Mainnet upgrade chaos? Binance lowers THETA contract leverage, FTX experiences price discrepancies and negative funding rates

After announcing Google Cloud as its validation node and mainnet upgrade for the blockchain project THETA, there has been a significant increase in value recently. On the 27th, Binance began trading its perpetual contracts, and FTX also continued to launch its derivative trading, which has raised some noteworthy points. Here is a summary of the phenomenon:

Binance and FTX Trading Phenomenon

Binance launched THETA spot trading as early as May 2018, and until the 27th, after the project released Mainnet 2.0 and collaborated with Google Cloud, it announced the launch of THETA contract trading. FTX exchange also launched THETA contract trading on the same day.

On the 28th, Binance issued a announcement stating that the originally planned leverage for THETA contract trading at 1-50x was reduced to 1-20x due to higher trading volume and market volatility, citing market norms, and significantly increasing the margin ratio.

In addition, due to the THETA Mainnet upgrade, Binance suspended deposits and withdrawals, causing abnormal premium in spot trading.

Observations show that the price difference between FTX's THETA perpetual contract and THETA quarterly contract 0626 is approximately 0.0771. The funding rate for THETA perpetual contract reached up to -0.8%. Both contracts had the highest price difference on the night of May 27th. FTX decided to change the reference price for THETA/BTC from Binance to reference THETA/USDT prices from Binance, OKEx, and Huobi, as stated.

Reasoning by FTX CEO

The FTX CEO mentioned earlier that the price of FTX's THETA perpetual contract is about 0.35, Binance is at 0.30, Huobi at 0.43, and OKEx at 0.37, so he believes this price is relatively reasonable.

1) https://t.co/AKkXBOd5i2 is now trading at about $0.35. Binance is at about $0.30, Huobi is about $0.43, and OKEx is about $0.3; so it makes sense, I guess, to be somewhere in that range. pic.twitter.com/1YCjLb6l9u

— SBF (@SBF_FTX) May 28, 2020

He further analyzed that this situation is due to exchanges including Binance, OKEx, etc., all suspending deposits and withdrawals due to the THETA Mainnet upgrade. This also makes it difficult for their perpetual contract prices to match spot prices.

He believes that THETA's trading performance was very volatile yesterday (27), coupled with most exchanges suspending deposits and withdrawals, leading to severe price disconnection among them.

2) Note that Binance perps are totally dislocated from the market. That's because:

1) they cap their funding. The upside is lower funding; the downside is there's nothing that forces their perp price to be the same as the index
2) not sure what their index is, can't find it

— SBF (@SBF_FTX) May 28, 2020