We are proud to present the Amun 2020 Derivatives and Tokens Benchmarking Survey where we surveyed 600+ participants about cryptoasset derivatives and tokens. The aim of this study was to better understand the problems and needs of users within the derivatives and token sector. At Amun Tokens, we see this as a key growth driver for the sector but information about user profiles, preferences, and the experience of using such products is still sparse.
The key findings of the survey were as follows:
- Nearly 35% of participants considered margin calls to be the primary part of leverage trading that was unclear
- 57.86% of participants were either neutral, unsatisfied, or very unsatisfied with the existing crypto derivatives market
- 37% of participants primarily owned individual cryptoassets such as Bitcoin and Ether, compared to around 23% who owned crypto asset futures. While around 11% owned crypto asset ETPs or structured products
- 78% of participants were familiar with leveraged tokens
- More than 80% of participants were interested in holding leveraged index or lending-based tokens, whilst around 74% of participants were interested in holding staking-based tokens
- Nearly 40% of participants got their derivatives data from CoinMarketCap, compared to around 25% for CoinGecko, and around 25% directly from exchanges
- In contrast, 59% of participants received their general crypto asset news from Telegram. This shows the growing interest in community building and alternatives platforms to build close communities using encryption-enabled messaging applications
There are many problems with the current state of affairs of derivatives and tokens within the industry; traders struggle to understand liquidations and margin requirements. Additionally, excessive leverage is actively promoted by exchanges, and data availability is poor when compared to traditional capital markets. Another large pain point for those in the industry that deal with derivatives has been the issues with margin calls — primarily due to a lack of user education and the excessive amounts of leverage available to traders.
Finally, education is a problem in the space with leading exchanges and platforms such as Binance and CoinMarketCap dominating user attention. In order to solve users' misunderstandings of how derivative and tokens products work, these platforms should take a leading role in user education. This is precisely why we have and will continue to strive to work with our primary exchange partners — Liquid, HitBTC, Bitcoin.com, and Bequant — to educate users about how exactly inverse and leverage tokens work through our education and research portals.
Our aim at Amun is to make purchasing digital asset tokens accessible, safe, and efficient through our suite of leveraged and inverse tokens such as the Amun Bitcoin 3x Daily Long (BTC3L) and Amun Ether 3x Daily Long (ETH3L). This market has a lot of untapped potential but key to this will be an increase in professionalism, transparency, alongside greater user experience, community building and, above all, education. We believe that our products, this research, and further endeavors will be an important contribution from us to this end.
We reached out to and solicited responses from a variety of users within the crypto asset space and from our extended community. The respondents came from different geographies and with different financial backgrounds. While no study can ever get an exhaustive overview of all the profiles of participants within the industry, we hope that this survey can act as a start.
In total, 629 participants filled out our survey where early participants from our closed network were paid $10-equivalent in ETH for their efforts, and latter participants were paid $1-equivalent in ETH. As our tokens are unavailable in the United States, Switzerland and Seychelles, we excluded participants from these countries. As such, we are aware that the results of this study do not represent the entire community. This survey is the first of a much wider effort to understand our industry better and, whilst not perfect, we hope that the results and our findings are useful.
Interestingly the majority were domiciled in Asia (85.37%). As we verified with each participant the information they recorded in the survey, we were able to discover their respective country of residence. In Asia, the leading countries of the participants were Indonesia, China, Japan, and India, compared to 7.79% from Africa, chiefly from Egypt, Nigeria, South Africa, and Ghana. 3.34% were from North America, but exclusively from Canada, as we excluded US citizens and residents and 3.34% from Europe were primarily from Germany, the UK, and France (not including Switzerland).
It was already a well-known fact that Asia was a continent — with countries such as China, South Korean, Japan, and Indonesia acting as key hubs — which has historically driven much of the interest in the crypto asset industry but our survey was still likely relatively over-skewed to the continent. This can be partially explained by the fact that the token and derivatives markets’ main players are all based in countries in Asia.
As expected, the user base was skewed extremely young with the majority (95%) of participants being younger than 40. For the remaining 5%, it is likely that some amount of submissions were inaccurately entered. It is clear that the use of derivatives and tokens is a pursuit dominated by the industry’s younger audience.
The participant base is also more interested in short-term gains (64.55%) compared to longer-term horizons in regards to investing in cryptoassets (35.45%). A majority (53.26%) of participants deemed their knowledge of Bitcoin and other cryptoassets to be of a good standard while only 7% considered their knowledge to be extensive. The surprising fact about this data point is the large number of participants who considered their knowledge to either be limited (26.39%) or none (13.35%) which perhaps demonstrates the fact that many retail investors are willing to purchase cryptoassets despite their limited knowledge.
Participant Profile — Trading
246 participants held Bitcoin and 239 participants held Ether, the long tail of the crypto asset market was held by a smaller number of participants — with noticeable examples being Tron (47), USDT (26), and BNB (24). Especially within the derivatives market, trading and interest in skewed largely to Bitcoin, which is generally the only crypto asset with enough liquidity and a robust-enough infrastructure to support products such as futures and options. However, we are increasingly seeing derivative products being rolled out for Ether also, and it has proved to be much easier for the long tail of cryptoassets to be included in leverage or inverse tokens. The vast majority (64.39%) of participants had holdings of $10,000 or less, as can be expected given that survey participants were retail token holders primarily as opposed to professional traders or those that necessarily work in the industry full-time.
58.35% of participants said that they invest in traditional asset classes and, as expected, a large number of participants did not even invest in traditional asset classes — implying that their portfolio solely consisted of cryptoassets. In a similar vein to the investor profile for cryptoassets, the majority (55.17%) of participants have traditional asset holdings of less than or equal to $10,000 which signals the retail skew of this survey.
How satisfied are they with the existing crypto derivatives market?
Nearly 12% of participants were either unsatisfied or very unsatisfied with their experience of crypto asset derivatives which is understandable given the lack of consumer protection, poor user experience, and inadequate product design for many derivative products in the market.
Nevertheless, the fact that 28.77% of participants were either satisfied or very satisfied with their experience of derivatives shows the willingness of those within the market to seek ways to get leveraged exposure, despite the risks. While the news and research around crypto asset derivative trading often focus on product innovation and legal stories, it’s important to remember that end-users are affected by the quality and usefulness of products.
Where do participants get their crypto news and derivatives data from?
Nearly 40% of participants got their derivatives data from CoinMarketCap, compared to around 25% for CoinGecko, and around 25% directly from exchanges. This point helps show how important CoinMarketCap and CoinGecko are disproportionately for cryptoasset education. Currently, both their offerings for the derivatives and token market are considerably worse than what is available on a platform like Skew. We find it likely that this will change in the coming months as both platforms have begun focusing much more noticeably on the derivatives market. As expected, exchanges still stand out as another large source of education for derivatives. On this front, much more work can be done to design exchanges’ user interfaces in ways that reduce the chance of users misunderstanding or misusing their products — relying on a research or education section is certainly not enough.
58.98% of the respondents get the majority of their crypto asset news from Telegram which is surprising as the platform is primarily dominated by informal information and communities — as opposed to being a social platform used mainly for news like Twitter or newsletters. This helps demonstrate how important word-of-mouth education and news as well as community building is in the market when compared to traditional capital marks which are much more dominated by more typical news sources.
How familiar are they with: perpetual swaps, options, leveraged tokens, and margin trading?
The vast majority of participants were familiar with the various tools available to them to gain leveraged exposure to cryptoassets, such as perpetual swap contracts (65.66%), options contracts (69.32%), and margin trading (77.58%). Interestingly, 78.06% of participants were familiar with leveraged tokens, such as those launched by Amun; though this statistic is likely skewed due to the fact that many participants may have learned about our tokens during the survey process. While the various ways to get leveraged notional exposure to cryptoassets are increasingly popular, it is clear that many participants do not fully understand how all of such products work even if they are relatively familiar with them.
What are the typical quote currencies they use in trading and what derivative exchanges are they familiar with?
As expected, and supported by our other research, USDT is by far the most popular quote crypto asset for participants to use for trading — with 66.67% of participants choosing the stablecoin. USDC was the second most popular stablecoin in our survey (23.37%) and in the market, surprisingly followed by DAI being the preferred choice by participants at 9.06% — despite being currently the stablecoin with the smallest in the market aside from GUSD. The reason for this is likely due to the unique niche DAI has founded by acting as the medium of exchange for the entire Decentralized Finance (DeFi) market which has garnered it a small but loyal user base.
In terms of derivatives exchanges, Binance stands out as the most popular with 44% of participants being familiar with the exchange, compared to 31.5% for BitMEX, 30.8% for OKEx, and 25.8% for Huobi. Despite being late to the game compared to derivatives-first exchanges like BitMEX, Binance has benefitted from its existing user base and brand name to quickly become exceedingly competitive as a platform for users to get leveraged exposure. An open question is whether over the long-term more niche exchanges (such as Deribit for options or FTX for more exotic derivatives) will remain competitive or if the existing spot exchange players (Binance, OKEX, and Huobi) will continue to bundle the currently-competitive derivatives market.
What process of leverage trading do participants find unclear?
Given the largely unregulated nature of the crypto asset market, it is obvious that many users of such products are likely to find aspects of trading unclear — especially for products, such as perpetual swap contracts, that work in confusing ways. The data from our survey supports our intuition on the common issues users have with leverage trading. For example, 83.31% of the survey’s participants admitted that they found at least some aspect of leverage trading unclear, with 34.66% of participants finding margin calls unclear, compared to 21.3% for the associated fees, and 19.71% for the performance calculation. Due to the nature of current crypto asset derivatives exchange which often up to 100x leverage despite the volatility of the market, liquidations are common within the industry especially on exchanges which support crypto asset collateral for margin trading.
How much leverage would token holders want and for which assets?
We believe that leveraged tokens offer solutions to some of the issues that participants pointed out in the previous sections, namely by drastically reducing the potential for margin calls and making daily performance calculations simple for token holders. The interest for the different levels of leverage for tokens was relatively evenly distributed across the four options — 2x (28.2%), 3x (22%), 5x (22.4%), and 10x (27.5%). Anecdotally, based on existing market data 3x tokens seemed to be more popular than both 2x and 10x tokens in terms of trading volumes and the total net token value of existing tokens — especially due 10x tokens’ propensity to lead to wide swings in performance due to the market’s volatility. The tokens leveraged we’ve launched first are 3x long and short leveraged tokens but we’ll pay attention to our users’ feedback to help inform future releases.
Users preferred underlying crypto assets for such leveraged tokens were noticeably skewed towards BTC (25%) and ETH (26.2%), with other crypto assets having generated much lower interest from participants. This result is to be expected given that these two assets are generally considered “safer” to trade and are more popular so users may be more skeptical of seeking leveraged exposure to other more volatile cryptoassets, which can almost be viewed as being multiples of Beta on BTC.
Would participants trade and hold: index basket (leveraged or otherwise), staking-based, or lending-based tokens?
We are extremely interested in the variety of use cases that tokens can fulfil for users, by helping them get exposure to the crypto market in a user-friendly manner. We asked users whether they would trade a variety of different tokens beyond the kinds of leveraged tokens we’ve mentioned in this report. Participants displayed large amounts of interest in the tokens in general. For example, 77.58% of participants would trade an index basket token, 83.31% of participants would consider trading leveraged index tokens, 73.93% of participants would consider trading a staking-based token (that staked on their behalf), and 82.99% of participants would hold a token that lent out cryptoassets on their behalf and paid interest.
This data helps demonstrate the wide range of use cases that tokens can fill and their fundamental ability to ease the user experience issue present in many aspects of the industry, such as lending, staking, and holding a multi-asset portfolio. This data only adds to the overwhelming evidence that tokens present a fundamentally new and convenient way for token holders to engage with the market.
The aim of this study was to help the industry better understand the wants and needs of users within the crypto derivatives and token market. We believe that the findings of this survey can be a driving force behind improving the quality of the products that allow users to get exposure to cryptoassets. It’s for this reason that we have decided to launch our range of inverse and leverage tokens which users are able to find out more about on our official website.
We truly believe that inverse and leverage tokens can help fix some of the pain points we’ve discovered throughout this report — namely the difficulty users have with dealing with margin calls and performance calculation — and we strive to continue to provide education and research that allows users to better understand the crypto asset market and our range of tokens.