Derivatives in DeFi Explained

Derivatives

Derivatives are one of the key elements of any mature financial system. As the name suggests derivatives derive their value from something. This “something” is usually the price of another underlying financial asset such as a stock, a bond, a commodity, an interest rate, a currency or a cryptocurrency. Some of the most commonly used derivatives are forwards, futures, options and swaps.

Synthetix

Synthetix is usually the first protocol that comes to our minds when talking about derivatives in DeFi.

UMA

UMA is another protocol that enables the creation of synthetic assets.

Hegic

Hegic is a relatively new defi project that allows for trading options in a non-custodial and permissionless way.

Opyn

Another DeFi project that allows for trading options is Opyn.

Perp

Perpetual is yet another fairly new entrant into the decentralized derivatives space.

dYdX

dYdX is a decentralized derivatives exchange that offers spot, margin and more recently — perpetuals trading.

BarnBridge

BarnBridge is a risk tokenizing protocol that allows for hedging yield sensitivity and price volatility.

Summary

As we mentioned earlier, the Derivatives Market in traditional finance is huge and it will be interesting to see how big it will become in decentralized finance.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store