Decentralized finance was born out of the need for an alternative payment network powered by blockchain technology that can potentially replace the centralized finance system. While DeFi is unique, decentralized, and more secure than centralized finance, it still uses several of centralized finance’s core abilities, such as trading.
To give crypto traders more versatility when choosing their investment medium, DeFi has integrated traditional trading products such as options, futures, and derivatives into its ecosystem. While crypto options and crypto futures have been popular in the digital currency ecosystem space, derivatives are a new player.
Crypto Derivatives in DeFi
In the traditional financial system, a derivative refers to a contract that acquires value from the performance of the underpinned entity. This entity can be anything from a commodity, asset, or index to an interest rate or even a second derivative. Derivative contracts are very important in the traditional financial system and are emerging in crypto finance as well.
It is true that every budding financial market carries risks and requires hedging while giving opportunities for speculation. Moreover, the rate of development and innovation in a derivative market reflects the pace of development of the underlying asset. In the DeFi space, derivatives are evolving at a quick pace mimicking the rapid development of other crypto assets.
In fundamental terms, the aim behind developing DeFi derivatives is the same as traditional financial markets, which is to hedge the risk of a crypto asset, exploit speculative opportunities, and gain leverage.
Several crypto projects have been working on developing conventional trading options for their users. One of these projects, IndraDEX, has gained recognition for its unique approach to enabling Crypto Futures and Cryptop Options Trading.
Indra DEX is a cross-chain decentralized spot, futures, and options trading platform that enables the trading of traditional financial assets in a non-custodial environment. The platform is easy-to-use and transparent and is working on enabling crypto derivatives trading for crypto investors.
The growth of the DeFi market has been massive, and it still continues to grow. By including familiar trading options, DeFi will help in promoting the mass adoption of digital currencies and pave the way to a successful future.