Crypto derivatives exchange FTX will be issuing futures linked to the hashrate of the world’s leading cryptocurrency, bitcoin (BTC).
FTX Now Has A Derivatives Contract Offering Investors Exposure To BTC’s Hashrate
Hong Kong-based exchange FTX has unveiled a new product for bitcoin enthusiasts to leverage the coin’s booming network: hashrate futures calculated using the average difficulty of mining.
According to a blog post on Friday (May 15), FTX is set to roll out hashrate futures that are based on the average BTC mining difficulty from the beginning of a quarter and expire at the end of the quarter. The exchange explains that the futures product is based on the mining difficulty as it is virtually impossible to accurately measure the hashrate.
“It’s impossible to exactly measure hashrate–the best you can do is approximate it from block times and difficulty.”
The post further reads:
“However, given that difficulty adjustments attempt to maintain 10m block times, over long periods of time the average hashrate will be proportional to the average difficulty. So that means that, roughly speaking, difficulty futures should behave similarly to hashrate futures.“
The expiration value for the hashrate futures will be determined by first calculating the number of blocks mined during a particular quarter and then getting the difficulty for each block. The difficulties should then be averaged together before dividing the result by 1 trillion.
Both bitcoin hashrate and mining difficulty were posting record highs days before the halving. However, the hashrate has been plunging ever since the rewards for miners were slashed on May 11.
FTX’s first hashrate futures contract for Q3 2020 will expire to the average difficulty of mining a bitcoin for July-September 2020.
Notably, FTX first revealed intentions to launch bitcoin hashrate futures back in August last year. This means that the team spent at least nine months building the newly-launched futures product.
Growing Bitcoin Futures Products
Worth mentioning that FTX has been introducing new features throughout this year. Just last month, the exchange unveiled Oil Futures that expire to the spot price of West Texas crude oil, plus $100.
Also, with its new offering, FTX joins the likes of other crypto exchanges like Bitfinex that are scaling their derivatives offerings.
Earlier this month, Seychelles-based Bitfinex exchange announced the launch of first-of-its-kind BTCDOM perpetual swap that allows traders to bet on bitcoin’s dominance rate. BTC dominance is an indicator of bitcoin’s share versus the share of alternative cryptocurrencies. The contract has no expiry date and pays out in Tether (USDT).
