Digitex - A commission-free, trustless futures exchange for trading digital currency prices
I will love to introduce you to Digitex, Digitex is bringing about a commission-free futures exchange that covers operational costs by minting its own native currency, the DGTX token, instead of charging transaction fees on trades.
When there is an increase in demand for DGTX tokens from traders who are attracted to commission-free futures markets will outweigh the inflationary cost of minting a small number of new tokens each year.
This hybrid model of a centralized matching engine coupled with decentralized account balances gives traders the speed and reliability of off-chain price discovery combined with the trustless security of on-chain account settlement.
THE FUTURE MARKET
The Futures markets give traders the opportunity to trade prices without the high costs and risks of transferring, storing and paying in full for the actual underlying instrument on whose price they are trading. Whether on soybeans, gold, government bonds or Bitcoins, futures markets are a valuable financial tool for facilitating price trading by reducing friction and costs.
The Futures markets also act as a massive brake on the potential liquidity of futures markets by converting marginally profitable strategies into losing strategies after commissions, notwithstanding the unfavourable market condition.
Instead of penalising active traders for providing liquidity, this brand new revenue model imposes a small inflationary cost on all Digitex token holders on the understanding that commission-free and liquid markets will create demand for the DGTX token from traders that is greater than the inflationary cost of funding the exchange.
CHALLENGES FACED BY CRYPTO EXCHANGE COMPANIES
- High transaction fees
- Prone to hackers and fraudsters
- Lack of trust by exchangers and traders
- Lack of smart contracts
- No peg system for holding prices and making huge losses
- Lack of privacy
- Slow transaction speed
- No Scalability
Here’s an illustration of how DIGITEX Works
The Ethereum Based Token, Called the DGTX token
DGTX tokens eliminates transaction fees
DGTX tokens are used as the native currency of the exchange
All profits, losses, margin requirements and account balances are denominated in DGTX tokens, meaning that traders must own DGTX tokens to participate in the commission-free, trustless markets on Digitex.
Unlike other futures exchanges, traders on Digitex will be able to trade without having to trust the exchange with their money.
Commission-Free Futures Trading
The futures trader’s Utopian dream of a commission-free exchange is no longer a dream. By creating an ERC-223 compatible protocol token on the Ethereum blockchain, called the DGTX token, and using it as the Digitex Futures Exchange’s native currency in which the exchange can eliminate transaction fees on trades and cover costs by creating new tokens instead of charging fees, things become easier.
The futures exchange is what gives the DGTX token its utility as a vehicle for trading highly liquid futures markets without any transaction fees.
New DGTX tokens will be created via a fully audited token creation smart contract. Buyers will send ETH to the smart contract address and automatically receive the correct amount of
DGTX tokens in return. There will be a minimum and maximum funding cap.
The Digitex Protocol Token (DGTX Token)
At the heart of the Digitex Futures Exchange is its protocol token, the DGTX token. To buy or
sell futures contracts on the exchange a trader must have a margin balance of DGTX sufficient to cover his potential losses because the tick value of each Digitex futures contract is 1 DGTX token, meaning that all profits and losses are denominated in DGTX tokens. As trading volumes and liquidity increase on the Digitex futures markets the demand for DGTX by traders will also increase.
Below are the key elements of the DGTX token:
● DGTX is the protocol token that is the native currency of the Digitex Futures Exchange.
● The tick value of every Digitex futures market is 1 DGTX token.
● Margin requirements on each Digitex futures market are payable in DGTX tokens
because profits and losses are denominated in DGTX tokens.
● Account balances on the Digitex Futures Exchange, which are held by an independent
smart contract, are denominated in DGTX tokens.
● It is the creation of new DGTX tokens after approximately 2 years that allows the
exchange to operate without needing to charge transaction fees.
● The DGTX Token Sale/Initial Coin Offering (ICO) creates an initial supply of
1,000,000,000 DGTX (one billion DGTX tokens).
● There is no creation of new DGTX tokens for the first 2 years after the launch of the
Digitex Futures Exchange.
● Approximately 2 years after launching, the Digitex Futures Exchange starts to create
new DGTX tokens to cover the costs of running the Digitex Futures Exchange.
● New token issuance causes inflation but it also creates high demand for DGTX tokens
by subsidizing commission-free futures markets that attract large numbers of traders
who must buy DGTX tokens to participate.
● DGTX is an Ethereum based, ERC-223 token that will be freely tradable for Bitcoin,
Ether and many other cryptocurrencies on the Digitex platform through integration
with trustless, decentralized token trading protocols such as swap.tech, 0xproject.com and bancor.com.
● Traders can eliminate DGTX price risk from their trades with the DGTX Peg System.
BENEFITS OF THOSE WHO HAVE THE DGTX TOKEN
The owner of DGTX tokens has the ability to engage in the buying and selling of liquid futures contracts on the price of Bitcoin against the US Dollar, Ethereum against the US Dollar and Litecoin against the US Dollar without incurring any transaction fees on their trades.
The more active the trader, the greater the intrinsic value of DGTX to that trader because every time he buys or sells a Digitex futures contract he is saving himself from paying a commission.
DGTX Token Supply and Distribution
The initial supply of DGTX is 1,000,000,000 (one billion) DGTX tokens
DGTX Token Price Projections And Their Effect On Token Issuance Model
It’s very necessary to be part of the first adopters of this project because the greater the demand for DGTX tokens by traders on the Digitex Futures Exchange, the higher the price of DGTX will climb. The following table shows some different scenarios and assumptions and their effect on the price of DGTX tokens.
Here are some Assumptions:
● 2% of traders are whales who buy a total of $150,000 USD worth of DGTX tokens over
a 2 year period.
● 10% of traders are medium sized traders who buy a total of $15,000 USD worth of
DGTX tokens over a 2 year period.
● 88% of traders are small traders who buy a total of $1,500 USD worth of DGTX tokens
over a 2 year period.
● Although the total supply of DGTX tokens is 1000M, only 300M are available to be
bought and sold because the rest are locked up by the Digitex market makers (500M
DGTX), early contributors and advisors (100M DGTX, vested) and the founding team
(100M DGTX, vested).
The Peg System: Eliminating DGTX Price Risk On Trades
Many traders will consider the DGTX token to be a valuable, long term constituent of their
crypto-currency holdings and will therefore be willing to absorb the effects that any short
term price volatility of the DGTX token could have on their trading profits. However, traders
who are using the Digitex futures markets to hedge risk on their physical holdings of the
underlying instrument cannot tolerate this added element of the DGTX token’s price
affecting their positions.
With the peg system I can peg my coins like Bitcoin, Ethereum, when the price is going down, DGTX token can be used during risk trades I could buy DGTX tokens and then immediately use the DGTX peg system to lock in a sale price at the same price, guaranteeing that I can sell my DGTX tokens at the same price he bought them for whenever I wants.. The peg system allows anyone who owns DGTX tokens to lock in a sale price at the current market price, whilst keeping physical possession of their DGTX tokens to use as margin for doing trades on the Digitex futures markets.
Buying and Selling DGTX Tokens
A highly liquid market in DGTX tokens is essential to the success of the Digitex Futures
Exchange. Buying and selling DGTX tokens must be free, quick, easy and as frictionless as
possible. Traders must be able to instantly convert a wide range of crypto-currencies into
DGTX tokens and back again with little to no spread and with zero transaction fees. Many
traders will be happy to buy and hold DGTX tokens long term, but many other traders will buy DGTX tokens only when needed and then convert them back into ETH or BTC as soon as they close their positions.
Trustless Futures Trading
By replacing centralized account balances with an independent, decentralized smart contract on the Ethereum blockchain, traders can use the Digitex Futures Exchange without having to trust the exchange with their money. This hybrid mechanism of a centralized matching engine and decentralized account balances solves many of the problems associated with purely decentralized exchanges.
Hybrid Model of Centralized and Decentralized Components
Digitex is the intelligent combination of the speed and reliability of centralized servers with the trustless security of decentralized smart contracts. The Digitex Futures Exchange interacts with the smart contract so that it can update a trader’s available balance to reflect that trader’s outstanding margin liabilities and his trading profits and losses, but the exchange does not have physical possession of the trader’s funds and is unable to do anything else to the funds held in the smart contract.
DIGITEX Ultimate Ringfence
1. Digitex cannot freeze or seize a trader’s funds for any reason, such as outside pressure
from authorities, creditors, KYC/AML regulators etc. Digitex can and will resist this
pressure legally and without consequence because the exchange simply does not have
access to a trader’s funds.
2. Digitex cannot mismanage the trader’s funds in any way by using those funds for other
purposes because the exchange does not have control of or access to the private keys
of the trader’s DGTX tokens.
3. Digitex does not hold any private keys and so is therefore not a hacking target. In the
unlikely event of a security breach of the exchange, Digitex does not hold any funds
that can be stolen.
Digitex Oracle Updates Account Balance Smart Contract
Digitex has also brought out a smart contract technology that will bring you a summary of your account when you want to withdraw, so to minimize gas costs updates are only sent to the smart contract when the trader wants to withdraw.
The communication between the exchange and the smart contract presents a potential attack vector to hackers who might want to hack into the exchange for the purpose of updating the smart contract with incorrect information that lets them withdraw more than they have.
By doing this it is impossible for a hacker who has somehow gained access to the exchange to send incorrect updates to the smart contract because he will be unable to create the fake matched trades needed (each needing a counterparty and matching timestamps) to calculate his fake profit and update the smart contract with it.
DIGITEX has also enhanced its security by requiring users of the Digitex Futures Exchange to have the Metamask browser plugin. This ensures that only you have the ability to withdraw from your account balance by utilizing Metamask’s secure identity vault which uses signed blockchain transactions to verify you are the same person who made the deposit.
The Digitex Futures Exchange
The Digitex Futures Exchange is a trading environment for the trustless buying and selling of digital currency futures contracts with zero transaction fees. The exchange does not hold any client funds, combining the trustless security of decentralized account balances with the speed and reliability of a centralized order book and matching engine.
Main Features & Benefits
1. Zero Trading Fees
2. Decentralized Account Balances
3. Highly Liquid Futures Markets
4. Automated Market Makers
5. Digitex Native Currency
6. Token Issuance Revenue Model
7. Bitcoin, Ethereum & Litecoin Futures
8. One Click Ladder Trading Interface
9. Large Tick Sizes
10. High Leverage
11. No Auto Deleveraging
12. Sub-Millisecond Order Matching
13. Off-Chain Price Discovery, On-Chain Settlement
14. Decentralized Governance by Blockchain
15. Complete Privacy
16. Blockchain Driven
Automated Market Makers
Traders want to trade on liquid markets with tight spreads where they can get filled quickly and with the minimum of slippage. Digitex market makers are automated trading bots with algorithms that are programmed to break even. Not being driven by profit, the market makers do not exist to extract value from traders. Liquidity begets liquidity.
The Digitex market makers are a catalyst to a highly efficient trading environment where the majority of the ecosystem’s protocol tokens are in active use.
A major benefit that comes from the majority of DGTX tokens being in active use by traders is that the governance of new token issuance, which is controlled by DGTX token owners, is being done by interested parties who are actively using the platform.
BTC/USD Trade on Digitex Futures Exchange
● Bob is a short term, trend following Bitcoin trader. He sees the price of BTC/USD start
to rise and he jumps on by buying 500 BTC/USD futures contracts with a single click of
the mouse that are being offered for sale at $10,700.
● The price rises quickly and then starts to come down so Bob immediately hits the bid
and sells 500 contracts at $10,720 with a single click of the mouse.
● The tick size of the BTC/USD futures contract is $5 so Bob has made a profit of 4 ticks
on a 500 contract position which is a 2,000 tick profit. 1 tick is worth 1 DGTX so he has
made a profit of 2,000 DGTX.
● The current market price of 1 DGTX token is USD $0.10 so Bob’s profit is 2,000 DGTX x
$0.10 = $200.
● Bob’s initial margin requirement to open his trade was 500 x 20 DGTX = 10,000 DGTX
($1,000). He needed this much in his account to be able to enter the trade. His account
balance is held by an independent smart contract, not by the exchange.
● There are zero transactions fees on all trades so Bob’s profit of $200 after commission
As the prices of cryptocurrencies continues to rise, the current universal model of percentage based transaction fees on all other exchanges means that commissions are constantly getting more and more expensive. Ever increasing transaction fees make short term trading strategies that provide lots of liquidity to the markets even more unviable as time goes on, making Digitex more attractive to these highly valuable liquidity providers.
Decentralized Governance by Blockchain (DGBB)
Blockchain technology is the driving force behind Digitex: the blockchain allows the exchange to eliminate transaction fees through the creation of its own cryptocurrency, and smart contracts on the blockchain hold traders’ account balances, allowing the exchange to operate trustlessly.
Digitex also uses the blockchain to govern new token issuance efficiently and democratically through rules and voting systems that are encoded into smart contracts. One of the great promises of the blockchain is decentralized governance. On the assumption that DGTX owners will act in their own collective self interest, Digitex can move forwards as a dynamic organization capable of adapting quickly to changing conditions.
Despite, the buzz about the crypto market and the gains associated with launching ICOs, the blockchain industry has challenges with regulatory and security issues. Recent trends related to the industry include new structures for pricing ICOs, expansions in different jurisdiction and large companies embracing the blockchain industry. Although the industry has a positive outlook, regulatory issues and challenges such as hacking, securities law violations, security breaches, pump and dump schemes, outdated technology, cybercriminal activity, liquidity and coin/token volatility should not be overlooked, and that's where DIGITEX comes into play; Digitex Futures Exchange is a revolutionary new futures exchange model that mints its own native cryptocurrency to replace the need for transaction fees on trades.
Commission-free trading will create highly liquid futures markets by attracting high volume, short term traders whose trading strategies are not viable on other exchanges due to commissions. As cryptocurrency prices rise, percentage based transaction fees on other exchanges will also rise, further increasing the appeal of a commission-free futures exchange.
Commission-free markets create demand for DGTX tokens which more than offsets the inflationary cost of creating that demand.
Traders on Digitex can participate in liquid, commission-free markets without needing to trust the exchange with custody of their funds, further differentiating the exchange from the traditional exchanges that require traders to relinquish full control of their account balances to a central third party that can potentially freeze/mismanage/lose those funds.
Through Decentralized Governance by Blockchain (DGBB), new token issuance for the purpose of revenue generation is run democratically by DGTX token owners.
Highly liquid, commission-free futures markets on a stable, fast and trustless trading platform, during a period of exponential growth in cryptocurrency trading, will attract a large number of traders, creating huge demand for DGTX tokens. As the price of DGTX tokens increases the exchange must create fewer tokens to cover costs, thereby reducing the inflationary cost of creating new tokens.
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