BitMEX Announces BMEX Tokens to Revive Retail Interest

The exchange enjoyed some of the biggest trading volumes until recent years but has since failed to keep with newer competitors.

AccessTimeIconDec 21, 2021 at 12:05 p.m. UTC
Updated Dec 21, 2021 at 4:14 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

BitMEX will airdrop its BMEX tokens to account holders in early 2022, the exchange said in a post on Tuesday.

“We will be airdropping crypto tokens (BMEX) in your BitMEX.com wallets by 1 February 2022,” BitMEX said. Active, current and new users can earn BMEX tokens as of Tuesday.

BMEX tokens are similar to other exchange tokens such as Binance’s Binance coin and FTX’s FTT. Users can earn BMEX based on trading volumes at BitMEX and the fees generated for the exchange. More use cases for the token are expected in the future, as per the post.

BMEX will have a maximum supply of 450 million tokens vested over a period of up to five years, the exchange noted in a separate post. “The large majority of BMEX will be spent to reward users and grow the BitMEX ecosystem. An allocation of 20% is reserved for BitMEX employees and another 25% for our long-term commitment to the token and ecosystem,” the post added.

The BitMEX story

BitMEX, derived from “Bitcoin Mercantile Exchange,” was founded in 2014 and introduced bitcoin futures to the crypto market. This contributed to a change in market structure as traders could use leverage to place larger bets on the price movements of cryptocurrencies, such as bitcoin.

The exchange was also the first to introduce Perpetual Futures, a futures product without time-based expiry date as opposed to traditional market futures, which have an expiry date. Perpetual futures are a market standard these days, with nearly all crypto exchanges offering them instead of time-based futures.

Futures are a financial instrument that allows traders to bet on asset prices without holding the actual asset. Leverage is usually offered on futures, allowing the use of borrowed funds to increase one’s trading position on a relatively smaller initial capital.

“BitMEX ‘degens’ and the ‘trollbox’ were mainstays of the Wild West world of crypto trading before newer exchanges launched and gained relevance after 2017,“ said Tim Behrsin, founder of crypto project Grexie.

“BitMEX issuing tokens is how the exchange remains relevant among new crypto traders spoilt by choice by rival exchanges that offer interest-accruing exchange tokens and discounts based on tokens held. This is evident by the popularity of Binance coin, which has a market capitalization of $89 billion and is the world’s third-largest cryptocurrency after bitcoin and ethereum,” Behrsin said.

BitMEX processed billions of dollars worth of futures volumes in 2018 as the product gained relevance among users. It has since lost volumes to competitors like Binance, Huobi, and FTX, which offer their native tokens to users helping them save on trading fees and offer a wider range of assets to trade.

Analytics tool Glassnode shows bitcoin futures volumes on BitMEX in the past 24 hours was a tad above $1 billion. The 2017-founded Binance, in contrast, recorded over $23 billion in trading volume for a similar product.

However, exchange tokens do not necessarily equate to higher volumes or user base. U.S.-based exchanges Coinbase and Kraken, two of the world’s biggest crypto exchanges by volume, do not offer native tokens to users.

BitMEX has also been in the news in the last few years for its regulatory violations. In 2020, the exchange along with its co-founders were charged by U.S. regulators for facilitating unregistered trading and other violations. In August 2021, BitMEX said it reached a settlement with regards to the the civil charges against the exchange, and will pay a $100 million penalty to the regulators.

UPDATE (Dec. 21, 12:22 UTC): Adds details on BitMEX’s regulatory violations in last paragraph.

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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