EMX— AMA @ The Topic Room
EMX is a next generation and compliant derivatives exchange that focuses on bridging crypto to real world derivatives like stock indexes, gold, commodities and even forex assets. With big names backing it such as Bain Capital, HASHED and the Skype cofounder, EMX is poised to be a real force in both retail and B2B trading markets.
Q: So let’s kick it off. Jim, why don’t you introduce yourself and Craig. and tell us what EMX.com is in your own words.
Jim: Sure, Craig and I are the two co-founders of EMX and for the last year and a half, we’ve assembled a team and built a crypto-native derivative exchange that lets traders trade global markets without the need for fiat. That means people can stay in BTC, and trade crypto.& traditional markets from one account.
Craig: From the start, we focused on offering a mix of crypto and traditional contracts, a novel new market structure based on frequent batch auctions (to protmote fairness), and a better user experience.
Q: Can you tell us your your work background and your journey into crypto?
J: Craig and I studied computer science at Carnegie Mellon. After graduating in 2005, i went to Citigroup for 6 years and traded fixed income.
Q: What’s fixed income?
J: Fixed income products, like government bonds and credit, products. I then went to a global macro hedge fund.
Q: This is more exciting I would imagine.
J: Yeah, I helped managed about ~1bn$ and we traded pretty much every liquid market in the world.
Q: How come you studied CS but worked as a trader at Citigroup? Were you always interested in trading?
J: Yeah, trading has always been a passion of mine since college, never a dull moment.
Q: Why is the name EMX? What does it mean?
J: We began as EverMarkets, then shortened it to EMX (EverMarkets eXchange).
Q: When did you guys start building and how big is your engineering team?
C: EverMarkets started as a decentralized derivatives exchange built on Ethereum. In mid-2018 we pivoted to build a centralized exchange. It took about a year from when we started the build out to when we launched our first platform trading mainnet BTC. Before that, we launched testnet.emx.com to allow traders to try out their strategies and test the platform.
We currently have 5 engineers on our team — including myself. We’re all based here in Palo Alto, CA.
Q: Are there any country based limitations as far as who can open account?
J: Yes, there are limintations and most importantly, we do not allow US traders. We want to be as compliant as we can, because regulation is coming.
Q: How different is EMX from Bitmex? Will there be more liquidity than Bitmax and Binance?
J: We’re work our way up to liquidity, which the established players have, but they have also had problems with we’ll address, like lack of product access and scalability issues.
Q: In addition to safety and security, fairness is also an important issue. So to ensure fairness for users, what should EMX do?
C: From the beginning, EMX’s matching engine has been built around the ideas of “Frequent Batch Auctions” described by Prof Budish from the University of Chicago here: https://faculty.chicagobooth.edu/eric.budish/research/HFT-FrequentBatchAuctions.pdf
Frequent batch auctions help to make a more fair market for everyone, disincentivizing high-frequency trading and leveling the playing field for traders spending a ton of $ on infrastructure to be the fastest trader on the platform.
We’re seeing more and more high-freq traders getting into crypto which can be good and bad for retail traders — but auctions are a good way to keep things fair.
Q: Don’t you think crypto assets have outperformed all real world assets and it would be a big opportunity cost for people to trade in crypto for any real world assets , would people be actually interested?
J: We’re giving crypto traders access to new markets. If/when crypto markets are not volatile (fall 2018), they can use that crypto to trade other markets, which are volatile.
Q: Please mention 3 Killer features of EMX, which makes it ahead of its peers?
J: UI/UX, global markets from one account, auction based matching engine that can scale easier.
C: We’re confident we have the best user interface of any exchange, and we’re rapidly adding features to it. Second, we offer traditional swaps like gold swaps and equity swaps — which no one else has (tradable with BTC). People also really enjoy our trading competition platform, which has a dynamic leader board.
Q: It is known that EMX provides margin trading up to 100 times. Send deposit money to electronic money and use EMX token to get a discount on transaction fees. Is this a special feature that helps EMX attract users?
J: Yeah, we will have a token that will incentivize people to trade on EMX, by offering fee discounts, collateral, insurance pool payouts, and more.
Q: What is your view on upcoming Bakkt who is also coming with future trading with big backer?
C: Bakkt is definitely well-funded. They’re approaching the institutional US / UK markets — while EMX believes the market for crypto is more global, with less of a focus on institutions. We are building a product for the global crowd — from small to large traders. Bakkt will be focused more up-market.
They’re also focused on physically delivered futures in the institutional space with only up to 3x leverage, we offer cash delivered futures with up to 50x leverage currently (with more coming soon). Any instiutional adoption of crypto is a good thing though.
Q: The majority of futures trading volume is concentrated on a few large exchanges around the world, such as the Chicago Mercantile Exchange Group (CME), the Intercontinental Exchange (ICE), and the Eurex Exchange.Is this a disadvantage for EMX?
J: You’re right that current futures trading is done on only a handful of exchanges. We’re building something entirely new that allows traders to access the same markets without needing USD or EUR to trade, like they do on the CME/ICE.
Q: Are you only focusing on derivative trading or in future you can bring normal exchange too for altcoins?
J: We are going to be launching spot trading next month to trade our token and a few other tokens as well.
Q: With the success and development as today, what difficulties has EMX experienced?
C: We started EverMarkets with a focus on the US market and began discussing plans with US regulators — but we soon realized getting a US license would be a massive challenge and an expense we couldn’t afford. The second biggest challenge for us would be gaining the trust of traders. Many are reluctant to trust a new exchange, and with good reason.
EMX’s General Counsel / Chief Regulatory Officer is Jim Falvey, previously from CME / ICE. And we’re doing everything in a compliant way — requiring KYC on the exchange, for example. Earning the trust of traders is a problem that’s solved over time — we think one way to get people to trust us is to have them try our testnet, completely risk-free. Once people try out our user interface, they’ll wonder how they traded without us.
Q: What is special to emx which is not present to others to encourage to trade there and not to binance, kumex, bybit or bitmex?
J: We’ve gotten good feedback on our UI. On EMX, you can trade both crypto and gold and us equities.
Q: Commodities too?
J: Yeah, gold is live on EMX.
Q: What is going on with fiat trading? Is it possible to be in this year?
J: We are going to allow trading of FX products, like EUR, very soon. Or is your question about using fiat on EMX?
Q: How many TPS can your platform handle? Will it overcome overload issues?
C: Batch auctions are PERFECT for handling “bursty” markets like crypto.
We cross all orders that arrive in a distinct period (say, 1 second) all at once in a batch — and fill traders all at the same time at the time price — and we do that very frequently. So, if there is a period of high volatility, we don’t need to match every order / modify as it comes in — and issue fills sequentially.
So we can handle volatile markets much easier and our API can stay responsive.
Q: What is the total market size for crypto to traditional assets trading? Any figures as to daily volume?
J: The crypto market pales in comparison to traditional markets. Volumes in traditional markets are 1000x larger than volumes in crypto.
Q: How do you address missing market maker on exchanges to provide liquidity?
J: We have an internal market maker that helps supply liquidity. We’re also speaking to other market makers to join us.
Q: Can liquidity providers and internal trading team place both maker and taker orders?
Q: Live Products, was asking about this.
J: Yeah, we have a testnet platform to encourage people to test out our exchange before live trading.
Q: Will the scalability limitation of ETH network effect EMX platform operation since your EMX token is ERC-20? Or its a combination of on-chain and off-chain on EMX platform?
C: We started as an on-chain platform, then a combination of on-chain / off-chain, but now we’re completely off-chain (except for the EMX Token). The scalability issues with ETH were just too difficult to overcome at the time- but with progress in the space rencently, hopefully a decentralized derivatives exchange with a strong UX and performance is not too far off. We believe the tech is not there quite yet, though.
Q: The gold trading is interesting. Im little worried about US equities we know that they have a strict regulations about that. Is that need of US SEC approval?
J: We’re trading an index product and offering it to non-US folks, which is the most important to US regulators.
Q: What would be the utility of emx tokens ? Staking if any ? Airdrops if any ? Gold airdrop 😍?
J: Fee discounts, collateral, staking to earn payouts from the insurance fund.
Q: I noticed how fast everything is with the exchange. Can you describe the tech stack?
C: Sure- we’ve built a suite of secure cloud services that handle matching, clearing / settlement, and all API interactions (REST and WebSockets with a FIX connection to come). We work with BitGo for secure crypto custody.
Q: Do you have a strategy to benefit from Binance blocking US users from trading on their platform?
J: As mentioned by Craig, we require KYC so we know who is trading on EMX.
Q: Will there be a spot market too in the near future?
J: Yeah, in a few weeks.
Q: Are you guys pursuing plugging in your backend to power a bigger exchanges’ derivatives offering?
C: We’d be open to that- especially if they’re interested in auctions or collateralizing positions in traditional assets using crypto.
Q: Can you explain whats an Insurance fund in the context of a derivatives exchange?
J: Futures have built in leverage. For example, a trader can put down $100, and trade $10,000 of btc. If they lose more than $100 on their trade, the insurance fund comes in and picks up losses to the system. On EMX, we have designed our risk management to act in real time before a trader can lose their $100. If they get forced liquidated, they will pay a fee, which goes into the insurance fund too.
Q: How big is the team right now?
J: 9 full time engineers, marketing, legal, and 3–4 part time support folks.
Q: I thought your BTC Perpetual Swap currently being offered now mimicked the spot prices?
C: That’s right- perpetual swaps are built to track spot prices. There’s a benefit to pairing a derivatives market and spot market, though — especially if we accept more forms of collateral than simply BTC (because users will want to move between them).
Q: In the near future, is the EMX planning airdrop or bounty … for users?
C: Sign up at EMX.com for the latest updates on those — or join our Telegram (https://t.me/evermarkets).
Q: What is the difference between a margin trade and a futures contract?
C: This is a good one. Tons of traders are confused by the difference between these two.
J: Margin trading actually requires one to borrow funds to gain leverage. There is usually a fee to margin trade, like interest. Futures have built in leverage, so one can easily go long or short w/ leveage, without paying any borrow fees.
C: Trading derivatives is generally simpler and you can more cheaply get higher leverage (when you need / want it).
This is why the hedge funds / banks that Jim and I work at are huge futures (a type of derivative supported on EMX) traders. It’s just a simpler way to get exposure to global markets.
Q: Do you think a 8M hardcap of EMX ICO is quite hard to reach the goal in crypto market at the moment since investors had bad feeling about ICO in 2017–2018?
J: We have already raised most of this, and we have gotten a lot of great feedback from private investors. they saw that we have a working product already which already makes us stand out more compared to other ICO projects.
Q: Do you need kyc to use the platform?
C: Yes, we require identity verification (photo of an ID and a selfie) but it’s fast and automated (in most cases).
Q: Margin trading would require a necessary emx position I suppose?
J: No, margin trading is like you having 1 btc, and borrowing someone else’s 1btc, to now trade w/ 2 btc. Futures trading is putting 1btc down for initial margin, but then trading a 10btc position.
Q: The gold trading is interesting. Im little worried about US equities we know that they have a strict regulations about that. Is that need of US SEC approval?
C: We will not be offering single-name US equities (like AAPL) on EMX — only broad indexes.
Q: What is the reasoning behind this decision?
C: It’s just a stronger regulatory footing for us if we stick to broad markets and not individual (US) equities.
Q: Emx token will be available on other exchanges too?
J: Yup, at least one more upon listing on EMX.
Q: Will you be adding other major ALTs? Futures and perps?
J: Yeah, looking to launch an XTZ contract shortly. Any ones you are interested in?
Q: As far as I know, many people do not want to kyc and cannot kyc. Does this make it difficult for EMX?
C: We expect the regulatory environment for low/no-KYC exchanges to get much less friendly over time — and we think it’s best to be prepared. So, we’re requiring KYC from the start — but making it as easy and quick as we can.
Q: By excluding US , you’re losing a big market, aren’t you?
C: We’d love to welcome US traders, but we’re not able to right now as we seek US licenses. We’re making decisions to make us more appealing to regulators down the road.
Q: With bitmex coming under recent regulatory screening , how would emx mitigate the regulatory risks?
C: Good point. We think there’s a big opportunity here and the market for crypto exchanges definitely won’t look the same a year from now. We think we’re in a good spot for that.
BitMEX turned a blind eye to US users for a while — and VPNs :). But we’re trying to do everything the right way from the start with fast compliant KYC.
Q: What is the utility value for EMX tokens?
J: Fee discounts, collateral, staking (earn from insurance fund).
Q: Will there be future trading for unlaunched crypto tokens like dfinity, polkadot, etc. ?
C: Derivatives markets on unlaunched tokens is an interesting idea. We’re taking a look at that. The liquidity challenge is huge, though. Having a fast, easy-to-use platform up and live with a solid regulatory footing is an excellent place to build from. We can take advantage of market trends as they come and offer new interesting products to traders quickly. Existing platforms tend to become victims of their own success, slowing down and not being able to move as quickly. (But new platforms have the “bootstrapping” problem of finding liquiditiy — so building a new venue is always a double edged sword.) We’re excited to be able to innovate for our users and launch some new experiences.
Q: It is known that the EMX team consists of experienced quantitative traders, exchange officers, market producers, FCM employees and engineers. Is this an advantage for EMX?
J: Yeah, building an exchange from the ground up is not easy. We are leveraging our experience from engineering, to risk management, to trading to build a robust derivatives exchange that can handle the volatility of crypto markets and depth of traditional markets.
Q: Oh can use emx as collateral? and plz explain staking in more detail.
J: People can choose to stake EMX tokens along side the insurance fund. 10% of any net gains in the insurance fund will be paid out to the stakers.
Q: If you are staking emx tokens, can they also be used for collateral at the same time.
J: No, only one at a time.
Q: Would suggest focusing on what ur doing instread of chasing that. Like u said the traditional asset is 1000x larger than crypto.
C: Crypto is interesting right now because the derviatves markets are smaller than the spot (token trading) markets. This really shouldn’t be the case — and we want to be ready as the market shifts more toward derivatives.
Q:Why shouldn’t it be the case?
C: Here’s an interesting visualization of the relative sizes of markets (from two years ago — but still relevant): http://money.visualcapitalist.com/worlds-money-markets-one-visualization-2017/
We’d expect crypto markets to end up similar to traditional over time — and that means expansion of open interest in derivatives.
Yeah, markets generally evolve like this though — as we’re seeing. spot trading => futures / swaps => options.
Options are still too confusing / risky for most traders, but eventually someone will find a way to make them easier to understand. A lot of that is a UX problem. Maybe something we can tackle down the road, but there’s enough to focus on making derivatives safe, simple, and fair to trade in crypto right now.
Q: When staking, do you set a time period? or is there some sort of lockup before an withdraw to use for collateral?
J: We’re finalizing the parameters for this now. We’d like to make this as user friendly as possible. Will have more for you soon.
Q: Don’t you thinks your product range with only 3 pairs : Bitcoin, Gold and S&P 500 is not big enough? If you add Silver and NASDAQ , it might become attractive.
J: We’re launching more contracts shortly, starting with EUR and a few other crypto contracts. Will keep in mind your silver and nasdaq interest.
C: Yes, more contracts to trade helps get folks interested that are looking for a specific contract (NASDAQ, for example) but it also splits our liquidity pool — which can make prices worse for traders. We’ve just launched, so that’s why we’ve started with a limited number of contracts. We have tons of exciting ideas here, though.
Q: Do you have plants to create a DEX?
C: We started by building a DEX, then a hybrid DEX, then a CEX… 🙂 As the tech matures, our team would love to get back into decentralized solutions — but we just don’t feel we can provide a high-quality user experience with the current tools.
We could *build* new decentralized tools (like many projects in crypto are doing now), but then we couldn’t build EMX! So we’ve decided to stay on this path for now and reevaluate the DEX option as tech improves.
Q: When is the IEO?
Q: How much was raised in private rounds and who are the investors?
J: We raised 5mm from private buyers, most notably #Hashed. We also raised some equity, including Bain Capital Ventures.
Q: Will be there a mobile app for EMX platform?
C: You can trade EMX from mobile right now — but no app yet. We’re working on that.
Q: Can you list some successses that EMX has achieved?
J: We’ve worked hard for the last year and a half building out a user-friendly, scalable exchange that is the first to combine crypto and traditional markets. We built a unique matching engine, launched it to traders, hosted trading competitions with 1k+ traders.
C: Good question 🙂 I’d say 1) Launching a new derivatives exchange after over a year of building (feels great to launch), 2) Being the first crypto exchange to offer gold, equity index (and soon, FX) alongside crypto — COLLATERALIZED in crypto, and 3) a successful batch of competitions where we found some great first users.
Also our partnership with Bain Capital Ventures and finding a great Chief Regulatory Officer to shepherd us through this ever-changing regulatory climate.
Q: Tell us about the upcoming Token Sale?
J: This has our token sale information: https://www.emx.com/en/token-sale/ Details about our partner IEO exchange will be announced soon, and we’re opening a new presale round.
Q: Does EMX plan to develop to developing countries about the electronic money market like Vietnam and China? those are lucrative markets.
C: We actually get a lot of users from Vietnam- and China is a market we’re expanding to. We’re looking to localize EMX in more languages, as well. Right now we support English, Chinese, Korean, and Portuguese.
Q: What will happen if there is problem with fund of users on EMX?
C: We do all we can to secure customer data and funds on EMX. We work with BitGo — an industry leader — to manage crypto custody. We realize gaining user trust is our biggest challenge as a new crypto exchange.
Q: What is the problem that EMX poses? How to solve it? Will EMX the future be exchanged on the exchange? Please state why users must chooses EMX and not other projects? Which platform does EMX build on?
C: The global derivatives markets (outside of crypto) are massive and largely untapped by crypto holders. Accessing these markets is often costly, inefficient, and difficult depending on where you are located. Additionally, with only a handful of exceptions, the products for one exchange have no counterpart in any others. For example, S&P 500 futures are only readily traded on CME, while cocoa futures reside solely on ICE. Our mission is to provide access to similar markets to crypto traders in a fair, efficient, and cost-effective way. We solve this by offering derivatives on equities, commodities, and currencies, collateralized in Bitcoin (and altcoins). Our exchange is live at trade.emx.com so try it out!
J: 1. How to trade all markets, while staying in crypto
2. We will trade our token on our exchange, maybe will list a perp as well
3. We’ve built a live product, with good feedback on UI/Performance
4. We’re built on node
Q: 1 What is EMX future development plan?
2 in the process of developing EMX is it difficult to get like today?
3 does EMX now meet formidable opponents? If so, does EMX have any plans to develop it?
J: 1. We have plans to launch more contracts, build out a native mobile app, and improve functionality
2. Not sure what u mean?
3. All startups have hardships, but we’re a professional team with a long history to help us overcome them
Q: Lets wrap this up with a few more answers.
Any more questions, go to their official TG.
Five Winners will be announced in 24 hours alongside the 3 winners from Ferrum.
Invite everyone to try it out by using this link:
Invite everyone to join your telegram group too.
C: Thanks everyone it was great to be here! If you haven’t tried emx.com out yet you can check out our testnet first (testnet.emx.com). We’re currently running a promotion on the exchange with no fee trading and a 100% deposit match bonus — deposit your first $50 and we’ll match it $50. Or feel free to PM @immejb and me and we’ll walk you through it. Join our Telegram as well- https://t.me/evermarkets
J: Thanks everyone for listening to us for the last 1.5 hrs 🙂