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Derivatives

DeFi derivatives allow investors to limit their exposure to risk and benefit from underlying assets' price movement in a trustless environment.

Creates a market for hedging, leveraging, or downward speculation.

Through more advanced strategies, users are able to manage their risks as well as maximise their potential rewards through derivative assets such as futures, perpetuals, synthetics, options, and rate swaps.

Principles​

Majority of derivative implementations involves the creation of a token representing the derivative. Given the pseudonymous nature of DeFi, these assets are usually created upon the smart contract securing funding (i.e. collateral). The derivatives are then free to be traded while the protocol is protected from insolvency through a liquidation market.

Benefits​

Exposure to price movements of any asset (i.e. a synthetic asset that tracks the price of a stock); Enables short selling; More fine-tuned risk management options

Providers​

  • DYDX
  • Synthetix
  • Opyn
  • Perp
  • Barnbridge