The continuous refreshing record of DEX has confirmed the explosive power of DeFi. Will decentralized derivatives recreate the path of DEX?
Original Title: “The Year of Decentralized Derivatives Take Off, These 41 Value Projects Are Worth Watching”
Written by: Huang Xuejiao
In the traditional financial sector, the volume of derivatives is 40 to 60 times that of spot products. But in the field of crypto finance, BitWell CEO Jeff Young estimates that at present, the trading volume of crypto derivatives accounts for only 40.32% of the total trading volume of digital assets. Under the benchmark, many practitioners believe that encrypted derivatives still have a lot of room for development, “it is even possible to run out of several derivatives exchanges of Binance.”
Similar to spot, derivatives trading also corresponds to two types of solutions, centralized platforms and DEX. The continuous refreshing record of DEX has confirmed the explosive power of decentralized trading. So, will the decentralized derivatives platform continue to recreate the path of DEX?
At least, many capital believe so. According to incomplete statistics, since September last year, there have been 7 announced financings in the field of decentralized derivatives, with investment amounts ranging from US$2 million to US$10 million, and the top capital in the circle has basically entered field.
At an event held by Odaily Planet Daily in early January this year, Dragonfly Capital partner Mia Deng said that there have also been some small clues in derivatives this year, and it will be a very good track on the whole. “At present, we have not announced the actions in this area, but we are already looking at some projects that are structured products or decentralized derivatives.”
Mable Jiang, a partner at Multicoin Capital, pointed out more specifically that there are two directions in the derivatives field that deserve special attention. “One is decentralized perpetual contracts, because perpetual contracts are the most capital-efficient way of all derivatives, which saves resources. The second direction is income tokenization, including fixed-rate swaps. A kind of income tokenization.”
Some entrepreneurs of decentralized derivatives also believe that, just as DEX supplements (or even replaces) CEX, it is only a matter of time before the explosion of decentralized derivatives and the replacement of centralized trading methods.
Compared with centralized derivatives, DeFi derivatives agreements have five major advantages:
Without a centralized exchange operator, the cost will be lower in the long run;
No permission is required for access, making it anti-censorship, and no one can close, control and change the transaction agreement;
User own funds, no counterparty risk;
There is no license for trading varieties, and any asset with public price feed can be traded;
There are no withdrawal restrictions or transaction size restrictions.
Despite its advantages, decentralized derivatives trading has always had problems such as poor trading experience, insufficient liquidity, and unclear responsibility for accidents. Fortunately, with the integration of the Layer 2 solution and the introduction of AMM mode and profitable farming in some projects, some problems are being improved step by step.
According to DDX Chinese community statistics, in the third quarter of 2020, the transaction volume of the digital asset derivatives market reported US$2.7 trillion, an increase of 25.1% from the previous quarter and an increase of 159.4% from the third quarter of 2019.
However, a slight comparison of the trading volume of centralized derivatives shows that decentralized derivatives are still in their infancy.
To this end, Odaily Planet Daily has counted new and old projects in the three major markets, including decentralized derivatives trading, forecasting and insurance, for everyone’s attention and participation. In the future, we will also make a series of reports on the star projects, so stay tuned.
(Note: This article was published on February 8, 2021. Any currency not issued below refers to the currency that has not been issued as of February 2021.)
Derivatives trading
Leverage, futures (19 items)
dYdX (Unissued coins)
dYdX is the decentralized derivatives trading platform with the largest transaction volume on Ethereum , supporting lending, spot, leverage and perpetual contract transactions.
Prior to this, dYdX had completed 3 rounds of financing with a total of 20 million USD+.
Investors include: a16z, Polychain Capital, Kindred Ventures, 1confirmation, Elad Gil, Fred Ehrsam Three Arrows Capital, DeFiance Capital, Wintermute, Hashed, GSR, SCP, Scalar Capital, Spartan Group, RockTree Capital.
Vega (unissued currency)
Vega is a Layer 2 based decentralized derivatives trading agreement. The products to be provided include futures, swaps, options, etc.
In 2019, Vega announced a $5 million seed round of financing led by Pantera Capital. Other investors include Ripple’s Xpring, Hashed and KR1.
In March 2020, Vega released a testnet, allowing parties to build trading products on it.
Globedx (unissued currency)
Globedx is a decentralized derivatives trading protocol that supports currency-based perpetual contracts with a leverage of up to 100 times.
So far, Globe has completed two seed rounds totaling USD 3.15 million.
Some investors and investors include: Pantera Capital, Y Combinator and billionaire Tim Draper.
DerivaDEX (DDX)
DerivaDEX is a decentralized contract trading agreement, scheduled to go online in the first quarter of 2021.
So far, DerivaDEX has completed two rounds of financing, totaling US$2.7 million.
Investors and investors include: Polychain, Dragonfly, Three Arrows Capital, Coinbase Ventures, CMS Holdings, Calvin Liu (Compound CSO), Phil Daian.
Injective (INJ)
Injective is a Layer 2 decentralized derivatives trading protocol based on COSMOS that runs on Ethereum . It supports perpetual and delivery contracts, options and other derivatives. It also launched gold, Yield Farming, Tesla and Google stocks and other derivatives trading. However, the current beta version only releases perpetual contracts, and delivery contracts and option contracts are estimated to be realized in the second half of 2021.
So far, Injective has completed a seed round of financing of US$2.6 million.
Investors and investors include: Pantera Capital, QCP Soteria, Axia8 Ventures, K42, Krypton Capital, etc., as well as compound strategy leader Calvin Liu, Findora CEO Charles Lu, and former DRW partner Josh Felker.
Sovryn (SOV)
Sovryn is a decentralized lending and leveraged trading platform based on the Bitcoin sidechain RSK.
Earlier, Sovryn announced that it had obtained 2.5 million US dollars in financing through token pre-sale.
Some investors include: Greenfield One, Collider Ventures and Monday Capital.
DDEX (unissued currency)
DDEX is a decentralized margin trading platform based on the open source exchange framework Hydro protocol.
Prior to this, DDEX announced that it had received US$2.1 million in financing, with leading investment institutions including Initialized Capital and Zhen Fund.
Perpetual (PERP)
Perpetual (formerly Strike Agreement) is a decentralized perpetual contract agreement. In January of this year, Perpetual announced the launch of the main network. Users can currently trade Bitcoin and Ethereum perpetual contracts with a leverage of up to 12 times. There is no need to pay Gas fees during the transaction.
So far, Perpetual has completed $1.8 million in financing.
Investors include: Multicoin Capital, Zee Prime Capital, Three Arrows Capital, CMS Holdings, Alameda Research, Binance Labs, Mechanism Capital, Divergence Ventures.
SynFutures (unissued coins)
SynFutures is a decentralized futures exchange, currently on the testnet .
In January 2021, SynFutures announced the completion of a $1.4 million seed round of financing,
Some investors include: Dragonfly Capital and Standard Crypto.
Futureswap (FST)
Futureswap is an AMM-based perpetual contract platform that allows users to trade any ERC20 tokens with a leverage of up to 20 times.
Previously, Futureswap had announced that it had received US$400,000 in investment, and the disclosed investor was Framework Ventures.
Nuo (unissued coins)
Nuo is a platform that supports decentralized loans and margin trading.
So far, Nuo has completed $250,000 in financing.
Investors and investors include: Sequoia Capital (Surge Program), Polychain Capital, Dragonfly Capital, Consensys Labs, Astarc Ventures, Singapore Angel Network, Amrish Rau, Jitendra Gupta (CEO PayU India), Nitin Sharma (Incrypt).
MCDEX (MCB)
MCDEX is a decentralized perpetual contract and futures exchange based on the Layer 2 expansion plan Arbitrum Rollup.
In September 2020, MCDEX announced the completion of the first round of financing, and the specific amount was not disclosed.
Investors and investors include: Arthur Cheong (DeFinance Capital), Qiao Wang, DeFi Dad (Zapper), Yang Mindao (dForce CEO), Lei Yu (Fortube CEO), Zhang Yuanjie (Conflux co-founder), Steve Guo (Loopring CTO), Lei Mingda (DODO co-founder), Leo Cui (Talking Data), YOOZOO Games.
Kwenta (unissued coins)
Kwenta is a derivatives trading platform based on the Synthetix protocol, and its recent transaction volume has exceeded 500 million US dollars.
LN Markets (unissued currency)
LN Markets is a Bitcoin derivatives exchange built on the side chain Lightning Network of Bitcoin. Since its launch in March 2020, the total trading volume of the platform has reached US$18 million.
Leverj (LEV)
Leverj is a Plasma-based Layer 2 decentralized derivatives exchange. Currently, it has launched positive perpetual contracts for Bitcoin and Ethereum, accepting USDT as a margin and settlement currency.
bZx (BZRX)
bZx is a decentralized lending and margin trading platform.
Volmex (unissued currency)
Volmex.finance is an Ethereum- based volatility index and futures trading platform that has integrated Optimism’s second-tier expansion plan.
SynLev (SYN)
SynLev is a platform for generating and trading synthetic derivative tokens.
dFuture (DFT)
dFuture is a decentralized derivatives trading protocol that has entered the public beta period. It is reported that the project was initiated and incubated by Mix Labs under the MIX Group.
UniMex Network (UMX)
UniMex is a decentralized margin trading platform based on Uniswap. Allows users to open long and short positions based on the Uniswap token pair. The transaction fees incurred by the margin exchange belong to the lender, UniMexstaker and its partner Staker.
Options (8)
Opyn (unissued currency)
Opyn is an on-chain option platform based on the order book model built on the general option agreement “Convexity Protocol”, which is positioned to provide users with insurance services through option transactions.
So far, Opyn has completed two rounds of financing totaling USD 8.86 million.
Investors and investors include: Paradigm, Dragonfly, 1kx, Version One Ventures, DTC Capital, Uncorrelated Ventures and A. Capital, Synthetix co-founder Kain Warwick and Aave founder Stani Kulechov.
Opium (OPIUM)
Opium is a decentralized platform that supports the creation, settlement and trading of any derivatives. It currently supports the creation and trading of options and insurance markets.
In November last year, Opium received $3.25 million in financing.
Investors and investors include: QCP Soteria, HashKey, Galaxy Digital, Rockaway Blockchain Fund, MetaCartel Ventures, Alameda Research, Launch Hub, CMS Holdings, Kenetic Capital, One Block, SevenX, Zee Prime, Stani Kulechov (Aave Founder), Jordan Momtazi (Synthetix Founder), Trevor Koverko (Polymath Founder).
Hegic (HEGIC)
Hegic is a decentralized options platform based on the AMM model and currently supports American options. In April 2020, the V1 version of the agreement will be launched; on September 9, 2020, HEGIC tokens will be issued through the joint curve contract. In October 2020, the v888 version of the mainnet will be launched.
Due to its early launch, Hegic currently has a locked position of about US$56 million, ranking first in the decentralized options trading platform. According to the latest data in December 2020, Hegic’s option volume has exceeded 88 million US dollars.
Data from: debank.com
FinNexus (FNX)
FinNexus is a decentralized options agreement. The mainnet is currently online.
In August 2020, FinNexus received a strategic investment of USD 1 million, with Jubi Labs as the investor.
Primitive (Unissued coins)
Primitive is a decentralized options market, and the mainnet was officially launched on February 8.
Siren (unissued coins)
Siren is a decentralized option protocol used to create, trade, and redeem option contracts with full collateral for ERC20 tokens. Siren uses a binary option model similar to Cover, and specifies an exercise price and expiration date.
Charm Finance (unissued currency)
Charm Finance is an AMM-based decentralized option agreement that supports market pricing and automatic settlement.
Oddz (Unissued coins)
Oddz is a multi-chain option trading platform on Binance Smart Chain, Polkadot and Ethereum. It focuses on cross-chain transactions with zero gas fees.
Prediction market (5)
Augur (REP)
Augur is not only the first prediction platform, but also the first dAPP on Ethereum, which was officially released in June 2015. The forecasting process is mainly divided into four steps: market creation, trading, reporting and settlement. V God also served as a project consultant for Augur.
So far, Augur has completed 3 rounds of financing in total, and the investment amount has not been disclosed. Investors include OracleDAO, KR1, etc.
Polymarket (unissued currency)
Polymarket is a prediction market built on Matic Layer2, which supports users to place bets on hot controversial topics such as coronavirus, politics, current affairs, etc. The transaction will incur a 2% fee, which will be paid to the liquidity provider.
In October 2020, Polymarket announced the completion of US$4 million in financing.
Investment institutions and investors include: Polychain Capital, Naval Ravikant, Balaji Srinivasan (Coinbase CTO), Meltem Demirors, 1confirmation, ParaFi, Jack Herrick, Kal Vepuri, Stani Kulechov (Aave founder), Kain Warwick (Synthetix Founder), Samir Vasavade, Marc Bhargava, Calvin Liu.
Catnip (Unissued coins)
Catnip, as a project in the Augur ecosystem of the decentralized prediction market, mainly focuses on the transaction layer and provides Augur with an order book and AMM mechanism trading platform.
Prosper (PROS)
Prosper is a short-term prediction market platform on the Binance Smart Chain. Players can use Prosper to predict the BNB market and obtain PROS token rewards.
Numerai (NMR)
Numerai is a transactional data network for data scientists who are incentivized to predict models to improve the returns of hedge funds.
Decentralized insurance (8)
Nexus Mutual (NXM)
Nexus Mutual is the pioneer of DeFi insurance. Its first product is “smart contract insurance”, which allows users to purchase insurance to reduce asset losses caused by code defects or hacking attacks on Ethereum smart contracts.
In 2018, Nexus Mutual completed a seed round of financing with investors KR1 and Kenetic. According to first-class extrapolation, the seed round financing of the project is about 1.5 million US dollars.
According to DeBank, Nexus Mutual’s current lock-up volume has reached 328 million U.S. dollars, ranking 21st among various DeFi platforms with lock-up volume.
Data from: debank.com
COVER (COVER)
COVER is a decentralized insurance market. It hopes to tokenize the rights and obligations of insurance. When market participants play free games, they can realize the function of insurance through arbitrage.
On December 28, 2020, Cover was attacked by hackers (twice) due to an infinite coin minting vulnerability, causing a total of more than 5 million US dollars in asset losses. Currently the vulnerability has been fixed.
UNION (UNN)
UNION is a decentralized insurance platform, and its products are expected to be launched in the near future.
In November of last year, UNION just completed a round of US$3.9 million in financing. Participants included Alameda Research, Solidity Ventures, 3Commas and Black Edge Capital.
Nsure (Nsure)
( Https://nsure.network/ , token: Nsure)
Nsure Network is a decentralized insurance platform whose premiums are determined by a dynamic pricing model. The model uses capital demand (total insurance purchasing power) and capital supply (total pledged Nsure tokens) as parameters, and jointly determines the final premium in the model.
In September last year, Nsure Network completed a $1.45 million seed round led by Based Ventures. Other investors include Mechanism Capital, Caballeros Capital, 3Commas Venture, AU21, SignalVC and Genblock.
Umbrella (unreleased)
Umbrella is a DeFi insurance agreement issued by Yam Finance. The project team is currently developing the alpha version of Umbrella code, which will be internally tested in the Yam community.
Unslashed (not released)
Unslashed Finance is a DeFi insurance agreement that announced the launch of the mainnet in an invitation-only manner in January this year.
Soteria (SOTE)
Soteria is a decentralized mutual insurance platform. By staking tokens, users are both gainers and risk bearers. At the same time, token holders can use the tokens they hold to determine how much insurance coverage a project can have and whether to approve claims.
Soteria is currently released on Binance Smart Chain.
PolkaCover (CVR)
PolkaCover is a decentralized insurance agreement based on the Polkadot ecology. The platform will be divided into four development stages: encrypted insurance products, global markets, P2P insurance, and decentralized management and arbitration.
