Huobi adds perpetual swaps to its futures platform

Huobi, the largest exchange by volume trading almost $1 trillion this year, announced they will be adding perpetual swaps offering up to 125x leverage. Huobi DM will initially trade a BTC swap but plans to add additional assets in the future.

Why it matters

• Perpetual swaps have risen to prominence in the last few years by offering traders easy access to excessive leverage. As we saw with the recent market sell-off, this can create structural problems in the crypto markets as large drawdowns lead to liquidations en masse which only creates additional sell pressure. With one of the largest crypto exchanges in the world now offering perpetual swaps, this issue may only get worse.
• Huobi has taken steps to alleviate this problem by becoming the first exchange to implement a "'circuit breaker" to help calm markets in times of distress. Unlike circuit breakers in traditional exchanges, this won't pause trading. Instead, it halts the liquidation mechanism which can help prevent mass liquidations similar to what happened on BitMex as their perpetual swap traded below 20% of the actual spot price.