How Gemini’s derivatives used Kaiko benchmarks for fair valuation

THE PROBLEM

With an ambition to diversify its derivatives trading platform, Gemini needed a consistent pricing mechanism to establish a fair value for risk management and settlement for specific underlying cryptocurrencies. This would help alleviate the challenge posed by the variable prices quoted across different exchanges, and provide a single independent market valuation.

With a clear understanding of their requirements, Gemini entered the market to find a reliable and consistent benchmark that would give them a consensus price.

THE solution

After evaluating their data options, Gemini engaged Kaiko around their BMR-compliant digital asset Benchmarks. Built using aggregated trades data collected from vetted exchanges through a robust methodology, Gemini were able to instantly source a price most representative of fair market value, calculated by Kaiko. This price was calculated in real-time – updating every 5 seconds – and was used as an input for settlement in their perpetual contract offering.

A STABLE AND RELIABLE FOUNDATION FOR SERVICE GROWTH

With Kaiko Benchmarks providing a fair market valuation of the cryptocurrency underlying Gemini’s derivatives contracts, they were able to nullify the impact of anomalous price movements, providing more accurate and consistent valuations.  

This was fundamental to Gemini offering reliable and stable derivatives services and has laid the foundation for future expansion and success.