This year, Binance has launched a large number of contracts, the number of contracts I did not count, but the probability has surpassed many of the former head of the “derivatives exchange”.
Nowadays, many exchanges are actually focusing on “contracts” and seldom on spot, for the same reason: if the market capitalization is too high, it’s easy for users to take over the spot, but not for contracts, which allow users to go short or long.
So in fact, including not limited to Binance, OKX, Bybit, they are on the number of contracts are much more than the spot, the reason is also here.
And the main thing is, spot you may really need to “reserve spot” for users to use as a demand for cash, while the “contract” will not need, after all, is not “physical delivery”. After all, it is not “physical delivery”.
In itself, if you stand in a very onlooker’s point of view, the exchange itself is to provide “trading” place, so as long as to provide everyone with a trading pair on the line, itself is to earn the commission, so which commission can make money on which, which can increase the “commission income ”, just do it.
So on the “leverage” is not “commission” is also leverage geometry of income?
So in fact, from the “exchange” point of view, this is a normal operation, after all, the figure is the “transaction fee”, unless you insist on feeling “exchange” to eat the loss of customers, then the There are more to say, it can completely rely on your imagination to think, I will not say, there is no need.
The reason for the greater impact of the spot in which
Here is actually more like to explore the question of why the spot on the exchange or on the price will have a greater impact.
When you trade spot, the exchange has to “reserve spot” for users to withdraw and trade, so a lot of liquidity is locked up on the exchange, and many users don’t necessarily buy or sell them, which results in a lot less mc’s actually circulating in the market than there actually are.
And for an exchange to go live with spot means that it will definitely have spot itself, after all, you have to make sure that there is spot on the exchange addresses before you can open a trade, and that those addresses are brightly labeled.
So the impact on the price is much more favorable than the “contract”, and the main thing is, on the spot will make the “liquidity” is not so good, here the “liquidity” refers to make the “liquidity” of many “spot tokens” is not so good. This “liquidity” refers to the fact that many “spot tokens” are locked up in “trading searches”.
Especially when there are a lot of spot tokens, some people through the chain monitoring found that the balance of tokens on an exchange is very small, they will withdraw the coins by forcing the exchange to buy the coins, this kind of thing happened on $REEF, when @gate_io did not have enough coins, so @dotyyyds1234 gave a burst of forcing the short 😂.
The liquidity debate
The main relationship between contracts and spot is actually the “liquidity” debate.
After the contract, the liquidity is very good, and because you do not need to buy “spot” in fact, for the price of the impact is actually “not big”, are through the later “arbitrage” of the trend to become bigger, so many people will take advantage of the “contract” liquidity. So many people will utilize the “contract to arbitrage”, which leads to “liquidity” will be very good.
And a lot of coins you can find, the spot volume is far lower than the contract volume.
Even because of the contract, not only up can make money, down can also make money, resulting in liquidity will be even better.
The same 10000u, in the contract market may be able to become 200000u of capital flow, for the exchange itself is pumping, who can brush the flow of water more who is like.
And spot, especially at the moment spot liquidity is not good, because the recent market, cottage all the way down, for many exchanges on the spot are a big sun line and then all the way down, want to go on the exchange to continue to rise very little, rich and powerful vc coins can’t do it, purely by the concept of meme can do it?
So it gives an option to make money even if it goes down, and that can only be a contract.
So in fact, in the “users to make money” this starting point, on the “contract” in fact no problem.
Final Chapter
In fact, for the hand position more people, if on Binance contract, can give enough opportunity to ship, if the spot, may not necessarily be able to finish.
Because the depth of the spot is not very strong, the volume of transactions is not large, you if you rely solely on the chain of a bar smash or quite difficult, if you directly open the contract, or quite a high probability of a hand can be opened in.
Reminds me of $ARKM, a group of friends hold 10% of the total circulation of the start, by spot smashing can not be smashed out, and then open the full contract, and then step by step smashing, directly completed the shipment.
So in fact there is no conflict between spot and contract, it depends on how you use it, or how you understand the liquidity of this thing.
For most assets, the better the liquidity, the faster the fall, the less liquid, the better the rise.
As an example that would be assets such as NFT, BRC20, and so on.
Think about the commission so much, the exchange always want to get a piece of the pie, that spot is not on, the contract must be on it?
In the end, it’s all business, they can’t control the price, they are short, we can buy directly on the chain to burst empty ah 😂.
The liquidity is good, will be “market makers” grasp.
