Paradigm, the zero-fee, institutional liquidity network for crypto derivatives traders, announced the launch of spreads trading in partnership with FTX, one of the world’s leading regulated cryptocurrency exchanges.
FTX is the third exchange to partner with Paradigm on futures spreads and this partnership marks a major step towards the development of a liquid interest rate curve in crypto. Paradigm users will be able to trade the spread between spot, perpetuals and futures instruments on BTC, ETH, SOL, AVAX, APE, DOGE, LINK and LTC, all with guaranteed atomic execution and clearing of both legs on FTX.
Efficient spreads trading will provide a multitude of benefits to our joint customers, including the ability to:
Generate Yield via “Cash and Carry” Trades and Funding Rate Farming
Yield-seeking investors can now effortlessly execute “cash and carry” trades leveraging FTX’s spot and futures instruments across multiple currencies and futures expirations. In addition, traders can farm funding rates on perpetuals with a single click. These trades can now be placed via Paradigm with guaranteed atomic execution of both legs without any exposure to delta risk.
Roll Expiring Futures Hedges More Efficiently
Many traders and investors use futures to hedge or replicate crypto exposures. Futures spreads enable market participants to buy one futures contract and simultaneously sell another futures contract with a single trade. This provides an additional set of tools to traders and investors looking to lock in fixed hedging costs using futures (versus the floating cost of perpetual funding rates) and roll them when nearing expiration. Rolling expiring futures positions has never been easier or more cost-efficient!
Furthermore, spreads trading on Paradigm and FTX has additional benefits for market participants, namely lower fees and deeper, tighter liquidity.
50% Less Fees When Trading Spreads on Paradigm
Spreads executed on Paradigm and cleared on FTX will be charged 50% less fees compared to executing two individual outright trades. The cost of rolling positions or taking views on the yield curve has never been cheaper for both Paradigm and FTX clients.
Delta Neutral Spreads Mean Tighter, Deeper Markets
Spreads trading on Paradigm has guaranteed atomic execution of both legs, so is structurally less risky when compared to executing individual legs via a traditional exchange order book. This lower risk profile enables market makers to quote much tighter prices and in significantly larger sizes.
“Paradigm is a leading network providing institutional liquidity for crypto derivatives, and we’re excited to expand on our relationship with a formal partnership to collaborate on product developments for both of our users. This structured spread trading product is the first that will enable crypto investors to utilize cash and carry trades through FTX and Paradigm”, said Sam Bankman-Fried, CEO, FTX.
“FTX and Paradigm have a longstanding relationship, and I am ecstatic that we are able to bring our two companies together to improve the crypto ecosystem. With basis trading becoming a tradeable asset class on FTX, we should see significant interest from both crypto-natives trading yield as well as new investors in crypto who can now trade cash and carry as a single asset. And looking ahead, combining the client base and product expertise of both companies will undoubtedly lead to more synergies and new product offerings further down the road”, explained Anand Gomes, CEO, Paradigm.