The crypto industry has come a long way to reach the huge numbers of the present moment.
Despite the numerous predictions of several experts regarding a “cryptocurrency bubble”, developers remain focused on delivering value through innovation and investors remain confident in the post-2020 indicatives.
Currently, more than a decade after Bitcoin’s inception, the digital asset market appears to be maturing and paving the way for the mass adoption of blockchain technology.
Several platforms are structuring and working on projects that aim to create decentralized products and services that can effectively replace TradFi products.
In this article, you will discover promising projects that demonstrating the increased maturity of the blockchain-market.
Crypto Derivatives Are on the Rise
The derivatives market is one of the biggest and most abundant markets in the world.
Currently, the derivatives industry boasts numbers at over $1 quadrillion worldwide, mainly due to the high number of derivatives available in the market, as well the variety of assets that can be utilized in such operations (e.g., stocks, equities, bonds, commodities, currency, etc.)
But what are derivatives? A derivative can be explained as a tradable security/contract in which the value derives from an underlying asset. Most common forms of derivatives include futures and call or put options.
Further reading: Learn more about Kwenta
Crypto derivatives are nothing more than tradable securities in which the underlying asset is a digital asset, such as Bitcoin, Ether, or Tether, for example.
With the ever-growing popularity of DeFi, this niche gained even more exposure and numbers grew exponentially, as demonstrated by platforms such as Synthetix, which has an 84% dominance over DeFi’s derivatives numbers.
As the name suggests, Mirror is a platform focused on synthetic assets that reflect the crypto market. Hence, users can create fungible assets whose value derives from the price of real-world assets.
A synthetic asset issued on the platform is called a “mAsset”. For example, a synthetic version of a certain commodity would be called mCommodity. The protocol permits that users to mint, burn, and trade different mAssets.
To mint a mAsset, users have to lock up collateral in the form of a stablecoin or a distinct mAsset. The minimum amount of collateral required varies accordingly to the chosen asset utilized as collateral.
Built to have cross-chain functionalities, Mirror smart contracts are built on alternative blockchains (Terra and Cosmwasm). Plus, mAssets can be traded on the Ethereum blockchain via the Shuttle Terra-Ethereum bridge.
Entirely built and governed by its community, Mirror has a native governance token called MIR. The token supply is distributed via liquidity and platform incentives through a fair system. Hence, the protocol does not believe in investor pre-mining or team reserve when it comes to token distribution.
Typically, traders in crypto markets have to choose between performance or security. While most centralized exchanges offer high-level user experience and optimal liquidity, decentralized exchanges lack usability but offer trustless and non-custodial trading.
DerivaDEX believes that it is possible to bring the best of both worlds together to deliver a unique trading service.
The yet-to-launch platform is a community-governed DEX specialized in derivatives trading. Their goal is to deliver next-level performance and autonomy by offering:
- Real-time price feeds
- Efficient and rapid trade resolution
- Competitive fees
Currently, DerivaDEX has more than29K ETH in Total Value Locked (TVL). The platform utilized insurance mining to bootstrap capital for an exclusive insurance fund, where users stake their crypto to receive DDX tokens.
The DDX token is DerivaDEX’s native token, designed for governance and fee-reduction purposes. The protocol will be launched soon as a full-time DAO, so the token holder community will control the platform from the beginning.
Inspired by the AMM-trend, SynFutures aims to build the next generation of decentralized exchanges based solely on synthetic assets derivatives.
The platform allows users to create and trade several digital asset pairs utilizing one single digital asset as margin. Hence, liquidity providers (LPs) simply need to provide one single digital currency for a trading pair.
The protocol’s first version will be focused on the DeFi futures market and offer support to a wide array of assets, which includes ERC20 tokens and cross-chain assets.
Further reading: Are derivatives the future of DeFi?
Plus, the platform promises to deliver a decentralized approach to derivatives based on real-world assets, so users will have the possibility to take a leveraged position on goods such as gold or indices, for example.
On February 4th, SynFutures launched its v1 testnet with all smart contracts being audited by Peckshield.
One of the main issues that preclude DeFi from mass adoption is the lack of hedging. Scalability requires a certain amount of security for investors and traders, which are willing to take the risk but only at a certain level.
Opium is a platform focused on decentralized insurance products. Their goal is to aid DeFi users by allowing them to hedge the risks involved in decentralized protocols and strategies.
The platform’s value offer is similar to a hedge fund, in which users can opt to take the risks they are willing to take and hedge funds they do not want to risk. Plus, Opium is built on top of the Opium Network, which is a solid protocol for decentralized derivatives projects.
Given that Opium is a non-custodial protocol, it does not sell insurance to DeFi users. Instead, users sell tradeable insurance to other users with guaranteed collateral locked in smart contracts.
Issues covered by the platform include smart contract exploits, credit default events, stablecoin custodian insolvency, impermanent loss, price volatility, SAFT (Simple Agreement for Future Tokens) risk, and off-chain risks.
Currently, the platform is still in its initial stage and features are still being added progressively.
Primitive Finance can be described as a “survivor” type of project. The platform that focuses on DeFi options to offer capital efficiency and user-friendly derivatives trading suffered two major setbacks in less than one year.
The first event took place on May 1st, 2020, when the team discovered a smart-contract bug just two after announcing the protocol’s alpha release. The platform admitted the error and reassure that it would look more diligently at every single line of code to check for mistakes.
On December 28, 2020, the platform was back again and went live on mainnet. One of the platform’s key advantages is that option tokens do not need to rely on oracles or admins. Plus, any type of ERC20 token could be used as the underlying asset or the quote in transactions.
In early January, Primitive’s first options market was successfully concluded. However, in late February a critical vulnerability was discovered in the protocol’s smart contracts. Consequently, on February 22 the team has decided to whitehack Primitive’s smart contracts to secure user funds.
Thankfully, the decision was enough to secure all the money in the smart contracts. All white hacked funds are being given back to their respective owners. Despite the negative impact suffered, Primitive remained resilient and still has a promising purpose of value.
Pro-Level Tools to Up the Crypto Investors Game
The recent explosion in the popularity of crypto financial markets opened a gateway for various innovative tools that help traders to maximize their earnings and optimize portfolio management.
Previously, most of these resources were only available for white-collar TradFi investors working for giant brokerages and Wall Street companies.
Fortunately, technology helped to broke this barrier. Nowadays, any crypto enthusiast has access to pro-level analytics, trading bots, and other automated trading tools.
Designed to be the “eyes and ears” of smart DeFi investors, Parsec is an all-in-one management trading tool empowered with real-time data and high-fidelity visualizations. The platform’s goal is to paint a picture of the decentralized finance market in front of users.
Currently, Parsec has over 30 components that provide pro-level insight into the DeFi market, including price candles, trades stream, liquidations chart, correlations chart, transaction watcher, Market Cap treemap, and lending markets overview.
Users can also rely on Parsec’s portfolio tracking, which offers detailed multi-account portfolio tracking (including alternative asset locations). The platform also offers an exclusive DeFi news feed, where users can always stay up to date.
On January 28, Parsec was launched after securing $1.25 million in a funding round led by Polychain Capital and backed by leading venture capital firms such as Robot Ventures, Volt Capital, and Free Company.
Formerly known as UniSwapROI, the platform was recently rebranded as LiquidityFolio. Their goal is to provide a tracking tool that allows users to find the best liquidity pools and track their returns.
- Current liquidity
- The expected amount of fees expected at a specific time frame
- The expected amount of impermanent loss expected at a specific time frame
- The expected network ROI
- Equivalent yield (Annual Percentage Rate)
Founder Federico Nitidi believes that the platform has the potential to become Defi’s “Bloomberg terminal” for liquidity provision insights. Currently, the team is focused on growing and expanding the protocol as the leading reference in terms of DeFi analytics for market makers.
Crypto Lending Solutions Optimized
It is impossible to talk about the crypto industry and ignore crypto lending markets. Currently, the most successful platforms in DeFi are lending protocols such as Maker, Aave Protocol, and Compound.
Nonetheless, many developers and executives believe that the market still has gaps to fulfill, which led to the creation of several platforms that aim to offer next-level crypto lending solutions.
Further reading: Ultimate Guide to Lending Bitcoin in 2020
Built as a decentralized credit platform, Goldfinch offers crypto loans without collateral. The project believes that offering loans without collateral will open crypto lending markets to the masses.
Goldfinch decentralizes the lending process with DeFi technology, which creates a new layer of underwriting where anyone is allowed to be a lender. Consequently, banks and other entities are out of the equation.
The platform offers credit lines to lending businesses, which utilize their credit to draw down stablecoins from the pool. Then, the same lending businesses exchange the borrowed stablecoins for fiat currency to use in their local markets.
As expected, cryptocurrency holders deposit their tokens into Goldfinch’s pool to earn yield. When lending businesses pay back the protocol the owed funds plus interest, investors receive their invested capital.
Goldfinch stands out from the competition by focusing on emerging markets, such as Mexico, Nigeria, and Southeast Asia, for example. The team believes that emerging markets have the highest demand for their service due to the inefficiencies of traditional lending markets.
Warp is a platform focused on allowing liquidity (LP) tokens originated from liquidity providing to be utilized as collateral for stablecoin loans.
The platform allows users to gain leverage using their LP tokens by re-staking/farming stablecoins received from loans. Meanwhile, the same LP tokens utilized as collateral are staked in Uniswap pools, which enables users to earn simultaneous rewards for liquidity providing.
Another interesting possibility is that users can benefit from negative interest loans. As the yield generated by Uniswap pools could overcome the interest rate on loans, the surplus could be paid out to borrowers.
Instead of just depositing stablecoins into liquidity mining protocols and receiving back LP tokens, Warp users can also utilize their LP tokens to take out an extra stablecoin loan, using the borrowed funds to stake into liquidity mining.
Consequently, users can act as liquidity providers without necessarily locking up their digital assets and use extra borrowed funds to generate even more liquidity.
Undoubtedly, the blockchain industry has a promising landscape in the next decade. In this sense, various projects are developing solutions in the present moment to provide financial inclusion and decentralization to the masses.
Despite the overall growth of the crypto industry, some specific niches demonstrated more capacity to stand up to the existing challenges and provide feasible solutions for real-world issues, such as the crypto derivatives market and crypto lending markets.
Another niche with great potential for expansion and development involves pro-level trading tools that enable real-time data tracking, optimized portfolio management, and detailed data assessment.