The Singapore-based crypto exchange is launching interest rate swaps that allow traders to speculate on the rates themselves.
Singapore-based Delta Exchange has announced the launch of interest rate swaps (IRS) on DeFi rates, flash rates on Bitfinex, and interest rates on the BitMEX perpetual swap, starting today.
As the name suggests, an interest rate swap is a forward contract in which one stream of future interest payments is exchanged for another based on a specified principal amount.
Opening up a bridge between centralized and decentralized exchanges
Speaking with Cointelegraph, Pankaj Balani, CEO of Delta Exchange, said it was a first in the industry:
“Delta Exchange will be the first centralized exchange to offer interest rates swaps on any interest rates in the crypto ecosystem. The product will help in price discovery of rates and will open up a bridge between centralized and decentralized exchanges. Interest rate swaps are one of the most traded derivatives contracts in the traditional markets. We expect them to become popular in the crypto ecosystem as well.”
Balani says that IRS will help traders and institutions hedge their exposure to variable interest rates. The product will also allow traders to speculate on the rates themselves, “thereby creating liquidity and better price discovery of the interest rates.” Regarding the roll out he said:
“We are starting with interest rate swap for funding rates on Bitcoin perpetual swap on BitMEX. We plan to offer interest rate swaps on other variable-rates in the crypto ecosystem such as lending rates on Compound Finance for USDC, DAI, ETH etc. We are also planning to offer this product on the stability fee on DAI.”
Delta’s near-term plans
Delta Exchange announced on May 26 a new injection of funding from blockchain investor CoinFund, aiming to provide strategic resources for both parties in their focus to expand in India.