The State of Decentralized Derivatives Trading: Research #08
2022 started with lots of hot news and releases from protocols that actively develop on-chain derivatives trading on various blockchains and Spin is no exception: in late 2021 we launched Perps v2 alpha with upgraded functionality on Solana’s testnet; in mid January we announced the launch of Spin’s Freaky Elves utility NFT collection on NEAR protocol and will soon release the first on-chain order book DEX on NEAR Protocol’s testnet.
Let’s have a closer look at the progress of our on-chain mates and today we will also present the following protocols:
In early January, the Mango team listed several tokens from other blockchains in the spot section, which were previously traded only in the form of Perpetuals: AVAX, LUNA, BNB, all wrapped with Wormhole. As a result of listing these tokens, basis trading (an arbitrage strategy for earning on the funding rate) became possible thus decreasing the funding rate, which is good for traders.
The team also released a Risk Calculator, with which you can simulate the Health factor of an account depending on asset prices. They also implemented the feature of Health ratio ( quite similar to margin coefficient) email notifications. Additionally, the team goes on working hard in upgrading the GUI: now it is possible to view the account of the user who was the counterparty to the transaction, to adjust stop loss and other order types levels by moving indicators on the chart, to put NFTs as an avatar (thanks to the integration with Solflare), and to see the liquidating price for a certain asset.
Serum successfully raised over $70M for the development of the Serum Network from Commonwealth Asset Management LP, Tagus, Tiger Global and others. SRM also reached its ATH 24-hour trading volume, which was $575M on Saturday, January 22nd.
The protocol’s Convergence hackathon that runs in association with Wormhole is still accepting applications and will run till January 31st. The Serum team has also reduced the fees for two stablecoin pairs: USDT/USDC and MSOL/SOL to 1bps.
One of the hottest news for Zeta this month was the protocol’s mainnet launch. The team also partnered with Pattern Research and LedgerPrime. These companies provide liquidity on Zeta from very protocol launch on the mainnet.
Additionally, the team introduced undercollateralized options with cross margin. Users can now buy or sell options without having 100% collateral.
The dYdX team announced the launch of V4 by the end of 2022. They plan to make the protocol completely decentralized, direct all received commissions to the DAO, as well as many other improvements. They also launched a grant program with a total fund of $6.25M. The funds will be used to develop the dYdX ecosystem.
Additionally, the dYdX team introduced gamified trading competitions — dYdX Trading Leagues, a competition where users, based on the results of their trading for a week, will be distributed among different leagues and would keep competing next week. The weekly prize pool for a winning league is $350,000.
The team also reduced fees by more than 2 times on average, and now they are comparable to the fees of FTX and Binance Futures.
Opyn successfully launched trading Squeeth on Ethereum and presented an automated strategy for earning funding by selling Squeeth ETH with hedging through the purchase of an asset on the spot market. According to the developers, the structured product will make a profit if the price of ETH changes by less than 7.63% per day, in any direction.
DerivaDEX has launched a DAO to manage the protocol and an insurance fund, into which users have already deposited $59.4M. Gradually, the fund will be replenished from trading and liquidation fees, but for now it consists of users’ funds, for which the users receive an incentive.
PsyOptions held IDOs on FTX and Gate.io with the oversubscription of x20 and x45.8 respectively. On Gate, with a maximum allocation of $1.2M, the total bet of users was $55M. Following the token sale, the project token, PSY, was listed on FTX and Gate.io.
Long story short
The market of on-chain derivatives trading is rapidly growing. The protocols constantly upgrade the industry standards, improve the functionality, and welcome new users to futures and options trading.