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This Decentralized Derivatives Platform Is Leveling the Playing Field for Small Investors -Breaking

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The Decentralized Derivatives platform is leveling the playing field for small investors
  • The DeFi ecosystem has been steadily embracing synthetic assets.
  • SynFutures in Singapore is opening doors for smaller investors to the DeFi derivatives marketplace
  • SynFutures makes it possible to create and freely trade a variety of assets

The blockchain is bringing new services and products to financial markets through decentralized finance (DeFi). DeFi is seeing synthetic assets and other financial instruments gain in popularity.

To clarify, synths (or synthetic assets) are tokenized copies of an underlying asset such as stocks, bonds or NFTs. Synthetic products include derivatives such as swaps, options, futures, or swaps.

DeFi derivatives are experiencing a boom

For a long period, derivatives were a popular part of the financial system. People trade derivatives to hedge their bets, leverage, or benefit from the underlying asset’s growth. DeFi derivatives, though still very young in the market, are worth more than $1 quadrillion. It’s only a matter of time before much of this value moves to synthetic assets on the blockchain.

Synthetic assets allow traders and investors to have access to many financial instruments. They are not required to be owners of the underlying asset, including non-blockchain-based assets. Unlike traditional derivatives, synths can:

  • Let anyone mint your coins.
  • Anyone can trade crypto on any exchange.
  • Anybody can receive and send crypto wallets
  • You can switch easily to other assets. For example, you could easily swap silver for gold.

Equal playing fields

Singapore-based SynFutures – which raised $14 million from Polygon, Pantera, and other investors in September – is breaking the barriers for small investors in the DeFi derivatives market. Access to large synthetic assets, including indexes and altcoins as well as metals and equities should be easy for small investors.

Synthetix, an Ethereum-based company, was the first to let DeFi users trade and create synthetic assets through its peer-to–peer platform. Synthetix allows traders to access these assets by linking synths to stocks, precious metals and currencies.

dYdX, another non-custodial cryptocurrency exchange that offers synthetic exposure to different assets, is also available. StarkWare has partnered with it to implement a Layer-2 protocol that allows users to trade, without worrying about paying high gas prices. This Layer-2 protocol also lowers trade sizes. However, SynFutures is betting that the low gas fees, security, and ample liquidity aren’t enough to eliminate barriers to entry for smaller investors. We need to do more to make synthetic asset platforms equal, particularly considering that DeFi is still in its early stages.

It offers four distinct features that go beyond security and liquidity.

  • Single Token Model: SynFutures’ synthetic Automated Market Maker (sAMM) allows market participants to bring only a single digital asset. Smart contracts can be used to create the second asset for the trading pair.
  • Users-Generated Markets (UGM): This trading platform allows anyone to list any trading pair within 30 seconds. Futures markets could be created by projects using project tokens.
  • Unique Financial Logics: Perpetual futures with hard pegging to spot and rigid risk management to protect users’ positions and avoid excessive price volatility
  • Automated liquidator (ALQ),: Reduces entry barriers for liquidators. It automates the liquidation process.
  • SynFutures permits a broad range of assets, including Ethereum-native tokens and cross-chain assets. Real-world assets can also be synthesized, traded and free to trade. SynFutures will be the next dYdX, but it has even more features that are geared towards small investors.

    Closing thoughts

    Investors can trade synths to escape the restrictions of traditional financial markets. Trades can be made with both blockchain and non-blockchain assets, as well as their derivatives. With the adoption of blockchain technology and the rise of interest in synthetic assets, several derivatives platforms have emerged – and will continue to emerge – on different blockchains. SynFutures is unique because it has a user-generated marketplace, a single token model and strong risk management.

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