Digitex — Commission Free, Trustless Futures Exchange
Introduction
While the crypto market is relatively nascent in comparison to the stock market or any other real-world financial institution, it has indeed come of age. It is only a decade since the crypto concept was introduced to the world in the form of Bitcoin in 2008, and yet we see cryptos solving many of the real world financial and operational problems. So good has been the adoption that within a decade there were 1500 crypto-coins and a little over 200 crypto-exchanges operating across the world. The best statement of acceptance was allowing the trading of Bitcoin with USD thereby, accepting the cryptocurrency into real-world operations. However, there is some more ground to be made.
What am I speaking about? Well, the “futures” as a concept is yet to grace the crypto world amply. What I mean is that while most of the instruments of the financial world have made their way into the crypto world, futures, as a concept, is yet to make an impact. Or has it?
It has indeed! Digitex brings the futures concept to the crypto world and in effect, plugging a gaping hole in the working of the crypto instruments. Digitex allows the trading of BTC/USD, ETH/USD and LTC/USD. There is more to Digitex than meets the eye and in this article let’s look at that in-depth. But before we get to Digitex, let’s understand the need for “futures” trading itself.
Futures came into arrest volatility of the price of a commodity or product and in doing so ensure a stable rate for users of those commodities or products. For example, with crude oil prices surging from a low of USD 40 per barrel to the current USD 80 per barrel there would be an impact on many industries. Now, a user of such commodity (crude, in this case) expecting a price increase could get into a futures agreement with the oil major. In doing so, the user would de-risk from the price hike. Airline Industry is the best example of such a user. If an airline had entered a futures agreement with an oil major at USD 40 per barrel (say), today when oil is trading at USD 80, it would still get oil at USD 40. This, therefore, ensures that the airline is able to cater to its passengers at the same rate without needing a price hike in tickets. In short, the futures agreement safeguarded the airlines’ future operation and allowed them to get the oil at the same price of USD 40 per barrel even though the price doubled. This is the advantage of Futures agreement.
Digitex brings this instrument to the crypto world, and like I mentioned before, plugs a huge gap in the functioning of the crypto world. So, let’s get to know Digitex.
Digitex, let’s get to know them!
While we mentioned that Digitex brings the Futures Exchange to the crypto world what we didn’t mention is that it brings to users an exchange which charges zero trading fees (or commission). Now, zero exchange fee is unparalleled even in the real world exchanges. So, not only is the futures exchange coming to the crypto world but also it is free of commission charges.
In their whitepaper, Digitex is described as follow:
Digitex presents a commission-free futures exchange that covers operational costs by minting its own native currency, the DGTX token, instead of charging transaction fees on trades.
Increasing demand for DGTX tokens from traders who are attracted to commission-free futures markets will outweigh the inflationary cost of minting a small number of new tokens each year.
There are many more advantages which include the fact that the exchange does not hold the customers’ account details. They are held in a decentralized manner on the Ethereum blockchain through a smart contract. I am sure the details are exciting but let’s look at Digitex a bit more closely.
1. Commission Free Futures Trading
This part we already discussed and the native token of Digitex is DGTX which is an ERC223 compatible token on Ethereum Blockchain. All of the traders’ profits, losses, margin requirements, and account balance will be denominated in DGTX tokens. In other words, the operational cost of the exchange can be covered by creating new token instead of charging transaction fees.
In effect, the demand for DGTX tokens will allow its mining for running operations, which in turn allows traders to trade in a commission-free manner, which again leads to mining some amount of tokens instead of charging traders as also meeting future demand and the cycle repeats. Such a cycle in the real world is termed as a “Virtuous Cycle”.
2. Hybrid Futures Exchange
The world has seen pitfalls of decentralized only or centralized only exchanges. Digitex learns from that and therefore has a Hybrid Model. But before that let’s look at the challenges of centralized or decentralized only exchanges.
These are points which have been looked at by the Digitex Team to arrive at a Hybrid Model. The way Digitex puts it as follows:
Digitex is the intelligent combination of the speed and reliability of centralized servers with the trustless security of decentralized smart contracts.
So, the designing ensures that the Central Matching Engine and Order Book is on central servers and the exchange interacts with smart contracts to update user details. This makes the exchange faster, lean and operating at real-time. Only when a user wants to withdraw balance will the smart contract check with central servers and update the user’s balance and other details, on-chain. The GAS cost is, therefore, reduced as the on-chain activity is only at the time of withdrawal.
The above-said point is the only potential for a hack which is undone by the smart contract computing the person’s trade from scratch for the matched trades and then updating details. A hacker would be unable to send incorrect details which he could do only by matching all trades done earlier. An unlikely and impossible task.
3. Decentralized Governance
The Governance is also decentralized by Digitex on the blockchain. The assumption is that when authority is given to users to democratically vote for the token issuance, self-interest will come into play leading to an action which is beneficial to the platform.
So, members will want only enough tokens to be issued to manage demand and operations while ensuring that the value of tokens held by them does not depreciate due to such issuance. A potential win-win.
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Take a look at the following video about Digitex by CEO Adam Todd:
By the way, DGTX tokens are already trading on Mercatox and Exrates!
The concept is great but do users really gain in trades from the no-fee structure?
This can be only understood by an example. Take a look at the following example explaining the trade, cost at exchanges and final profit or loss.
As we can see, zero fees do have an impact on the final profit at the hands of the trader. Shown below is also the features of Digitex.
How does Digitex appear moving from 2019 through 2021?
To put things in perspective, Digitex is on FIRE!
After the initial token creation in 2018, the next time that tokens will be created is in 2021. Digitex in their whitepaper talk about the price increase that the Digitex token can expect by 2021, depending on different scenarios of buyers participating in the buying. Take a look, at the same below.
This price hike chart from the whitepaper, at best, can be considered as conservative!!
As of 19th October 2018, the price of DGTX is USD 0.126 and we are still in 2018. The token literally breaks all possible growth records almost every day. There are some more enviable details like their ICO got sold in 17 minutes, they are employing Plasma technology to improve on the Ethereum’s scaling issues, and, of course, the runaway price are just few indicators of the investors’ mood.
In fact, those who bought during the ICO have already experienced 100% to 1000% profit and the big launch is still by the end of 2018. Can we imagine where we are going to see the coin? Of course, these are all my personal opinion and readers are advised to do their own research before planning to invest.
Also, take a look at the following comparison of tokens over a one week period by @cryptokita on Digitex’s Telegram channel.
And here is the latest DGTX Token performance chart from coinmarket.cap as of 19th October 2018.
If all these developments are something to go by then we can expect a rock-solid growth from 2019 through 2021.
Summary
From the crypto world perspective, Digitex is an innovative solution. In fact, the aspect of zero commission is an alien concept even to the real-world and therefore, it can be safely said that the Digitex Team has brought forth a solution which is quite unique. The initial euphoria which began with people coming to know about the Futures crypto-exchange has culminated into the ICO being sold out in 17 minutes, followed by a price hike beyond anyone’s expectation. It is only going to get better from here!
What’s more the model itself promotes liquidity by using a native token allowing users to trade even in small price movement without paying commissions. The initial apprehension with futures trading in cryptos is effectively undone by Digitex. It truly opens up a commission-free, trustless and highly liquid futures market for trading!
Those interested in DGTX
For those interested in Digitex, I would recommend that you do your own research about Digitex from any of the following informative resources:
- Digitex Website
- Digitex WhitePaper
- Digitex Blog
- Digitex Telegram
- Digitex Reddit
- Digitex Facebook
- Digitex Twitter
- Digitex YouTube
If it still interests readers, more about the Early Access can be found here. Hope readers had fun reading and knowing about Digitex!
