2020 Futures Industry Report

Jan 2021

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Industry Voices

Cryptos represented by Nowadays, the types of products in has been favored the are and held by global complemented, and the market focus investors heavily in the has gradually shifted from the investment portfolio, for expansion of product types into the cryptos are squeezing competition of product quality. gold’s position and Increasing capital utilization and becoming one of the reducing risk have become the next diversified options for key points of contending for the investors. Cryptos are derivatives market. Besides, the DeFi expected to occupy a derivatives market will be especially central position in the concerned by exchanges in 2021. investment industry, and the derivatives markets’ Jay Hao stronger growth will be CEO driven by the attention of institutional investors within 2021. The derivatives market does not Tom implied potential of revolution yet, the only commonly used derivatives Contract Principal on the market are still leveraged products, futures, perpetual and Derivatives markets will options. These products actually have huge growth in the evolved from traditional finance future, and most of people industry and having very good will choose to trade with financial integrity. leverages. With more product types, from the perspective of system and capital utilization, Jason exchanges will try to build unified account system, Head of Market which is not complicated Business but high-technological for them. The activeness of the derivatives market is relatively beyond the James Ju spot market. Regarding regulation, it will tend to be strict Founder & CEO and formal in the future. AML/ CFT is still the top priority of the Traditional financial platforms and must pay more derivatives market has attention on this. developed hundreds of years so that very formal and mature nowadays, Olivia which is worthy to study Brand Director and reference for crypto exchanges. In the future, we will continue to help channels improve the The competition of professional winning rate of customer product capabilities and risk control tradings. Customers is capabilities will be the main exchanges’ source of core competing field of the exchanges. competitiveness, meanwhile We can see that whether contract or compliance is the threshold spot, the service capabilities of high- for exchanges to survive quality platforms will step forward in and compete. this year. Michael Su Alicia Founder Senior Partner tokeninsight.com

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2021.01.18 [email protected] to view real-time trading data on to view real-time Wayne, TokenInsight COO TokenInsightofficialwebsite against others by relying on special products will gradually decrease, and the head effect of and the head effect will gradually decrease, on special products against others by relying the competition between exchanges will In the future, exchanges will intensify further. crypto exchanges, large types of exchanges: existing following three the around revolve exchanges established by traditional institutions after acquiring licenses, and decentralized exchanges. Now you can visit data on the cryptos in the secondary market. For more and different exchanges different market in 2020, Please Enjoy the Report. crypto futures ourishing, BTC futures trading volume just accounts for about 63% of the total market trading volume just accounts for about 63% of the total market fourishing, BTC futures trading volume. and even platforms intense indicate more on different of products The improvements fts competition among crypto exchanges in 2021. The competition in pro straightforward fts, and use the makes the platforms the pro user education, overemphasize usually neglect the essence of exchange is ftable users to attract other users. However, some pro data from for exchanges is no difference or lose, there Whether users’ win only platform provider. users life, but leads to an unhealthy ft-dominated operation not only reduces indeed. Pro of users, which is unsustainable. structure the opportunity to stand out exchanges, in large-scale With of products the improvement cant increase. On the contrary, On the contrary, have no signifcant increase. issues, and its annual transaction volume signifcantly in 2020. increased and their market share Bybit and FTX achieve rapid growth, BitMEX in 2020Q4. Bybit's quarterly trading volume exceeds landscape of the innovation, the competitive and product Withfnement of regulation the re to certain adjustments. As institutional investors begin crypto market has also undergone in line with the clearly more exchanges are allocate cryptos in their portfolios, compliant Exchange 31, 2020, the Chicago Mercantile needs of institutional investors. On December in the market. open interest BTC futures (CME) became the platform with the largest booming in 20Q3, of DeFi’s because futures, In terms of the mainstream of the proportion the whole market is In Q4, although sharply. market drop of BTC futures the proportion continuously updating all-time-high of BTC and ETH prices in Q4, the quarterly trading all-time-high of BTC and ETH prices continuously updating to compared of 98.1% $5,350B, an increase in 20Q4 reaches volume of crypto derivatives the very frst time surpasses spot for trading volume of futures Q3, and the quarterly ($4,9980B). two phenomena we have seen. are there the year, throughout market Reviewing the futures contracts. attention to futures and more paying more are First, the leading exchanges contracts (Coin- futures crypto OKEx have all achieved the mainstream , , and share second phenomenon is that the market The this year. and USDT-margined) margined 39% in Q1 to 84% in Q4. from signifcantly, of perpetual contracts has increased experienced serious loss of users due to compliance In terms exchanges, BitMEX of futures The scale of the crypto futures market grows rapidly in 2020. The annual market volume annual market volume in 2020. The rapidly grows market of the crypto futures The scale rises from open interest contract the market-wide futures meanwhile exceeds $12,314B, of the of 384.9%. Because an increase the end of the year, $3.51B to $17.03B at RESEARCH

Overview tokeninsight.com 4 5 6 7 8 19 21 22 11 Dominant Contract Users and Popularity Regulation Dynamics Large Comprehensive Exchange Comprehensive Large Compliant Exchange Exchange Emerging Overview Product Contract Distribution Exchange Analysis Exchanges Comparison Exchanges Classification Exchange Futures Large Industry Update Industry Lanscape Trading Volume Market Trading Open Interest Executive Summary Executive RESEARCH

Content tokeninsight.com RESEARCH

In 2020, TokenInsight obtained relevant data from 43 exchanges in Executive the crypto derivatives industry. The $12.31 trading volume of the crypto futures market is reported to be Summary trillion $12.31 trillion, an increase of 402% from 2019.

On December 31, 2020, the market- Surpass Regul wide open interest amounted to $17.03 The trading volume ation billion, an increase of of crypto futures 485% 485% from January 1, continues to rise, and In October 2020 ($3.51 billion). the market shares of 2020, the US large comprehensive Department exchanges have huge of Justice changes. Binance accused The ratio of futures to spot Futures Q4 futures BitMEX and trading volume on large quarterly trading its executives comprehensive exchanges volume surpasses of violating the Bank reached 2.7. The Huobi Futures, and Secrecy Act. market is rising, which reflected its market share 2.7 the leverage advantage of futures increases by 11%. contracts relative to spot.

Perpetual Contract

Growth Compliance The proportion of perpetual New players such as FTX In 2020, CME contract transactions in 2020 and Bybit increase exchanges’ open increases from 39% in Q1 to 84% in rapidly, and Bybit's Q4 interest reached $1.6 Q4. Due to the base effect, some turnover billion, who is the large-scale comprehensive has exceeded BitMEX. exchanges such as Huobi Futures Meanwhile, BitZ ranked first in the futures and OKEx still focus on delivery sixth in annual trading market. futures contracts mainly. volume.

Classification TokenInsight classifies futures exchanges. The current futures exchanges on the market can be divided into: large comprehensive exchanges, large futures exchanges, compliant exchanges and emerging exchanges. Among them, emerging exchanges are new forces with rapid growth and innovative features, including Bitcoinwin and Bingbon, etc. tokeninsight.com 5 RESEARCH

INDUSTRY ① OKEx officially launched Bitcoin European options products; ② FTX Exchange launches 2020 US presidential election forecast futures UPDATE contract ③ Bakkt has been identified as an important factor in the growth of the Intercontinental Exchange (ICE). The earnings per share of the Intercontinental Exchange (ICE) increased to US$0.95 year-on-year; ； ④ Bybit launched USDT perpetual contract;Q1

① Binance announced the acquisition of CoinMarketCap for $400 million;

② Huobi DM was upgraded to Huobi Futures, and continued to maintain the first place in the derivatives market by trading volume;

③ The exchange Deribit ceases to provide services to Japanese users;

④ Angelina Kwan, former COO of BitMEX, joined Deribit's investor board;

⑤ Hopex launches CBBC(Callable Bull-Bear Contracts);

⑥ The Europe Cambridge Blockchain Technology Development Trend Charity Foundation appraised "the world's top ten compliance management data trading centers", and Bitcoinwin exchange was selected.Q2 ① Matrixport launched its own derivatives exchange bit.com;

② HHuobi launches option contract, the industry's first USDT-based option contract;

③ Huobi USDT/USD perpetual contract is officially launched, supporting 1x-1000x leverage;

④ The total trading volume of Bitcoin options on bit.com exceeds $360 million, following Deribit and CME; ⑤ Bingbon and SlowMist reached a securityQ3 strategic cooperation;

① The open interest of Chicago Mercantile Exchange BTC futures surpassed Binance;

② The Chinese name of BitZ's third anniversary brand upgrade "币在" was officially launched;

③ Deribit exchange launched a BTC with a of $100,000;

④ In Q4 2020, the quarterly trading volume of crypto derivatives surpassed the spot for the first time;

⑤ bit.com's bitcoin options trading volume reached $1.4 billion, surpassing CME in December;

⑥ FTX lists 's Pre IPO futures contract;

⑦ The Chicago Board Options Exchange announced that it will create a crypto index; ⑧ TradingView officially launched BingbonQ4 trading charts. tokeninsight.com 6 RESEARCH

Industry Landscape

Spots Derivatives Exchanges Exchanges

DecentralizedExchanges

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TRADING 1. Market Trading Volume In 2020, the total trading volume of the crypto futures market is $12.3 trillion, and the Q4 trading volume surpasses the spot market for the frst time in history.

TokenInsight collects and sorts out the annual transaction data of derivatives of 43 crypto exchanges, and classifes and compares derivatives exchanges based on market conditions. This article focuses on a detailed study of the futures market transactions in 2020.

In 2020, the trading volume of the crypto futures market is $12,314B. Among them, the Q4 crypto futures trading volume reaches $5,350B, an increase of 98.1% compared with the previous quarter, surpasses the spot ($4,998B) for the first time.

‣ Total futures volume(2019Q4-2020Q4) Source: TokenInsight

Changesintotalvolume Totalvolume $6,000B 98.1%

25.1% $3,000B 124.2% 2.6% $5,350B

$2,700B $2,105B $2,159B $939B 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

‣ 2020 Quarterly spot The trading volume of the crypto spot market at the same period is shown trading volume on the left. In 2020, the crypto spot market trading volume reached Source:TokenInsight $21,083B. Different from the continuous growth of crypto futures, the spot market trading volume has not shown a signifcant growth trend in 2020. $4,998B ‣ Comparison of futures 20Q4 The total trading volume of and spot volume crypto futures in 2020 is Source: TokenInsight $3,998B approximately 36.87% of the 20Q3 63.13% total trading volume, which is $5,441B an increase of 18.75% from

20Q2 18.12% in 2019. In 2020, Q4 futures trading volume $6,647B achieved the highest 2020SpotVolume 20Q1 increase of this year, 2020DerivativeVolume 36.87% $3,500B $7,000B exceeding $5 trillion. tokeninsight.com 8 RESEARCH

In the fourth quarter, the price of Bitcoin breaks through ATH, investors' enthusiasm for trading is high, which leads to the break out of crypto derivatives market trading volume.

In 2020, the average daily trading volume of the crypto futures market is $33.23B. The highest daily transaction occurred on December 27, at $142.9B; the lowest daily transaction occurred on July 19, at just $9.26B. Along with the rising market conditions in the second half of the year, the trading volume of crypto futures has repeatedly exceeded historical highs, and the volume of Q4 futures trading has increased by 154% compared to Q1.

‣ Total derivatives and spots daily volume in 2020 Source: TokenInsight

Totalfuturesvolume Totalspotvolume BTCprice $200B $33,000

$25,500 $133B

$18,000

$67B $10,500

$3,000 2020/1/1 2020/3/28 2020/6/23 2020/9/18 2020/12/14

In the frst half of 2020, the growth of crypto futures trading volume is not obvious. Because of the Covid-19 pandemic, the liquidity of global fnancial assets has been seriously affected. BTC futures also experienced a large-scale sell-off on March 12, and crypto futures positions once shrank sharply. The crypto futures’ open interest in the whole market fell by 28% that day, and the March futures open interest was the lowest level in 2020.

In the second half of 2020, DeFi has become the biggest hot spot in Q3, attracting a large infux of funds and rebuilding industry confdence. At the same time, the price of cryptos recovered from the liquidity crisis, and the daily trading volume of futures recovered to around $80B. In Q4, as Microstrategy, Square, Grayscale and other large institutions invested in BTC, the spot market was awakened, and futures trading volume rose sharply, which together drove the single-day trading volume of cryptos to exceed $140B on November 27th. In late December, the prices of mainstream cryptos such as BTC and ETH broke new high, following with the market-wide futures trading volume quickly recovered and rose steadily.

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2. Market Open Interest

In 2020, the futures market open interest rise

‣ Market-wide futures steadily, and the long-term allocation value of cryptos open interest at the gradually appear. end of each month in 2020 In 2020, the open interest of the whole market rises from $3.51B at the Source: TokenInsight beginning of the year to $17.03B at the end of the year, an increase of 384.9%. According to the 2020 futures daily open interest data compiled by TokenInsight, $3.85B there is no obvious positive correlation between the market open interest and the JAN $4.18B BTC price in 2020 (the correlation coeffcient is 0.07). FEB $2.16B In the frst half of 2020, crypto prices are in a shock range. The growth of market- MAR wide futures open interest was almost zero. Especially, after the "3.12" liquidity $3.63B APR shock, the crypto futures positions once shrank sharply. In Q3 of 2020, Bitcoin $5.49B fuctuated around $10,000, and futures holdings were also relatively stable, MAY maintaining around $8B. Looking at the whole year, the substantial increase in $5.53B futures positions occurs in 2020Q4. The crypto bull market in November led to a JUNE $7.93B rapid increase in open interest, and the futures open interest at the end of the JULY month increased by 45% from the previous month. In the brief downward $9.43B adjustment experienced by the market in early December, there was no signifcant AUG $7.22B change in futures positions. In late December, the prices of mainstream cryptos

SEPT such as BTC and ETH broke new highs again, and the open interest of the whole $8.42B market rose again steadily. Finally, as of December 31, 2020, the futures open OCT interest reached $17.03B. $12.47B

NOV $17.03B In 2020Q4, cryptos represented by BTC and ETH performed strongly, which DEC $9B $18B increased investors' demand for futures allocation, resulting in a substantial increase in futures holdings. Compared with spot, futures have higher leverage properties, in the case of signifcant increases in asset prices, futures will bring more benefts to traders. Referring the traditional fnancial market futures scale, TokenInsight is optimistic about the further growth of crypto futures open interest in 2021.

‣ Comparison of daily open interest and BTC price in the whole market in 2020 Source: TokenInsight OpenInterest BTCPrice $20B $30,000

$16B $22,500 $12B $15,000 $8B $7,500 $4B

2020/1/1 2020/3/27 2020/6/21 2020/9/15 2020/12/10 tokeninsight.com 10 RESEARCH

EXCHANGE 1. Exchanges Comparison

ANALYSIS The top3 exchanges in the crypto futures market account for half of market share, and futures trading volume sources are more concentrated than spot.

The trading volume of crypto futures exchanges this year is shown in the chart below. The top3 exchanges in the futures market are Huobi Futures, Binance Futures, and OKEx, with a total trading volume of half of the market, while the total market share of the top3 spot exchanges is only 9%, which means that crypto futures are trading relatively concentrated.

‣ 2020 trading volume (excluding exchanges with abnormal trading volume) and market concentration Source: TokenInsight

HuobiFutures $2,240.8B

BinanceFutures $2,212.9B

OKEx $1,599.6B

BitMEX $929.2B

Bybit $603.8B

BitZ $347.7B

FTX $340.8B

Hopex $324.1B

Bitforex $307.0B Top3 Others Phemex(Futures) $147.6B Futures 50% 50% Deribit $145.6B

CME $47.9B Others 91% ZBG $43.1B Spot Top3 Gate.io $35.7B 9%

Kraken $24.5B

Note：BitZ, Hopex, and Bitforex's API trading has Bakkt $2.7B not been fully opened $750B $1,500B $2,250B $3,000B tokeninsight.com 11 RESEARCH

‣ 2020 Top6 Futures Exchange The industry concentration extent gap between the spot and derivatives Trading Volume Ranking markets is partly due to the greater professionalism requirements of the Source: TokenInsight futures market, which requires trading platforms to have professional R&D capabilities and risk control mechanisms. Therefore, for large exchanges with scale advantages, there are certain advantages in the derivatives business. Vol. $2,240.8B TokenInsight uses the total trading volume of derivatives as its measurement standard, and compares the top5 exchanges with the total market trading volume, as shown in the following charts:

Vol. ‣ Overall market share of the top5 futures exchanges in each $2,212.9B quarter of 2020 Source: TokenInsight

Vol. Top5 Top5 Top5 Top5 $1,599.6B 20Q1 20Q2 20Q3 20Q4 71% 61% 58% 60% In 2020, among the top fve exchanges for annual derivatives trading Vol. volume, Huobi Futures and Binance Futures both exceeds $2 trillion, $929.2B followed by OKEx with $1.59 trillion. At the whole year perspectives, the overall market share of the top5 exchanges in trading volume declined slightly, but Binance has grown signifcantly. In 2020, Binance's share of the crypto futures market rises from 11% in Q1 to 22% in Q4, with the fastest

Vol. market growth among the top5 exchanges. In Q4 of 2020, Binance futures trading volume reached $117.48 billion, surpassing Huobi Futures's $847.8 $603.8B billion in the same period, becoming the crypto exchange with the highest transaction share in the futures market.

‣ Volume of the top5 futures exchanges in 2020 Vol. Source: TokenInsight $347.7B HuobiFutures BinanceFutures OKEx BitMEX Bybit Others

11% 11% 12% 11% 20% 16% 18% 22% 9% 7% 4% 19% 15% 20% 16% 21% 5% 4% 5%

5% 29% 39% 42% 40% 20Q1 20Q2 20Q3 20Q4 tokeninsight.com 12 RESEARCH

2. Exchange Classification In order to observe the growth of exchanges in 2020, TokenInsight divides the existing exchanges in the current market into four types: large comprehensive exchanges, large futures exchanges, compliant exchanges and emerging exchanges based on the characteristics of each exchange. Large comprehensive exchanges are fully developed in many markets such as spot, futures and OTC; large futures exchanges focus on crypto futures business such as futures contracts; compliant exchanges focus on institutional services; emerging exchanges are new exchanges (within a year) or a new force with relatively rapid growth and innovative features.

‣ Classification standards of futures exchanges in this report Source: TokenInsight

Classification Standard Amount Exchanges Included

Futures yearly Bybit Large futures volume>$300B; 3 FTX exchanges mainly provide futures BitMEX trading.

Futures yearly Large volume>$1000B; Huobi Futures comprehensive provide services like 3 Binance Futures exchanges spots, futures, OTC, OKEx etc…

Operated with MTL license issued by CME Compliant most of the states in 3 Bakkt exchanges US; or supervised by Futures FCA.

Rapidly developed in bit.com Emerging 2020 or exchanges Phemex 4 exchanges with innovation Bingbon highlights. Bitcoinwin

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3. Large Futures Exchange

‣ Percentage of trading Large-scale futures exchanges trading volume is volume on large derivatives exchanges in concentrated on perpetual contracts, and Bybit ranks 2020 frst in Q4 futures volume among them. Source: TokenInsight

15.15% TokenInsight classifed these exchanges by the total trading volume more than $300B in 2020, and mainly provides futures contract as standards, screening out three large futures exchanges, including Bybit, FTX and BitMEX. Large futures exchanges focus on the crypto derivatives products trading track based on futures and options. From the perspective of product composition, the trading volume of large futures exchanges mainly comes from perpetual contracts. From the perspective of market share, BitMEX performed relatively poorly in Q4 due to regulatory events.

‣ Daily trading volume of large futures exchanges in 2020 Source: TokenInsight

Bybit BitMEX FTX $12M $10M $8M $6M $4M $2M

2020/1/1 2020/5/30 2020/10/27 2020/12/31

Among the large futures exchanges, Bybit achieved substantial growth in Q4, with daily trading volume $3.18B on average, surpassing BitMEX ($2.64B), and its futures trading volume ranked frst among large futures exchanges. Meanwhile, FTX has also achieved rapid growth relied on its own futures contracts product innovation. FTX's average daily trading volume in 2020Q1 was $0.84B, while Q4 average daily trading volume reached $1.76B, an increase of 109.5% compared to Q1.

‣ Quarterly trading volume of large futures exchanges in 2020 Source: TokenInsight

$3.46B $3.18B Q1 Q2 Q3 Q4 $3B $2.6B $2.24B $2B $2B $1.76B

$1.14B $1.15B $1B $1B $0.84B $0.52B $1B

BitMEX Bybit FTX tokeninsight.com 14 RESEARCH

4. Large Comprehensive Exchange

‣ 2020 futures/spot volume ratio of large In 2020, the trading volume of futures on large comprehensive exchanges comprehensive exchanges increased signifcantly, and Source:TokenInsight Binance’s market share increased by 11%

Spot Future Due to the limited growth of the spot market, the futures market has become the biggest growth driving factor for the crypto trading market in 2020. As shown in the charts on the left, in 2020, the spot trading volume of Binance Futures, Huobi Futures and OKEx on large comprehensive exchanges is less than half of the 2.0x futures trading volume, and the proportion of spot transactions on large comprehensive exchanges is much lower than the 63% market average, which refects the gradual tilt of large comprehensive exchanges in the direction of futures business in platform operations.

BinanceFutures Huobi Futures' futures trading volume is 4.1 times of its spot trading volume, Binance accounting for 80.39% of its total trading volume, and it have the largest proportion of futures business. Binance Futures and OKEx Futures trading volume accounted for 66.6% and 72.9% of the total trading volume respectively. Besides, they all have relatively complete crypto derivative product lines, which can trade Spot Future a variety of derivative contracts such as crypto delivery contracts, perpetual contracts and options.

In terms of the growth of futures business, the daily trading volume of futures 4.1x contracts on large comprehensive exchanges has increased signifcantly in 2020. As of December 31, 2020, Binance Futures' daily trading volume has increased by 1.02%1, far exceeding the market average (0.65%). The daily volume growth of Huobi Futures and OKEx was 0.65% and 0.29%, respectively.

HuobiFutures ‣ Daily trading volume of futures on large comprehensive exchanges Huobi in 2020 Source:TokenInsight

Spot Future HuobiFutures OKEx BinanceFutures $40B

$33B 2.70x $27B

$20B

OKEx(Futures) $13B OKEx 1The growth rate of average $7B daily trading volume is calculated by the geometric growth rate of annual trading volume 1/1 4/10 7/19 10/27 12/31 tokeninsight.com 15 RESEARCH

In 2020Q4, as the price of cryptos keeps hitting new highs, users have a strong willingness to invest. From the perspective of daily average data, the trading activity of large futures exchanges has increased signifcantly in Q4. Combined with the performance of the business growth throughout the year, Binance's futures business has grown signifcantly, with its market share increasing from 11% at the end of Q1 to 22% at the end of Q4, a 100% growth rate. ‣ Changes in Binance futures trading ‣ 2020 quarterly average daily volume of futures on large volume market comprehensive exchanges share in 2020 Source: TokenInsight Source: TokenInsight Q1 Q2 Q3 Q4 $14B $13B

11% Q1 $9.42B $9B 16% $7.28B Q2 $6B $5B $4.86B $4.76B $4.63B $5B $3.69B 18% $3B Q3 $2.46B $2.67B

22% Q4 Huobi Futures Binance Futures OKEx

0 In 2020, the open interest of large comprehensive exchanges are also gradually increasing. Among them, Binance Futures futures holdings increased from $0.14B at the beginning of the year to $2.81B at the end of the year. The platform's annual futures open interest increased by more than 20 times, the most signifcant increase. Huobi Futures and OKEx futures open interest increased from $0.52B and $1.25B at the beginning of the year to $1.81B and $1.91B at the end of the year respectively. Among them, the OKEx platform's open interest rose the most slowly, and the annual futures open interest only increased by 60%, which was far below the market average. Huobi Futures has a relatively balanced performance in its holdings, and its open interest for the year have increased by 3.5 times. In summary, the futures open interest of large comprehensive exchanges have undergone major changes in 2020, and Binance's position market share has increased signifcantly among all of them.

‣ Daily open interest of futures on large comprehensive exchanges in 2020 Source: TokenInsight $3.0B BinanceFutures HuobiFutures OKEX

$2.5B

$2.0B

$1.5B

$1.0B

$0.5B

1/1 4/10 7/19 10/27 12/31 tokeninsight.com 16 RESEARCH

6. Compliant Exchange

Institutional funds have increased demand for the allocation of cryptos, and the CME Bitcoin futures contract has the most open interest in the market

This report involved Bakkt, CME and Kraken Futures (Crypto Facilities) as representing compliant exchanges. The trading volume of the three exchanges this year totaled $75.14B. Among the three compliant exchanges, CME had the highest trading volume of crypto futures. Its quarterly trading volume has increased from $6.83B in Q1 to $47.9B, and the quarterly geometric growth rate has reached 94.5%, which is the fastest growth rate in 2020. Bakkt focuses on the provision of BTC delivery contract services, its transaction remained unchanged comparing with last year, while Kraken's volume has increased from $6.15B in Q1 to $24.5B in Q4.

‣ Overview of futures trading volume on compliant exchanges in 2020 Source:TokenInsight

$50B $47.9B Q1 Q2 Q3 Q4

$33B $27B $24.5B

$17B $15.15B

$6.83B $6.15B $5.61B $6B $4B $2.74B $1.51B $0.85B

CME Kraken Bakkt Compliant exchanges have relatively outstanding performance in terms of open interest. On December 31, 2020, CME's BTC futures open interest tied with Binance Futures and OKEx to rank frst in the market. Although CME's trading volume is much lower than Binance Futures and OKEx, as institutional investors begin to allocate cryptos, compliant exchanges are clearly more in line with the needs of institutional investors. If the regulatory rules are further refned in the future, having a compliance license may become the core advantage of these exchanges.

‣ Ranking of exchange futures open interest as of December 31, 2020 Source:TokenInsight BTCOpenInterest $1.60B $1.60B $1.60B $2B

$0.98B $1B $0.82B

$1B

CME Binance Futures OKEx Huobi Futures BitMEX tokeninsight.com 17 RESEARCH

7. Emerging Exchanges

Emerging exchange Bingbon focuses on globalization and compliance operations

Bingbon was registered in Estonia in 2018. Although Bingbon is an emerging exchange, it attaches great importance to regulatory compliance. The platform has operating licenses in multiple countries and regions. According to license requirements, users in different regions will be evaluated with varying degrees of KYC and qualifed traders. In addition, the platform is closer to users’ need in terms of product design. Bingbon uses perpetual contracts as its main product. Users can trade contracts with USDT in their account, which is more convenient and easy to understand. In order to match the needs of users, Bingbon also launched two products, professional contract trading and standard contract trading, for institutional investors and ordinary users respectively.

Bingbon focuses on the global development. According to Bingbon's disclosure, 70% of the platform's users are from overseas. In the future, Bingbon will focus on expanding markets in Europe, America, Russia, Southeast Asia and South , deepen its local cultivation, and working hard in localized operations.

‣ Bingbon regulatory license Source: TokenInsight

Regulatory License Description

Australian Digital Currency Trading Agency Australia DCE license Standard License

European Estonia Blockchain Regulatory European MTR license License

Bitcoinwin aims to improve user trading win rates

Bitcoinwin was founded in Toronto, Canada in 2018 and has obtained a digital currency trading license issued by the Australian fnancial regulatory agency. As an emerging exchange, Bitcoinwin attaches great importance to regulatory compliance requirements and is committed to protecting customer assets and privacy. In terms of development goals, Bitcoinwin's goals are different as most derivatives exchanges. Bitcoinwin does not issue platform tokens to avoid fund- raising activities of token issuance; it does not provide API interfaces, which the platform believes can prevent high-frequency traders from harming the interests of ordinary investors through quantitative trading. It is worth noting that Bitcoinwin is very strict in the selection of crypto trading pairs. At present, the platform mainly supports users' investment transactions only in mainstream cryptos such as BTC, BCH, and ETH, which shows that the platform attaches great importance to the protection of user investment security. TokneInsight will continue to track the development of this exchange. tokeninsight.com 18 RESEARCH

PRODUCT 1. Contract Distribution

OVERVIEW Perpetual contract trading volume increased signifcantly in 2020, frmly occupying the mainstream ‣ 2020 Quarterly market position perpetual contract market share TokenInsight Throughout 2020, exchanges actively deploy in the futures contracts market. Take a large comprehensive exchange as an example. Huobi Futures launched perpetual contracts, while Binance Futures added crypto-based perpetual 39% Q1 contracts to expand its derivatives business product line. Based on the overall annual market performance, the market share of perpetual contracts has increased 75% signifcantly. In 2020, Q4 perpetual contracts accounted for 83.49% of the Q2 market, while only 39.1% in the frst quarter of 2020. This change shows that the 96% focus of crypto futures traders in 2020 has shifted from delivery contracts to Q3 perpetual contracts. Due to the different product strategies of each exchange, TokenInsight uses six large exchanges with annual trading volume of more than 84% Q4 $300B as an example to analyze the market share of the two types of contracts. Details are as follows. 1

‣ Comparison of large futures/comprehensive exchanges’ contract distribution Source: TokenInsight Deliverycontractvolume Perpetualcontractvolume

HuobiFutures $1315.2B $925.1B

BinanceFutures $84.0B $2,129.0B

OKEx $1073.8B $525.8B

$122.0B $807.1B BitMEX 61.37% 38.63% Bybit $603.8B

DeliveryContract $39.5B$244.5B$244.5B FTX PerpetualContract $39.5B $0B $600B $1,200B $1,800B $2,400B $3,000B

In 2020, Huobi Futures and OKEx's perpetual contract volume accounted for 41.3% and 32.9% respectively, which is the lowest percentage of perpetual contracts among large comprehensive exchanges. The main reason is that Huobi Futures and OKEx have larger scales on delivery contract. Under the infuence of the base effect, perpetual contracts, as a new derivative product, have a relatively low transaction share in the futures business. In 2020, the growth of Binance Futures' futures business mainly comes from perpetual contracts, which accounted for 96.2% of transactions. BitMEX, as the launcher of perpetual contracts, accounts for 86.8% of transactions in perpetual contracts and 86.1% of transactions in FTX. Besides, Bybit focuses on the perpetual contract product line, with no delivery products. tokeninsight.com 19 RESEARCH

2. Mainstream Contracts

As affected by the rise of DeFi in 2020Q3, the share of BTC contract market has dropped signifcantly

In 2020, the futures trading of crypto investors in Q1 will focus on the mainstream contracts represented by BTC, ETH, and EOS. The three types of contract markets account for a total of 90%. In Q2, The global economy was hit by the pandemic. Under the infuence of the "312 Incident", the price of cryptos fuctuated sharply. Perhaps for security reasons, investors have further tendency in trading three major contracts (that is, BTC, ETH, and EOS), hence the number increased to 95%. Due to the popularity of DeFi in Q3, the market share of ETH contract volume increased from 10% to 16%, an increase of more than 50%. The quarterly turnover of BTC contracts accounted for 65% of the total futures market turnover, a decrease of 17% from the previous quarter. In 2020Q4, the BTC market share further shrank, accounting for about 63%; the ETH market accounted for 15%, basically unchanged.

‣ Main contract market share in each quarter of 2020 Source: TokenInsight

BTC 9% ETH 10% EOS 3% Others 4% 10% 5%

20Q2 78% 20Q1 82%

16% 15% 4% 1%

15% 21%

63% 65% 20Q3 20Q4

tokeninsight.com 20 RESEARCH

USERS 1. Google Trends AND The search popularity of the keyword "Bitcoin POPULARITY Futures" peaked in the fourth quarter, and the popularity of (including and Taiwan) and the United States was higher.

TokenInsight reviewed the popularity of crypto futures keywords in 2020 to analyze the popularity of BTC futures.

As shown in the fgure below, taking the widely distributed keyword "Bitcoin Futures" in the search terms related to crypto futures as an example, the overall popularity trend of "Bitcoin Futures" in 2020 is in a state of turbulence with large fuctuations, and the popularity value is at the end of the year. Reached this year's peak1 (100). Which means that the search popularity of "Bitcoin Futures" is related to the fuctuation of BTC market. During the period of the "312 event” and the BTC bull market in December, the search popularity of "Bitcoin Futures" both exceeded 80.

‣ 2020 Bitcoin Futures Google trends chart Source: Google Trend, TokenInsight BTCFutures 100

67

‣ 2020 Maps of “Bitcoin 33 Futures” Google Trends Distribution (Euro) Source Google Trend, 0 TokenInsight 2020/1/5 2020/8/2 2020/12/27 In terms of searches sources, the top fve countries/regions ranked by popularity are China (100), the United States (100), Canada (91), Australia (81), and (78).

‣ 2020 Bitcoin Futures Google trends map Source: Google Trend, TokenInsight ‣ 2020 Maps of “Bitcoin Futures” Google Trends Distribution (North America) GoogleTrendTokenInsight 1Peak value measure: The heat value represents the search heat relative to the highest point in the specified area and time in the chart. The highest heat score is 100 points; 50, if the heat is half of the former; 0, if there is not enough data.

tokeninsight.com 21 RESEARCH

2. Users

In the second half of 2020, Binance's visits exceeded 200 million. With its unique product innovation, FTX has obvious advantages in traffc

We analyze the situation of exchange users through the visits of crypto futures exchanges. As shown in the chart below, in Q2 of 2020, Binance's visit volume exceeded 200 million, which was signifcantly higher than that of other derivatives exchanges. BitMEX's overall traffc is still in the leading position among large derivatives exchanges. Although FTX's futures contract trading scale is not as large as Bybit's, its product innovation has attracted more market enthusiasm. In the second half of 2020, the number of visits to the FTX offcial website reached 12.1 million, much higher than Bybit's 2.52 million visits, and the traffc advantage is obvious.

‣ Statistics of 2020 Q2 futures exchanges visitors Source: Similarweb; TokenInsight

PV Binance

Huobi

OKEx

BitMEX

FTX

Bybit

60M 120M 180M 240M 300M In order to analyze the user base of large futures exchanges, TokenInsight analyzes the number of Twitter followers, because social platform data refects the use of ‣ Comparison of the exchange to a certain extent. According to Twitter data, among large futures exchanges volume trading platforms, the number of Twitter account followers from high to low are SourceTokenInsight Bybit (104,800), BitMEX (82,400), and FTX (47,200).

‣ Statistics of 2020 large futures exchange Twitter followers 49.63% 18% Source: Twitter; TokenInsight Followers

110K 104.8K 82.4K 32.21% Bybit 73K BitMEX FTX 47.2K 1The comprehensive 37K exchange traffic statistics are its derivatives platform, “Futures” has been omitted in the expression BitMEX Bybit FTX tokeninsight.com 22 RESEARCH

REGULATION DYNAMICS Latest News

• March 2020, CFTC, the top regulator of financial derivatives in the United States, clarified the parameters used for physical delivery of cryptos

• July 24, 2020, US regulators allowed banks to hold cryptos;

• September 15, 2020, 49 U.S. states and the capital of US Washington will unify the regulatory framework to simplify the compliance work of crypto companies;

• September 29, 2020, the US Securities and Exchange Commission (SEC) stated that it would not impose sanctions on digital security exchanges that comply with existing regulations;

• October 2020, US Department of Justice accused BitMEX and its executives of violating the Bank Secrecy Act;

• October 9, 2020, U.S. Attorney General issued a cryptocurrency enforcement framework.

• July 31, 2020, Russian President Putin signed a law to regulate cryptos.

Russia • July 10, July 10, 2020, FATF issued a review report on the implementation of revised standards for cryptos and their service providers on stable currency-related anti-money FATF laundering and anti-terrorist financing issues.

• August 24, 2020, UK regulator plans to extend financial crime reporting obligations to crypto trading providers;

• October 7, 2020, the UK financial regulator banned the sale UK of crypto derivatives to individual investors.

• March 2020, promulgated the "Reporting and Use of Specific Financial Transaction Information Act" amendment law, allowing the application of AML and CFT to crypto exchanges. Korea

• April 2020, implemented an amendment bill requiring two KYC documents to open an account on a crypto exchange;

• January 2020, the Financial Services Agency of Japan: To carry out crypto derivatives transactions, registration Japan applications must be made in advance.

tokeninsight.com 23 The report is based on public sources considered to be reliable, but TokenInsight Inc. does not guarantee the accuracy or completeness of any information contained herein. The report had been prepared for informative purposes only and does not constitute an offer or a recommendation to purchase, hold, or sell any (tokens) or to engage in any investment activities. Any opinions or expressions herein refect a judgment made as of the date of publication, and TokenInsight Inc. reserves the right to withdraw or amend its acknowledgment at any time in its sole discretion. TokenInsight Inc. will periodically or irregularly track the subjects of the reports to determine whether to adjust the acknowledgement and will publish them in a timely manner.

TokenInsight Inc. takes its due diligence to ensure the report provides a true and fair view without potential infuences of any third parties. There is no association between TokenInsight Inc. and the subject referred in the report which would harm the objectivity, independence, and impartiality of the report.

Trading and investing in cryptocurrencies (tokens) may involve signifcant risks including price and illiquidity. Investors should fully aware the potential risks and are not to construe the content of the report as the only information for investment activities. None of the products or TokenInsight Inc, nor any of its authors or employees shall be liable to any party for its direct or indirect losses alleged to have been suffered on account thereof.

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