Phemex Review: Is It Worth It?

By Dalton Rush | November, 2022

Phemex Review

In this Phemex review, we will give you everything you need to know about the exchange. We will dig into their security, fees, customer support, and trading platform.

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Background And History

Phemex is based in Singapore and was founded in 2019 by eight former Morgan Stanley Executives and has launched officially on December 25th, 2020.

Phemex has built one of the world’s fastest cryptocurrency derivatives and spot trading platforms. Phemex leverages a “User-Oriented” approach to develop more powerful features than other exchanges, for traders to easily buy & sell contracts with trust.

Safety

Wallet Security

Phemex has designed and implemented a Hierarchical Deterministic Cold Wallet System which assigns separate cold wallet deposit addresses to each user. All the deposits are periodically gathered in the company’s multi-signature cold wallet via offline signature.

Phemex processes withdrawal requests 3 times/day, and each request is rigorously scrutinized by both operators and founders. Based on the team's sophisticated Wall Street risk control experience, Phemex is able to detect any malicious actions and quickly act to protect the assets of the users and the platform. Qualified withdrawal requests are also processed via offline signature, thereby all assets remain 100% stored in a cold wallet system with all operations conducted offline.

System Security

Phemex deploys its system and secures its machines on the Amazon Web Service (AWS) Cloud.

Phemex uses several firewalls to separate different zones and machines for different trading purposes. There are multiple levels of security and internal network access management protocols to control the accessibility of one instance to another. Beyond network firewall management, Phemex also applies restrictions on a system level. In many restricted zones, Phemex only allows whitelisted instances to access the system while the system itself must also be whitelisted.

User Account security

Phemex uses a two-factor authentication mechanism to protect all its user's accounts. When a user performs any critical operations such as login, funding, or password modifications, the system automatically triggers two-factor authentication. This forces the user to perform a secondary authentication to protect account integrity and security.

Similarly, Phemex uses a bank-level double-entry bookkeeping system to ensure account security. Double-entry bookkeeping is based on the balance of assets and equity as the basis for accounting. Each time a user performs a funding operation, Phemex performs a matching accounting action in two or more accounts to prevent the tampering of records. Through the double-entry bookkeeping mechanism, Phemex can immediately detect if the user's account has been tampered with. If so, the system will immediately freeze the tampered account and stops all of its pending actions and operations.

Trading Engine Safety

The Phemex trading platform is comprised of two main core components: The CrossEngine and the TradingEngine. The CrossEngine strictly matches client orders based on price and time priority. The TradingEngine is responsible for managing a full set of risk checks on behalf of the client's trading account. These include costs, fees, PNL, computing, and more, in real-time.

Like other high-frequency trading systems, both of our engines were written in C++. The promising and predictable performance of C++ makes it ideal for modern trading systems. Due to the highly volatile nature of cryptocurrencies, users need engines to react as quickly as possible. Overloading is simply unacceptable. Velocity is an essential necessity for traders as their most concerning challenge is the inability to trade during big market movements. The Phemex engines are at least 10x faster compared to other competitors. The engines are also highly customized. Phemex has minimized 3rd party lib dependencies to keep the core simple and fast.

On top of performance, seamless disaster recovery is another feature provided by Phemex's engines. Phemex has developed its own recovery system that gives users 99.99% high availability. Each engine runs with multiple hot and warm backups at the same time. In most cases, users will not even notice system maintenance periods or upgrades. Such seamless and fast recovery is critical for 24/7 exchanges.

Phemex Insurance

Phemex uses an Insurance Fund to prevent its client's positions from becoming Auto-Deleveraged. The Insurance Fund is used to alleviate unfilled liquidation orders on the platform before they are taken over by the auto-deleveraging system. Due to how Phemex’s platform is structured, the exchange does not require payments from traders who have negative account balances when they are liquidated in a leveraged trade. Instead, the exchange uses its Insurance Fund to ensure that the winning party of a trade receives their expected profits even when the losing party’s funds do not cover the winning party’s gains. The Fund grows from liquidations that were able to be executed in the market at a price better than the bankruptcy price of that specific position.

Leverage

Leverage is an investment strategy that helps traders amplify returns by using borrowed funds or other financial assets. However, as much as the potential for returns is amplified, so is the potential risk for losses. Leverage equals the ratio between the total value of the position and the minimum investment required (margin).

On Phemex, you can trade Perpetual Contracts with up to 100x leverage. You begin by allocating a certain margin or portion of your funds to open a position. Then, you choose the amount of leverage you wish to use. Phemex adjusts your Liquidation Price based on your level of leverage. The more leverage you use, the smaller the distance between your Entry Price and your Liquidation Price. Leverage gives you the potential for significant profits at a minimal cost, but you are also more likely to have your positions liquidated with smaller market movements in the wrong direction.

Phemex offers fourteen trading pairs (BTC/USD, ETH/USD, LINK/USD, XTZ/USD, LTC/USD, UNI/USD, YFI/USD, DOT/USD, COMP/USD, LEND/USD, ALGO/USD, XRP/USD, BCH/USD, ADA/USD), and the legacy product GOLD/USD. The trading wallet system allows users to hedge against volatility by saving funds in nominal USD at any time.

Registration

To register a new account on Phemex, perform the following steps:

Go to Phemex.com and click Register on the top right corner of the page.
Enter your email address, password, and the RushRadar Invitation Code D6TYN. Click Continue.
You will then be sent a verification email and code. Enter it in the next window that appears.
Begin trading!

Premium Subscription

Phemex is the first exchange to offer zero-fee for spot-trading behind a simple membership.

You can choose to sign up for a 30 day plan ($9.90), a 90 day plan ($19.90), or a yearly plan ($69.90).

The membership will allow you to trade cryptocurrencies with no limits (BTC, ETH, XRP, LINK, ONT, ADA, TZ, LTC, TRX, ONT, BCH, NEO, etc.).

Phemex Pros & Cons

Phemex: Pros

Institutional Background of the team
Premium membership
Phemex’s design criteria
Bracket Orders
Very secure
No KYC verification

Phemex: Cons

Relatively new
Does not work for US residents

Phemex Review: Verdict

Phemex offers a lot of great features that set it apart from other competitors, although it is still fairly recent, this definitely makes it one of the best platforms for crypto traders.

Phemex's greatest selling point is the zero-fee trading model included with the Phemex Premium membership, if you plan to trade on a regular basis, the $69.90 annual membership plan will very likely save you a good amount of money.

New trading pairs keep being added, and these improvements foresee a bright future ahead for Phemex.

Hopefully, Phemex also manages to offer its services for US residents.

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