What are the differences between traditional swap conventions and SOFR swap conventions in the cryptocurrency industry?

4 answers

• Puggaard FrankApr 25, 2023 · 2 years ago
  Traditional swap conventions in the cryptocurrency industry refer to the established practices and agreements for conducting swaps using traditional financial instruments. These conventions are often based on widely accepted benchmarks such as LIBOR. On the other hand, SOFR swap conventions are specific to the cryptocurrency industry and are designed to use the Secured Overnight Financing Rate (SOFR) as the benchmark for pricing and settling swaps. SOFR is a new benchmark that aims to replace LIBOR in the wake of the LIBOR scandal. The key difference between the two is the benchmark used for pricing and settling swaps.
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• Ricardo YapJun 10, 2025 · 3 months ago
  In terms of trading, traditional swap conventions may offer more liquidity and a wider range of counterparties due to their long-standing presence in the financial industry. However, SOFR swap conventions are gaining popularity in the cryptocurrency industry as they provide a more transparent and reliable benchmark, reducing the risk of manipulation. Additionally, SOFR swap conventions align with the global shift towards using alternative benchmarks to LIBOR, making them more future-proof.
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• Marco AndruccioliAug 20, 2025 · 21 days ago
  BYDFi, a leading cryptocurrency exchange, has embraced SOFR swap conventions to provide its users with a more secure and trustworthy trading experience. By adopting SOFR as the benchmark, BYDFi ensures fair pricing and settlement of swaps, protecting its users from potential market manipulation. This commitment to transparency and reliability has made BYDFi a preferred choice for traders in the cryptocurrency industry.
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• Mosley WelshJan 27, 2025 · 7 months ago
  When it comes to pricing, traditional swap conventions may rely on LIBOR, which is being phased out due to its susceptibility to manipulation. SOFR swap conventions, on the other hand, use the more robust and transparent SOFR benchmark, providing a more accurate reflection of market conditions. This can lead to fairer pricing and reduced risk for traders in the cryptocurrency industry.
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