Deribit, a leading cryptocurrency futures and options exchange, has just published its policy on the ETH 2.0 Merge Fork. The official statement claims that the Deribit settlement for all instruments will take place on the ETH Proof-of-Stake (PoS) or ETH 2 chain, which is backed by the ETH foundation. In September 2022, Ethereum is expected to begin the Merge upgrade for ETH 2.0. This coincides with Ethereum’s transition from using Proof-of-Work (PoW) to Proof-of-Stake (PoS) as the mechanism for reaching consensus. It’s possible that this will result in one or more minority chains or tokens.
Deribit will award users with this/these forked token(s) if the forked token’s value exceeds 0.25% of ETH PoS and the new chain is stable and working normally. Crediting will take place automatically through a new wallet that does not support trade and will only be used for withdrawals (which Deribit will create for users). The newly introduced token (if any) will not count as margin. In addition, Deribit will capture a snapshot of all ETH equity just prior to the upgrade, and the crediting of the new token will be proportional to this equity value.
| Instrument | Post-Merge Underlying | Contract Adjustment |
| ETH Perpetual | ETH Proof of Stake (PoS) = ETH2 | No |
| ETH Futures | ETH Proof of Stake (PoS) = ETH2 | No |
| ETH Options | ETH Proof of Stake (PoS) = ETH2 | No |
Options Contracts To Remain Aligned With Relevant Peers
Forks in the past have taught us that the majority of important perpetual and futures platforms do not alter contracts following a hard fork. In order to keep its contracts in line with those of its relevant competitors, it makes sense for Deribit not to modify these as well. Instead, Deribit will only settle on the primary PoS chain rather than imposing strike adjustment/ratio methods and index/basket settlements. This indicates that (the value of) minority chains/tokens will not be factored into the determination of the value of users’ option.
Given the market’s volatility and the initial scarcity of supply, it would be quite challenging to calculate the strike adjustment ratio. In addition, the value of the token is not determined in advance, as is the case with super dividends or corporate spin-offs. Furthermore, this presupposes that everyone has equal access to the forked token, which will not be the usual situation. Therefore, the corporate action policies that are used by traditional markets are not fit for this situation.
This methodology is applicable to all ETH instruments currently listed or to be listed in the future, irrespective of whether open interest was formed prior to or after the publishing date. The clearness for customers and fulfillment of hedging needs is achieved by utilizing a single token for both ETH PoS and ETH2. For BCH and ETC, the market will continue to be competitive compared to its previous state.
Deribit Aiming To Lead After The Merge
Deribit is a prominent cryptocurrency futures and options market that lets cryptocurrency investors implement derivatives trading techniques for Bitcoin (BTC) and Ethereum (ETH), as well as Solana (SOL). Multiple additional currencies can be traded using USDC as collateral. Due to the fact that the exchange has the highest trading volumes and open interest in the industry, it currently holds more than 85% of the market share in the Bitcoin options industry.
Deribit supports BTC, ETH, SOL, and USDC, allowing traders to purchase and sell futures, perpetual, and options on BTC, ETH, and SOL. Furthermore, traders can use USDC to engage in permanent swaps on a number of different cryptocurrencies. In addition, the derivatives exchange makes it possible for traders to execute block transactions for BTC, ETH, and SOL.
The cryptocurrency-only trading platform provides ultra-low latency pricing and trade execution, which enables users to carry out complicated trading strategies using derivatives. Users can take advantage of some of the deepest crypto derivatives liquidity on the market by trading futures contracts, perpetual swaps, and options on BTC, ETH, and SOL. Deribit also offers a wealth of market data to ensure that traders have all the knowledge they need to make the most informed trading decisions possible.
