Derivatives in DeFi Explained


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


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


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


Another DeFi project that allows for trading options is Opyn.


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


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


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


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.



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