On Monday, Paradigm, a crypto over-the-counter liquidity network, announced the launch of a block trading facility on the leading derivatives exchange Deribit for options linked to major alternative cryptocurrencies MATIC, SOL, and XRP.
Paradigm stated on X that clients can now execute block trades in Polygon (MATIC), Solana (SOL), and Ripple (XRP). These linear options will provide payouts that "directly correlate with the price movements of the underlying asset." Options are derivative contracts granting the buyer the right, but not the obligation, to buy or sell the underlying asset by a specified expiration date at a predetermined price. A call option allows the buyer to purchase the asset, while a put option allows the buyer to sell it.
Block trades are privately negotiated futures, options, or combination trades that exceed certain volume thresholds. Participants typically use communication technologies like Paradigm to request quotes bilaterally and agree on the price.
The trade is then submitted to an exchange, such as Deribit, for execution and clearing. These block trades help reduce slippage and costs associated with executing large transactions, ensuring minimal impact on the market price.
Since its founding in 2016, Paradigm's OTC network has been a favored venue for institutional investors engaging in block trades, registering nearly $400 billion in volume to date. As of May, it accounts for 17% of the cumulative bitcoin and ether options activity on Deribit.
Paradigm's new block trading facility for altcoins has already seen activity. On Monday, Paradigm announced the successful completion of its first trade involving 500,000 units of MATIC call spreads between Singapore-based QCP Capital and Galaxy Digital. This trade involved MATIC call options with strikes at 80 cents and 95 cents, expiring on May 31. Facilitated by Paradigm, the trade was executed on Deribit. MATIC, the native cryptocurrency of the Polygon Network, is used for staking and gas fees.
Luuk Strijers, Chief Executive Officer at Deribit, expressed excitement over Paradigm expanding its block trading services to include linear altcoin options, starting with MATIC. He noted that this expansion broadens their mutual offerings and sets the stage for future inaugural blocks in SOL and XRP.
May 2024, Cryptoniteuae