Please note that the information in this post has now been superseded by the information in a later blog post from Monday August 3.
At Digitex, we’re always looking for ways to make sure our users have the very best trading experience possible, and to ensure we stand apart from the competition. Recently, Adam has been looking at our liquidation model and whether or not it can be improved. Here, he explains that we’re looking to make some changes to the Liquidation system, and the rationale behind them.
The current liquidation system used on the DFE is an exact copy of the system used by other cryptocurrency futures exchanges. The system is designed to penalize the trader for having taken their losing position to the Liquidation price. When a trader’s losing position hits his Liquidation price he is stopped out at the worse Bankruptcy price and the system gain made by doing this is added to the Insurance Fund.
This mechanism is deemed necessary in order to keep the Insurance Fund topped up for when very volatile conditions cause the exchange to lose money as a result of liquidating highly leveraged traders who cannot cover their losses. All the major cryptocurrency futures exchanges use some variation of this system and we built the DFE to mirror current accepted practices.
But it’s very unfair to the trader who gets stopped out because his loss is bigger than it should be. At Digitex we already have a large Insurance Fund that’s fit for purpose. We’re not interested in unthinkingly copying the practices of competitor exchanges, especially when it means penalizing traders and taking their money unfairly.
In the last week, due to volatility in the price of Bitcoin, our system gains from liquidations amounted to 2 million DGTX. While this is good news for the Insurance Fund, it’s bad news for the traders whose losses were bigger than they should have been.
Digitex Takes a Fresh Approach
With this in mind, we have decided to refund all the system gains that we have made from traders who were liquidated whilst we figure out a better system for liquidation.
For the foreseeable future, we will continue to refund all system gains made whilst we figure out a better way. After all, we successfully figured out how to completely eliminate all trading fees and create a fairer trading environment. Continuing this ethos means we’re now focusing on how to eliminate the inequalities in our liquidation system.
Put simply, copying any system that BitMex has designed is never a good idea if you have the best interests of traders at heart. The Digitex Futures exchange is a new kind of exchange that exists to enrich and empower its traders. That means completely removing any and all mechanical edges that might be working against them, even if we have to go back to the drawing board and design our own unique system from scratch.
If you have had a losing position that was forcibly liquidated by our system we will automatically refund whatever system gain we made on that liquidation back to your main wallet. We are currently working out exactly who to refund and how much, so you can expect to receive your refund by the end of next week. This applies for all trades since you joined the DFE mainnet.
Until further notice, we will refund all system gains at the end of each day until we have developed a new system that eliminates the possibility of system gains being collected in the first place.
You can consider it just one more way that Digitex stands apart from the competition by being the only exchange on the market that has its interests aligned with those of its users.
Final Reminder to Sign Up for Tomorrow
If you haven’t set a reminder already, then I would urge you to make sure you’re online tomorrow for our big Launch Day Trading Event on YouTube. The Digitex team has been working really hard to make sure it’s going to be a day to remember, with a schedule packed full of some huge crypto influencers and pro traders.
With a massive $250,000 worth of DGTX to give away, we’re making it so difficult for you guys to lose money. So don’t miss it – get on over to YouTube and make sure you’re online on the DFE and trading with at least 1000 DGTX in your wallet and you’ll be in with a chance of walking away with some free DGTX. See you then!