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DeFi - Derivatives - An Overview

Alfredo de Candia Hacker Noon profile picture

@alfredodecandiaAlfredo de Candia

Author of "Mastering EOS" & "Mastering DeFi" blockchain specialist, android developer

We have come to the end of the exploration of the macro areas that include decentralized finance (DeFi) and we come to talk about the most difficult sector for a normal person to understand and that stops only at the superficial layer of DeFi.

We are talking about derivatives, tools that may seem simple for the few iterations that the user asks for, given that there are only a couple of transactions that must be carried out, but this does not take away the complexity that these high-level financial instruments offer.

In fact, we always talk about financial instruments that instead of being in traditional finance, have moved into the digital world and onto the blockchain, with the same dynamics when possible or with interesting tricks that you need to know thoroughly.

But it does not end there because derivatives are only the tip of the iceberg in this sector, since the most famous instruments are those that allow you to create new assets, overcollateralising positions using tokens from the platform itself or others.

We are talking about the creation of synthetic assets and that it is possible to create anything we want, therefore being connected to an asset, to a share, to gold or other physical or digital assets, fiat, indices and all other types of derivatives that is It is therefore possible to exploit maximum freedom to decide what and how much to create.

Traditionally this type of platform allows you to create assets by putting enough assets as collateral to maintain the position, we also speak of 800% collateralisation precisely because they are very unstable assets and it is better to have a solid base in case of fluctuations, then based on the platform we will be able to obtain benefits or other incentives.

From here it is understood that overcollateralising a position of 800% is not cheap and if you do things recklessly or randomly, you can lose huge capital because all the parameters that the platform asks for have not been evaluated.

In addition to these derivatives there are also options that always exploit crypto to be able to manage them and here the various platforms tend to mirror the markets and passages of the traditional world, but instead of being centralized, we have an incredible opening because anyone can participate without problems and with no limits whatsoever, since not everyone can access this type of instrument in the traditional market, and therefore only for a few.

For example, one of the most famous platforms of this type on the Ethereum blockchain is certainly Synthetix (SNX) and which dates back only to February 2019, therefore very young as a platform in this area.

On the EOS blockchain, on the other hand, we find the Organix (OGX) project regarding derivatives and we can define the version of Synthetix but on EOS, instead for the options we have EOS Options which, as the name itself reminds us, deals with options but on the EOS blockchain .

Finally, as regards the Tron blockchain, we have a protocol practically identical to that of Synthetix, which takes the name of Oikos and therefore if one knows how to use or wants to use derivatives on Tron, this platform is available.

How can I approach this world?

Obviously, the best thing to do is to understand and read a lot about traditional financial derivatives, and then move on to using these platforms, but how? In this case you can start from all the documentation you will find on the respective ones, or follow the only guide that contains these and different protocols on DeFi, we are talking about book that explains the various topics in detail, which takes the name of "Mastering DeFi - A practical guide for beginners and the advanced", important because it not only explains the basics of this sector and the various steps of the various protocols, over 30, but it is also the only one that examines 3 different blockchains such as Ethereum (ETH), EOS and Tron (TRX).


book that analyzes the macro-categories of decentralized finance which are:

  • Derivatives

All organized into 8 chapters and also divided by blockchain so as to have a complete picture of what we find on the various blockchains and also make the relative comparisons to leave maximum freedom for anyone to use the blockchain they prefer without closing the door to others.

Over 30 protocols analyzed in detail and details, with relative fundamental steps, an indication of the various costs incurred to carry out the various transactions, so as to make the reader aware before he can interact with him.

Translated into 8 different languagesItalianEnglishGerman, French, SpanishPortugueseDutch, and Japanese, so as not to exclude anyone from this revolution that is underway and will continue in the years to come.


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