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Fireblocks forms new integration partnership with X-Margin for crypto derivatives market

By Pavithra R

September 08, 2020

  • Fireblocks
  • USA
  • X-Margin
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FireblocksNew York-based Fireblocks, an institutional platform for securely moving blockchain-based digital assets, has announced that the firm has expanded support for the crypto derivatives market through a new integration with X-Margin.

The integration allows both X-Margin and Fireblocks to preform the trading of derivatives on any asset, using any form of collateral while receiving cross-margin benefits across counterparties. X-Margin, as a distributed clearing network, eliminates counterparty risk, while Fireblocks secures collateral and automates settlement with it’s digital asset security infrastructure.

“The derivatives market has always been attractive for larger investors, but one of the biggest hurdles they needed to overcome has to do with capital efficiency, custody, and security. Working with Fireblocks to grow X-Margin’s distributed clearing network is an obvious and natural fit given the number of institutional trading firms actively using Fireblocks. The partnership allows institutional trading firms to cross margin and bilaterally trade derivatives without compromising security,” said Darshan Vaidya, CEO of X-Margin.

Crypto derivatives trading requires users to hold funds on exchanges as collateral so that contracts can be funded, making it a high risk for institutional investors, especially given the number of exchange hacks that have happened over the last year. The sector is seeing huge traction with Q1 of 2020 with more than $2T in trading volume, a 314% increase from 2019. This has resulted in an increased need to provide security, which helps institutions to feel comfortable while using some of the newer and more sophisticated financial instruments available in the crypto market today.

X-Margin is a zero-knowledge cross margin system designed to solve a major pain point in the industry. Derivatives trading firms currently need to post collateral with each venue they trade at, even if they have offsetting positions across them, which is expensive and increases custody and operational risks. Starting with bilateral derivatives, X-Margin’s proprietary zero-knowledge technology allows users to get the portfolio effects of central clearing without needing a central intermediary to verify positions. Users can net risk across counterparties and automatically settle trades.

“The Fireblocks/X-Margin integration perfectly combines cross-platform collateralization, risk transfer, and settlements into one comprehensive package that encompasses the whole life cycle of a trade. This has been a crucial infrastructure piece that has evaded the institutional digital asset markets until now,” said Shiliang Tang, CIO LedgerPrime.

Recently, Voyager Digital integrated Fireblocks digital asset network.

JST Capital, XBTO and LedgerPrime, are the first customers to successfully trade custom bilateral derivatives with cross margin, utilizing X-Margin’s distributed clearing network.

Founded in 2018, Fireblocks is a provider of enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. It offers an end to end security platform for transferring digital assets. It streamlines all exchanges, OTCs, counterparties, hot wallets, and custodians into one platform and enables them to securely scale digital asset operations through patent-pending SGX & MPC technology.

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