Delta cryptocurrency exchange has announced the launch of interest rate swaps (IRS) on cryptocurrency rates. The swaps will be available on DeFi rates, flash rates on Bitfinex, and interest rates on the BitMEX perpetual swap.
An interest rate swap is a forward contract where one stream of future interest payments is exchanged for another based on a specified principal amount.
Pankaj Balani, CEO of Delta Exchange said:
“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 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.”
Balani further adds:
“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.”
The cryptocurrency exchange will soon launch IRS for USD Coint (USDC) lending rates on Compound Finance and Dai (DAI) lending rates on Compound Finance at 50x leverage.