Nexo’s futures markets aren’t targeted at high-leverage traders of existing perps exchanges. Rather, they’re designed for Nexo’s existing customer base, as well as users of other exchanges who’ve yet to experiment with leveraged products.
Crypto exchange Nexo has expanded its core products with the introduction of futures trading. The exchange now allows its users to trade more than 70 assets with leverage. Nexo’s futures markets have been designed for users who may have no previous experience of leveraged trading. For this reason, this new product comes with multiple consumer safeguards built in.
With a focus on user-friendliness and mobile-friendliness, Nexo has positioned itself as the ideal exchange for millennials and Gen Z. It attracts the sort of users who are digital natives and comfortable with holding their net worth in different markets from stocks to crypto. The introduction of futures trading is a big move for Nexo, which has elected to introduce its leveraged products carefully and responsibly.
Nexo Looks to the Future
Leverage allows traders to place trades whose value is greater than the assets they have on account. The upside if their intuition is correct is that they can make significant profit. The downside, should the trade go against them, is their position can be liquidated. In designing its futures products, Nexo has given careful consideration to how best to balance freedom of choice with consumer protection.
The exchange has elected to cap its maximum leverage at 50x. This is sufficient to satisfy those with an appetite for risk, while falling short of the 100-150x offered by some of the more reckless exchanges. The perpetual contracts Nexo is introducing have no expiry date and are denominated in USDT. In order to access Nexo’s futures markets, there’s one other caveat: users must complete an interactive quiz that determines their knowledge of the products they wish to trade.
The Case for Trading Crypto Futures
Futures trading, once the preserve of pros and Wall Street veterans, has become normalized within the cryptocurrency industry. Greater availability, better interfaces, and increased awareness of the workings of leveraged products has helped make them seem less exotic. Nexo’s decision to roll out futures markets will help to further demystify them.
Though the basic concept underpinning futures markets is broadly understood, novice traders may lack comprehension of the versatility that futures provide. For example, futures are prized among seasoned traders for their suitability for supporting hedging strategies. A trader may purchase an asset on the spot market while shorting a correlated asset (e.g. BTC and ETH respectively). This gives them exposure to the spot asset coupled with a degree of protection should its price fall. They may also generate profit from the funding rate for perps, depending on whether the market is net long or short.
Nexo’s futures markets aren’t targeted at high-leverage traders of existing perps exchanges. Rather, they’re designed for Nexo’s existing customer base, as well as users of other exchanges who’ve yet to experiment with leveraged products. Nexo is confident its exchange can form a trustworthy platform for gaining exposure to futures which will provide a fundamental grounding in how markets work. In the process, users will be able to demonstrate their knowledge of futures products and gain confidence in responsibly entering and exiting leveraged positions.