Paradigm, the zero-fee, liquidity network for crypto derivatives traders, has now launched spreads trading in partnership with FTX, one of the world’s leading regulated cryptocurrency exchanges.
FTX is the third exchange to partner with Paradigm on futures spreads and this partnership marks a major step towards the development of a liquid interest rate curve in crypto. Paradigm users will be able to trade the spread between spot, perpetuals and futures instruments on BTC, ETH, SOL, AVAX, APE, DOGE, LINK and LTC, all with guaranteed atomic execution and clearing of both legs on FTX.
Paradigm is a zero-fee, liquidity network for crypto derivatives traders across CeFi and DeFi. The platform provides traders with unified access to multi-asset, multi-protocol liquidity on demand without compromising on price, size, cost and immediacy. The firm’s mission is to create a platform where traders can trade anything, with anyone and settle it anywhere.
Generating yield via “cash and carry” trades and funding rate farming
Yield-seeking investors can now execute “cash and carry” trades leveraging FTX’s spot and futures instruments across multiple currencies and futures expirations. In addition, traders can farm funding rates on perpetuals with a single click. These trades can now be placed via Paradigm with guaranteed atomic execution of both legs without any exposure to delta risk!
Roll expiring futures hedges more efficiently
Many traders and investors use futures to hedge or replicate crypto exposures. Futures spreads enable market participants to buy one futures contract and simultaneously sell another futures contract with a single trade. This provides an additional set of tools to traders and investors looking to lock in fixed hedging costs using futures (versus the floating cost of perpetual funding rates) and roll them when nearing expiration.
Spreads executed on Paradigm and cleared on FTX will be charged 50% less fees compared to executing two individual outright trades. The cost of rolling positions or taking views on the yield curve has never been cheaper for both Paradigm and FTX clients!
Guaranteed atomic execution
Spreads trading on Paradigm has guaranteed atomic execution of both legs, so is structurally less risky when compared to executing individual legs via a traditional exchange order book. This lower risk profile enables market makers to quote much tighter prices and in significantly larger sizes.
“This structured spread trading product is the first that will enable crypto investors to utilize cash and carry trades through FTX and Paradigm,” said Sam Bankman-Fried, CEO of FTX.
Significant interest anticipated from yield traders
With basis trading becoming a tradeable asset class on FTX, Paradigm said it is expecting to see significant interest from both crypto-natives trading yield as well as new investors in crypto who can now trade cash and carry as a single asset.
“And looking ahead, combining the client base and product expertise of both companies will undoubtedly lead to more synergies and new product offerings further down the road,” said Anand Gomes, CEO of Paradigm.