Deribit Review

Pros Explained

• Highly sophisticated trading experience: Deribit is a market-leading crypto derivatives exchange with ultra-low latency or time between a user executing a trade and the platform’s response to settle the transaction.
• Supports futures, options, and perpetuals: While many leading crypto exchanges offer futures contracts, Deribit also offers options and perpetual swaps. 
• Leading cryptocurrency options trading venue: This crypto derivatives exchange has established itself as the go-to platform for Bitcoin and Ether options, owning over 85% of the Bitcoin options market share.  

Cons Explained

• Operates as an unregulated exchange: Deribit is not regulated, which means it could potentially run into regulatory issues in the future. 
• Not accessible to U.S. traders: Deribit is not licensed to operate in the United States and doesn’t allow U.S. users. 

Introduction

Deribit is a leading cryptocurrency futures and options exchange that enables crypto traders to execute derivatives trading strategies for Bitcoin (BTC) and Ether (ETH). Several other currencies can also be traded using USDC as collateral.. 

The exchange has established itself as the go-to Bitcoin options trading platform with the largest trading volumes and open interest in the market, resulting in over 85% market share of the Bitcoin options market.

Company Overview

Deribit was originally established in the Netherlands in 2016 but is now headquartered in Panama. It was one of the first Bitcoin options trading platforms and has since become the largest Bitcoin options exchange by volume and open interest.

Despite building a dedicated Bitcoin derivatives trading platform, Deribit added support for Ether trading in 2019 to allow users to trade all of the exchange’s derivatives contracts for both BTC and ETH. Deribit have since added support for SOL and USDC.

Even though it has one of the most advanced crypto derivatives offerings in the market, Deribit hasn’t established itself as a regulated entity. While it currently isn’t required to do so, the fast-changing regulatory landscape could be a concern for Deribit users. 

Cryptocurrencies Available on Deribit

Deribit supports 16 currencies including BTC, ETH, SOL, and USDC, as well as spot trading in BTC_USDC, ETH_USDC and BTC_ETH pairs. The platform also enables traders to buy and sell futures, perpetuals, and options on cryptocurrencies BTC and ETH. Traders can also trade perpetual swaps on several other cryptocurrencies with USDC. Additionally, the derivatives exchange allows traders to execute block trades for BTC and ETH, and SOL. 

Trading Experience

Deribit offers a highly professional crypto derivatives trading dashboard, ideal for advanced traders. 

The crypto-only trading platform offers ultra-low latency pricing and trade execution, allowing users to execute complex derivatives trading strategies. Users can trade futures contracts, perpetual swaps, and options on BTC and ETH, and benefit from some of the deepest crypto derivatives liquidity in the market. 

Deribit also provides an abundance of market data to ensure traders have all the information they need to make the best possible trading decisions. 

Fees

Deribit uses a maker-taker fee model, where liquidity providers (price makers) are charged a lower trading fee than price takers. 

Trading Fees

Options fees can never be higher than 12.5% of the options price. For example, if a Bitcoin option is traded at 0.0001 BTC, the taker fee will be 0.0000125 BTC (as opposed to 0.0003 BTC). 

Delivery Fees

Futures and options deliveries also incur a fee. The daily options and weekly futures are exempt from delivery fees.

Liquidation Fees

Deribit also charges a fee when positions are liquidated. Liquidation fees differ for Bitcoin and Ether.

Deposits are free on Deribit, while withdrawal fees depend on the state of the Bitcoin network at the time. 

Security

Deribit holds over 99% of customer funds in cold storage to prevent a loss of user funds due to a cybersecurity breach. The company credits this for the November 1 , 2022 hack being "isolated & quarantined to our BTC, ETH and USDC hot wallets." Deribit also provides two-factor authentication to allow users to secure their accounts.

The company also operates an insurance fund that exists to ensure winners get paid in full, and prevent losing traders being left with negative equity. Users can view the size of the insurance fund on their trading dashboard. 

As Deribit allows users to trade with leverage, traders can take positions that are larger than their account balances. To ensure that they do not incur a higher loss than they can afford to pay the winning party, positions are automatically liquidated when margin requirements can no longer be met. At this point, the insurance fund compensates the winning party, covering the deficit left by the losing party to ensure that the winning party receives its full payout. 

Opening a Deribit Account

Deribit offers two types of accounts: Individual and Corporate. 

Individuals can sign up using a standard ID verification process that takes only a few minutes to complete and provides full access to the trading platform’s products and features. 

Corporate account holders are required to undergo a more detailed KYC procedure to comply with the exchange’s AML/KYC rules. 

Deribit has a straightforward signup process that’s similar to signing up for an online brokerage account. 

To create an account on Deribit, you’ll need to provide your email address, username, password, and country of residence. Once you confirm your email address, you can access the trading dashboard. 

To start trading, you’ll need to complete identity verification by sharing your name, birth date, home address, country of residence, proof of address, and government-issued ID. Deribit will also require that you confirm your identity using your device’s camera, and its software will compare your image to the photo on your government-issued ID.

Once you have completed the ID verification process and your account has been verified, you can place your first order. 

To open a corporate account on Deribit, the onboarding process is more complicated and involves declaring who the ultimate beneficial owners (“UBOs”) and controlling individuals (e.g. directors) are. 

As mentioned, Deribit is not available to customers in the U.S. at this time. In addition, the company has added Canada to it's list of restricted countries.

Customer Service

Deribit offers customer support via a help center, support tickets, and email. There is also a Telegram group that users can access for general questions. Like many other crypto exchanges, it does not offer phone support to users.

Customer Satisfaction

Deribit is committed to customer satisfaction and loyalty. The exchange highlighted this when it reimbursed customers $1.3 million during a flash crash on Oct. 31, 2019. A bug in the trading platform’s BTC index calculation mechanism caused a temporary price drop from $9,150 to $7,720 before bouncing back within minutes. 

Account Management

Deribit users can trade using the exchange’s web-based platform or via the mobile application (available for Android and iOS). Traders can also connect via the API.

How Deribit Compares to Other Cryptocurrency Companies

Deribit differentiates itself from other leading crypto exchanges by focusing on cryptocurrency derivatives. 

While exchanges like Coinbase, Binance, and CEX.IO aim to onboard new crypto investors and experienced traders alike, Deribit exclusively targets professional traders looking to execute derivatives trading strategies in the crypto markets. 

Methodology 

Investopedia is dedicated to helping those interested in cryptocurrency investing make informed and safe decisions. We are committed to providing our readers with unbiased reviews of the top cryptocurrency exchanges for investors of all levels.

Exchanges were reviewed on points including security, fees, number of cryptocurrencies available, and more. We also considered if the exchange is regulated by a proper agency or entirely decentralized. Our full cryptocurrency exchange methodology, including the review process and weighted data points, is available for review.