Derivative products are growing rapidly in modern finance. The global market is gigantic and, according to BIS estimates, is an unimaginable $ 700 trillion. The DeFi derivatives sector, on the other hand, is only $ 911 million. So the growth potential is enormous. Which projects could dominate the world of decentralized derivatives in the future?

Today we’re taking a look at the five largest DeFi platforms. When it comes to the legitimacy and maturity of various financial instruments, derivatives have proven time and again to be a crucial piece of infrastructure necessary for the long-term growth of any asset class.

In terms of cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), the introduction of Bitcoin futures offered an important option for institutional investors to hedge against risk.

What are DeFi derivative platforms?

A derivative is a contract between two or more parties whose value is based on an agreed underlying financial asset (securities, commodities …) or a group of assets (such as an index). Common base instruments include bonds, commodities, currencies, interest rates, market indices and stocks.

In addition, derivatives are inherently secondary securities in that their value is derived from the value of the primary security to which they are linked. Examples of derivatives are usually futures contracts such as futures, options or swaps.

Thanks to the emergence of smart contracts , engineered derivatives can be created. This makes it possible to conclude derivative contracts without a third party. This trend has enabled retail investors to take advantage of financial instruments that are normally only available to those with brokerage accounts or specialist knowledge.

The derivatives market in the Ethereum DeFi sector is still very small and many projects are still in the early stages of development.

Below we take a look at the five largest DeFi derivative projects

5. Erasure: Total Value Locked $ 3.6 million

Numerai has developed the Erasure Protocol, a decentralized data marketplace for forecasting markets. In addition, Erasure allows you to upload forecasts and build a reputation for them over time by using cryptocurrencies such as Numeraire (NMR) or DAI.

Users who make predictions submit them with a time stamp for which they store NMR. This gives them the opportunity to buy access to encrypted forecast feeds and to rate the forecasts of other participants. Reliable forecast sources can be developed based on historical performance.

To try out Erasure, take a look at Erasure Quant. Erasure Quant can be used to upload signals and potentially receive cash for stock forecasting. Or you can on ErasureBaybuy or sell the predictions of other participants. The aim of Erasure is to build up reliable sources of information on a variety of topics over time.

4. dYdX: Total Value Locked $ 39.1 million

dYdXis the largest decentralized derivatives exchange on the Ethereum blockchain. With their margin deposit, users can leverage their speculations on falling or rising prices by a maximum of five times. There is a trading fee of 0.05 percent to 5 percent.

It is also possible to lend assets on the DeFi-DEX at a variable interest rate that depends on the supply and demand of the platform. Five percent of all interest payments from borrowers are set aside for the record to fund an insurance pool. The rest of the interest payments are paid out to people who make their capital available on dYdX. Currently, the DeFi protocol supports trading pairs for ETH, DAI and USDC.

3. Hegic: Total Value Locked $ 50.5 million

Hegic is an on-chain peer-to-pool options trading protocol built on top of Ethereum. The protocol enables users to use call and put options on Ethereum or tokenized Bitcoin. In addition, users can make liquidity available on Hegic.

This makes it possible to earn money from the trading volume of the Hegic platform. In addition, due to the liquidity stored in the option contract itself, Hegic options can be exercised at any time during the holding period of a contract.

This means that Hegic trade options yourself or participate in the success of the platform as a liquidity provider.

2. Nexus Mutual: Total Value Locked $ 86.2 million

Nexus Mutualis an open source platform through which users can insure their risks in the decentralized finance sector. For this reason, Nexus Mutual offers all DeFi investors an opportunity to lower their investment risks in the emerging Ethereum industry.

With the help of smart contracts, investors can protect themselves against bugs or hacks in the DeFi sector. In addition, Nexus Mutual owns a native platform token called NXM.

This benefits from the success of the protocol in three different ways. On the one hand, it is possible to stake NXM in contracts that you consider safe, for which you receive rewards in return. In addition, NXM is used as a governance token by voting on various updates of the protocol and receiving rewards for this. NXM can also be obtained for assessing DeFi platform risks.

1. Synthetix: Total Value Locked $ 766.1 million

Synthetix is ​​a protocol for the issuing and trading of synthetic assets. The platform is considered the inventor of synthetic assets and helps users to map the value of various on-chain and off-chain assets such as crypto currencies, fiat currencies, stocks or commodities.

This makes it possible, for example, to participate in price increases of listed companies via the Ethereum blockchain.

Synthetix has two different tokens: SNX and Synth. SNX is the primary native token issued by the DeFi platform and available for trading. Thus, various synthetic products can be created by storing SNX.

The synth generated then track the price of the corresponding asset and so, for example, sETH stands for ETH and sGold for gold. The synths produced can either be held or traded on the Synthetix exchange.

The ratio between the value of the secured SNX and the value of the synthetic synth must be more than 750 percent for the security of the protocol to be guaranteed. Debtors receive the trading fee from the Synthetix exchange as a reward by staking SNX.

Crystal Blockchain has published a report on all major security incidents in the blockchain space since 2011.

Since 2011, malicious actors have managed to steal the equivalent of approximately $ 7.6 billion in funds

The report noted that US-based exchanges are the most targeted, while Japanese exchange CoinCheck holds the record for the biggest hack.

Crypto analysis firm Crystal Blockchain has released a report detailing all the major security breaches, fraudulent activity, cyber terrorism and scams in the cryptocurrency arena since 2011.

According to the report , since the emergence of the cryptocurrency markets, 113 security attacks and 23 fraudulent schemes have resulted in the theft of crypto assets worth around $ 7.6 billion. As a press release announcing the report points out, this figure is equivalent to Monaco’s GDP.

The report highlighted some key findings, including on the most common places of exchange security breaches

Unsurprisingly, these are the countries with the most developed crypto markets, namely the United States, United Kingdom, South Korea, Japan and China.

The United States, in particular, appears to be a major target. Since the inception of the blockchain ecosystem, U.S.-based crypto services have been targeted by malicious actors a total of 13 times. In terms of stolen value, however, China remains the leader.

Coincheck in Japan takes the title of the biggest hack to date, with a loss of $ 535 million. Crystal also cited hackers‘ preferred methods, “the most popular method of crypto theft is infiltration of exchange security systems”.

The report ends with a section of predictions from Crystal’s security experts. These predictions are hardly optimistic: “Over the next two years, as the number of blockchains continues to grow, and the methods and technologies used by illegal hackers continue to improve and develop, we can assume that the number of hackers will also continue to increase ”.

Crystal says that with an adequate mode of corrective action, the damage caused by scams and hacks, especially in the case of “hot wallets”, could be mitigated. Overall, the report leaves little reason to believe that the latest Harvest Finance infiltration will be anything but the next installment in a long list of warnings.

Milliardær hedgefondssjef Stanley Druckenmiller er den siste høyprofilerte investoren som offentliggjør at han har investert i kryptokurrency.

Under et nylig intervju med CNBC avslørte den høyverdige investoren at han også eier noe gull. Han mener imidlertid at bitcoin-investeringen hans vil prestere bedre enn det edle metallet.

Akkurat som de fleste legendariske milliardærinvestorer avviste Druckenmiller flaggskipskryptovalutaen tidligere. Hans siste åpenbaring representerer derfor en fullstendig vending i hans syn på bitcoin.
Bitcoin kan være bedre enn gull: Stanley Druckenmiller

I en snakk med CNBC på mandag, roste den amerikanske investoren Stanley Druckenmiller som var en vellykket hedgefondforvalter i rundt 30 år, bitcoin ved å si at den „har mye tiltrekningskraft som en butikk med verdi for både årtusener og den nye vestkysten.“ Han bemerket videre at bitcoin har eksistert i 13 år, og at merkevaren som en butikk av verdi forbedres for hver dag som går.

Druckenmillers kommentarer kommer varme på hælene til et ansiktssmeltende rally registrert av bitcoin. Den digitale valutaen er opptil 110% i år etter å ha zoomet forbi $ 15 000-marken. Dette representerer en nesten firedoblet vekst fra midten av mars.

Selv om han eier „mange mange flere ganger“ gull enn bitcoin, vil bitcoin-innsatsen hans sannsynligvis prestere bedre enn gullallokeringen hans. „Den er tynnere, mer illikvid, og har mye mer beta,“ utdyper Druckenmiller. Enkelt sagt, han mener at toppkryptovaluta har et større opp-potensial enn gull, til tross for at hans investering i den gule legeringen er betydelig større enn hans bitcoin-stash.

Hvordan kom Stanley Druckenmiller til Bitcoin?

I juni i fjor uttalte Druckenmiller under et intervju med Economic Club i New York at han oppfatter bitcoin som en “løsning på jakt etter et problem. Jeg forstår ikke hvorfor vi trenger denne tingen. “ Han la til:

“Jeg trenger bare ikke å spille i bitcoin; Jeg ville ikke kort det, jeg ville ikke være lenge. […] Jeg forstår ikke hvorfor det er en annen verdi enn du ikke kan opprette den. Det er mange ting du ikke kan lage som ikke vil gå til en million. „

Spol frem til 2020, og Druckenmiller er en bitcoin-investor. Det er imidlertid ikke klart nøyaktig hvor mye penger han har investert i kryptovalutaen. Uansett er milliardæren som nå synger bitcoin-ros etter å tidligere ha slått eiendelen til, et velkomment syn.

Til syvende og sist bør ikke Druckenmillers bitcoin-påtegning nedprioriteres, da det markerer et sentralt øyeblikk for kryptovaluta. Som bitcoinevangelist og Wall Street-veteran Raoul Pal uttrykte det strengt:

“Betydningen av verdens største og mest respekterte pengesjef – Stan Druckenmiller sa akkurat nå at han er lang bitcoin kan ikke overdrives. Dette har fjernet alle hindringer for ethvert hedgefond eller kapital å investere. ”