[ANN] HEXS.NET - Digital Asset Trading Platform

[hexs]

I'm very excited to announce the completion and launch of a project I've been working on for the last 7 months. It has gone through a 2-month beta with roughly 40 users; and suggestions were taken and tweaks were made along the way to create a secure & simple bare-bone trading exchange and client front-end terminal.

Value proposition:
HEXS.NET is a crypto-currency margin trading platform and allows users to hedge their bitcoin exposure down to 0.01 μBTC / per penny of the underlying; and initial margin requirements starting at 0.25 μBTC per contract. Fees are only applied to market orders (flat 0.01 μBTC per contract) and no fees for passive/limit orders. There are also no additional fees or swap charges; unless you want to consider the fee paid to miners when you load or redeem your wallet.

Digital Contract Types:
HEXS.NET offers two different contract settlement types; normal and logarithmic. All trades are consolidated and settled weekly. Normal contracts settle at the 24-hour average price of the underlying. Logarithmic contracts settle at the log of the 24h average price. For example, if the 24-hour average price of BTC/USD is $600 at settlement; then the normal digital contract will settle at $600.00 and the logarithmic digital contract will settle at log(600) =~ 2.78.

Active Contracts:
Normal:
BTC.USD, BTC.CAD, BTC.EUR, BTC.GBP, BTC.CHF, BTC.AUD, BTC.NZD, BTC.JPY

Log:
XBT.USD, XBT.CAD, XBT.EUR, XBT.GBP, XBT.CHF, XBT.AUD, XBT.NZD, XBT.JPY


Market Data / API
The client terminal provides no charting functionality as our focus is on speed and securely matching buyers and sellers. Raw JSON data is provided so that you may create your own charting solution.

Active Contract Orderbook: http://174.128.239.221/limitbook.txt (json)
All executed trades: http://174.128.239.221/marketdata.txt (json)

Automated trading functionality via Websocket API will be provided by COINIGY. These guys are doing a great job of creating an exchange-neutral trading platform that any active crypto-trader will appreciate. A temporary 'FIX style' direct-socket solution can be provided to those interested in market-making.

Client Terminal
The client terminal is written in JAVA and is a Runnable JAR file and is the most secure way of sending commands to the trading engine. If you are scared of using java and running java executable; then you can use the COINIGY web trading interface when it becomes available.
http://s30.postimg.org/lk5uicgw1/hext.png


Support:
Live support for exchange accounts is built into the terminal. Select the chat bubble, and a support agent will be notified to assist you.
Or you can reach out on IRC @ #HEXS on irc.freenode.net

Regulatory Environment / AML & KYC
HEXS.NET operates as an exempt money-services business as per FinCEN exemption guidelines. Withdrawals are limited to $750 per day and multiple withdrawal requests are not allowed until the last is processed. You also cannot cancel a withdrawal request once initiated. This temporary limitation reduces our paperwork and regulatory burden. BUT basic verification is still mandatory. A valid drivers license and proof of address is required to open an account (much like a library card). This will help us recover your account if you lost your password and also help us easily transition when withdrawal limit is increased and the service operates as a fully non-exempt money-services business. Currently the service will only support BITCOIN <> BITCOIN trading; and thus our only regulatory reporting requirement is to file a Suspicious Activity Report when withdrawal values (in dollars) are greater than $1,000.

Exchange Procedures
1). Limit orders are matched atomically with time & price priority against incoming market orders.
2). Stop orders are triggered when the last price is equal to or greater than for stop buy (or less than for stop sell). The order will immediately become a market order.
3). Contracts are settled every Sunday at 1:00AM GMT. The service shuts down for maintenance for 1 hour prior to this time.


I hope everyone enjoys the service as a few friends and myself are committed full(over)-time to this project alongside the COINIGY founders. We all want to provide you a great service and a cost-effective way to manage your bitcoin exposure alongside helping to mitigate counterparty risks with margin trading digital assets.


P.S. This is not a decentralized exchange. Those types of exchanges do not promote price competition and you end up with very wide spreads (which is good for the store, but bad price liquidity for the last buyer or seller). A decentralized exchange is like Wal-mart. If that still upsets you, then you should know that we made this with the classical economic school of thought in mind & care about mom & pop business'  


Questions? Comments? Concerns?

[kittucrypt]

So  you are providing BTC futures here?

[hexs]

So  you are providing BTC futures here?

Non-deliverable forward contracts.

[hexs]

Just a friendly reminder; there is no account minimum-- you can load your wallet with $0.25 worth of bitcoins and start trading. The margins to initiate 1 contract is 0.25 μBTC (25 satoshi). Fees are 0.01 μBTC (1 satoshi) per market order. Limit order fees are waived (re-credited at settlement). The goal is to provide a open and highly liquid digital asset trading market free from information asymmetries. Never load all the bitcoins you own to the exchange wallet.

Fee rebate is available for any interested market-maker.


Please feel free to ask questions or address any concerns.

[hexs]

I would like to address a common question a few users have brought to my attention ie. "how do I actually hedge on your platform?"

Example:

You own 1 bitcoin at an average price of $600.25 and would like to hedge your downside risk.

Step 1: Determine how much a $0.01 is worth in satoshi for that price level.

Set $600.25 equal to 1 bitcoin, divide both sides by $600.25 to determine how much $1 is worth in satoshi.

Divide both sides again by 100 to determine how much $0.01 is worth in satoshi.

$600.25 = 1 BTC
1 = 1/600.25 BTC
0.01 = 1/600.25/100 BTC

so 1 penny change is worth roughly ~ (1/600.25)/100 or 1666 satoshi. (this ratio is not static; if price moves down-- you will need to short more to stay hedged; if price moves up -- you will need to be short less to stay hedged.)


Step 2: As the BTC.USD contract has a minimum tick increment of $0.01 and a minimum tick value of 1/Satoshi per tick; you must sell 1,666 contracts to be hedged.

The margin required is constant at $100USD (for the time being) per bitcoin hedged. THUS, your effective leverage will change with price.

IF BTC/USD spot rate is $100, it will take you $100 in bitcoin to hedge. (effective leverage 1:1)

IF BTC/USD spot rate drops below $100, to $50, your leverage is still $100 (effective 1:2)

IF BTC/USD spot rate drops to $25, your leverage is still $100. (effective 1:4).

Margin rates will be adjusted for the BTC.USD contract, whereas the margin rates for the log contracts will always be constant (at 25 satoshi per contract) as the settlement prices are less volatile.



Questions? Comments? Concerns?

Let me know!

[hexs]

Websocket API is available for those interested in immediate automated trading.

See: https://bitcointalk.org/index.php?topic=440759.msg7555348#new

If interested in this set-up, let me know or email us! Thanks!

[mtwelve]

Would be interested in doing an article regarding your website for http://bitcoinist.net/ Just Pm me if you are willing to take this offer.

[hexs]

Hello again! Giving the thread a slight bump. We are looking for traders interested in automated market making.. please reach out to us and we will provide you everything you need to get started! We will waive all fees for market-makers.

We have over two dozen accounts but no one is trading 

We are working on a 'How-to' guide for the platform (it's very simple!) which will be out shortly.


For those who do not understand what a NDF market is or how a margin trading account works; please check out this very informative video series from Khan Academy:

https://www.khanacademy.org/economics-finance-domain/core-finance/derivative-securities/forward-futures-contracts/v/futures-margin-mechanics


I appreciate and welcome any feedback / comments / suggestions. Let us know what we are doing wrong or right!

[mtwelve]

You never got back to me regarding an interview... Whats up?

[hexs]

As per the the recent regulatory framework introduced in NYS: http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf

We operate as a exempt money-services business as per Federal/FinCEN guidelines; Unfortunately, the proposed NYS framework provides no exemption; and thus, for the time being, we will no longer accept customers who are residents of NYS. All affected customers have been notified to withdraw funds out of HEXS.NET.

[hexs]

The core trading engine will be offline starting 8/10/2014 for roughly 7-14 business days due to critical updates, and subsequent testing before re-release, to our core pricing and trade booking engine. The update will allow customers to engage in spot transactions (dollar for bitcoin and vice-verse) as well as non-deliverable (financially settled) forwards.

The update will introduce a new thoroughly documented Websocket API with working examples in Javascript and Tyrus (A library used to create client Websocket endpoint in Java).

All other limits (withdraw and deposit) are in place to maintain FinCEN exemption status. If you have any comments, questions or concerns, please reach out to us and let us know.

[DannyElfman]

How do you handle situations where you can't match all future positions internally? Bucket shop?

[hexs]

How do you handle situations where you can't match all future positions internally? Bucket shop?

Due to the trading backgrounds of key firm shareholders we believe it would be a conflict of interest to take the other side of trades. So put simply, we don't take the other side of trades and this is why our total volume is still zero-- although our verified customer base is growing daily. Go figure. We feel this is the best time to implement these updates before trading starts to pick up where such a large downtime is unacceptable.

HEXS.NET is purely focused on providing fast, secure and reliable order matching based on time-price priority. If you are trying to buy and no one is willing to sell to you; your trade will not execute and will become a limit order instead. (ex. If there are no visible offers (or bids) and you place a market buy order (or sell order); the market order will become a limit order.)

We received some feedback from customers and non-customers that we should create a liquidity bot to get trading started.. but we don't feel that would be the right thing to do. We don't believe in the broker-dealer model nor do we engage as broker-dealers. Rather, we are willing to accommodate customers who are interested in providing a two-sided market with fee-waivers and rebates per trade.

Let us know if you have any other questions.

[DannyElfman]

How do you handle situations where you can't match all future positions internally? Bucket shop?

Due to the trading backgrounds of key firm shareholders we believe it would be a conflict of interest to take the other side of trades. So put simply, we don't take the other side of trades and this is why our total volume is still zero-- although our verified customer base is growing daily. Go figure. We feel this is the best time to implement these updates before trading starts to pick up where such a large downtime is unacceptable.

HEXS.NET is purely focused on providing fast, secure and reliable order matching based on time-price priority. If you are trying to buy and no one is willing to sell to you; you're trade will not execute and will become a limit order instead. (ex. If there are no visible offers (or bids) and you place a market buy order (or sell order); the market order will become a limit order.)

We received some feedback from customers and non-customers that we should create a liquidity bot to get trading started.. but we don't feel that would be the right thing to do. We don't believe in the broker-dealer model nor do we engage as broker-dealers. Rather, we are willing to accommodate customers who are interested in providing a two-sided market with fee-waivers and rebates per trade.

Let us know if you have any other questions.

Very good answer. Will take a closer look into this project if I find some time!

[hexs]

Sorry for the delayed restart. We will be back up shortly with a few improvements and multiple-crypto support as well as support for fiat deposits; fiat deposits will be limited to 750$ per day in/out; same with crypto in/out. All transactions pegged to dollars.

Manuals with discrete directions regarding the websocket API, as well as standalone client, will be up shortly. A demo environment will also be enabled for testing automated strategies in sandbox mode.

Thanks for checking us out.