Introducing the EMX GOLD Perpetual

Posted by EMX Team on Jul 24, 2019 9:07:49 AM

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Bitcoin has long been referred to as the "Digital Gold" — and the two have always been compared to each other. Bitcoin is the newer, flashier asset, with all the properties of a currency. Gold, on the other hand, is tried and true, and much more liquid due to the immense size of its market. According to the World Gold Council, the total value of all gold ever mined is about $7.8 trillion. Compare against the size of the crypto market — $161 billion. Its demand is always high, and the supply is always disproportionately low. 

Both have loyal followings — and while Bitcoin and its inherent volatility can be very appealing to speculators, gold is equally useful as a trading asset. It's a smart addition to any portfolio due to its historical reliability and real-world intrinsic value.

If you look back in history, you will discover that stocks and bonds have low or negative correlations with gold, especially during periods of economic recession. This makes gold an invaluable hedge against stock volatility. Even if its value does not rise, an asset that remains static while others decline is still very useful as a hedge. And of course, as more people flee stocks and invest in gold, price rises accordingly.

The debate over Bitcoin vs. gold is one that may take decades to resolve, but one thing's for sure — traders would be smart to be exposed to both. And now, you can trade both on EMX.

We're pleased to announce that with the introduction of the gold perpetual contract on EMX, you can trade both gold and its digital equivalent, Bitcoin, all on one exchange. That means you can long or short the price of gold on EMX, without ever having to convert to fiat. All profits are earned in Bitcoin.

We're really proud to introduce this contract because of the value it brings to hedgers, and we hope to introduce many more innovative products in the future.

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What is a Perpetual Contract?

A perpetual swap contract is a futures contract with no expiry or settlement. Typically, futures contracts expire and need to go to settlement. At expiration, for physically settled futures, the underlying commodity is delivered, and for cash settled futures, funds are credited or debited from the trader’s account. Perpetual swaps do not expire and therefore traders can perpetually keep their position open without worrying about settlement of the contract.

The Gold Perpetual Swap Contract on EMX uses an underlying index called the EMX GOLD Index, which tracks physical gold prices from multiple industry sources. The GOLD-PERP contract offers up to 25X leverage, with a taker fee of 0.075% and maker rebate of 0.03%. For more about the EMX GOLD perpetual contract and its specs, click here.

Funding Rates

In order to keep the contract in line with the actual value of the underlying asset, a “funding rate” is used in conjunction with the spot price of the asset, which is the market value of the underlying asset. EMX uses several different spot sources to calculate the relevant spot price for their contracts.

The funding rate is based off the spot price, and the way it works is by forcing one side of the market to pay the other side if the price of the contract strays from the spot price. If the contract is worth more than the spot price, long positions (bulls) will pay short positions (bears) at a rate determined by the amount of variance between the spot price and the current price of the futures contract. If the futures contract is valued at less than the spot price, bears pay bulls. This is done to keep the marketplace as equal as possible.

On EMX, funding is paid every 8 hours to only those holding positions at 04:00, 12:00, 20:00 UTC. Funding is paid on the USD notional value (calculated using Mark Price) of the position.

For more about the EMX perpetuals and their specifications, click here.

Conclusion

Trading a perpetual can be extremely beneficial for a trader, as it offers convenience and flexibility due to the lack of an expiry.

We also plan to add perpetual swaps for other traditional commodities and equity indices in the near future, so stay tuned for those.

To start trading the EMX perpetual, click here. For questions, contact us at support@emx.com or join our conversations on Twitter or Telegram.

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The EMX Tokens or any rights to acquire EMX Tokens are only available outside of the United States and to non-U.S. Persons, and are not available to persons with whom, or in jurisdictions where, transactions involving digital assets are prohibited or in many manner restricted by applicable laws or regulations.

 

Topics: Product