The Growing Role of DeFi Derivatives

Derivatives in DeFi

  • Futures: these are contracts between counterparties to exchange an asset at a specific price on a specific date. This includes so-called “perpetuals” which are a special type of futures contract that can be settled at any time.
  • Options: these are similar to futures, but give counterparties the option to exercise an exchange of an asset on a specific date at a specific price.
  • Swaps: simple derivatives that allow two or more parties to exchange specific financial instruments or cashflows over an agreed period of time.
  • Collateralized loans: take the form of collateralized debt positions or obligations that can be freely exchanged and traded.
Image courtesy: Mirror Protocol

The Current State of DeFi Derivatives

  • dYdX: The platform allows users to trade perpetual futures with up to 25x leverage and is currently by far the most popular decentralized exchange for margin trading.
  • Mirror Protocol: Built on Terra, Mirror Protocol allows users to issue and trade synthetic assets (known as mAssets) that mimic the value of their real-world counterparts.
  • DerivaDEX: Derivadex is an Ethereum-based derivatives trading platform that combines a decentralized autonomous organization (DAO) with an insurance mining solution to improve security and opportunity for derivatives traders.
  • Synthetix: Synthetix allows users to create unique derivative assets known as synths that can be tied to essentially any real-world asset — such as fiat currencies and commodities.
  • Nexus Mutual: A popular risk-sharing market that allows users to take out insurance against smart contract risks while introducing a new asset class known as tokenized credit default swaps.
  • Augur: A decentralized prediction market that allows users to create their own prediction markets on almost any event or outcome.
Image courtesy: DeFi Pulse

Why Trade Derivatives?




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