DEX derivatives exploded in 2022 with leading players like GMX, GNX, PERP & $DYDX. Best of all, new players are emerging in 2023.
This newsletter will examine the gold rush in crypto derivatives, and the new players to look out for.
Derivatives are financial contracts that derive their value from an underlying asset, group of assets, or benchmarks. Some common derivatives are future contracts, DOVs and swaps.
Additionally, derivatives are the largest financial markets in the world, with an estimation of $600T to $1Q in notional value. Imagine the potential of on-chain derivatives if TradFi derivatives is worth this huge.
Ever since the 2021 bull market, the crypto derivatives have been growing steadily on both centralised and decentralised exchanges. However, recently users are gravitating towards DEX derivatives obviously due to fall of FTX & the need for self-custodian practices.
Users also prefer DEX derivatives due to the following reasons:
They offer real yields
To hedge against the market
They grow organically
It is capital efficient
One of the easiest way to quantify the growth of a narrative is to look at its top players. So far, the top DEX derivatives like @GMX_IO, @GainsNetwork_io, @dYdX, and @perpprotocol are doing incredibly well.
GMX is among the top 3 highest revenue-generating protocols, as par @CryptoFeesInfo
Gains Network recently did an ATH of over $1B in weekly trading volume.
Perp Protocol has the highest number of transactions per day in Optimism Network.
There are lots of promising emerging DEX derivatives coming up recently. Players that might ride the next wave of derivatives growth and institutional adoption. Let's look at 5 emerging players (in no particular order)
Vela Exchange / @vela_exchange
With Vela Exchange, users can create positions against performance of synthetic assets with leverage up to 100x. The platform has an incredible reward structure and an innovative tech.
Prep88 / @0xPerp88
Built on Polygon, Prep88 is a prep exchange that supports a max leverage of 88x and low trading fees. Also, they offer 0% price swap for assets. Prep88 is not left out in the real yield game: they currently offering about $15% APR.
3/ El Dorado Exchange / @ede_finance
El Dorado is a decentralised spot and prep exchange offering up to 50x leverage, low, and real yields. Trading on El Dorado is supported by 3 pools that earn LPs fees from market making, swap fees, and leverage trading.
Y2K / @y2kfinance
Built on Arbitrum, Y2K Finance allows users to hedge on the risk of pegged assets. Essentially, users can "sell" or "buy" insurance for pegged assets by depositing $ETH into the various Y2K's vaults.
NFT Prep / @nftperp
NFT Prep is bringing innovation to the on-chain derivatives space. They're arguably the first perpetual futures DEX allowing users to long and short trade NFTs. Best of all, users can trade with up to 5x leverage. Excited about this one.
Other Notable Mentions:
Logium - @LogiumDEX
Vest - @VestExchange / take a closer look.
That’s all for today. Talk soon.