquidation Engine will intervene with traders who have insufficient account balances and force close their positions. Since this is a risk vector for the exchange, in such a situation, the trader must pay a penalty which is then allocated to the Digitex Insurance Fund.
Through a series of proposals put forward to the Digitex community, the company plans to re-allocate these tokens to its automated market makers which are programmed to lose.
CEO Adam Todd explained, “We would start off with a large insurance fund of 100 million DGTX (which is 10% of the DGTX supply that was originally allocated to the market makers). Then, as the fund goes above that and the Liquidation Engine starts registering an excess of tokens, instead of burning them or letting them build up over time, we give them to the market makers to lose.”
Having market makers losing money will allow the exchange to create liquid markets through highly active market making since they can place more trades than if they were trying to break even or make a profit.
The Digitex CEO went on to say, “These types of active markets will attract traders. The fact that the market makers are losing money as well is a bonus. It gives traders the chance to win the tokens that the market makers are losing.”
He also noted that unlike BitMEX, whose Insurance Fund continually grows with the funds sitting idle, the Digitex Insurance Fund would always stay at 100 million DGTX. If it were to drop below 100 million, the exchange would simply make adjustments to the market maker losses to ensure the fund always maintains this level.
“We are giving the tokens back to the active short term scalping traders that never come into contact with the Liquidation Engine. They can trade full time, and in a way that will target what the market makers are doing, short term scalping style, no fees to worry about. It’s innovative, it’s new, and it’s another reason to pull traders to Digitex and not other exchanges.”
About Digitex Ltd
Digitex Ltd is a zero-fee cryptocurrency exchange with its native DGTX token. The exchange’s flagship product is futures, however, it will be launching spot market trading as well as non-custodial accounts. Registered in the Republic of Seychelles, the company was founded by a former futures trader and betting-exchange trader and has developed a revolutionary token issuance revenue model for sustainably operating an exchange without charging commissions.
For further information about Digitex Ltd, please visit www.digitexfutures.com.