“FutureX Meet-Up #3 — Derivatives, Evolution or Revolution?” Recap and Highlights
It is no surprise that DeFi derivatives are attracting significant interest considering the importance of derivative contracts in traditional financial systems. While DeFi derivative space attracts significant interest within the DeFi industry, the market also carries risks as derivatives are evolving at an incredibly rapid pace and the fact that almost anyone can create crypto derivatives in an open and permissionless way.
SynFutures is a next-generation decentralized derivatives exchange that is committed to helping traders trade decentralized synthetic asset futures and derivatives more efficiently and effectively, and most importantly safely. We established our FutureX sessions in August as a way to connect and share our thoughts with the wider SynFutures community.
We’ve previously hosted FutureX events in which we discussed Layer 2 and NFTs in DeFi, and we were thrilled to host our “FutureX Session #3: Derivatives, Evolution or Revolution?” event to discuss the trending topic on rapidly-developing derivatives.
On Nov 2nd 2021, SynFututre’s Matt the Finance Guy hosted the “FutureX Session #3: Derivatives, Evolution or Revolution?” event with a distinguished panel of blockchain experts consisting of Perpetual Protocol’s Yenwen Feng, Antimatter Protocol’s Jack Lu, Sherwin Dowlat from Polychain Capital and CEO of Synfutures, Rachel Lin.
We discussed various topics on the current state of derivatives in the crypto landscape, and whether the ecosystem is primed for evolution or a revolution.
Keep reading to see highlights and insights from our guests from the event regarding the current and future state of derivatives in blockchain.
Selected Highlights from the Event
Sherwin Dowlat:
What I’ve found to be probably one of the most interesting elements of derivatives within DeFi is the potential for capital efficiency. I used to trade stocks and when you understand how much capital is actually being locked as margin and collateral in different places, and how limited that is to be able to be able to move, be moved around, you actually lose a lot of opportunity, and you really understand how much capital is actually of walked on the sidelines and cannot participate in defi. I think the first primitive of this was LP tokens where users could take a representation of liquidity and use it elsewhere. With the launch of Unswap v3, its usage has spread out everywhere in the space and it is when you realize how much capital is on the sidelines that can be used more efficiently.
I think a great innovation I’ve seen in the DeFi derivatives space is the emergence of the AMMs, because it allows users to add in passive liquidity and bootstrap liquidity for tail-end assets where they would otherwise have trouble on platforms like Coinbase.
In a more macro perspective, as I see more institutions and larger money coming into crypto, especially with, hopefully, some regulation that comes about to allow more money to come in, I’m thinking about where this money will be going and the infrastructure that will be needed for the space.
Rachel Lin:
One of the most exciting things that I see is the emergence of NFT derivatives because I think that most of the assets will be non-fungible in the future which makes it a huge market. In the digital world, it’s easier for assets to be tailor-made for certain purposes with different underlines and become non-refundable. That’s when blockchain could really utilize its advantage and bring innovations to the futures markets.
AMMs enable normal people to do market-making as simple as making a deposit which increases the utilization of the whole network’s liquidity. So if you have some idle BTC or ETH, you could just put it out there and contribute to the whole financial system which will help you earn some fees. At the same time, the systems could also benefit from having you making your contribution.
After 6 months of testing, we launched a beta version last month in October and we’ve been seeing a cumulative of about 20,000 users with around 3,000 weekly active users trading on our platforms without any token incentive. Although it’s still just the beginning, I think the daily trading volume is already at around $20 million without incentives. What we are offering are, till this day I believe, still the only services that could enable anyone to create any trading pairs in just a few clicks.
Yenwen Feng:
For traders in the DeFi space, their trading behavior is heavily dependent on the fees. When the fee is much lower, they naturally trade more; if the fee is high, they would be more conservative as it possesses more risk. With derivatives, traders can go into more risky DeFi spaces with less concerns. I think space will continue to grow for a long while.
Jack Lv:
What we’re seeing is people starting to mimic previous projects. Yet a lot of models still need to be built. Maybe we’ll see more innovation within the market in the near future as the majority of users know that this is a huge market potential. Even though there is a trend of people going into gaming makeovers, I think the space will keep innovating as DeFi is the future.
For the complete video recording of our FutureX events, please visit our YouTube Channel.
We look forward to bringing you more insights and knowledge in the coming FutureX events! Stay tuned for more information!
About SynFutures
SynFutures is a next-generation derivatives exchange focused on creating an open and trustless derivatives market by enabling trading on anything with a price feed. By cultivating a free market and maximizing the variety of tradable assets, SynFutures is lowering the barrier to entry in the derivatives market, creating a more equitable digital assets exchange market.
