Zcash is a relatively new cryptocurrency, first mined on the 28th of October 2016, that attempts to solve the issue of fungibility in Bitcoin. It does this where no knowledge of the inputs or outputs of the cryptographic signature are required for verification. This is called a Zero-Knowledge Proof. Other cryptocurrencies attempt to solve the same problem using different cryptographic methods. The currency is denominated by the currency code ZEC. Further information about Zcash and ZEC can be found here.
On BitMEX, the ZEC derivative is in the form of a Futures Contract and allows traders to speculate on the future value of the Zcash / Bitcoin (ZEC/XBT) exchange rate. Traders need not have Zcash to trade the futures contract as it only requires Bitcoin as margin.
The ZEC futures’ underlying is the ZEC/XBT exchange rate on Poloniex as recorded in the .ZECXBT Index. The futures are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.
|XBT Contract Value||Multiplier * Futures Price * 1 ZEC|
|USD Contract Value||XBT Contract Value * XBTUSD|
|PnL Calculation||# Contracts * Multiplier * (Exit Price - Entry Price)|
Traders who think that the price of ZEC 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 ZEC futures contracts feature a leverage of up to 5x.
For example, to buy 10 Bitcoin worth of contracts, you will require 2 Bitcoin of Initial Margin.
The ZEC futures contracts will settle on the .ZECXBT30M Index Price. Settlement will occur on the last Friday of the Settlement Month.
A trader wants to goes long 10 XBT of ZEC futures contracts. ZECH17 (the Zcash futures contract expiring in March 2017) trades at 0.0500 XBT. As the leverage is 5x, the trader only needs 2 XBT of margin for this trade.
The trader must buy 200 contracts: 10 XBT / (0.0500 XBT * 1).
A few days later, the price rises to 0.0600 XBT and the trader sells all their contracts.
The trader’s profit will be: 200 * 1 * (0.0600 - 0.0500) = 2 XBT