Bitfinex Integrates Blockstream's Liquid Network for More Efficient Trading

Digital asset exchange Bitfinex has integrated Blockstream’s Liquid Network on its crypto trading platform. The Liquid Network is a cryptoasset settlement network which connects crypto exchanges and major institutions throughout the world, in order to facilitate quick and private bitcoin (BTC) transactions.

Liquid Network Facilitates “Rapid, Confidential, Secure” Transactions

As explained in a blog post, published on May 9, 2019, by Bitfinex’s management, the Liquid Network has been developed to meet the demands and requirements of cryptoasset traders. The settlement network aims to provide “rapid, confidential and secure” payment channels, which may be used to conduct Bitcoin transactions among different parties.

According to Bitfinex’s post, crypto traders will be able to “rapidly circulate Bitcoin and USDT” between different exchanges, in order to profit off of arbitrage and price fluctuations. This may potentially “inter-exchange spreads across major trading pairs,” Bitfinex’s blog explains.

In addition to creating tighter spreads, the integration of Blockstream’s Liquid Network will allow traders to “react to trading opportunities” a lot faster “due to significantly lowered settlement times,” Bitfinex noted. Moreover, Liquid Network integration will hide the “amounts and types” of cryptoassets being exchanged - which will “improve confidentiality” and reduce the chances of “front-running.”

Commenting on the benefits of adding the Liquid Network to Bitfinex’s trading platform, Paolo Ardoino, the Chief Technical Officer at Bitfinex, remarked:

Issuing Bitcoin, stablecoins, and various other digital assets under one blockchain platform makes a lot of sense. It reduces the integration burden for an exchange like ourselves, and traders can manage all their assets from a single wallet application. We’re excited to be active on the Liquid Network, and we’re looking forward to watching it develop.

Liquid Network May Be Used To “Tokenize Fiat Currencies”

As noted on Blockstream’s official website, the Liquid Network serves as a blockchain for cryptoaset “exchanges, brokers, and market makers.” As a settlement network, it includes a “Liquid’s Issued Assets feature,” which allows network participants to “tokenize fiat currencies, securities,” and digital assets.

According to Blockstream’s developers, digital assets on the Liquid Network are “traded within the same blockchain environment,” which is similar to the widely-used Bitcoin Core codebase. This helps to reduce the time required to perform integrations and it’s arguably a better option than using “multiple blockchains, clients, and APIs,” Blockstream’s development team states

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.