For years the method for crypto-derivative trading had a basic implementation that brought a significant amount of risk. Institutional traders were communicating and negotiating privately large trades via Skype and Telegram, whereas the order book’s execution was manually coordinated afterward.
The main risk is mostly related to the execution itself as the combination trades, and the spread was fluctuating, making the upcoming trades more unstable.
A newly announced partnership between Paradigm and the cryptocurrency derivatives exchange Deribit aims to solve this problem by allowing institutional crypto-derivative traders to negotiate and execute orders on the platform.
Multi-Instrument Block Trading Solution
With this newly announced partnership, both companies present a more proper execution, and the risks are efficiently eliminated as the public tape is shown as block trades.
“This solution allows you to negotiate deals privately on Paradigm and have them centrally cleared on Deribit, eliminating execution risks like front running. It’s a crucial step in onboarding institutional traders in the world of crypto.” Marius Jansen, COO and Co-Founder of Deribit told CryptoPotato.
Paradigm automates price negotiations and settlement workflows for OTC digital asset traders. The platform grants its users with management tools such as approving specific counterparties before a certain trade with them is conducted and a full directory of potential counterparties.
The block trading will be available both on the Paradigm system and directly on Deribit via API. It’s also important to mention that Paradigm may not be accessed by US citizens, as well as some more minor territories.
Institutional Adoption On The Rise
By providing the automated trade solution, this partnership is continuing an exiting wave of institutional cryptocurrency adoption from the last few months.
This comes just days following Bakkt’s futures launch date announcement, something that the crypto community had been waiting for long.