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Why The Future is Bright For Crypto Derivatives

The biggest move we saw in recent months was the first ever adoption of a Bitcoin ETF onto a US exchange. This was a move a long time in the making, but it eventually happened and it brought the crypto realm one step closer to acceptance in the eyes of the regulators and the market participants. This move was certainly a popular one, with the ETF seeing over 24 million shares changing hands in its first 24 hours, making this the second most popularly traded ETF debut ever. The exchange-traded crypto market has seen over US$400 billion in volume in 2021 so far.

DeFi is DeFinitely One to Watch

DeFi is no shrinking violet either, with a massive locked-in value of over US$140 billion, covering everything from staking, to prediction markets, to KYC and stablecoins. Derivatives trading of crypto is also booming. This is where contracts are bought and sold on underlying assets, which include cryptos, synthetic tokens and stablecoins.

A unique study by Carnegie Mellon University, has shown just how popular this market is, with on a typical day over $100 billion in trading volume, which gives the NYSE a run for its money.

Derivative Trading on Crypto

In a landmark funding round, one company, Paradigm, which brings liquidity to crypto derivatives traders, managed to privately raise $35 million from a variety of both crypto focused and more generic venture capital firms. A partner from one of them, Jump Capital, said his,

“Institutional infrastructure in crypto capital markets is still nascent and liquidity highly fragmented. Paradigm is disrupting that by providing a single point of access to global liquidity and a unified execution and settlement layer to most institutional traders in the world.”

According to SynFutures, one of the major players in the crypto derivatives realm,

“SynFutures is an innovative project that is driving the growth of DeFi by bringing complex financial instruments such as derivatives to digital assets. People in TradFi have been using derivatives to gain leverage, hedge their positions, or amplify the returns for decades. Users can access the same services in DeFi, thanks to projects like SynFutures..”

SynFutures is a platform that offers traders open and centralized access to trade derivatives. On top of this it allows them to create their own markets by building their own synthesized contracts on a huge selection of assets, including Ethereum compatible ones, cross chain and also off chain assets too.

Synthetic assets are an exciting new addition to DeFi. Quite simply, they represent an asset such as a stock, bond, currencies, cryptocurrencies, options, futures, NFTs, and interest rates and trading them on a platform like SynFutures means there is deep liquidity for all contracts, both existing and newly synthesized and it means users don’t to have worry about holding and storing the underlying assets. A blessing for those individuals that no longer need to go through the laborious process of registering and onboarding with a variety of exchanges and then holding wallets.

The future is bright for the derivatives crypto market and it’s one that institutions are sitting up and paying attention to as the volume and popularity grows each month.

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1 COMMENT

  1. and ….. what is the CFD industry to do about this ‘competitor model’ in derivatives .. as I see DEX in DeFi can offer higher leverage with no margin call in perpetual pools and swaps and even perpetual options, in any instrument => and DLT is more cost effective – example is Uniswap run by a v small number of staff and its AMMs – the attributes of DeFi in non custodial, non manipulated prices and accessibility – the only drawback seems the high fees to trade but L2 protocols developments seems to be able to drive these costs down – although still experimental and buggy [smart contract hacks, exchanges going down – so the commanding heights battle begins – as product development is insane in DeFi = so CFD brokers maybe are the new roadkill

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