Tezos is a new decentralized blockchain that governs itself by establishing a true digital commonwealth. It facilitates formal verification, a technique which mathematically proves the correctness of the code governing transactions and boosts the security of the most sensitive or financially weighted smart contracts.
The Tezos crowdsale is slated to begin on 1 July 2017.
On BitMEX, the XTZ derivative is in the form of a Futures Contract and allows traders to speculate on the future value of the Tezzie / Bitcoin (XTZ/XBT) exchange rate. Traders need not have Tezzie to trade the futures contract as it only requires Bitcoin as margin.
The XTZ futures’ underlying is the XTZ/XBT exchange rate on Bittrex, Kraken, or Poloniex as recorded in the .XTZXBT Index. The futures are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.
|XBT Contract Value||Multiplier * Futures Price * 1 XTZ|
|USD Contract Value||XBT Contract Value * XBTUSD|
|PnL Calculation||# Contracts * Multiplier * (Exit Price - Entry Price)|
Traders who think that the price of XTZ will rise will buy the futures contract. Conversely, traders who believe the price will drop will sell the futures contract.
All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The XTZ futures contracts feature a leverage of up to 2x.
For example, to buy 10 Bitcoin worth of contracts, you will only require 5 Bitcoin of Initial Margin.
The Tezos platform is still under development. It is expected that Tezzie tokens will be available for trading in the secondary market by the expiry date of XTZZ17, 29 December 2017 12:00 UTC.
If the Tezos crowdsale has not been completed before the expiry date, XTZZ17’s settlement price will be 0.
If the crowdsale was completed but XTZ/XBT trading has not begun on either Bittrex, Kraken, or Poloniex by 28 December 2017 12:00 UTC, XTZZ17’s settlement price will then be the ICO price.
If XTZ/XBT trading begins on or before 28 December 2017 12:00 UTC, BitMEX will announce the reference exchange prior to settlement. The XTZ futures contracts will then settle on the .XTZXBT30M Index Price.
As per the Settlement guide above, if trading has not begun on the aforementioned exchanges by the proposed date then the settlement price of XTZZ17 will default to the ICO price during the fundraiser as per Section 4 of the Tezos Overview, that is:
ICO Price = 1 XBT / 5,000 XTZ = 0.0002 XBT
XTZ futures may only move 25% above (Limit Up) or below (Limit Down) the previous session close. Each session is 2 hours in length, resetting on every even hour UTC time. Buy or sell orders may not be placed above or below the Limit Up or Down price respectively. The Limit Up and Down percentage will be removed shortly before or after XTZ lists on a secondary spot market. Advance notice will be given before the limits are removed, and XTZ futures are allowed to trade freely.
A trader wants to goes long 10 XBT of XTZ futures contracts. XTZZ17 (the quarterly XTZ futures contract) trades at 0.0200 XBT. As the leverage is 2x, the trader only needs 5 XBT of margin for this trade.
The trader must buy 500 contracts: 10 XBT / (0.0200 XBT * 1).
A few days later, the price rises to 0.0250 XBT and the trader sells all their contracts.
The trader’s profit will be: 500 * 1 * (0.0250 - 0.0200) = 2.5 XBT