Bybit Announces Sweeping Changes with New USDT Contracts

UTC by Julia Sakovich · 4 min read
Bybit Announces Sweeping Changes with New USDT Contracts
Photo: Bybit / Facebook

The rollout of USDT contracts introduces some major flexibility improvements to margin accounts. USDT will be the single currency for all user account balances, profits, and losses.

March has been an extremely challenging month for the crypto markets, but at least some exchanges are keeping calm and carrying on with their roadmaps. Bybit has confirmed it’s rolling out some significantly enhanced functionality to its trading platform with the introduction of USDT contracts. The changes will mean that users have considerably more flexibility in how they manage their margin trading accounts.

Until now, Bybit offered users a range of perpetual contracts with pairs, including BTCUSD, ETHUSD, XRPUSD, and others. The platform doesn’t trade in fiat, meaning that users would have account balances comprising the different underlying cryptocurrencies.

Single Currency for All Trading

The rollout of USDT contracts introduces some major flexibility improvements to margin accounts. USDT will be the single currency for all user account balances, profits, and losses. This means two significant changes. Firstly, users will be able to hedge against losses by taking concurrent long and short positions against the same asset. So, if the market suddenly falls as it did recently, a short position against any given asset could yield sufficient profit to protect against the risk of a long position being liquidated.

This flexibility also allows users to hedge positions with different underlying assets against one another. For example, if a BTCUSDT contract yields a profit, that profit is held in the user’s account in USDT, meaning they could transfer it over to top up margin an ETHUSD position. Bybit even allows for this to be done via an Auto Margin Replenishment feature, meaning that it will be done automatically, so traders don’t risk their positions being liquidated while they’re asleep or otherwise offline.

All these changes are immediately available, along with some further enhancements to the Bybit user interface. For example, traders can now set their Take Profit/Stop Loss directly within the order placement window. Bybit is also lowering its margin requirements to a level below competitors, in a move to lure traders who may be excluded from borrowing margin on other exchanges.

Turbulent Time

Despite the turbulence over the last few weeks, Bybit seems determined to capitalize on any opportunities the unrest has thrown up. BitMEX is perhaps Bybit’s biggest rival, and it has recently been the focus of many headlines in the crypto press. The Seychelles based exchange force-liquidated over $700m worth of assets amid a series of apparent server outages, on the day that Bitcoin’s price crashed around 40%.

The aftermath for BitMEX has been challenging. Skew data shows that ETH traders turned to rival exchanges, including Bybit and FTX, in the days immediately following the market crash. However, over last weekend, Binance and OKEx also overtook BitMEX in trading volume for BTC futures – its flagship product.

Given the questions that traders have had around this unfortunate sequence of events, it seems inevitable that the futures trading giant was going to suffer. On the day of the event itself, several parties questioned whether BitMEX had taken its own servers offline as a form of circuit breaker – ceasing trading to prevent further losses. BitMEX denied this, saying the problems were caused by its cloud service provider.

However, in the aftermath, BitMEX users also had questions regarding why the exchange hadn’t put its sizable insurance fund to use as a way of offsetting user losses. Eventually, the company published a blog post on March 23 to defend its position, stating that the fund is there to protect profitable traders from having their positions auto-deleveraged as a way of preventing the house from bankruptcy.

It remains to be seen if the damage is long-term, or whether BitMEX’s attempts to reassure users will work to restore volumes to its previous levels.

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