The Digitex Futures Exchange opened on mainnet earlier this week to an initial group of 20 users who have been providing enthusiastic feedback about zero-fee trading. The exchange saw trading reach one million Bitcoin futures contracts worth $7m in the first 24 hours of opening. The move is just the first phase in a launch that will involve onboarding users in groups over the coming weeks.
Digitex Futures launched during the ICO boom of 2018 and has been operating a testnet version of its zero-fee trading platform since November 2019. Although the testnet didn’t involve real trading, the company had attracted significant trading volume on the testnet by running giveaway contests of its exchange token, DGTX. At one point, testnet volumes saw order matching speeds of over 300 million contracts in a single minute.
However, because the testnet wasn’t supporting trading with real tokens, Monday’s mainnet launch marks the first time that Digitex has been able to demonstrate its promise of zero-fee trading. The company’s large and loyal supporter base comprises many traders who adopt the scalping strategy — extremely short-term trading at high volume to profit from minor market movements.
The current challenge faced by scalp traders is that the existing business model of cryptocurrency exchanges involves traders paying fees that are calculated as a percentage of each transaction. Therefore, scalp traders find that their profits get eaten up by the fees.
Digitex CEO Adam Todd is a former futures trader who saw an opportunity to reconstruct the exchange revenue model. Digitex runs on its own token, DGTX. Unlike most exchange tokens that offer a discount on trading fees, traders are required to use DGTX to access the exchange.
Todd believes that the demand among scalpers for zero-fee trading will drive demand for the DGTX token and by managing supply, he can run a profitable exchange through occasional token sales. The rationale is that traders will accept a managed level of inflation on the value of DGTX if it means scalpers can successfully earn profits not available via other trading platforms.
An Enthusiastic Reception
Three days in and the initial group of 20 users has been providing the company with some enthusiastic feedback about the exchange. Digitex selected the group based on their trading experience and long-standing support for the company’s vision. Below is a screenprint from a private Telegram the company has been running for the mainnet users, shared on the company’s blog.
Some of the traders have taken to their own social channels to share their thoughts and experiences. One user tweeted that “cryptocurrency trading will never be the same after today’s launch.” Others have shared their live trading sessions on YouTube.
Traders have also been demonstrating that zero-fee trading really does generate profits for scalpers, with the blog post showing a conversation where three traders had finished up their sessions with 1,000, 1,300, and 1,500 DGTX, respectively. As things stand, Digitex has put a temporary limit on leverage to 10x but soon plans to raise this to 100x, illustrating that there’s further potential to magnify the size of trades.
The company is now planning to open up the Digitex Futures exchange to a broader group of 200 users, once again selected from its supporter base. After that, there are 10,000 more users waiting to trade tokens that the company has been awarding as prizes in referral contests. A full public opening is planned for late spring or early summer, depending on when the developers deem it ready.
The value of the DGTX token rose around 10% against the dollar in the 24 hours following the exchange launch.
A revenue model based around a token is a first for the crypto futures markets. However, the initial user feedback and illustrations of profitable scalping provide an early indication that Digitex could well be onto something truly transformative.