What are derivatives in DeFi?

In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, interest rate, or even another derivative.

Derivatives can be used for a number of purposes, including insuring against price movements (hedging), increasing exposure to price movements for speculation, or getting access to otherwise hard-to-trade assets or markets.

Given the importance of derivative contracts in mature, traditional financial systems, it should be no surprise that derivatives are emerging in crypto markets.

Derivatives in DeFi

Derivatives aren’t new to the crypto world—BitMex, founded in 2014, is a peer-to-peer trading platform with perpetual contracts and futures bought and sold in Bitcoin. Since then, various other centralized exchanges have been launched, they ultimately take on the roles of both brokers and exchanges.

In DeFi, there is no custody. Settlement takes place on-chain, where the terms of the contract are fulfilled. The intersection of DeFi and derivatives is a gamechanger, bringing yet another borderless, low-barrier, financial instrument to the world.

Deri Protocol shapes derivatives in Web3

Funding-fee-based derivatives have gained a lot of popularity over the years. With the broad range of crypto derivative instruments on offer, Deri Protocol provides DeFi traders numerous ways to enter the market.

In total, Deri Protocol offers three products:

  • Perpetual Futures

  • Everlasting Options

  • Power Perpetuals

With Deri Protocol, trades are executed under AMM paradigm and positions are tokenized as NFTs, highly composable with other DeFi projects.

Read more about these products Getting Started


The information provided is for educational purposes and should not be construed as investment advice by Deri Protocol. Traders should do their own research before making any investment decision. For more details, visit: https://deri.io

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