- The DEX-to-CEX futures trade volume was just 1.4% as of July 2023.
- The derivatives market was dominated by crypto perpetual futures, which contributed over 90% to its TVL.
Over the years, decentralized finance (DeFi) has played an active role in spreading Web3 to a wider market. DeFi mirrors all of the activities commonly associated with the TradFi market, such as asset trading, lending, and borrowing. However, no centralized organization dominates it.
According to data from DeFiLlama, about $66.94 billion worth of cryptos were locked in DeFi protocols at the time of writing. Moreover, revenue from DeFi was predicted to hit a whopping $231.2 billion by 2030.
As the market evolves, one sub-sector of DeFi that will be crucial to its growth story is decentralized derivatives.
The world of decentralized derivatives
Binance published a report that delved into the decentralized derivatives landscape, analyzing the status of on-chain protocols as well as the market outlook.
As widely understood, crypto derivatives allow investors to place bets on price changes of cryptos without owning the underlying asset. Crypto derivatives formed a lion’s share of the market when it came to centralized exchanges (CEX). However, the contribution from DeFi left a lot to be desired.
The DEX-to-CEX futures trade volume was just 1.4% as of July 2023. Moreover, the contribution of derivatives-based products to total DeFi total value locked (TVL) was just 3.7% as per the report.
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Author: Aniket Verma
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