Boxmining v2

Author: Angela Wang

  • Binance futures trading: How to guide

    Binance futures trading: How to guide

    Crypto futures trading allows traders to have exposure to cryptocurrencies without the need to own the underlying crypto asset. Binance exchange offers futures trading to users through Binance Futures, which has 279 trading pairs. This article provides a guide on how to trade on Binance Futures.

    Get 20% off fees when signing up for Binance with the following link!

    What is Binance?

    Binance was launched in 2017 and is arguably the world’s most popular centralized cryptocurrency exchange. It has over 2 billion average daily volume and 72 million site visits daily. The Binance ecosystem includes Binance exchange, BNB Chain, Trust Wallet, Binance card, and other services.

    What is crypto futures trading?

    Crypto futures contracts create an obligation for parties to exchange the asset at a predetermined price and date. On most cryptocurrency exchanges, however, the parties can settle for the cash equivalent. But, the trade must take place. 

    Traders use futures trading to profit from market movements by going either “long” or “short” on a futures contract. Going “long” means that a trader purchases a futures contract expecting it would increase in value in the future. And if the value of the cryptocurrency does increase, the long trader would profit. On the other hand, a trader going “short” means they are hoping prices will drop.

    Learn more about crypto futures trading with our guide- Crypto Futures Trading: What is it?

    What is Binance Futures?

    Binance Futures allows users to trade crypto futures contracts on Binance. It has 279 trading pairs and has the second-highest 24-hour trading volume amongst all crypto derivative exchanges. Binance Futures offers USDⓈ-M Futures and COIN-M Futures. These are perpetual or quarterly contracts settled in USDT/BUSD, or cryptocurrency respectively.

    Binance Futures also has interesting features such as a leaderboard, showing traders with the highest ROI or PNL. Other traders can follow these top traders and see what positions they are holding, as well as copy their trades.

    For traders who are more competitive, Binance Futures has a battle mode where you can guess whether prices will rise or fall within the next 1 or 5 minutes. Then, you will be matched with another player who predicted in the opposite direction. Players will still gain points regardless of whether they win or lose. Points can then be used to earn further rewards.

    Binance Futures trading fees

    Binance uses a maker-taker fee structure. Maker trades are orders that go on the order book partially or fully e.g. limit orders. Taker trades are executed immediately before entering the order book. Market orders are a type of taker trade. The fee charged depends on which type of trade. As maker trades add volume to the order books and thus “make” the market, it is in an exchange’s interest to have more of these orders. Therefore, maker fees are usually lower than taker fees.

    Binance also has a 9-tier VIP structure which offers progressively lower fees for users with high trade volume and substantial BNB holdings. Users who use BUSD, Binance’s USD stablecoin, or BNB for settling fees are also rewarded with lower trading fees.

    The lowest tier, i.e. “Regular users” are traders with a past 30-day trading volume of less than 15 million BUSD or hold 0 BNB. For regular users, the maker/taker fee for USDⓈ-M futures trading is 0.02%/0.04%, and for COIN-M futures, the maker/taker fee is 0.01%/0.05%.

    Highest tier users i.e. VIP 9, users must have a past 30-day trading volume of over 25 billion BUSD and hold over 5,500 BNB. VIP 9 users enjoy a maker/taker fee of 0.00%/0.017% for USDⓈ-M futures trading, and for COIN-M futures, the maker/taker fee is -0.009%/0.024%.

    Binance futures trading fees
    Binance futures trading fees (Source: Binance)

    Extra discount! Enjoy 20% off fees when signing up for Binance with the following link!

    Pros and advantages of trading on Binance Futures

    Binance is one of the leading cryptocurrency exchanges. According to CoinGecko, Binance has the second-highest trading volume with over US$35 million being traded in 24 hours. Here are some of the pros and advantages of crypto trading on Binance Futures:

    • Many trading pairs. Binance Futures have 279 trading pairs, giving traders a wide range of options from popular cryptocurrencies such as Bitcoin ($BTC), to meme coins such as Shiba Inu ($SHIB).
    • Low trading fees and generous fee structure. Maker/taker fees start at 0.02%/0.04%. However, Binance Coin ($BNB) and BUSD holders, and high-volume traders are entitled to discounts, bringing trading fees to as low as 0.0100%/0.0207%.
    • Low minimum trade amount. Traders can start with a minimum trade amount of 0.001 BTC on the BTCUSDT Perpetual market.
    • Binance offers up to 100x leverage. This allows more experienced traders to potentially maximise their gains.
    • Binance has trading tools such as Grid Trading, TWAP, Advanced TP/SL, and Multi-Symbols Trading Page for maximum trading efficiency.

    Cons and disadvantages of trading on Binance Futures

    • Futures trading is not available in the US. So US traders will need to use other exchanges for futures trading.
    • Users must pass the verification process in order to begin using Binance Futures.

    Is Binance Futures trading safe?

    Binance has a US$300 million Insurance Fund to protect traders. The Fund acts as a safety net to protect bankrupt traders from adverse losses whilst ensuring that winning traders are paid in full. The purpose of Binance’s insurance fund is to limit counterparty liquidations. Counterparty liquidations are where the positions of opposing traders are automatically liquidated in order to cover a bankrupt trader’s position. The insurance fund takes the remaining positions when a trader in liquidation has less than 0 USDT after all their positions are liquidated. These remaining positions would be offloaded onto the market gradually and liquidation fees will be collected from users that do not result in bankruptcy.

    Binance also has a Cooling-Off Period function to help traders prevent compulsive trading behaviours. It works by preventing traders from trading futures-related products on the exchange for a predetermined period.

    How to start trading on Binance Futures

    Trading on Binance Futures only requires 5 simple steps.

    1. Sign up for a Binance Account

    To sign up AND get an additional 20% off trading fees click here.

    Alternatively, on the Binance main page, click register and enter your details. Don’t forget to fill in GQWT3T1T for the Referral ID in order to be eligible for 20% off trading fees.

    You can sign up with your phone, email, Google, or Apple accounts.

    2. Open a Binance Futures account

    Go to Binance Futures and click Open Now, if prompted, you can enter GQWT3T1T as the Futures referral code in order to enjoy 20% off trades. Then, complete and get all the answers correct on the 14-question quiz on how to use Binance Futures.

    3. Complete the verification process

    Click Profile and then Verification. Follow the steps and fill in your personal information. A government-issued ID (e.g. a passport) and address proof must be provided, and you must also pass the facial recognition test.

    4. Make a deposit into your Binance account

    Binance allows you to deposit fiat or cryptocurrencies into your account. To deposit, click on your profile and go to Dashboard. Under Fund your Account, you can choose to Buy crypto using Mastercard, Visa, Google, or Apple Pay. Users can also choose to Deposit crypto from other exchanges or their hardware wallet.

    5. Start trading

    On Binance Futures, choose between USDⓈ-M and COIN-M Futures Contracts. On the top left-hand corner (marked in yellow), you can choose which futures contract to trade.

    Choose which futures contract to trade
    Choose which futures contract to trade (Source: Binance)

    On the left-hand side, there are various tools to help you identify patterns or trades such as trend lines, arrows, or Fibonacci retracement. You can use these tools to annotate your charts.

    Binance Futures chart tools
    Binance Futures chart tools (Source: Binance)

    On the top right-hand side of the page, you can select the Margin Mode. Users can choose between Cross or Isolated margin modes. Cross-margin mode means that the entire margin balance will be shared across open positions. However, if there is a liquidation event, the risk is that their entire margin balance and any open positions may be lost. Isolated margin mode, on the other hand, allows traders to manage their risk on individual positions by restricting the amount of margin allocation. The benefit of isolated margin mode is that if a position is close to being liquidated, users can allocate additional margin to that position.

    Set your Leverage (if any) by clicking on the top right-hand corner. Traders can set the leverage from 1x to 125x. However, traders should be careful that setting high leverage could result in significant losses in the event of a liquidation.

    On the right-hand side of the page, you can also select the type of order (e.g. Limit, Market, Stop Limit, etc), the order price, and size. For a more automated yet managed trading experience, traders can also select TP/SL i.e. when to take profits, or stop loss. Finally, traders need to select between a Buy/Long, or Sell/Short order.

    Is Binance Futures safe?

    Binance Futures comes with security features expected from every reputable cryptocurrency exchange. Binance Futures requires users to have passed the KYC verification before they can start trading. Before trades are executed, users must also have enabled 2FA authentication and will be sent an Anti-Phishing Code for verification.

    Binance Futures also has a nearly US$300 million insurance fund to protect bankrupt traders from adverse losses. It also ensures that profits of winning traders are fully paid out.

    Finally, if users really need help, Binance offers customer support in 17 different languages via Live Chat or email.

    Conclusion

    Trading futures contracts are a great way for cryptocurrency traders to profit from fluctuations in cryptocurrency prices. Furthermore, Binance Futures is a popular exchange for traders of any level to trade futures since they have a large number of trading pairs. Binance Futures also has the benefit of a huge insurance fund, helpful tutorials, and customer support to ensure that customers have a straightforward and secure trading experience.

    Enjoy 20% off fees when signing up for Binance with the following link!

  • Crypto Futures Trading: What is it?

    Crypto Futures Trading: What is it?

    Crypto futures trading is a type of derivative financial contract. It creates an obligation for the parties to exchange the crypto asset at a predetermined price and date. In this article, we look at what is crypto futures trading.

    What is futures trading?

    Futures are generally named based on the month they expire. For example, a March crude oil futures contract will expire in March and is based on crude oil as an underlying asset. You can also find contracts for other commodities. 

    Traders use the term futures broadly for a whole asset class. And there are multiple futures contracts available based on different types of assets. For example: 

    • Commodities such as crude oil, corn, and wheat;
    • US bonds, or any other government-backed financial bond;
    • Precious commodities like silver and gold; and
    • Index futures such as the Dow Jones Industrial Index.

    For example, a BTCUSD quarterly contract uses BTC as an underlying asset and expires quarterly.

    What is crypto futures trading?

    In crypto futures trading, traders can gain exposure to cryptocurrencies without actually needing to possess the underlying crypto asset. However, there are risks involved with futures trading such as high price volatility.

    Traders use futures trading to take advantage and profit from market movements by going either long or short on a futures contract. Going “long” means that a trader purchases a futures contract expecting that it would increase in value in the future. On the other hand, a trader going “short” means they are hoping prices will drop.

    Here is an example of a futures contract:

    Adam enters into a long futures position when BTC was trading at US$15,000 whilst Bob enters into a short futures position. BTC prices rose to US$20,000 and both Adam and Bob agree to settle their positions. For Adam, BTC was worth more at settlement than when he entered the long position. So Adam makes a profit of US$5,000 from the exchange, being the price difference between the two times. On the other hand, Bob is holding a losing trade since he was holding a short position. So Bob must instead pay the exchange the deficit loss of US$5,000.

    Crypto futures trading
    Crypto futures trading (Source: Binance)

    Difference between options and futures contracts trading

    Futures and options contracts are not the same. An options contract does not impose an obligation on the buyer or the seller. Rather, an options contract gives the parties the option to buy or sell a crypto asset at a fixed price on a specified expiry date. There are 2 types of options contracts: call contracts which give traders the right to buy, and put options which give traders the right to sell.

    On the other hand, in a futures contract, the buyer has to take possession of the underlying asset, and the seller has to sell that asset. The parties can settle for the cash equivalent, which is what happens on most cryptocurrency exchanges. However, the trade must take place. 

    Pros of crypto futures trading

    Here are some benefits (pros) of crypto futures trading:

    • Crypto futures contracts allow traders to gain exposure to cryptocurrencies and possibly profit from their price movements without holding the cryptocurrency itself.
    • Traders can bet against the direction of the market and profit from it. Long traders predict the price of a crypto asset will increase. Whist traders which go short would profit if prices drop.
    • Trading crypto futures with leverage allows traders to potentially have more gains with only a fraction of the total cost. This, however, comes with risks.

    Cons of crypto futures trading

    Here are some risks (cons) of crypto futures trading:

    • Cryptocurrency markets can be very volatile. And unlike traditional markets, cryptocurrencies are traded 24 hours a day. This means traders must constantly check the direction of the market.
    • Leveraged trading is very risky and could lead to substantial losses.

    Conclusion

    Crypto futures trading is a good way to gain exposure to cryptocurrency trading without holding the underlying cryptocurrency. It is also a hugely popular financial product that is offered on most crypto exchanges. Traders however should take extra care and ensure they have appropriate trading risk mitigation strategies in place to manage their portfolios. You would never invest more than you can afford to lose, especially when cryptocurrency markets are by nature extremely volatile.

  • Crypto funding rates: How it works and how to earn passive income

    Crypto funding rates: How it works and how to earn passive income

    Funding rates are periodic payments by cryptocurrency exchanges to traders based on the difference between the perpetual contract market and spot prices. Depending on your standpoint, you could either stand to receive payment or be the party paying it. Many cryptocurrency traders take advantage of crypto funding rates to earn passive income. In this guide, we look at how crypto funding rates work and how you can earn passive income from them.

    What are traditional futures vs perpetual futures contracts in crypto trading?

    To understand what is a funding rate, we must first know the difference between Traditional Futures and Perpetual Futures contracts. 

    A key feature of traditional futures contracts is the expiration date. Traditional Futures contracts usually settle (expire) once a month or quarter. And when this happens, the settlement procedure begins. During this settlement period, the contract price converges with the spot price and then all open positions will expire.

    Crypto-derivative exchanges like Binance often provide Perpetual Futures contracts, which have a similar structure to Traditional Futures contracts. Perpetual contracts, on the other hand, have a significant advantage. The advantage of perpetual contracts is that they do not have an expiry date. So traders can, for example, keep a short position open indefinitely unless they are liquidated.

    Furthermore, Traditional Futures usually have a broker who will ask the trader to top up the amount accordingly based on “margin calls” i.e. the margin difference between the contract price and the spot price.

    Due to the fact that perpetual futures contracts never settle or expire, cryptocurrency exchanges require a system to ensure that futures and index prices converge on a regular basis. This is where the concept of the funding rate comes in.

    What is a Funding Rate?

    Funding rates are periodic payments to long traders, which predict the market will go up, and short traders, which foresee the market will go down. The funding rate amount is based on the difference between the perpetual contract market and spot prices. So, depending on the traders’ position, they can either stand to pay or receive the funding rate.

    When the funding rate is positive, the price of the perpetual contract is greater than the mark price. In such cases, long traders pay short traders. Conversely, the funding rate is negative when perpetual prices are below the mark price. This is when the short traders pay the long traders.

    Why do Funding Rates Exist?

    Futures contracts expire (settle) at a future date. When this happens, the futures price will meet with the current spot price. That is, the futures price is a predetermined spot price at a predetermined date in the future.

    The futures market can be in one of two states relative to the spot price:

    • Contango: The futures market is trading above the spot price; or
    • Backwardation: The futures market is trading below the spot price.

    The difference between the futures and spot market is called the “basis”.

    Whilst perpetual contracts do not expire, they still need to settle at a spot price. However, there are sometimes differences in the cryptocurrency’s prices between the spot and futures prices on an exchange. This is despite the fact that they should be in line since they need to settle against each other over time.

    Therefore, to keep the spot price and the perpetual contract prices in line, exchanges add an interest rate component (i.e. a funding rate). This funding rate incentivizes traders to take positions that help close the price gap, whilst penalizing those that do the opposite. In essence:

    • When the funding rate is positive, those who are long pay those who are short. This means those who are short will benefit. Therefore, people are incentivized to take short positions; and
    • When the funding rate is negative, those who are short pay those who are long. So if you are in a long position, you will receive the funding paid by those who are short.

    Traders try to avoid paying the “penalty” by closing their long or short positions before the funding rate expires. When traders do this, the prices between the contracts and spot prices will begin to converge.

    For example, when the contracts price is above the spot price, the funding rate is positive. In such cases, those who are long pay those who are short. Traders with long positions are encouraged to close their positions before the funding rate expires to avoid paying those with short positions. Meanwhile, traders are incentivized to open short positions because they can receive payment. The effect of this is that the contracts price will be pushed down and the gap between that and the spot price will be closed.

    On the other hand, when the contract price is below the spot price, the funding rate is negative. Shorts will pay the longs. Therefore, traders with short positions will try and close their positions to avoid payment and open long positions to receive payment. Thus, the contract price will be increased to meet the spot price.

    What is the Purpose of Funding Rates?

    The purpose of funding rates is to prevent continued divergence in the perpetual contract market and the spot price for a cryptocurrency. And since prices of cryptocurrencies are consistently fluctuating, the funding rate has to be recalculated periodically. For example, some exchanges like Binance will recalculate their funding rates every 8 hours.

    How to Make Money and Earn Passive Income from Funding Rates

    One tip to make some “passive income” from funding rates is to buy AND short the exact same amount of the cryptocurrency you put your money on. 

    This method balances the positive and negative funding rates, where technically you do not have a position in that particular cryptocurrency market since it is counterbalanced. 

    However, your short trading will get paid on an hourly basis. So, you can get “passive income” on the side, even though overall it mostly turns out to be net value since you have the positive trades too. 

    A lot of large trading firms use this defunding method to get large sums of money quickly. 

    Conclusion

    Crypto funding rates are an integral feature of the perpetual futures market Most cryptocurrency exchanges use funding rates to ensure that contract prices are always in line with spot prices. In turn, traders can benefit from taking advantage of funding rates to earn some passive income with funding fees.

    To learn more about how to profit from funding rates on different exchanges, check out these articles:

  • What will happen to BlockFi?

    What will happen to BlockFi?

    BlockFi is a company that specialises in providing cryptocurrency lending services to clients worldwide. In our previous article, we reported that since 11th November 2022, BlockFi has paused its client withdrawals. Their reason for this was because of the “lack of clarity” in the status of FTX.com, FTX US and Alameda. Now the question is, what will happen to BlockFi? Will they also go bankrupt like FTX?

    What is BlockFi?

    BlockFi was founded in 2017 by Zac Prince and Flori Marquez. The aim of BlockFi was to create credit services for those with limited access to simple financial products. Their financial products included borrowing using crypto as collateral, the ability to earn crypto interest rates, and trading, among others.

    BlockFi prides itself as the only independent lender and is backed by notable investors such as Valar Ventures, Fidelity, Akuna Capital, and Coinbase Ventures to name a few.

    What is happening to BlockFi?

    Since 11th November 2022, BlockFi has paused its client withdrawals due to “lack of clarity” in the status of FTX.com, FTX US, and Alameda. Wire withdrawals and loan processing have also been delayed since 10th November 2022 but are expected to resume on 14th November 2022. When BlockFi users access the website, there is a banner warning them that client withdrawals have been paused. BlockFi also reminds users not to make deposits to the BlockFi Wallet or Interest Accounts for the time being.

    BlockFi suspends withdrawals
    BlockFi suspends withdrawals

    What is happening to BlockFi cards?

    BlockFi’s BlockFi Rewards Visa Signature Card was one of the first cryptocurrency rewards credit cards in the market. The BlockFi card’s major benefits include 1.5% crypto rewards on every single purchase, which can go up to 10% for spending with BlockFi’s partners.

    However, there have been people reporting that purchasing privileges on the BlockFi card have been suspended “until further notice”. This means that cardholders can no longer make purchases using the BlockFi card.

    BlockFi card services have been suspended

    This development stems from the fact that payments company Curve is in active negotiations with BlockFi to acquire their over 87,000 credit card customers. According to reports, if the negotiation is successful, Curve will take over the BlockFi card program, and aim for customers to still be able to earn crypto rewards as they did before.

    Is BlockFi in trouble?

    In June 2022, FTX US had extended a US$400 million line of credit to BlockFi with an option for FTX us to acquire BlockFi for a variable price of up to US$240 million. However, the collapse and bankruptcy of FTX have put the future of BlockFi in question for some. This is compounded by the fact that California’s Department of Financial Protection and Innovation (DFPI) said on 11th November 2022 that they were suspending BlockFi’s lending license for 30 days. During this suspension, the DFPI will be conducting investigations into BlockFi.

    BlockFi has also admitted in its latest update that it had “significant exposure” to FTX and their associated companies. However, they deny they had a majority of funds held at FTX. To learn more, check out our article- Were BlockFi’s assets held on FTX?

    BlockFi files for bankruptcy

    On 28th November 2022, BlockFi announced it had filed for Chapter 11 bankruptcy in the United States. This latest development comes after speculation has already been brewing in the past few weeks that it was affected by the collapse of FTX exchange. The bankruptcy will include Blockfi and 8 of its subsidiaries.

    According to Court documents, BlockFi has over 100,000 creditors. The company has both assets and liabilities in the range of US$1-10 billion and US$256.9 million cash on hand.

    Therefore, the future of BlockFi is still uncertain, and there is fear that it may go bankrupt like the FTX Group. However, there is currently no official announcement or news that BlockFi will be filing for bankruptcy.

    How much does FTX owe BlockFi and vice versa?

    During BlockFi’s bankruptcy hearing, the company revealed it has US$355 million stuck on FTX. Further, Alameda Research, an associated company of FTX, has defaulted on its US$680 million loan from BlockFi.

    On 28th November 2022, BlockFi had also sued Emergent Fidelity Technologies, a company owned by FTX’s Sam Bankman-Fried. The purpose of the lawsuit was to seek SBF’s shares in Robinhood that were used as collateral as part of a pledge agreement.

    On the other hand, on 1st July 2022, FTX US extended a US$400 million line of credit to BlockFi. Of this, BlockFi still owes FTX US US$275 million as allegedly agreed to by 89% of its shareholders. The purpose of the loan was to help BlockFi after it was affected by the collapse of Terra’s stablecoin in May this year. The loan was originally set to mature on 30th June 2027 and had an interest rate of 5% per annum.

    What will happen to BlockFi?

    On 28th November 2022, BlockFi had its first bankruptcy hearing. During this hearing, BlockFi expressed that it will intend to seek the Court’s approval to restore withdrawals for BlockFi wallet holders. However, no formal application has been made yet and the Court has not made a decision on whether withdrawals will be reopened to customers.

    BlockFi’s next bankruptcy hearing is presently scheduled for 9th January 2023 at 10:00 EST.

  • Binance Funding Rates: What is it and how to profit from it?

    Binance Funding Rates: What is it and how to profit from it?

    Binance is the world’s most visited and used centralized cryptocurrency exchange in the world. The exchange has over 2 billion average daily volume and over 1.4 million transactions per second. The Binance ecosystem includes not only Binance exchange, but also BNB Chain, Trust Wallet, Binance card, and more. Many crypto traders like to take advantage of an exchange’s funding rates and fees to earn some profit and passive income. In this article, we look at how Binance funding rates and fees work, and how to profit from it.

    Sign up for Binance and enjoy 20% off fees!

    What is Binance?

    Changpeng Zhao (CZ) and Ye He founded Binance in 2017. Since then, Binance has become the world’s most popular cryptocurrency exchange with the largest organic trading volume. Binance is available in most countries, including the United States under Binance.us (with the exception of a few states). The exchange also supports 600 cryptocurrencies on its international site and over 130 cryptocurrencies on Binance.us.

    What are crypto funding rates?

    Crypto funding rates are periodic payments of the price difference between perpetual contract markets and spot prices. Funding payments are made either to/by long or short traders depending on the funding rate.

    Funding rates exist to align the perpetual contract price to the spot price. If the perpetual contract trading price is higher than the spot price, long position holders would pay short position holders. Conversely, if the perpetual contract trading price is lower than the spot price, short position holders pay long position holders.

    Learn more about crypto funding rates with our article: Crypto funding rates: How it works and how to earn passive income

    What are Binance funding rates?

    As mentioned above, the purpose of funding rates is to prevent continued differences between the price s fo the perpetual contract markets and spot prices. Therefore, crypto funding rates are periodically recalculated. Binance recalculates its funding rates every 8 hours.

    Users can locate the funding rate, and when the funding interval expires at the top of the Binance Futures page. So as seen in the below screenshot, the funding rate is -0.0014% and the funding period will expire in 3 hours 26 minutes.

    Binance funding rate and expiry
    Binance funding rate and expiry (Source: Binance)

    How does Binance calculate the funding rate?

    Binance calculates the funding rate based on two factors: The interest rate, and the premium.

    Binance Futures generally fixes the interest rate at 0.03% per day (i.e. 0.01 per funding interval). However, for BNBUSDT and BNBUSD, the interest rate is 0%. Meanwhile, the premium fluctuates depending on the price difference between the perpetual contract and the mark price. A large difference, or spread, equates to a high premium. On the other hand, a low premium means there is only a narrow difference between the two prices.

    When the funding rate is positive, it means that the price of the perpetual contract is higher than the mark price. Whereas if the funding rate is negative, the perpetual prices are below the mark price.

    Binance uses the following formula to calculate funding rates:

    Funding Amount= Nominal Value of Positions x Funding Rate

    Where Nominal Value of Positions= Mark Price x Contract Size

    How are Binance funding rates paid?

    When the funding rate is positive, long traders pay short traders. On the other hand, when the funding rate is negative, the short traders pay the longs. On Binance, funding rates are paid between users i.e. peer-to-peer. This means Binance does not take any fees from users paying or receiving the funding rates.

    Funding payments are made every 8 hours at 00:00 UTC, 08:00 UTC, and 16:00 UTC. However, this can be subject to change in cases of extreme market volatility. Traders must have open positions 15 seconds before or after the specified funding times in order to be liable to pay or receive any funding fees.  

    How to profit from Binance funding rates?

    The purpose of funding rates is to encourage traders to take positions that allow the perpetual contract prices to be in line with the spot market. So, traders can develop strategies that allow them to take advantage of funding rates and profit from it.

    How to be notified of Binance funding rates

    Binance offers a notification feature where they will send you an email/SMS/in-app notification when the funding rate reaches a certain percentage. To activate this feature, log in to your account and go to “Derivatives” and then “USDⓈ-M Futures”. Then, click on the “notification” button, “preference” and then “notification”. Here, you can set the funding fee trigger. The default trigger is 0.25%, meaning that Binance will send you a notification when the funding rate reaches 0.25%.

    Crypto funding rate trends

    Crypto funding rates are correlated with the price trend of the underlying asset, as seen from historical data. So the spot market generally dictates the funding rate.

    The above diagram shows the correlation between Binance’s funding rates and Bitcoin prices for the period from 20 December 2019 to 20 January 2020. As can be seen, the rise in funding rates corresponds to a Bitcoin price pump.

    Traders can see Binance’s historical funding rates here.

    Sign up for Binance and get 20% off fees!

  • Were BlockFi’s assets held on FTX?

    Were BlockFi’s assets held on FTX exchange, which is now bankrupt, and its funds hacked?BlockFi provides lending services to clients across the globe. In our previous article, we reported that BlockFi has paused its client withdrawals since 11th November 2022 due to lack of clarity” on the status of FTX.com, FTX US and Alameda. 

    Does BlockFi have exposure to FTX?

    Shortly after BlockFi halted client withdrawals, the FTX Group filed for bankruptcy. Worse, FTX had been hacked and over US$600 million in funds were stolen. A lot of these funds belonged to FTX exchange users such as retail investors and even blockchain companies. Therefore, rumours have been swirling that BlockFi has substantial assets held in FTX.

    On 14th November 2022, BlockFi issued an update addressing the rumours that a majority of its assets were held on FTX. Admitting they have “significant exposure” to FTX and their associated corporate entities.

    On 28th November 2022, and during BlockFi’s bankruptcy hearing, the company revealed it has US$355 million stuck on FTX. On the other hand, Further, Alameda Research, an associated company of FTX, owes US$680 million to BlockFi.

    On 28th November 2022, BlockFi also sued Emergent Fidelity Technologies, a company owned by FTX’s Sam Bankman-Fried (SBF). The lawsuit seeks SBF’s shares in Robinhood that were used as collateral as part of a pledge agreement.

    Will BlockFi be able to recover any funds from FTX?

    According to BlockFi’s 14th November 2022 update, BlockFi “…will continue to work on recovering all obligations owed to BlockFi.” BlockFi, however, expects there will be delays in the recovery of assets from FTX. This is because FTX, FTX.US and Alameda have filed for bankruptcy.

    However, with the news that BlockFi has also filed for bankruptcy, it is starting to become uncertain whether BlockFi will be able to recover everything it has stuck on FTX.

    BlockFi assured users they were independent of FTX

    Previously, BlockFi Founder and COO Flori Marquez have assured users via Twitter that it is an independent business entity from FTX. Although, BlockFi does have a US$400 million line of credit from FTX.US (and not FTX.com). To learn more about the difference between FTX.com and FTX.us, check out our article- Key Similarities and Differences Between FTX.com and FTX.us

    Twitter post from BlockFi Founder and COO Flori Marquez

    What’s next for BlockFi?

    On 28th November 2022, BlockFi filed for bankruptcy. During its first hearing, BlockFi expressed it intends to seek approval to restore withdrawals from BlockFi wallets. However, no Court application has been made yet and the Court has not decided whether customers will be allowed to make withdrawals.

    BlockFi’s next bankruptcy hearing is presently scheduled for 9th January 2023 at 10:00 EST.

    To learn more, check out our other article- What will happen to BlockFi?

    FTX EXCHANGE (INCLUDING FTX INTERNATIONAL AND FTX.US) ARE NO LONGER IN OPERATION

    Both exchanges have filed for bankruptcy. Subsequently, the exchange was “hacked” and more than US$600 million worth of cryptocurrencies drained. The hacker is strongly rumoured to be a former FTX employee. For more about how this story unfolded and the latest news, check out these articles:

  • Is KuCoin safe from the collapse of FTX?

    Is KuCoin safe from the collapse of FTX?

    KuCoin is a cryptocurrency exchange launched on 15th September 2017 and has over 20 million users worldwide. The recent bankruptcy of the FTX Group and “hack” however have resulted in a “contagion effect” resulting in speculation as to which other crypto companies might collapse. In this article, we answer the question- is KuCoin safe from the collapse of FTX.

    What is KuCoin?

    KuCoin is a centralized cryptocurrency exchange, meaning that users’ cryptocurrency deposits are stored and held in custody by the exchange. KuCoin refers to itself as “The People’s Exchange” and is headquartered in Seychelles. The exchange has over 20 million users worldwide and 660 million US dollars in trading volume daily. This certainly puts them in the top 10 most popular exchanges in the market.

    How might the collapse of FTX affect KuCoin?

    On 11th November 2022, FTX, FTX US, and Alameda filed for bankruptcy in the United States. This came after several days of withdrawals being suspended on the exchanges and rumours already circulating that they were in trouble. On the same day, it was reported that over US$600 million were drained from FTX by a hacker. This hacker was eventually identified to be a former employee of FTX exchange. It was also revealed that one of the reasons for FTX’s collapse was because Alameda Research, which was FTX’s trading house, had burned through nearly US$10 billion in cash belonging to its clients.

    The collapse of FTX has brought the safety of all centralized cryptocurrency exchanges to the forefront. This is especially since FTX was one of, if not, the largest cryptocurrency exchanges. The revelations that FTX had been wrongfully handling client funds have also sent fear amongst cryptocurrency traders.

    As a result, in the days leading up to the announcement of FTX’s bankruptcy filing, cryptocurrency traders were rushing to withdraw their funds stored on exchanges. There were rumours circulating as to which crypto companies had funds on FTX. And, if so, how much and whether they would be affected by the collapse of FTX. Meanwhile, some cryptocurrency services such as BlockFi have also suspended withdrawals and are rumoured to be filing for bankruptcy. Of course, being a major exchange, KuCoin was also subject to rumours and questions about its solvency and whether they are safe from the FTX contagion.

    KuCoin addresses rumours of outflows following FTX collapse

    On 9th November 2022, KuCoin’s CEO Johnny Lyu wrote a letter addressing the FUD (Fear, Uncertainty and Doubt) surrounding the exchange. The rumour surrounding KuCoin originated from a stablecoin outflow chart by Nansen, a blockchain analytics firm. The flowchart showed that US$300 million had left the exchange. However, it was quickly clarified by Nansen CEO Alex Svanevik that the US$300 million was merely a swap from USDT network to Tron. Therefore, the funds had in fact not left KuCoin exchange.

    Nansen clarifies the alleged outflow of US$300 million from KuCoin

    In the letter, KuCoin also notes that it was probably the 10th time in 6 months that there are circulating rumours on Twitter that KuCoin is insolvent. It is also admitted that KuCoin did suffer a hack in 2020 with over US$275 million worth of cryptocurrencies, resulting in a liquidity crisis. However, KuCoin was able to cover 100% of their users’ funds and so users did not suffer any loss.

    As seen below, KuCoin has also denied having any exposure to FTX or its native FTT token.

    Does KuCoin have any exposure to FTX or FTT?

    Lyu has also clarified on Twitter that KuCoin does not have any exposure on FTX or FTT. This dispelled the speculation by Cobie, host of the UpOnly podcast.

    KuCoin FTX FTT exposure rumour
    Lyu dispels rumours that KuCoin has exposure on FTX or FTT (Source: Twitter)

    Is KuCoin safe?

    As seen above, KuCoin has already expressly denied they have any exposure to or deposited any funds at FTX. To reassure its users, KuCoin has promised to release its Merkle tree proof-of-reserves (POF) in one month.

    Meanwhile, Nansen has listed KuCoin’s portfolios and explanatory statements of accounts here.

    The “total assets” and “net worth” figures in the portfolio show the sum of the cryptocurrencies in the wallet addresses provided by KuCoin. These wallets are continuously monitored by Nansen, although they cannot be taken as a complete statement of the actual assets or reserves held.

    On 11th November 2022, Lyu also provided an overview of their hot and cold addresses and holdings. KuCoin’s holdings as of 7:00 UTC on 11th November 2022 comprised of 20,504 BTC, 180,299 ETH, 1,075,909,241 USDT, 365,722,839 USDC, and 69,601,075 KCS.

    KuCoin wallet holdings

    As mentioned, KuCoin is working on the Merkle-tree proof-of-reserves. The exchange is also expecting the completion of an audit by third-party auditor Aarmanio LPP. Both are expected to be completed in a month’s time i.e. in around early December 2022.

    Therefore, it seems that KuCoin exchange is safe from the FTX collapse for now. However, users are still recommended to keep their funds off of any exchanges. Instead, users should consider storing their cryptocurrencies in hardware wallets as it means the cryptocurrencies are in their own custody. Check out our reviews for some popular hardware wallets:

  • FTX, FTX US and Alameda File for Bankruptcy

    FTX, FTX US and Alameda File for Bankruptcy

    Sam Bankman-Fried (SBF), Founder of FTX, FTX US and Alameda has announced on Twitter that he has filed for Chapter 11 bankruptcy proceedings in the United States.

    SBF files FTX, FTX US and Alameda for bankruptcy in the US

    The Chapter 11 bankruptcy proceedings affects FTX International, FTX US, Alameda and 130 other affiliated companies.

    On the same day, Sam Bankman-Fried also resigned from his position as CEO of the FTX Group. John J. Ray III is now the current CEO of the FTX Group.

    The purpose of initiating the Chapter 11 proceedings is to give the FTX Group the opportunity to assess its situation. It also allows the Group to develop ways to hopefully maximize recoveries for stakeholders.

    In the same tweet, SBF stated that he is working on “giving clarity on where things are in terms of user recovery ASAP.” There are no further announcements or indications of when users will be able to withdraw their funds. FTX International users have not been able to withdraw their funds since 8th November 2022, and FTX US users have been unable to withdraw their funds since 10th November 2022.

    This latest development comes as negotiations for other companies to acquire FTX International, most notably from Binance, had fallen through.

    To learn more about Binance’s previous plan to rescue FTX International, click here. Also, check out our article on the “war” between SBF and CZ which started the recent cascade of events.

    What happens next?

    If the FTX Group does eventually go down the bankruptcy route, the assets and liabilities of the Group, and the affected stakeholders would need to be identified. And the Group’s assets potentially liquidated. (www.biolighttechnologies.com) Distribution of users’ funds (if any) will only occur at the final stages of the proceedings, which could be years away.

    Therefore, affected users are recommended to access their accounts and collect screenshots or downloads of all deposits, withdrawals, balances, and account information. It is suggested to keep this information safe in case it becomes necessary in future proceedings.

    Download FTX account information
    Download FTX account information

    To download your account and transaction records on FTX, access your FTX account. Then, simply go onto the relevant Balances, Deposits, or Withdrawals tab, and click on the small cloud icon. This will download a .csv file containing your transaction records.

  • BlockFi suspends withdrawals over unclear status of FTX

    BlockFi suspends withdrawals over unclear status of FTX

    BlockFi is a company specialising in providing cryptocurrency lending services to clients worldwide. In a tweet on 11th November 2022, BlockFi stated they are unable to “operate business as usual” and will be pausing client withdrawals.

    BlockFi announces it will suspend withdrawals

    BlockFi states their decision to suspend withdrawals is due to a “lack of clarity” over the status of FTX.com, FTX US, and Alameda Research. Resulting in them being unable to operate their business as usual.

    Learn more about the current crisist at FTX and what will happen now that the plan for Binance to acquire FTX has fallen through here.

    To reassure users, BlockFi has stated that they will remain in communication with their users, albeit less frequently than they are used to. The Company’s Founder and COO, Flori Marquez had also previously reassured BlockFi users in a tweet that BlockFi is an independent business entity until at least July 2023. Furthermore, they have a US$400 million line of credit from FTX.us (and not FTX International- which is the subject of the current crisis). This US$400 million loan would allow FTX.us to acquire BlockFi if certain conditions were met, such as clearance from the SEC, and having at least US$10 billion in client assets.

    BlockFi website
    BlockFi website currently does not show they have any issues with withdrawals

    We noticed that when accessing the BlockFi website, there is no warning banner indicating that withdrawals are suspended and their News page does not show the latest Twitter announcement. Therefore, the only place to get the latest updates from BlockFi is via their official Twitter account and we would suggest affected BlockFi users check it frequently.

  • Voyager Digital goes bankrupt: A victim of the Three Arrows Capital collapse?

    Voyager Digital goes bankrupt: A victim of the Three Arrows Capital collapse?

    Voyager Digital is a publicly listed crypto brokerage firm which filed for bankruptcy on 5th July 2022.

    Who is Voyager Digital?

    Voyager Digital was founded in 2017 as a cryptocurrency brokerage firm allowing clients to buy and sell cryptocurrencies and other digital assets on its platform. Their main feature was that they did not charge commission fees through utilizing its smart order routing to connect to dozens of other cryptocurrency exchanges and market makers. Voyager Digital is currently listed on the Toronto Stock Exchange under the stock ticker VOYG.

    Voyager Digital is also a major creditor of Three Arrows Capital, which has also recently filed for bankruptcy. Since 1st July 2022, Voyager Digital has temporarily suspended all trading, deposits, withdrawals, and loyalty rewards on its platform.

    Voyager Digital files for bankruptcy

    Voyager Digital issued a Notice of Default against 3AC on 27th June 2022 and reduced its withdrawal limit to US$10k per day. This spooked shareholders and users of Voyager Digital. The Company saw its share prices plunge over 60% after its ties with 3AC was revealed, combined with its poor performance during the crypto downturn.

    The Notice stated that 3AC failed to make timely repayments on its loan of 15,250 BTC and US$350 million USDC. However, Voyager Digital has reassured its users that its platform is still fully functional. Furthermore, as of 24th June 2022, Voyager had approximately US$137 cash and crypto assets on hand. The Company also has US$200 milllon cash and USDC, and a 15,000 BTC revolving loan from Alameda Ventures Limited.

    On 5th July 2022, Voyager Digital Holdings filed for bankruptcy in the Southern District of New York. Voyager Digital estimates it has over 100,000 creditors and total debts of somewhere between US$1 to US$10 billion in liabilities. The Company believes that notwithstanding its liabilities, it still has around US$1 to US$10 billion in assets. They also assure that will have sufficient funds available for distribution to its unsecured creditors.

    According to a tweet by CEO Stephen Ehrlich, the purpose of filing for bankruptcy was to “…protect assets on the platform, [and] maximize value for all stakeholders.”

    This is certainly a huge relief to Alameda Research. They are listed in court documents filed by Voyager as its largest unsecured creditor with over US$75million in unpaid debts. This is substantially larger than its second largest unsecured creditor with a US$9.7million claim.

    Meanwhile, the share prices of Voyager Digital Ltd (VYGVF) plummeted by almost 12% as a result of this development. Share prices for the Company took a huge hit since their involvement with 3AC was discovered. VYGVF share prices have been down nearly 89% since early June 2022.

    FTX to bail out Voyager Digital?

    FTX exchange recently secured a winning bid of US$1.42 billion for Voyager Digital’s assets. The assets included in the bid include (i) the fair market value of all of Voyager’s cryptocurrency at a future date to be determined, worth around US$1.3 billion; and (2) additional consideration of “incremental value”, worth around US$111 million. As for Voyager’s claims against Three Arrows Capital, this will remain with the bankruptcy estate and any amount eventually recovered will be distributed to the estate’s creditors.

    The tentative plan from FTX will allow all priority claimants to be paid out in full. Meanwhile, other account holders would be able to recover approximately 72% of their account value. The plan for FTX to buy out Voyager’s assets however is still pending the approval of Voyager’s creditors and the Court.

    Voyager Digital suspends withdrawals, will customers get their USD and crypto back?

    According to the latest blog post from Voyager Digital, they are working to restore access to customers’ USD deposits. However, it does not mention when withdrawals will be reopened. Voyager Digital also alleged that customers’ USD in their Voyager cash account is held in a For Benefit of Customers account at the Metropolitan Commercial Bank of New York (and not by Voyager themselves) and is Federal Deposit Insurance Corporation (FDIC) insured. However, a joint letter dated 28th July 2022 from the Federal Reserve and the FDIC to Voyager requests them to remove “false and misleading” statements that its user deposit accounts are FDIC insured.

    As for customers’ cryptocurrencies, Voyager states that they have approximately US$1.3 billion worth of crypto assets on their platform. This is inclusive of its over US$650million claim against Three Arrows Capital.

    Voyager has proposed a reorganization plan which is currently pending the approval of the Court. Customers will be able to select the following options with regards to their cryptocurrencies held by Voyager:

    1. Pro-rata share of cryptocurrencies;
    2. Pro-rata share of proceeds recovered from Three Arrows Capital;
    3. Pro-rata share of common shares in Voyager after it is reorganized; and
    4. Pro-rata share of existing Voyager tokens.

    However, according to Voyager, this is not the finalized plan. Voyager’s customers will have the opportunity to vote on whether or not they agree with the reorganization plan. It is likely that it will be a long time before customers will have their funds and cryptocurrencies returned.

    Voyager details claim process for customers

    Voyager’s blog post details how affected customers with cryptocurrencies in their accounts can begin to claim their crypto. Voyager will be sending an email from “Voyager Digital Restructuring” containing a unique link and personal identification number. The link will set out the customers’ account holdings. If customers agree with the account information set out in the email, they are not required to submit a claim form. On the other hand, if customers disagree with the information, or the claim is marked as “contingent”, “unliquidated” or “disputed”, they must submit a proof of claim form. This Proof of Claim form must be filed on Voyager’s case website on or before 3rd October 2022 at 5:00pm EST.

    However, there is still no information on when affected customers can actually receive the cryptocurrencies locked in their Voyager Digital accounts.

    Voyager customers say no to “retention bonus” totaling US$1.9 million to employees.

    Voyager had asked the Court to approve a US$1.9 million payment to 38 of its employees as a “retention bonus”. The Company claims that these employees are essential to its continued operation and restructuring, and are apparently non-executive employees. Voyager is also asking the Court to allow them to redact the names, titles, salaries, proposed bonuses and other information relating to the 38 persons. Their reasoning is that this is non-public and personal information which could be sensitive.

    However, a group of Voyager customers objected to Voyager’s proposal, stating that its employees are already well-compensated and that there is little evidence that they plan to resign. They also argue that the Company has otherwise done little else to reduce costs. The US Trustee’s Office is also objecting to Voyager’s proposal, particularly to the request to redact the employees’ information. This is because they see it as critical information that stakeholders should have in order to evaluate whether the proposed bonus is necessary.

    On 24th August 2022, the Court ultimately approved Voyager’s application to pay US$1.9 million in retention bonuses to employees.