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<h2 id="header-0">What Are Crypto Derivatives?</h2>Derivatives are closely linked to the expectations of market participants. Simply put, a crypto derivative is an agreement that arranges the purchase or sale of crypto money or an asset based on a pre-determined price and time in the future. There are mainly two types of crypto derivatives: futures and options.Because of the high risk in the crypto market, introducing derivatives becomes crucial to its development. Generally speaking, crypto derivatives have three functions for investors’ sake:1. Managing riskBy setting the pre-determined price in advance can largely hedge the risk from future price changes. This is mainly for optimistic crypto enthusiasts.2. SpeculationOne of the main drivers behind crypto derivatives is speculation. Speculators can be anyone who simply wants to benefit from price volatility. In this case, bearish investors can also join and gain by shorting the crypto if they expect the price to drop. This is exactly what happened after the 2017 bitcoin mania.3. LeverageInvestors can amplify their risks and rewards by leveraging in the derivatives market. As most derivatives allow for margin trading, the investors can open positions larger than their deposits. This function is essential for investors who have a strong belief in future price trends and can help them gain more benefits.<h2 id="header-1">Crypto Derivatives History</h2>The following table summarizes crucial steps in the history of crypto derivatives.<img src="https://academy-public.coinmarketcap.com/srd-optimized-uploads/a9f2bd99e53d40f9beee2ce621a92c04.png" />The Crypto market is much more volatile than the traditional market, which creates a massive demand for derivatives to hedge the risk, speculate, and leverage.The first bitcoin futures platform emerged in 2011 but didn’t attract much market attention. BitMEX joined in 2014 to foster bitcoin derivatives market and invented perpetual swaps in 2016.CBOE and CME offered bitcoin derivatives in December 2017, since then crypto derivatives can be traded in regulated exchanges. However, severe selloffs followed, and the crypto market cooled down.2019 was a big year for crypto derivatives. Lots of famous derivatives exchanges were launched. Even some big names in spot exchange joined to offer crypto derivatives for investors.During the pandemic, the crypto market attracted more retail and institutional investors in 2020. The bitcoin price soared to sky-high, and demand for derivatives surged accordingly.Ethereum futures were launched by CME in February 2021, allowing more options for the institutional trading of ETH. As more regulations are carried out in Europe and the US, many crypto derivative platforms relocate, and Asia becomes the new center.On the grand scale of things, crypto derivatives markets are still at a nascent stage, and we should look forward to their further development as more institutional players join the market!<h2 id="header-2">Position Exchange Derivatives - The Future</h2>The Decentralized Perpetual Trading Protocol (DPTP) of Position Exchange is a promising project aimed at creating DeFi exchange platforms that are accessible, simple, and secure for perpetual futures trading. DPTP 2.0 version includes Futures Bridge which promisingly drives a progressive move towards derivatives in DeFi.Thanks to the development of Futures Bridge, users can expect a new version of DPTP with faster processing times, lower fees, more pairs, greater liquidity and leverage, and better performance compared to a Centralized Exchange in the coming time. The second version of DPTP also features a new UI which provides a better and more user-friendly interface. Position Exchange is heading at the best and most complete version of DPTP 2.0 with easy usage, faultlessness, and high credibility.

Crypto Derivatives: The Past, Present And Future

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